No krisha, no business! – doing business in Tajikistan
According to the results of the survey conducted in Tajikistan by International Financial Corporation this summer, the entrepreneurs undergo regular inspections by different governmental agencies. The frequency of inspections varies from 6 to 21 times a month depending on the region.
Most of the time the inspections are conducted by tax inspection (91%), fire inspection (34%), sanitary inspection (30%), “Tajikjstandard” agency (20%), energy inspection department (19%) and by the social security fund (12%).
According to IFC, the inspections and corruption are the main obstacles on the way of development of private sector in Tajikistan. The development of new business is challenged by complicated procedure of license obtainment. Consequently, 75% of the interviewed businessmen solve their problems by informal methods and only 18% solve their problems by official methods.
In its recently published annual report, the International Financial Corporation, IFC, ranked Tajikistan second from the bottom of a list of 28 countries of Eastern Europe and Central Asia in terms of the business climate.
I think that the regular inspections by governmental agencies are not the main obstacles for private sector development. There is another reason which I think is the main one. It is the relatives of high officials, the children or nephews or brothers, whoever is closely related to them. Using different leverages that they are provided with by their relatives in the government, they control all the business.
Recently, in Dushanbe I met Parviz, a fifth-year student, who studies in Tajik State University. He was very pessimistic about doing business in Tajikistan. He said that it is impossible to do a business in Tajikistan, especially in the cities if you don’t have a “krisha”. Krisha is a Russian slang which literally means a “roof” or “shelter” but the meaning is “custody”. This slang is used in most of the former Soviet republics.
Your krisha can be a criminal, a high official in the government, especially in a law enforcement agency or a former warlord. It is better to have a krisha from law enforcement agencies or from the government because the criminals and former warlords are not that much influential in Tajikistan.
“I opened a small shop for a loan which I received from a bank where I was selling DVD-players”, said Parviz. “However, after some time when I was done with the loan and started to get a profit, two guys came to my shop and asked me to close it. They said that the son one of one high official had opened a new market where he was selling DVD-players and no-one else in the city had a right to do it”, ruefully said Parviz.
Parviz says that he was lucky just to close the shop and lose nothing but the future profit. There are cases when you start a business and if it is a successful business then there come people who give you less than a half of what you have invested and seize your business. These people are usually representing someone from the government or law enforcement agencies.
If your business is not that successful you have a chance to float but besides the official taxes you have to pay extra “taxes” to your krisha, so no-one else can make you sink. However, very often it comes out that your krisha is very “heavy” and you can not maintain it.
on December 4th, 2006 at 5:25 am
This is a tragedy that has plagued Tajikistan for many years. Unless the government takes measures to fix this sort of business harassment Tajikistan will never be a self-sustainable country but will always depend on foreign economic aid. This is not how my society should develop. Everybody should have equal opportunities and same access to develop his business regardless of whose nephew or son he/she is.
Unless Tajiks wake up and change the government this tragedy will continue and greatly damage the future of independent Tajikistan.
on December 4th, 2006 at 10:35 am
Good article Vadim, and one that highlights a fundamental problem that affects not only in Tajikistan but also one many other former Soviet countries and beyond (according to one Syrian aquaintance it is also the case there be it not as extreme as in Uzbekistan for instance).
BTW, the situation is also very convenient for a number of foreign companies who are in cahoots with regime goons.
In my opinion, this absense of what I call ‘economic democracy’ is one of the biggest sources of frustration much more than teh lack of political democratisation. It’s keeping a substantial part of the population into structural poverty.
“Unless Tajiks wake up and change the government this tragedy will continue and greatly damage the future of independent Tajikistan.”
Yes, I agree with Umed that change is not possible under the present regimes be it in Tajikistan or elsewhere. These regimes know *very* well that if they allow an independent small and medium busineses sector to flourish, it will undermine their economic interests. And, worse for them, create a class of people who will, sooner or later, ask for more political participation in one form or another (which is a natural process). On the other hand, if they keep enforcing the status quo, it will create ever more social frustration that will unavoidable explode one day. Either case, they (as well as their expat cronies and cheerleader academics) are toast.
In the specific case of Tajikistan, I don’t see any change as long as tha active generation remains traumatised by the civil war and buys into the myth (which the Rakhmonov regime and local officials savvily exploit) that any change means war again. IMO, things will become more interesting in 5 to 7 years, when the generation who was born in the late ‘80/early ‘90 (and never consciously lived through the war) will grow up and have its own pretentions and frustrations. Also, I believe that the labor migration — the mardikoron — to Russia also has its effect on people’s mentality. Tens of thousand of men in teh active age who spned years or part thereof in a — comparatively — freer environment, who have money, and for who and the serf mentality at home (creeping for/glorifying the president and the hakim) becomes much less obvious.
on December 4th, 2006 at 12:46 pm
Thanks for the comment Ataman. You are right that “things will become more interesting in 5 to 7 years, when the generation who was born in the late ‘80/early ‘90 (and never consciously lived through the war) will grow up and have its own pretentions and frustrations”.
Recently, I’m not sure about the exact date, one of the famous pop-singers Arash was supposed to have a concert in Dushanbe but later on, when a lot of people gathered near the stadium it came out that he cancelled his concert. The young people started to crush the nearby shops and cars. The news was not made very much public but a lot of people talk about it. As I know the official media showed this protest as a prank of several hooligans but it was something else. Some of my acquaintances told me that it was not just a spontaneous protest against the organizers of the concert but it was the protest against the regime. A lot of young people went there on purpose with stones in their pockets to throw them into the militiamen as the representatives of the regime. I know that four or five militiamen were beaten up. I think that the growing generation is already showing its pretensions and frustrations. Many young people think that if you are not the relative of Rahmonov or any other high official in the government then you don’t have a future.
on December 5th, 2006 at 4:31 pm
I had this alert published on Sept. 10th.
Canceled pop concert sparks mass riots in central Dushanbe, Tajikistan Sept. 10-11. Exercise caution and avoid affected areas.
Authorities reported mass riots in Dushanbe, Tajikistan Sept. 10-11 after a pop concert slated to take place at a downtown stadium was abruptly canceled. Approximately 40,000 tickets were sold for the concert featuring Iranian singer Arish. The event was part of the grand weekend celebration of the 15th anniversary of the Central Asian country’s independence.
Rioting youths first clashed with police outside of the venue, vandalizing parked cars and attempting to reach the main square, home of the Tajik Parliament. A contingent of riot police was dispatched to the area and some of the protesters were taken into custody.
Police in Dushanbe remain on high alert, and the affected areas have been cordoned off. There have been no official statements regarding casualties or damage, but President Emomali Rakhmonov promptly returned to the capital from the south of the country.
Avoid the affected areas for at least the next 24 hours. Expect roadblocks and identity checks. If driving, expect to be asked to exit your vehicle, show identification and have your vehicle searched. Exercise caution.
on December 5th, 2006 at 11:44 pm
I was in Dushanbe a day after the Arash concert got cancelled. All we heard was that several young people rioted - stones were thrown etc. But after all, everything remained pretty quiet.
on December 6th, 2006 at 7:22 am
I was at the riot. The Tajik youths get rather irritated when they don’t get their ‘Arash’. The concert actually did go on, but I think a lot of people didn’t get. Sadly, I was one of them. I left just before things got too crazy. When riot police show up and start sending attack dogs after people, it’s time to check out. Funny thing is I didn’t hear about how crazy it had gotten until three weeks later. Quiet indeed.
on December 6th, 2006 at 10:31 am
Business in Tajikistan will not progress till they can free up the economic situation. Also the electricity problems are not helpful. It is amazing that a country with one of the largest dams in the world and only 6 million people can not give electricity to live on.
Business will not move forward till the basics of life are given. What business wants to be set up if they can not even function with electricity.
It is amazing no one is writing about electricity. The whole country is suffering at this time with freezing temperatures. Where is the blog on this? Jafar
on December 6th, 2006 at 11:41 am
Jafar,
If you go to www.neweurasia.net and read the last round up you can find some writings about the electricity problem in Tajikistan.
on December 7th, 2006 at 4:17 am
You’re absolutely right about the frezzing part. No electricity in this weather is ridiculous. I might also add that this is one of the worst winters (or at least coldest) Dushanbe has seen in a while. We’ve also been fed so many stories concerning electricity. It has been so “on and off” that nobody even knows if the outage has actually happened or not. Last I heard it wasn’t actually going to happen. My house finally got the power back yesterday, but all of the houses around us had power for the little 2 day outage. I the entire country is in the dark (no pun intended) on this matter.
on December 7th, 2006 at 8:54 am
Interesting post!
Actually, international organizations, NGOs and mass media have been highlighting this problem for years and suggesting ways to erdicate this “krisha” problems (basically, part of the bigger problem of corruption). Their efforts have not led to any improvement of situation.
I said in one of my comments to previous posts that patron-client relations is a traditional part of social relations throughout Central Asia. People give something and anticipate that they will receive something else in return.
I have a friend who owns a small shop in Dushanbe. He says he regrets opening the shop and even thinks of writing a book “Business in Tajikistan for Dummies”. When I talk to him, I understand that traditional business knowledge, western expertise in doing and managing business simply does not work in Tajikistan.
I also wanted to write a post on this issue, but I didn’t know what needs to be done to resolve the problem. Does anybody have any idea?
on December 7th, 2006 at 9:00 am
I also wanted to comment on the concert of Arash. First, there were no tickets to the concert. The entrance was free because the event was part of the celebration of 15th anniversary of independence. Second, the disorder that followed cancellation of the concert was not organized, nor was it planned by anyone. The disorders in Dushanbe involved several small groups of young people throwing stones at cars and policemen. The suggestion that they threw stones at policemen to express their dissatisfaction with the regime cannot be backed by any evidence. I was there from the beginning o the event till the very end and I can assure you that the violence was spontaneous, sporadic and was caused mainly by young and drunk boys.
on December 7th, 2006 at 9:45 am
“I have a friend who owns a small shop in Dushanbe. He says he regrets opening the shop and even thinks of writing a book “Business in Tajikistan for Dummies”. ”
It would actually be interesting to know how some other foreign businessmen, like the European bloke who runs the 2 (or 3) ‘Gollandskii Supermarket’ in Dushanbe, manage it. Probably a good ‘krisha’ in the higher govt. échelons (for now) until they will take his business away.
on December 7th, 2006 at 1:27 pm
Hm, but the Gollandski is gone! There are no Gollandskis any more, they have been taken over by “Orima” owned, as people say, by president’s daughter. The “Orima” network has been growing at an impressive scale - they now have stores almost in all parts of Dushanbe.
on December 9th, 2006 at 9:04 am
Aha, strange. When I in Dushanbe in October the main shop was still there, as was a second one more south of the city. But you’re right it was not called ‘Gollandskii’ any longer. People continue to call it that way.
I do know that Rakhmonov’s daughter owns this Sitora supermarket (one of teh worst kitsch buildings ever, and badly built at that!), as well as Karvan market on the outskirts of Dushanbe.
on January 10th, 2007 at 6:44 am
I can see the literacy rate of tajikistan which is already 100% and it is best to start a business with peoples of such country.It would be a great experience.
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on February 10th, 2008 at 9:43 pm
Thanks for the article, I just want to add some extra staff that is happening in Tajikistan. For the past years business men’s has been the target for government officials. As most of you said it is because the president can not see others richer due to luck of insecurity on their own seats.
Let me just remind you of those people who are living inside Tajikistan or outside that’s still don’t know. The corrupted government has brought a new organization so called “KARUPSIA” in order to prosecute well rich business men’s who are working so hard 7 days a week and who established there business in Tajikistan for the past decades.
Its shame to see our entrepreneur to be forced to go to prison for so called bribery or “pora””visiyatka”, it shows how corrupted is the so called new democratic Tajikistan. Its very sad and hard to watch people suffer in Tajikistan and in its prisons. People who have brought jobs, food, water and services are put behind bars for no reason only because the government thinks that these people one day may want more power or devolution.
Dear president, Please wake up! Your killing your own people, it is the right time to do the right thing to let the DEMAND AND SUPPLY OF GOODS DO THE ECONOMY. You should listen now or history may repeat itself like SADAM HUSSIAN!
I ALSO WANT SAY SOMETHING TO INTERNATIONAL COMMUNITY, WE NEED HELP, how can we live in world where there is no freedom of expression and opinion, anything you say either kgb or karupsia is behind your back intimidating you to give money and when you do you will go to prison because your giving bribery! This is a hypocrite, double standard and ignorant government.
As most of you said the whole Tajikistan looks like belongs to Ramonov family, what the hell I guess soon ORIMA (SUPERMARKET) would be ORIMOV supermarket!!
Only time can tell how long this system would be going sooner or later new generation would fight for justice like iran.
I would appreciate when you read this article to voice your opinion.
Many thanks hope I am not bugged on the internet!!!