There is real interest, there are immense opportunities—but also increasing risks—, and the world is watching what is happening in Tajikistan. On this particular occasion, when I can express my particular gratitude for excellent, constructive, and impactful collaboration and the development of new friendships, it is my impression that this is one of the biggest differences to the situation a little more than four years ago, when I first walked through the largely deserted border crossing in Oybek, before taking the flight from Khujand to Dushanbe. At the time, countries that had attracted attention, stirred up some excitement, including among my colleagues, were elsewhere—some were close but just not here.
For reasons both entirely outside this country’s control and of internal developments and domestic policy decisions (many as direct result of our joint work), Tajikistan arouses interest and is assuming—more and more—a central position in global agendas. As much as the exogenous challenges, spanning climate change, the COVID-19 pandemic, the deteriorating security situation in Tajikistan’s immediate neighborhood, appear to amplify existing socio-economic development challenges and imply additional fiscal obligations—sympathies to Mr. Qahhorzoda!—, they do hold the key for Tajikistan to take a significant step towards accelerating and advancing sustainable, resilient, and inclusive development.
This is the case particularly, as these challenges, within the context of Tajikistan’s priorities, are interrelated. That said, allow me to summarize my message looking forward the following way: the construction of the Rogun HPP is not an investment, it is—to be successful—the entire bloc of economic, social, and environmental policies. In terms of envisaged results, this is easy to see. First, Within the global debate on green recoveries and decarbonization, Rogun together with Nurek and all other HPPs is the broader region’s most promising perspective of a gradual move out of the reliance on fossil fuels. Second, in terms of the overarching economic model, the energy sector has opened opportunities for an increasingly export-oriented development approach. Rogun being the anchor, any programming on the financing and revenue sides have to include the focus on supporting and strengthening human capital—education, health, and social assistance—to build the foundation for a modern, more productive, and opportunity-generating economy. And third, linked to objectives of sustainability, the ability to finance such an investment presupposes the need to regard the private sector as partner and co-contributor to Tajikistan’s ambitious development objectives.
As argued on several occasions, including through the Development Coordination Council (DCC) in the Consultative Council on Improvement of Investment Climate under the President of the Republic of Tajikistan, the Government’s decision to finance Rogun necessitates the approval and adoption of a tax reform that provides the private sector with (i) predictability in, and security of, tax obligation; (ii) incentive structures to have entrepreneurs and investors want to grow and want to be honest vis-à-vis the State; and (iii) a level playing field that rewards those companies that are innovative in production and responsive to consumer demand. Between the considerable space to compete in domestic markets, thus far dominated by imports, and access the very large and underserviced, if not “hungry” markets in the direct vicinity, the perspective for dynamic private-sector development is substantial. In fact, compared to countries—even if more prosperous, more sophisticated, and more diversified—with a strong dominance of state-owned and typically overstaffed enterprises, Tajikistan has every opportunity to increase domestic productivity (and with it, average wages) in a dynamic and sustainable manner by attracting “greenfield investments”.
Thus, a tax code that guarantees predictability and reinforces confidence, joint with supplementary measures to strengthen the business climate, will help to overcome Tajikistan’s supply constraints and allow enterprises to benefit from the existing, hitherto unmet demand for goods and services the country produces (or can produce). This is much easier, much quicker than reforming economic sectors dominated by state-owned sectors, not least because a strategy anchored on addressing business climate constraints will create employment rather than require the need to lay-off workers in uncompetitive SOEs.
Especially if these measures are complemented and reinforced by the focus on improving the quality of, and access to, education and health, new direct investments, additional production, increased exports, and further employment will be the consequence. The resultant increase in domestic productivity and labor demand will, in turn, be the principal factor behind rising average wage levels.
In addition, the tax base will broaden. Joint with efforts to keep on strengthening institutions and public finance management, the broader tax base—including the increasing ability to rely on direct taxes—would enable the budget increasingly to meet all obligations, from the energy sector to other existing and emerging priorities. Plus, here is where the interests from external and domestic factors intertwine. Any country willing to address, in a serious and strategic manner, existing development challenges can count on international support, certainly on support from the World Bank.
As times are changing, Rogun looks not less daunting but more visionary than it did at the design stage. The global focus on decarbonization is one. If we look at the business climate and comparative advantages, the access to clean, reliable, and affordable energy is, for important potential investors in key sectors, a very distinct and decisive reason to invest—much more important than any tax incentive.
That said, allow me please to raise the glass (i) to wish Tajikistan the vision, courage, and success in building further on the critical investments made in previous years; (ii) to thank my counterparts in Government for the exceptional collaboration and the important results achieved; (iii) to thank colleagues among development partners, especially, in the DCC, but also in my Office and among my colleagues, for excellent collaboration; (iv) to express my gratitude for the ability to have found friends here in Tajikistan; (iv) for the opportunity to have had experiences with unforgettable and lasting impressions; and (v) to see Tajikistan in the news for its progress, its successes, and its decision taken to support sustainable, inclusive development—with clean energy, a profitable private sector, and well-educated, healthy families with professional perspectives, access to affordable nutritious food, clean water, and internet services throughout the country.
Ташаккур! Спасибо! Thank you!