Tajikistan: Investing

FDI in Figures

According to UNCTAD’s World Investment Report 2023, FDI inflows to the country more than doubled in 2022, reaching USD 174 million, compared to 84 million one year earlier. Nevertheless, the level is still below the one recorded before the pandemic (USD 360 and 364 million, respectively, in 2018 and 2019). The total stock of FDI reached USD 3.3 billion in 2021, representing around 31.8% of the country's GDP. The main investors are China (accounting for around 40% of all FDIs), 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. According to the Monitoring of Mutual Investments report by the Eurasian Development Bank (EDB), Tajikistan primarily allocates FDI towards the extraction of mineral resources. In 2022, the country reportedly attracted approximately USD 430 million in direct investments, with 85% directed to the extraction of mineral resources, 13% to production and processing, and 1.7% to construction and other sectors. Preliminary figures from the State Committee for Investment show that, in 2023, Tajikistan attracted foreign investments worth USD 2.7 billion. The increase compared to 2022 amounted to USD 113.6 million, or 4.4%. Russia's investments in the republic totaled USD 99.3 million in 2023, positioning Moscow as the third-largest investor in Tajikistan's economy, following Kazakhstan and China, whose investments amounted to USD 220.4 million and USD 130.1 million, respectively. Other significant investors in the republic last year included Luxembourg (USD 77.4 million), Italy (USD 65.5 million), the US (USD 36.4 million), and the UK (USD 29 million). These foreign investments are primarily directed towards key sectors of the country's economy, including the mining industry, processing industry, banking, construction, agriculture, wholesale and retail trade, transport, logistics and communication, hotels and restaurants, and real estate transactions.

Tajikistan offers a favorable 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. 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, and many judges are poorly trained and inexperienced, while corruption is widespread (the country ranks 162nd out of 180 in the latest Corruption Perception Index). Furthermore, labor regulations are not flexible enough to facilitate dynamic employment growth. Investments in certain sectors require special government permission, including aviation, defense, security, and law enforcement. Overall, the country's business environment is weak, and Tajikistan ranks 137th out of 184 countries on the latest Index of Economic Freedom.

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Latest Update: May 2024