National Report Tajikistan /
CENTRAL ASIA TRADE & TRANSPORT FACILITATION AUDIT
NATIONAL REPORTS
TAJIKISTAN
Initiated by:
The Worldbank, USA
Written by:
NEA Transport research and training, The Netherlands
Our reference:
(D20020454\23060)
Status: Draft
March 2003
CONTENTS
Page
1Introduction
2Trade trends, transport flows and infrastructure......
3Ongoing reform process......
4Trade, transport and customs practice......
5Key impediments to trade and transport......
6Trade and transport action plan......
Annex 1 Public investment and technical assistance in transport
1Introduction
The study
This is the country report for Tajikistan in the framework of the Central Asia Trade and Transport Facilitation Study. The project has been financed by the World Bank and commissioned to NEA Transport research and training in The Netherlands.
Main objectives of the study are to:
- Identify and describe the main impediments in the domain of trade and transport facilitation to increased international trade for Central Asian countries
- Formulate priority actions to be taken by Central Asian governments to remove these impediments
During the project three experts on transport and logistics of NEA have been travelling through Central Asia, visiting Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan and Turkmenistan. Each country has been visited by one expert for at least one week. During this week numerous meeting have been arranged with the Government and the business circles.
The project has resulted into one Synthesis Report and a Country Report for each of the Central Asian states. The result was only possible thanks to the excellent support of the World Bank including its regional offices, and the people whom contributed during all the meetings that were organised in Central Asia. We are grateful that we were able to work with them. This report has been elaborated by Arthur Gleijm (team leader), Harrie de Leijer, Menno Langeveld and René Meeuws in co-operation with experts from MNT Consulting in Tajikistan.
Tajikistan
Tajikistan is a mountainous and land-locked country situated between Afghanistan (South), Uzbekistan (West, North-West), Kyrgyzstan (North) and China (East). South-eastern Tajikistan borders on a small corridor of Afghan territory dividing Tajikistan from Pakistan; a legacy from the “Great Game” between the United Kingdom and Russia from the end of the 19th and beginning of the 20th century. History played another mean trick with the country when the Soviet Union in 1929 decided to mark a large and prosperous part of territory inhabited by Tajik population (including the cities of Samarqand and Bukhara) into the boundaries of Uzbekistan. Tajikistan was one of the poorest Soviet republics, with 40 percent of its budget subsidies from Moscow. It had the USSR's lowest per capita GDP and highest population growth. The Soviet collapse was, therefore, particularly challenging. Neither efforts to solve the new economic problems that came with independence nor nation-building have been very successful. This is mostly caused to its difficult geographical circumstances.
More than half its territory is above 3,000 meters, with limited interaction between the various parts of the country so strong regional identities have emerged and each populated valley tend to behave like an autonomous region. Western parts of the country are on a lowland plain, bisected by two narrow ranges.
The eastern part of the country is inhabited by the Pamiris population of the Gorno-Badakhshan Autonomous Republic (GBAO), who speak a different language, belong to the Ismaili branch of Shi’a Islam and are cut off from the rest of Tajikistan during most of the year. Central Tajikistan (Gharm and the Karategin Valley), is relatively isolated in high mountains. Its people tend to be more religious and conservative.
The South (Khatlon Province) and the North (Sughd Province) have substantial Uzbek communities. Sughd Province, in the Ferghana Valley, has close links with neighbouring Kyrgyzstan and Uzbekistan.
Nowadays, Tajikistan faces four major challenges: constructing a viable political system and functioning state; fighting criminality and drugs-trafficking; improve the economy; and establishing good relations with intractable neighbours.
This report
After this introduction this Country Report consists of a chapter on trade trends, transport flows and the infrastructure. The third chapter is devoted to the ongoing reform process. Chapter 4 introduces the country’s trade, transport and customs practice. Key impediments in trade and transport are presented in chapter 5. The Country Report is finalised with a trade and transport action plan. In annex 1 the interviewed stakeholders are listed while Annex 2 consists of the major technical assistance and investment projects.
2Trade trends, transport flows and infrastructure
Even without the destruction caused by the civil war, the economy of Tajikistan would have faced severe problems on the moment of gaining independence. In 1991 subsidies from Moscow covered more than 40 per cent of Tajikistan’s expenditures. The loss of these Soviet subsidies was a hard blow on the national budget of Tajikistan, but the following civil war destroyed the economy almost completely, including infrastructure. Right at the end of the civil war, the Tajik economy was confronted with the Russian economic crisis. Last but not least, the country has suffered successive natural disasters since 1998. Major floods have destroyed or damaged infrastructure, homes and crops, and two years of severe drought have led to a sharp drop in agricultural output.
The economy of Tajikistan is highly dependent on foreign trade, with exports equivalent to 70% of GDP. Cotton and aluminium are responsible for over 80% of export earnings, rendering the economy extremely vulnerable to terms-of-trade shifts caused by fluctuations in international prices and, indeed, the prices of these two major exports deteriorated considerably in 2001: cotton, for example, fell by 35%. In addition, production of goods for export was severely hampered by a 2-month closure of the railway connection between Tajikistan and the Russian Federation—the country’s major trading partner.
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Central Asia Trade & Transport Facilitation AuditNational Report Tajikistan /
Main export products Tajikistan in tonnes (Year 1999)
ProductDestination country / Petroleum Products
(0,8%)¹ / Other Chemical products
(3,1%) / Other Construction materials
(23,8%) / Scrap Metal
(1,4%) / Other ferrous and non-ferrous metals
(32,2%) / Cotton
(15,4%) / Textiles and its wares (other than cotton)
(3,1%) / Agriculture products
(11,7%) / Food Stuff
(3,3%) / Manufactured Goods
(3,8%)
Europe-W&S / 0 / 0 / 0 / 460 / 165.255 / 54.176 / 7.285 / 0 / 0 / 0
Uzbekistan / 0 / 15.712 / 164.459 / 0 / 1.622 / 11 / 11 / 642 / 25 / 20.553
Russia-Asia / 0 / 17 / 0 / 60 / 53.114 / 6.447 / 3.656 / 73.068 / 19.577 / 1.475
Middle-East / 0 / 91 / 0 / 3.738 / 3.243 / 14.901 / 714 / 173 / 528 / 1.044
Turkmenistan / 0 / 5.807 / 7.155 / 101 / 0 / 82 / 2.385 / 198 / 470
Kyrgyzstan / 6.093 / 298 / 29 / 1.572 / 47 / 6 / 48 / 645 / 91 / 388
Kazakhstan / 0 / 555 / 257 / 0 / 202 / 0 / 67 / 1.701 / 968 / 871
Sub total, in tonnes / 6.093 / 22.480 / 171.900 / 5.830 / 223.584 / 75.541 / 11.863 / 78.614 / 21.387 / 24.801
Total export to all countries, in tonnes / 6.093 / 22.571 / 171.900 / 9.836 / 232.511 / 111.259 / 22.382 / 84.629 / 23.620 / 27.446
Source: TRACECA Statistics
Main import products Tajikistan in tonnes (Year 1999)[1]
ProductOrigin country / Cokes
(10,3%) / Crude oil
(17,4%) / Grain and Cereals
(23,5%) / Fertilisers
(2,5%) / Other Chemical products
(13,7%) / Other Construction materials
(4,2%) / Other ferrous and non-ferrous metals
(1,9%) / Timber
(1,8%) / Food Stuff
(3,9%) / Manufactured Goods
(13,8%)
Kazakhstan / 21.683 / 0 / 415.308 / 90 / 231 / 258 / 1.240 / 0 / 246 / 21.256
Uzbekistan / 7.450 / 232.746 / 331 / 15.698 / 894 / 60.160 / 45 / 0 / 965 / 120
Europe-W&S / 78.895 / 3.013 / 0 / 0 / 8.359 / 0 / 834 / 1.737 / 1.329 / 202.803
Russia-Asia / 34.436 / 31.564 / 2.021 / 24.401 / 23.571 / 173 / 26.366 / 30.935 / 23.137 / 15.265
Ukraine / 1.043 / 11.506 / 0 / 0 / 134.690 / 3.238 / 6.193 / 0 / 984 / 0
Turkmenistan / 36.506 / 36.040 / 0 / 4.830 / 5.739 / 1.649 / 0 / 0 / 0 / 0
Kyrgyzstan / 0 / 298 / 8.205 / 64 / 27 / 11.894 / 388 / 334 / 378 / 130
Sub total, in tonnes[2] / 180.013 / 315.167 / 425.865 / 45.083 / 173.511 / 77.372 / 35.066 / 33.006 / 27.039 / 239.574
Total import from all countries, in tonnes / 187.715 / 317.971 / 430.154 / 46.425 / 250.013 / 77.387 / 36.135 / 33.107 / 71.083 / 252.742
Source: TRACECA Statistics
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Central Asia Trade & Transport Facilitation AuditNational Report Tajikistan /
Economic growth, mainly pushed by capital-intensive aluminium production, has so far failed to have much of an impact on formal sector employment or the level of poverty. While the official unemployment rate fell to 2.8% in 2001 from 3.3% in 2000, unofficial estimates put the unemployment or underemployment rate much higher at over 30%. An estimated 200,000 people left the country in 2001, more than in the previous year, most of them to the Russian Federation in search of work. Some emigrated permanently, and some left for seasonal work.
Further, about one third of the labour force is estimated to be working abroad. Such population movements should be seen against a background in which almost 80% of the population continue to live in poverty. According to some Tajiks many of the Tajik expats have stopped sending money to their relatives, thereby increasing poverty and forcing woman to participate in drugs trafficking.
A UN official estimated that drugs trade accounts for 30 to 50 per cent of the economy. The UN has identified six drugs routes from Afghanistan, two of which run through Tajikistan. Most seizures are from the thousands of small-scale traffickers who carry only a few grams of heroin at a time.
Production of aluminium and cotton requires imports of intermediate capital goods and fuel that in the past have faced financing constraints. Further, the Government's strategy of increasing cotton production for exports could have negative effects. Continuing the practice of monoculture that has been in effect over the past 50 years could exacerbate environmental problems. On the side of imports, Tajikistan has a sizeable energy trade deficit with import costs of coal, oil, and gas outweighing export revenues from the sale of electricity. Coal production and consumption in Tajikistan have plummeted since the country's independence. Coal consumption fell from 251,000 short tons in 1992 to just 13,880 short tons in 1999. Tajikistan has a very small oil industry, with most of the country's production coming from the northern Leninobod Soghd Region.
Since it does not have a domestic refinery, all petroleum products must be imported. Uzbekistan supplies more than 70% of Tajikistan's oil demand, and overall, Commonwealth of Independent States (CIS) account for more than 97% of Tajikistan's oil product imports. In September 2000, an Austrian firm agreed to back Tajikistan's plans to build an oil refinery with a $3.5-million credit, but no further progress has been made to construct the refinery.
Despite a rise in the gas production, Tajikistan's annual gas consumption of over 40 Bcf/year (billion cubic feet) forces the country to rely heavily on natural gas imports from Uzbekistan and Turkmenistan. Natural gas pipelines run from Uzbekistan to Tajikistan's capital of Dushanbe, as well as through northern Tajikistan. Tajikistan has a barter arrangement with Uzbekistan under which Tajikistan receives Uzbek gas in exchange for Uzbekistan's use of a rail transport corridor and gas pipeline across northern Tajikistan that links Uzbekistan's eastern territory with its gas fields.
For agricultural purposes Tajikistan depends on import of (substances for) artificial fertiliser. In the beginning of 2002 however, the Government of Uzbekistan, issued new legislation making it necessary to have a license for transit and export of more than 80 goods (explosive and substances for explosive goods, including artificial fertiliser).
Tajikistan's transport sector faces the challenge of recovering from a sharp downturn in the past decade. Between 1991 and 1998, the share of transport within the nation’s economy shrank from 5 to 1 percent of GDP. Total tonnage hauled by public transport contracted by a factor of 6.4 during 1992-98, while the number of passengers declined by over 50 percent. Average daily traffic (ADT) on main arterial roads dropped from 3,750 vehicles per day in 1990 to 800 in 1995. With recent upturns in economic activity, ADT has risen to 2,250 vpd (60 percent of 1990 levels).[3] Distances from Tajikistan to current and potential export markets are very great (3,700 km to the Black Sea, 4,200 to Moscow, 6,000 km to the heart of the Chinese mainland).
Traditionally, rail transport has been utilised for aluminium, grain, fertiliser, and cement imports, aluminium and cotton exports, and domestic service for the industrial sector. Agriculture, more than industry, relied on trucking. The railways in Tajikistan are regarded by the government as an important strategic part of the economy, and are geographically divided into three sections: the Northern section is in Sugd region, Central section – in Dushanbe, and Southern section - in Khatlon region. All three sections are isolated from each other. They are connected through the territory of other countries (Uzbekistan and Turkmenistan).
Railways perform a considerable role in transport infrastructure as they carry 90% of all export goods. In 2000, goods turnover by railway out of total goods turnover by all kinds of transport in the Republic of Tajikistan was 56.3%.[4] Tajikistan is more dependent on its northern neighbours for access to highway routes than rail transit. Important highway routes follow rail lines, with the exception of a road from Panjikent to the Zerafshan Valley portion of Uzbekistan (Samarkand Province) and a road from Khorog to Osh Province in the Kyrgyzstan portion of the Ferghana Valley. When internal roads from Dushanbe to Leninabad Province (North-South connection) and GBAO become impassable (often for 5-6 months) in wintertime, traffic is routed through Uzbekistan and Kyrgyzstan.
The majority of highways are located in mountains. Due to land deficit, they are laid up along slopes feet or mountainous rivers continually being affected by landslides, stone falls, mudflows, floods, and other natural disasters. More than 80% of the roads were designed and constructed between 1960-1980, when norms allowed a vehicle axle load of no more than six tons. (EU standard nowadays11.5 tons).
Figure Modal Split for export and import in 1999 (no later figures are available)
Source: TRACECA Statistics
However, in the last years the vehicle stock is gradually modernising, with heavier trucks that cause intensive damage to the roads. Perhaps worst hit by economic and natural disasters and the civil war is the GBAO, the vast, sparsely populated region in the east of Tajikistan. During the Soviet period up to 1,000 trucks a day supplied the region with goods. Now traffic is 50 to100 trucks. Since there is little local cultivation, some 70 per cent of all food products are imported. Prices are 50 per cent higher than elsewhere, though people tend to be poorer.
If poverty throughout Tajikistan is 50 to 55 per cent, the figure for GBAO is locally estimated to be 99 per cent. (ICG) Tajik road transport operators do not often have business in this region, especially not on this moment when they are so many financial attractive humanitarian aid transports in to the direction of Afghanistan. However, according to Tajik operators the Russian Ministry of Emergency Situations operates with 50 trucks in GBAO from Osh in Kyrgyzstan. From Dushanbe eastwards into direction of the border with China is one main road, which is for large part through mountainous area where roads are difficult and costly to construct.
Tajik road operators estimate the quality of this road in the following way:
- Dushanbe-Khorog: very bad
- Khorog-Murgab: 1st 120 km are normal for Tajik circumstances,
- After the 1st mountain pass very bad and
- Near Murgab 30 km normal
From Murgab to the border with China (which is closest and probably will not open soon, as China seems to have more interest in the border crossing with Tajikistan) is a “road” of 100 km of which recently 32 km has been started new construction. The remaining 68 km is, however, still in a very bad condition.
The Asian Development Bank estimates that maintenance and construction of roads in Tajikistan requires $34 million per year ($10.88 million for the national network and S23.3 million for local roads). To establish a mechanism for cost recovery in maintenance, the Government established the Road Fund in 1994. The Road Fund Law stipulates that funds destined for maintenance and construction will be used exclusively for this purpose, and that the Road Fund be administered separately from other lines of the budget.
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Central Asia Trade & Transport Facilitation AuditNational Report Tajikistan /
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Central Asia Trade & Transport Facilitation AuditNational Report Tajikistan /
Performance indicators
Disregarding its future transit potential, on this moment Tajikistan is for many products at the beginning or destination of transport corridors. Therefore, transport costs are in this country excessively high, resulting in high prices of consumer goods for the population.
Because Tajik operators have to pay large transit and bribing fees, traders prefer to use Uzbek operators for import/export. On the same time, they look for cheaper products that can be sold to the Tajik population. Instead of importing Dutch products, which still happened a year ago, they now look more to the Asian market and especially to China.
Containers are incidentally used for transport in Tajikistan.
For the Tajik railways the major problem is that the costs used as a basis for tariff scales in Price Schedule 10-01, which has been effective from 1997, were calculated under average network conditions of Soviet times. All railways were quite different than now with regard to cargo flow structure, average distances, and average cargo weight in total traffic. The price structure of goods and services carried by railways was also different. Therefore, the current price schedules do not reflect real transportation costs and are too low for Tajikistan.
Examples of transport prices
What / Price in USD20 ft container / $ 400 to Moscow by rail in case of household goods, foreigners have to pay $ 3000. Cotton and aluminium are more expensive. $ 5000 minimal for transport. (exclusive customs, transit fees)
Transit fees for trucks in Uzbekistan / $ 300
Additional fee (bribes) at checkpoints in case of private company minimal 100, in case of company vehicle minimal 50
(at least 4 big checkpoints were registered during 87 km from Tajikistan border to Tashkent on 18/05)
Transit fee for trucks in Kazakhstan / $220
Additional fee (bribes) at checkpoints in case of private company minimal 100, in case of company vehicle minimal 50
Transit fee for trucks in Kyrgyzstan / ?
Transit fee for trucks in Turkmenistan / $ 250 + transit visa 35 + additional fees (which are less than in Uzbekistan)
Customs fees between Uzbekistan. and Tajikistan / Taj customs $ 100-200
Uzb customs $ 100-200
Transit fees: / Uzbekistan: before 8-01-2002 200-500, now 130 + 70 insurance
8 days valid + transit visa driver applied to Ministry of Foreign Affairs of T. > Embassy Uzbekistan. > choice between urgent visa $40 and normal visa $16
3Ongoing reform process
In spring 2002 an agreement was signed with Uzbekistan on extension of the number of border checkpoints. Now there are only 5 checkpoints, but this is supposed to become 16 (with a border length of around 1300 km). This agreement is not yet ratified and does not include rules for the required visa for Tajiks to enter Uzbekistan (one of the big points at issue between the two countries).