Tajikistan: Investing

FDI in Figures

With an annual average of about 15% of GDP over the past decade, total investment in Tajikistan is low by regional and international standards. According to UNCTAD’s 2021 World Investment Report, FDI inflows to Tajikistan decreased from USD 213 million in 2019 to USD 107 million in 2020, mainly due to the global health and economic crisis triggered by the Covid-19 pandemic. FDI stocks totalled USD 3.1 billion in 2020. Aluminium, cotton and energy are the sectors that attract the most foreign investment. Tourism also reveals its potential. The main investors are China (accounting for three-quarters of all FDI), Russia, the United Kingdom, Switzerland and Iran (data U.S. Department of State). China gradually replaced Russia as the largest investor in the country, as part of its Belt and Road Initiative, including China-funded thermal and hydropower plant projects as well as a road infrastructure project between Dushanbe and Uzbekistan. Preliminary figures from the National Agency for Statistics show that FDI inflows reached USD 342.2 million in 2021, mostly from China.
Tajikistan offers a favourable environment for regional and cross-border investments, although the risk may be high. The government is directing foreign investment towards the development of new sectors while modernizing existing industries, and its National Development Strategy 2016-2030 targets to attract as much as USD 55 billion in FDI by 2030. All private investments are selected and require government approval. There are no limits on foreign ownership or control of firms and no sector-specific restrictions that discriminate against market access. The Tajik parliament continued to grant tax exemptions to Chinese firms investing in the country, but investment laws are applied inconsistently. Tajikistan was ranked 106th in the World Bank's latest Doing Business report, gaining 20 spots from the previous edition. In particular, the World Bank highlights the progress made in getting credit and electricity as well as starting a business. However, poor industrial productivity, complicated procedures for obtaining a building permit, difficult access to credit and poor resolution of insolvency cases, a fragile and uncertain business environment and poor infrastructure are among the factors that limit the attractiveness of the country. Under Tajik law, all land belongs to the state. The judiciary lacks independence. Many judges are poorly trained and inexperienced, and corruption is widespread. Furthermore, labour regulations are not flexible enough to facilitate dynamic employment growth. Investments in certain sectors require special government permission, including aviation, defence, security, and law enforcement.

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Latest Update: February 2023