Tajikistan is the poorest state in Central Asia, but in recent years it has managed to maintain a high rate of development, so that, perhaps soon, both politicians and investors will have to change their attitude towards this country. We talk about the successes and difficulties of the transformation of Tajikistan’s economy with Zarina Dadabaeva, Doctor of Political Science, leading researcher at the Center for Post-Soviet Studies of the Institute of Economics of the Russian Academy of Sciences
— Zarina Abdurakhmanovna, can we talk about re-industrialization of Tajikistan? Why has the share of people employed in industry more than doubled in a quarter of a century since the republic gained independence: from 21% to 51%?
— Talking about re-industrialization of Tajikistan’s economy, in our opinion, would be premature: the country continues to remain more agrarian; but the basis for the development of industry, of course, existed. These are well-known Soviet industrial enterprises, such as the Tajik Aluminum Plant, hydropower facilities, the TajikHydroAggregate plant, which produced hydraulic equipment, the Tekstilmash plant, which produced spinning machines. The production facilities of such enterprises as the nitrogen fertilizer plant in Kurgan-Tyube (now the city of Bokhtar), the plants for the manufacture of plastics and the production of household refrigerators in Dushanbe, and the electrochemical plant in Yavan also remained.
In the Sogd region, the potential of unique enterprises of the military-industrial complex has been preserved. The industrial-agrarian economy created in Soviet Tajikistan, where 38% was industry and 15.4% was agriculture, was replaced by the agrarian-industrial economy of independent Tajikistan. Yes, throughout the post-Soviet period, attempts were made to change the agrarian model of development. In the National Development Strategy 2030 the task of a gradual transition to an industrial-agrarian type of economy was set. But reaching these goals is slow.
— What is the reason for the lag?
— Tajikistan is an interesting country in terms of economic development. On the one hand, it has a large human potential — 9.6 million people, while the young economically active population prevails. On the other hand, a weak economy cannot provide employment for the most of the population, and the level of education does not allow to acquire the necessary professional skills. The number of jobs created annually lags behind the growth rate of the working-age population. Therefore, people migrate to Russia and other EAEU countries.
However, according to official figures, over 30 years of independence, more than 50 large enterprises appeared in light industry alone. They mainly process cotton, produce medical products based on it, garments, leather goods, etc. The number of new industries in the dynamic mining industry has increased; their capacity in the total industry volume increased by 60-80%. For the period from 1992 to 2020. 38 large facilities were brought into exploitation.
Perhaps the largest growth occurred in the construction industry. If until 1991 there were about 30 factories and workshops providing the country with construction materials, then by 2019 there were already 517 of them. The increased production of cement made it possible not only to meet domestic needs, but also to increase its export to neighboring countries: Uzbekistan, Afghanistan and Kyrgyzstan. Industry share of construction materials production in total industry by 2020 was more than 10%. The food industry is actively developing: its indicator (including drinks and tobacco) in 2019 equaled 33.7% of the total share of industry. At the same time, in 2020 the share of the population employed in industry was slightly more than 10.3%, while the share of the population involved in agriculture was 45.7%.
— How would you rate the role of FEZ (free economic zones) in the preservation and development of various branches of the Tajik economy?
— 5 free economic zones are registered in Tajikistan — Sugd, Ishkoshim, Pyanj, Dangara, Kulyab. 75 enterprises are registered in the FEZ, tax preferences consist in the need to pay two (instead of ten) mandatory taxes fixed by the Tax Code, the cost of renting a land plot is in the range of $0.5–1 per 1 square meter. The production of general-purpose goods is carried out, which contributes not only to the maintenance of traditional industries (processing of food products, cotton, etc.), but also to the development of new industries. Attracting foreign investors made it possible to establish production for the construction industry. In 2019 about 1070 people worked in the FEZ.
However, production in FEZ is uneven. 3 free economic zones are developing more effectively. SEZ Sugd, where 24 entities producing solar heliocollectors, electric wires, various plastic profiles, food products, were registered (since the opening of the zone in 2009, industrial products worth $60.907 million have been produced). In the FEZ “Dangara” there are 26 active entities producing building materials, metal structures, plastic pipes; also at FEZ enterprises dried fruits are processed and packaged. Since 2011, products worth $10.8 million have been produced in this zone. FEZ “Pyanj”: the creation of this zone in 2008 was caused by a developed transport network in the region of the same name, including the intersection of the most important international highways, which, of course, contributes to the export of goods from the enterprises located here. All three zones are leaders in attracting foreign investment and manufacturing products.
The Ishkashim SEZ, organized in 2011, specializes to a large extent in small and large hydropower, and a tourist cluster. But its share in the total volume of products produced by the FEZ is small. Due to the fact that the Kulyab FEZ was created only in 2019, it is still difficult to talk about its results.
— What are the prerequisites of the formed stability of the country’s energy complex taking into account geographical distance from the Russian Federation (key trade and economic partner), difficult natural conditions, long-standing tension in relations with neighboring Uzbekistan, close proximity to a new hotbed of instability — Afghanistan?
— The capacity of the Nurek, Sangtudinskaya-1, Sangtudinskaya-2, Pamir, and (under construction) Rogun hydroelectric power stations allows, despite the internal shortage of electricity, to nevertheless export it. If earlier Tajikistan was part of the unified energy system of Central Asia, which ensured its stability of year-round electricity generation for the needs of the national economy, then with the collapse of the USSR, the country faced problems — up to the introduction of energy limit for the population. Yes, indeed, Russia is the main trade and economic partner of the republic: in the total trade turnover of Tajikistan, the share of Russian exports is more than $1 billion. Russia is also a major investor in the republic: with its help, a large hydropower facility Sangtuda-1 was erected. But it is worth noting that in recent years, Russian investments have been declining.
As for the tense relations with neighboring Uzbekistan, they are in the past. The change of leadership in this country made it possible to establish good-neighbourly, economically mutually beneficial contacts. This also had a favorable effect on the development of the energy industry, as both countries were able to use electricity flow if necessary.
Prior to the recent events in Afghanistan, Tajikistan also had friendly and stable relations with that country. As part of bilateral trade and economic agreements, Afghanistan received electricity from Tajikistan at a very low price of 3 cents per kilowatt on a 110 kW transmission line and 4.5 cents on 220 kW line. I do not think that with the establishment of a new power in Afghanistan, the situation will negatively affect the energy industry, although only Tajikistan did not recognize it from all the countries of Central Asia. This will largely affect the overall political and economic situation in the region and will primarily affect security.
— To what extent did the country manage to tighten the level of AIC equipment to the standards of the XXI century, at least in some areas?
— Of course, along with hydropower capabilities of the republic, its agricultural industry deserves attention. Unique climatic conditions, the introduction of modern methods of growing and processing agricultural products, as well as cheap labor, in our opinion, can become significant arguments for Russian entrepreneurs. Within the framework of the Agricultural Reform Program of the Republic of Tajikistan for 2012-2020, the rules of land and water use have changed, the possibility of choosing cultivated crops has been provided. Individual, family, collective farms arose, which, along with state and corporate associations, supplemented the structures of production and employment.
The use of modern technologies is observed mainly among producers of poultry and vegetable products. Tajik farmers and large agricultural holdings are gradually introducing integrated microbiological fertilizer technologies into practice, which in turn encourages a reduction in labor costs and an increase in the quality of the crop. Tajik scientists have developed a combined machine KM-1; it was tested in the seed farm named after Dzerzhinsky in Gissar district. In one pass, the mechanism performs 6 different technological operations, including continuous cultivation, milling and leveling of soil, introduction of mineral fertilizers, sowing of grain seeds.
Interviewed by Alexey Golyakov