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Ministry of Justice

Republic of Tajikistan

 On December 1, 2016 No. 614

ORDER OF THE GOVERNMENT OF THE REPUBLIC OF TAJIKISTAN

of November 26, 2016 No. 503

"About the State program of export promotion and to import substitution in the Republic of Tajikistan for 2016-2020"

 According to article 7 of the Law of the Republic of Tajikistan "About the state forecasts, concepts, strategy programs it is social - economic development of the Republic of Tajikistan", for the purpose of assistance to implementation of the state external economic policy, increase in competitiveness of domestic production, expansion of opportunities of export and import substitution, the Government of the Republic of Tajikistan decides:

1. Approve the State program of export promotion and to import substitution in the Republic of Tajikistan for 2016-2020 and the Plan of program implementation (appendices 1 and 2).

2. To the ministries and departments, local executive bodies of the government to the companies and other organizations, irrespective of patterns of ownership to take specific measures for complete and effective implementation of the State program of export promotion and import substitution in the Republic of Tajikistan for 2016-2020.

3. And to import substitution in the Republic of Tajikistan for 2016-2020 to assign coordination of works on monitoring and implementation of the State program of export promotion to the Ministry of Economic Development and Trade of the Republic of Tajikistan.

4. To provide to the ministries and departments, local executive bodies of the government information on results of program implementation in the first half of the year and for accounting year in the Ministry of Economic Development and Trade of the Republic of Tajikistan.

5. To the Ministry of economic development and trade of the Republic of Tajikistan:

- to annually submit to the Government of the Republic of Tajikistan the report on the course of implementation of the State program of export promotion and import substitution in the Republic of Tajikistan for 2016-2020 and the Plan of program implementation;

- in case of change of economic situation, commodity and financial structure of the Program under the influence of external and internal factors, the period of its realization, in accordance with the established procedure to make changes and additions.

Prime Minister of the Republic of Tajikistan 
Emomalii Rahmon

Appendix 1

Approved by the Order of the Government of the Republic of Tajikistan of November 26, 2016 No. 503

The state program of export promotion and to import substitution in the Republic of Tajikistan for 2016-2020

1. Introduction

1. The state program of export promotion and to import substitution in the Republic of Tajikistan for 2016-2020 (further - the Program) is developed for creating favorable conditions of realization of the state external economic policy, and increase in competitiveness of domestic production on internal and the foreign markets directed to export growth in volumes, decrease in share of consumer goods and services in total amount of import.

2. For its achievement within the Program the following strategic tasks determined by the National strategy of development for the Republic of Tajikistan for the period till 2030 will begin to be carried out:

- it is essential to reduce dependence on import of basic food;

- provide increase in production of export and import-substituting products at the expense of measures for assistance to potential exporters and investors, provisions of effective mechanisms of support and stimulation of domestic manufacturers and exporters of goods and carrying out necessary reforms in the real sector;

- create the modern logistic centers and expand the international communication, transport and economic corridors;

- bring into accord with requirements of international standards of service railway, automobile, air-lines and other modes of transport;

- provide growth of import-substituting and export production at the expense of measures for assistance to potential exporters and investors, development of cooperation, chains of value added and clusterization.

3. In case of development of the Program experience of realization and the learned lessons of the previous Development program of export of the Republic of Tajikistan for the period till 2015, and also features of the current environment of international trade and new tendencies in the field of globalization and regional integration were considered.

4. Based on results of the carried-out critical analysis of foreign economic activity from 2000 till 2014 key problems and restraining factors of export and import substitution are revealed, the reasons and factors of noncompetitiveness of domestic manufacturers are determined. The choice of the strategic directions of export having competitive advantages is reasonable taking into account the analysis of perspective niches and target markets. Perspectives in import substitution, the available possibilities of creation from scratch, revival or building-up of capacities in the domestic market, predetermined sectoral and industry priorities with accurate identification of goods items.

5. The key place in the Program is taken by problems of institutional development of export and import substitution which found the logical solution in actions for enhancement of regulatory framework of foreign economic activity, reforming of trade policy and simplification of export-import procedures, assistance to attraction of direct foreign investments and new technologies, creation of institutes of support of export and improvement of infrastructure of export and re-export in free economic zones, forming of goods distribution network and sales of goods abroad, strengthening of human potential and training for institutes of support of export and import substitution.

6. The program assumes measures of tax-exempt and duty-free importation of new technologies and the equipment, stimulation of export within agreements of the World Trade Organization enhancement of customs and currency control, anti-dumping and protective measures, tax incentives and financial and credit mechanisms, including improvement of access to finance of exporters and importozamenyayushchy productions, and also specific industry measures.

7. Increase in product competitiveness in the internal and external markets as the most important factor of development of export and import substitution, the reflection found in specific measures for improvement of product quality according to the international standards and standards, including the World Trade Organization, EEU and other potential markets, enhancement of packaging, marking and branding, implementation of innovations in export-oriented and import-substituting production, enhancement of logistics, transport infrastructure, quality management development.

8. In final part of the Program key parameters of the forecast of development of foreign trade activity of Tajikistan for 2016-2020, ratios of export and import, and also the forecast of export, import and import substitution for 20 key products are provided, realization mechanisms, and also monitoring and control of the program implementation course are determined. The program is developed according to the laws of the Republic of Tajikistan "About the state forecasts, concepts, strategy and programs of social and economic development of the Republic of Tajikistan", "About trade and consumer services", "About foreign trade activity", "About currency control and currency exchange control", "About free economic zones in the Republic of Tajikistan", "About export control", "About public-private partnership".

9. Extent of achievement of the planned strategic and target tasks will be traced, first, by the target indicators including macroeconomic indicators and key parameters of development of export, import and import substitution in separate key goods and services.

10. Forecast development of foreign trade activity of the Republic of Tajikistan for the period till 2020 considers changes in amounts and structure of export and import within three scenarios: "pessimistic", "realistic and basic" and "optimistical", the providing with investments and degree of satisfaction of financial support of actions of the Program determined by level. The program implementation in case of realistic-basic option will allow to increase export cost almost by 80 percent, to improve export ratio to import with 25,8 of percent to the level of 40 percent, to reduce trade balance by percent 5,9.

11. Realization of the main actions of the Program is reflected, in the actions plan which is based on three interconnected directions: enhancement of institutional bases of development of export and import substitution, strengthening of the state support of national export-oriented and import-substituting productions, and also increase in competitiveness of the Tajik goods in the internal and external markets. Certainly, within one program to resolve all problems of development of export and import substitution it is impossible therefore separate specific measures and specific actions will be provided within the developed industry development programs of priority sectors of national economy with accurate orientation to strengthening of export opportunities and building-up of competitive import substitution.

12. In the National strategy of development for the Republic of Tajikistan for the period till 2030 and the Medium-term development program of Tajikistan for 2016-2020 in implementation process of this Program it will be given to efficiency, diversifications of variety and competitiveness of real production sector, human development, strengthenings of organizational structure and restructuring and considerable changes have considerable advantages. With respect thereto it is expected that the Development program of agricultural industry for 2016-2020 which will be provided by the end of 2016 with respect thereto the measures for the priority directions mentioned in industry and regional levels will be included.

2. Condition and problems of export and import substitution in the Republic of Tajikistan

§1. Analysis of condition of foreign economic activity of Tajikistan

13. Tajikistan is open economy, net importer of goods and services. Liberalization of foreign trade of the country happened in the mid-nineties last century. In 2012 the country was in the rating of global trade in goods on the 143rd and 140th line item on export and import respectively (The World Trade Organization of 2014).

14. After independence acquisition the geographical structure of export of the country underwent cardinal changes. If in 1992 export to the Commonwealth countries of the independent states constituted 62 percent, and to foreign countries, 38 percent, then by 2014 this ratio significantly changed: 26 percent, and foreign countries, mainly Asian countries - 74 percent from the total amount of export fall to the share of the Commonwealth countries of the independent states.

15. Because of limitation of export basket where primary aluminum and cotton fiber prevailed, essential scope change of export for the observed period in value term is not observed. Recession or rise of export is in many respects connected with fluctuation of the world prices for the primary goods exported from Tajikistan.

16. Other picture is observed on import. In 2014 the import volume in value term in comparison with 2000 increased in time 6,4, and from the Commonwealth countries of the independent states increased in 3,9 of times, including from Russia almost in 11,3 of times, and from foreign countries - by 19 times, including from the countries of Asia in time 45,3. Essential growth of import was connected, first of all, with increase in receipts of money transfers of migrants and splash in the consumer demand from the population against the background of "nepospevaniye" of national production to satisfy it owing to limitation and backwardness of the available production capacities.

17. Change of geographical structure of import in many respects happened due to noncompetitiveness by criterion the price - goods quality of the Commonwealth countries of the independent states and higher level of diversification of goods, the technologies and services provided by foreign countries, in particular, China and Turkey.

18. In 2015 five main trading partners of Tajikistan on export were Turkey (28,7 of percent), Switzerland (23,1 of percent), Kazakhstan (16,4 of percent), Iran (6,7 of percent), Afghanistan (6,3 of percent), and on import - Russia (30,5, of percent), China (22,2 of percent), Kazakhstan (16,2 of percent), Switzerland (3,1 of percent) and Lithuania (percent 2,4).

19. Key export goods in 2015 were primary aluminum (24,8 percent), ore concentrates (17,1 percent), cotton-fiber (17,5 percent) and the electric power (5,5 percent), and the main import goods: oil products (11,7 percent), wheat (7,1 percent), the liquefied gas (4,3 percent), alumina (3,9 percent) and flour (1,8 percent).

20. Considering the principle of succession of development of strategic documents, the analysis of program implementation of development of export of the Republic of Tajikistan for the period till 2015 was carried out. Assessment of implementation of the previous Program allowed to reveal the following main lessons which are considered by preparation of this Program:

- the program is adopted before the National development strategy, without priorities and its target indicators;

- the solution of institutional problems of development of export did not become priority task;

- insufficient accounting of the happening structural changes and emphasis on raw export;

- insufficient attention to training, system of marketing and quality management;

- low involvement of private sector, the superoptimistical forecast of expectations from external investors;

- weak coordination of actions between the industry ministries and departments and private sector, absence of specific authorized body on program implementation with sufficient powers;

- the mechanism of review and adjustment of forecast indicators taking into account the changing real situation is not provided.

21. Tajikistan is participant of multilateral agreements about free trade within the Commonwealth of Independent States, the Economic Cooperation Organization and the Central Asian regional economic cooperation. Besides, the country has bilateral agreements with many Commonwealth countries of the independent states. Thanks to participation of the country in regional integration associations, and also availability of bilateral agreements about the free trade area, the specific weight of imported goods without payment of customs duties in 2012 made 80% of general import (Asian bank development of the country of the Central Asian regional economic cooperation, 2012), and according to statistical data of customs authorities of the Republic of Tajikistan for 2015, is higher than 70 percent.

22. On March 2, 2013 the Republic of Tajikistan became the full-fledged member of the World Trade Organization. With respect thereto the country undertook number of the important obligations consisting in further liberalization of trade regime and acceleration of integration into world economy.

23. At the beginning of 2015 the Program of adaptation of economy of the Republic of Tajikistan in connection with membership in the World Trade Organization in which the questions of financial and non-financial support of domestic manufacturers and increase in their competitiveness, creation of conditions for improvement of quality of the made products and promotion of export, ensuring investments in the domestic market, application of measures for protection of domestic manufacturers, creation of conditions for free trade, attraction of foreign investments, the introduction in system of settlement of trade disputes at the international level are raised was adopted.

24. Tajikistan became one of the first countries (after the People's Republic of China, Singapore, Mauritania and the USA) ratifying the agreement on simplification of procedures of trade of the World Trade Organization. It will allow to lower total trading costs due to reducing number of allowing documents for export and import, and also essential reducing time of crossing of borders.

25. The weighted average rates after the entry of the country into the World Trade Organization practically did not change and constituted 8 percent (7,8 percent during 2005-2012), including for agricultural products - 10,4 of percent (11,4 percent during 2005-2012) and 7,6 of percent (2005-2012 - 7,4 percent).

26. By estimates of the World Bank (The World Bank 2014), owing to the entry of Tajikistan in the World Trade Organization growth of the direct foreign investments (DFI) by 2018 will constitute 2,4 percent, domestic Gross domestic product in comparison with 2013 constituted 1,2 of percent, especially in the field of power, infrastructure, mining industry and telecommunications. It can attract new technologies which in turn, will raise labor productivity and will lead to export growth in volumes.

27. The ratio of total amount of trade (export plus import) to Gross internal output of Tajikistan which is often called "index of openness of economy" for the period on average constituted 1991-2012 100 percent that testifies to high degree of its openness.

28. Other indicator testimonial of country involvement degree into international trade, the "terms of trade" indicator is. This ratio of export and import in absolute expression. The export prevalence over import demonstrates improvement of terms of trade and vice versa. For all observed period only in 1992 export prevailed over import. In 1999 and 2000 export and import were made even in value term. Since 2005, there was essential increase in money transfers of migrants from abroad that caused significant increase in aggregative demand of the population for goods, services, to the companies and infrastructure projects which in turn, caused sharp increase in import. On the other hand, limitation of export basket did not promote increase in export. It led to essential deterioration in terms of trade and prevalence of import over export in 2015 to time 3,9.

29. Thus, the main tendency of foreign trade of the last more than two decades - permanent increase in amount of import purchases. As a result there was not only negative balance of trading balance, but also explicit disproportion between export and import, and dynamics of this process strongly amplified. Due to the circumstances noted above, acceptance of efficient steps on change of the current situation is advisable. Development and program implementation of export promotion and to import substitution in the Republic of Tajikistan is one of important and timely measures in this direction.

§2. The problems and obstacles constraining export, the reasons of noncompetitiveness of internal producers

30. There is a number of the problems constraining development of the export potential of Tajikistan. For their systematization system factors and objective premises are allocated.

31. It is necessary to carry the following to number of the key system problems constraining export opportunities of national economy:

- low level of product competitiveness owing to low technological level, experience of producers and institutional aspects in adjacent areas;

- availability of administrative barriers on the way of export of products, as in the country, and the neighboring adjacent states;

- insufficient degree of freedom of enterprise, unpredictable business environment and limited interest in implementation of innovations;

- lack of purposeful system of marketing and insufficiently effective management, including quality management.

32. As the main objective premises which are slowing down export growth it is possible to call:

- remoteness from the main transport flows and the main foreign markets;

- high share of transport-forwarding costs in the cost of export products, including unauthorized charges;

- absence of institutes of assistance and promotion of products in the internal and external markets;

- low level of the state support of assistance to export development;

- lack of real incentives to export for producers.

33. The program of export promotion and to import substitution in the Republic of Tajikistan along with identification of the main obstacles is designed to offer development of export and competitiveness ways and mechanisms of their overcoming and decrease. The offered system of measures assumes the following components: institutional, state support and increase in competitiveness which are provided respectively in Chapter 5, 6 and 7 are in details reflected in the Plan of measures for program implementation.

3. Purposes and tasks of the program

34. Program purposes:

- long-term goal of the Program - to assist realization to the state external economic policy and increase in competitiveness of domestic production on internal and the foreign markets, growth in volumes of non-oil export and decrease in share of consumer goods and services in the total amount of import;

- the medium-term purpose of the Program - to create the effective national system of export promotion and to import substitution providing favorable conditions for increase in investment and business appeal and also objective premises for strong growth of non-oil export and competitive import substitution.

35. Program tasks

1) Strategic tasks of the Program is the following:

- it is essential to reduce dependence on import of basic products of consumer food;

- provide transition to new technological level for the purpose of increase in product competitiveness;

- improvement of business environment and creation of the atmosphere of partnership and cooperation, forming of the favorable investment climate of public-private partnership;

- create the modern logistic centers and expand the international communication, transport and economic corridors;

- bring into accord with requirements of international standards of service railway, automobile, air-lines and other modes of transport;

- strengthen realization of transit telecommunication capacity of the country and handling capacity of Internet traffic.

2) Target tasks of the Program is the following:

- determination of the strategic priority directions of development of export taking into account opportunities of the country and situation in the global markets;

- the choice of specific perspective niches and target markets taking into account the available export potential and competitive advantages;

- creation of organizational, institutional and legal conditions for development of export activities and import substitution;

- support of growth of competitiveness of domestic production in the internal and external markets;

- forming of the most convenient export infrastructure, elimination of artificial barriers, increase in efficiency of non-financial instruments of support of export;

- providing financial support to the export organizations, taking into account requirements of membership of Tajikistan in World trade to the organization, and also institutes of support of export, including in foreign states;

- every possible stimulation of export and competitive import substitution;

- forming of modern public services and implementation of the principle of single window on the basis of modern information and communication technologies by provision of the state services in foreign trade activity;

- achievement of forecast indicators of development of export and import substitution on target indicators of the Program, including product parameters;

- creation of the efficient mechanism of program implementation and effective monitoring system and control;

- increase in the international trade status of the Republic of Tajikistan and places in the international ratings;

- increase in level of credibility to the pursued external economic policy exporters, investors and importers.

36. In this Program the following target indicators and indicators will be used:

1) Macroeconomic indicators:

- Foreign trade turnover, one million US dollars, growth rate, %

- Export, one million US dollars, growth rate, %

- Import, one million US dollars, growth rate, %

- Import substitution, one million somoni, growth rate, %

- Balance of trading balance, one million US dollars

2) Indexes:

- Global competitiveness;

- Concentration and diversifications of export;

- Trade specialization;

- Terms of trade;

- Business regarding foreign trade.

3) Product indicators:

- Export, one million US dollars, growth rate, %

- Import, one million US dollars, growth rate, %

- Import substitution, one million somoni, growth rate, %

4) Cross-industry indicators:

- increase in number of workplaces in the field of export and import substitution;

- growth of the average salary in the organizations exporters and import substitution;

- target indicators of this program will be oriented also to achievement of main objectives of Sustainable Development of the UN by the Republic of Tajikistan. Target indicators and indicators of development of foreign trade activity of the Republic of Tajikistan for 2016 - 2020, and also perspectives of Tajikistan in the international ratings and on key indexes are given in Appendices No. 2 of this Program.

4. Strategic directions of development of export and import substitution

§ 3. Strategic analysis

37. SWOT analysis of the export potential of the Republic of Tajikistan:

- one of the best and well proved in practice instruments of strategic analysis at the national level is SWOT analysis. Results of SWOT analysis of development of the export potential of the Republic of Tajikistan are given in Table 3.2. In it strong and weaknesses of the export potential act as internal factors, and opportunity and threat - external;

- follows from the carried-out analysis that strengths of Tajikistan which are its competitive advantages in international trade for development of export are used slightly. Numerous weaknesses outweigh so far, not diversified raw model of export, the limited amount of own competitive production is consequence of what. However there are also opportunities for export development which in case of acceptance of new model of growth and consistently implementable state economic policy, can quite yield real results;

- in compliance of the National strategy of development for the Republic of Tajikistan for the period till 2030 and the Medium-term development program of Tajikistan for 2016-2020 on which necessary measures of efficiency, diversification and competitiveness of real production sector will be taken;

38. Structural analysis of export of the Republic of Tajikistan and its perspectives:

Commodity export from the republic has steady raw character. Therefore in five years of program implementation the developed structure of export with tough domination of raw orientation will be difficult to be changed. However the main tendency - increase in share of energy carriers and goods with more high value added, and also building-ups of export of services, including the international tourism, will begin to be looked through in days of program implementation. Dynamics of change of structure of commodity export from Tajikistan for 2000 till 2020 is provided on Table 1.

Table 1. Dynamics of change of structure of export (as a percentage to result)

Indicators

 2001

2005

2010

2014

2015

2020

Energy carriers

12,1

6,2

1,9

4,9

5.0

9,2

Raw materials and materials

78,1

82,4

86,3

84,9

82,6

65,1

Machines and equipment

1,2

1,4

3,6

2,5

2,7

3,9

Consumer goods

7,7

8,3

7,8

7,5

7,9

10,1

Other products and services

0,9

1,7

0,4

0,2

0,5

11,7

Total

100

100

100

100

100

100

Table 2. SWOT analysis of the export potential of the Republic of Tajikistan

S-Strengths

W-Weaknesses

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