DUSHANBE, October 2, 2008, Asia-Plus — In 2007, Tajikistan topped the CIS state in terms of actual attraction of foreign investments, ranked by the UNTCAD World Investment Report 17th among 141 countries of the world.
The United Nations Conference on Trade and Development (UNCTAD) published its World Investment Report 2007 on September 24 this year.
According to the report, among the post-Soviet states, only Estonia (ranked 8th) and Georgia (ranked 9th) outstrip Tajikistan, while Moldova was ranked 19th, Kazakhstan 23rd, Latvia 31st, Ukraine 35th, Armenia 39th, Lithuania 53 rd, Kyrgyzstan 55th, Russia 81st, Uzbekistan 124th, and Azerbaijan 140th.
As highlighted in this year’s World Investment Report, recent years have seen a revival of foreign direct investment in extractive industries, reflecting higher commodity prices. This commodity boom, partly fuelled by rising Asian demand for various natural resources, should open a window of opportunity for mineral-rich countries to accelerate their development.
The World Investment Report 2007 focuses on the role of transnational corporations in extractive industries, and documents their presence in many of the world’s poorest economies. Transnational corporations can bring in the finance and management skills these economies need to transform their resources into products that can be used locally or exported. The rise of new transnational corporations from the South, not least Asia, has given mineral-rich countries a wider spectrum of potential sources of investment.
The report notes that within the CIS area, investments were attracted mainly in fast-extending markets of consumer goods and natural resources.
In the meantime, Tajik experts consider that the volume of foreign direct investments in Tajikistan’s economy remains low.
According to Dr. Hojimuhammad Umarov, one of the main obstacles on the way of the foreign investments to Tajikistan is a high level of corruption in the country. “The country should introduce more efficient mechanisms to reduce the corruption level in the country and thereby to persuade investors to invest in our economy,” Dr. Umarov stressed, noting that to speed up economic growth Tajikistan should restrict external borrowings and “improve investment climate, reducing the corruption level.”
According to Professor Nouriddin Qayumov, Director of the Institute for Economic Studies at the Ministry of Economic Development and Trade (MoEDT), the country’s banking system is still underdeveloped and has not yet provided long-term and medium-term loans, while loan interest rates are too high.
“To make the country more attractive for investments we need branches of foreign banks in the country,” said Qayumov, “In the course of competition, branches of foreign banks could promote reduction in loan interest rates set by Tajik banks at 20%-30%. High loan interest rates set by Tajik banks put obstacle on the way of foreign investments to the country.” Besides, the majority of investors do not want to invest in Tajikistan through local banks because they are not sure in stability of their work, according to Qayumov.
