Address by the President of the Republic to the Parliament
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Distinguished Members of Senate and the Lower Chamber of Parliament!
The Republic of Tajikistan, disregard of the changing political, economic and security situation in the world, has been making firm steps towards the sustainable economic development, achievement of its strategic objectives and thereby ensuring decent life for public.
However, we have lately been noticing a trend of superiority, expeditious armament and emergence of the signs of the start of a new period of cold war in the world.
This year also instability and conflicts continued in various parts of the world, and it was recognized as the difficult period full of contradictions for the international community. More than hundred countries of the world became subject to inhuman attack of terrorists and extremists in this period.
The reality is that the instability geography is growingly expanding and the global threat and challenges have impacted the fundamental base of the global order and system and important methods of international affairs. The continuation of this situation can clearly cause political, economic, security, human and cultural threat and danger to various parts of the world.
In the current stage, our country has been undertaking substantive measures to timely react to the global threats and challenges in the process of development of relevant internal and external capacity.
In this process, it is very important for Tajikistan to ensure better integration into the world and the regional community, international and regional organizations and to ensure a comprehensive cooperation.
We are for a fair global system free of wars and conflicts, expansion of equal and mutually beneficial cooperation and partnership between all countries of the world, ensuring global and regional security through constructive dialogue and negotiations based on the UN Charter.
The analysis of the current global situation and the trends of international affairs proves that we have chosen the right way in our pathway to expand multidimensional cooperation with all countries of the world based on respect and implementation of our national interests.
Given the current reality and with a view to ensuring sustainable security to prevent growing terrorism and extremism threats and other challenges of the contemporary time, we stand ready to strengthen broader cooperation with international and regional organizations and partner countries.
In this regard, we plan to host an International High Level Conference on joint counteraction to terrorism, extremism and violent radicalization in Dushanbe in May of 2018 in cooperation with the UN, EU, OSCE and other development partners.
The analysis of the current global situation and the international affairs trend proves that we have chosen the right way based on our national interests. Our Open Doors Policy as the genuine core of our relations with the contemporary world proved to be realistic, right and beneficial. This policy increased Tajikistan's partners and created a favorable foundation for wider participation of our country in the activities of international and regional organizations. We will continue this policy and will further undertake necessary measures to strengthen our cooperation with all countries of the world.
In this process, it is important to protect Tajikistan's political, economic and security interests, attract foreign investments for implementation of large-scale infrastructure projects, create favorable external environment for our country's sustainable development and ensure its security.
Our country initiated several creative initiatives at the international level to achieve these objectives and settle the water related issues. As a result, the international community recognized Tajikistan as the initiator of global water issues during the last two decades.
We believe that the continuous implementation of water diplomacy is the realistic means of solution to challenges in this sphere and we will continue playing this leading role within the next decade also.
Our new global initiative International Decade for Action Water for Sustainable Development, 2018-2028 will officially start on March 22, 2018 on the sideline of celebration of International Nawruz and the World Water Day. Various events will be arranged within this Initiative in various countries of the world, including Tajikistan.
Tajikistan, during its independence, determined wider regional cooperation as the most important tool of solution to economic, trade, social, environmental and security issues as well as peace and stability in Central Asia, and is committed to strengthening people-to-people relations in the Region based on friendship and trust.
The common goals and objectives of our countries require ensuring favorable environment for free movement of people and smooth delivery of goods and investments and labor resources in the region. By relying on this method, we can enhance our security cooperation also and jointly counteract to and resist the current global threats and challenges in the region.
We believe that regional creative integration will be beneficial for all countries and nations in Central Asia.
Strengthening and expansion of relations with the CIS member countries is of strategic and particular importance in Tajikistan's foreign policy.
Tajikistan will be presiding in CIS in 2018. The Meeting of the Heads of State and Government of this Organization's member states to be held in Tajikistan next year will be among the most important events within our Chairmanship.
Next year we will also host the International High Level Conference on implementation of the International Decade for Action Water for Sustainable Development, 2018-2028 and the Meeting of the Heads of Government of Shanghai Cooperation Organization, which will be of particular importance.
Tajikistan's relations with key and other countries of Asia are gaining partnership spirit, which is the vivid evidence of our creative objectives. We will further continue our cooperation with all Asian countries in such a constructive way.
We think that support to Afghanistan's economic revival and social development is the best tool for establishment of peace and stability in this country and ensuring security in the region. Therefore, we would like to call the International community to increase their hands-on assistance to support socio-economic development and improvement of security situation in Afghanistan. Tajikistan makes efforts to strengthen impartial cooperation with the Government of this neighboring country.
Cooperation with American and European countries is of particular importance in Tajikistan's foreign policy. We are interested in further expanding Tajikistan's relation with this group of countries, which are our important international development partners, based on mutual understanding, respect and mutually beneficial principles.
We have also been undertaking measures to vitalize our relations and cooperation with the West African and Latin American countries. The current rapid geo-economic transformations increasing the importance of economic diplomacy. Therefore, effective and fruitful use of economic diplomacy means to achieve national objectives is one of the priorities in Tajikistan's foreign policy.
Expansion of economic cooperation with regional and international partners, international and regional financial institutions should always be at the center of attention of our Government and its relevant institutions.
The Government needs to undertake necessary measures to fulfill Tajikistan's commitments within international and regional organizations and effectively involve them in implementation of important national programs and projects, including the National Development Strategy to 2030.
It is important for the ministries and agencies in their cooperation with other countries to undertake effective measures in protecting our country's national interests, attracting foreign investment, including direct investments and new technologies.
We need to expand our humanitarian and cultural cooperation with other countries of the world in the current stage.
The Tajik nation decently contributed to the world civilization development with its ancient traditions and culture.
Our good traditions and national holidays like Nawruz, Mehrgon and Sada have served for promotion of decent behavior and morality in the history. Therefore, it is necessary to include the spiritual and nontangible achievements of our noble people into the UNESCO world heritage list, and to promote the role of Tajik nation as a creator of civilization. With this regard, the Ministry of Foreign Affairs needs to undertake more efforts in effective promotion of core goals and objectives of our foreign policy and expansion of multifaceted relations with other countries and international and regional organizations.
Ladies and Gentlemen!
The Government has been mobilizing every possible opportunity and resources for rehabilitation and construction of social and economic infrastructure, introduction of the latest technologies, settling the issues of water and energy, particularly use of renewable energy sources and implementation of Green Economy, ensuring favorable investment and business environment, private sector development and ensuring rule of law.
We will need to make further efforts for protection of our national economic interests, effective and rational use of available opportunities and resources, and seeking for new sources of economic development, improving local production's competitiveness and applying innovative technologies. We have been ensuring the necessary environment, and adopting and implementing relevant public programs and strategies in this regard.
We have been implementing the National Development Strategy of Tajikistan to 2030 during the last two years, the priority actions of which are incorporated into the Midterm Development Program of Tajikistan (2016-2020), and have been achieving economic development gross indicators.
We allocated more than TJS 36bn from the public budget to achieve the envisaged objectives in this period and plan to allocate almost TJS 70bn for this purpose in 2018-2020.
I outlined in details about the achievements of the last 25 years of our state independence in my last Address. Now I would like to draw your attention to the achievements and existing challenges and the task for the next year.
This year we maintained stable macroeconomic indicators, our GDP growth made 7% and it reached TJS 60bn.
According to projection, our GDP will increase by 30% and reach up to TJS 82bn during the next three years.
With this regard, the Government needs to analyze the outcomes of the NDS implementation for the last two years thoroughly and to mobilize all possible opportunities and resources to ensure quality implementation of the Program by identifying the promoting and constraining factors. It also needs to improve the effectiveness and competitiveness of all capacities significantly and run reforms in various spheres of the national economy.
In 2017 the GDP per capita increased by 12% compared to the last year and exceeded by 8% against the projected indicator and the public's monetary income increased by 10%.
We ensured the growth of the national economy's spheres, including industry at 21.5%, agriculture at 7.2%, fixed assets financing at more than 6%, retail trade at 6.6% and fee-based services at 1.8% and maintained the inflation at the rate of 6.3%.
We ensured the public budget revenue implementation overall and determined the 2018 budget amounting TJS 21.3bn, which will be by 7.3% more compared to 2017.
Though during 11 months of 2017 the export increased by 35.4% and the import decreased by 10% compared to this period of the last year, we are not satisfied with these indicators since still the major part of our products are exported without final processing.
Therefore, we need to pay a particular attention to the export strengthening and expedite the diversification process of export-oriented production and undertake necessary measures in terms of final processing of agricultural products, including cotton, fruits and vegetables, extraction of minerals, and precious metals and stones.
The public budget takes into account its social objectives and the Government continuously undertakes measures to improve the population's living standards. During the last five years the public budget funding for the education and healthcare sphere increased by 2.3 and 2.1 times respectively and by 16% and 25% in 2017 compared to 2016. Given the development of our economy and current financial resources, we will implement the next phase of wage increase for budget-funded agencies' staff starting from September 1, 2018. Thus, we will increase the wage of staff in the public executive authorities, educational, science, culture, sports, healthcare institutions, social protection agencies and other budget-funded organizations by 15%, and the wage of staff in law enforcement agencies and military officers by 10%. We will increased the minimum and maximum size of age-based pensions, the baseline pension, and the retirement pension up to 15% in average and the scholarship of university students and other scholarships by 15%.
We have been implementing public finance management reforms in the country to ensure effective and targeted use of budget resources, control and ensure their transparent spending. Within this reform, we will introduce a system of budgeting focusing on the country's development.
The development budget alongside with fulfillment of the State's growing social obligations, will also promote expansion of innovative and investment activities, quality implementation of sectorial programs and construction of infrastructure facilities.
We need to strengthen the program based budgeting to improve effectiveness of allocation and targeted use of financial resources. In this process, we need to pay a serious attention to the modern evaluation methods of adopted development strategies and programs and ensure their financing based on performance and effectiveness.
Implementation of activities on regulation of main budget administrators will make it possible to improve effectiveness of operation of public authorities, ensure monitoring of transparent and effective use of public finance and implementation of sectorial programs.
These measures will also improve the financing process at local level. I have to note that the local budgets reached TJS 5.3bn in 2017 and the share of subsidies from the national budget in them accounted for 16.7%. However, the qualitative analysis of local budget and the local socio-economic development plan implementation shows that the real capacity of local areas are not taken into account. Therefore, the province, district and town local executive authorities need to undertake specific measures to improve effective and transparent use of local budget, and ensure complementary sources of local budget replenishment.
The Government needs to undertake measures on improvement of tax administration system to ensure more simplified, easy and transparent taxation process. Alongside with this, it is necessary to improve the statistic reporting forms and the mechanisms of statistic information collection.
The situation with the monetary system, particularly the pressure of exchange rate on the national currency, instable banking capital, insufficient amount of loans issued to the national economy and attraction of investments urges us to undertake immediate measures in this area. This year, the loans issued by banks decreased by 4% compared to 2016.
This situation emerged due to the weak activities and indifference of heads and persons in charge of a number of commercial banks, including Agroinvestbank and Tojiksodirotbank. We have accomplished a number of activities following recapitalization of the two systemic banks to improve their financial situation and paying back the clients' savings. However, these measures are still not sufficient to recover these two banks fully. Therefore, the Government needs to develop and implement plan of rehabilitation and recovery of Tojiksodirotbank and Agroinvestbank joint stock companies at the shortest possible.
Savings portfolio of financial institutions accounted for TJS 9bn as of 30 November 2017, which decreased by TJS 464m or 5% compared to this period of 2016.
The analysis of the loans allocated in 11 months of 2017 shows that their amount for production entrepreneurship increased by 4% only while they increased by 43% in the field of services.This situation will negatively impact on the speed of the development of real sectors, particularly on the country's industrialization.
With this regard, the National Bank needs to undertake specific measures to conduct necessary monetary reforms, maintain stable exchange rate, stable prices and operation of banks, supervise the banking legislation enforcement and improve it, minimize the risks and introduce corporate governance methods.
We have been undertaking measures to regulate payment services, ensure simple and transparent operations, reduce cash in circulation and scale up non-cash settlements. It is necessary to develop the necessary infrastructure based on international experience.
Though according to analysis the number of bankcard holders increased by 5.5% and made 1.7m people in the last year, so far 95% of card are used for cash withdrawal operations only. With this regard, the National Bank needs to strengthen the supervision of implementation of the Payment System Development Strategy and undertake measures on installation of payment terminals and wider use of bankcards.
Alongside with this, it is necessary to reduce the minimum statutory capital amount for newly established bank from the existing TJS 80mn to TJS 50mn to ensure fair competition in the banking services market, expand the population's access to financial resources, and attract more investment into this sector.
During the last two years, we have channeled more than TJS 22bn from all sources to the national economy, TJS 6m of which are public investment project funds.
In this period, we signed and have been implementing 40 loan and grant agreements amounting TJS 7bn for implementation of 26 projects on development of energy, transport and social infrastructure. In this regard, the State Committee for Investment and State Property Management needs to ensure strict control over the quality, transparent and timely implementation of these projects.
According to program documents, we expect to double the private sector's share in overall investment by 2020. This objective urges us to pay a priority attention to creation of favorable environment and introduction of incentives for entrepreneurship and investments on the ground.
We need to vitalize the development and implementation of investment projects based on analysis of peculiarities of each region, including their natural and human resources, climate and location specifics. Therefore, the Government needs to introduce the methods of performance-based evaluation of executive authorities in provinces, towns and districts based on their contribution in ensuring favorable environment for entrepreneurship, creation of new jobs and vitalization of private investment activities.
The State Committee for Investment and State Property Management jointly with the local executive authorities need to undertake specific measures to arrange courses on business plan and investment project proposal development, improvement of legal and financial awareness of citizens and ensuring their access to financial resources.
Alongside with this, it is necessary to strengthen the activities of free economic zones in terms of attraction of investments and creation of infrastructure. The Government needs to thoroughly study the challenges of free economic zones and undertake additional measures to enhance their activities and establish other free economic zones in the country.
At the meeting with entrepreneurs and investors held on October 14 of this year, we have thoroughly analyzed the achievements and failures of the sector, well noted all proposals of entrepreneurs and we have currently been implementing a plan of action based on these factors.
I would like to emphasize once again that despite the comprehensive support by the State to entrepreneurs, we still see some cases of legislation breach by some entrepreneurs. The inspection in 2016 and 2017 showed that the tax amount evaded by entrepreneurs amounted TJS 1.6bn.)
According to the Government Resolution of May 27, 2017, we will establish a state administration on food safety based on four units and entities of the Ministry of Agriculture, and a state administration on protection of public health based on three units of the Ministry of Public Health and Social Protection.
Creation of the above-mentioned agencies will make it possible to reduce duplication of tasks and responsibilities, coordinate inspections, save public budget funds and reduce barriers to entrepreneurship.
According to the existing legislation, currently 78 inspection, supervisory, licensing and permit authorities, as well as law enforcement agencies inspect the activities of businesses.
Since mostly the legal entities are subject to inspection, in average five inspections were conducted in every active legal entity during nine months of 2017.
Therefore, with a view to overcoming groundless and duplicated inspections, and creating a favorable environment for entrepreneurship, I think it is necessary to introduce moratorium for all types of inspection of entrepreneurs engaged in production for the next two years, except the scheduled inspections by the tax authorities, Prosecutor's General Office, Public Accounts Committee, Anticorruption and State Financial Control Agency, and the National Bank.
Distinguished Members of Parliament!
Development of industry and final processing of its products is among the most important tasks given the changing situation and demand in the global market and with a view to ensuring sustainable economic growth.
I would like to recall that we envisage future industrialization and innovative development of our country, and it is very important to improve the effectiveness of processing and improve local products competitiveness through application of the latest technologies to achieve this objective.
Therefore, the Ministry of Industry and Innovative Technologies needs to implement sectorial programs on continuous increased raw material final processing based on the analysis of the regions' capacity and possibilities and by defining priority areas in domestic production.
To strengthen the industries and supply them with qualified professionals, we need to boost the cooperation between the secondary and higher educational institutions and industrial enterprises on training of professionals with technical and technological skills.
In 2017, we established and launched 150 industries and created 3 000 jobs. In this period, the measures undertaken by the Government on final processing of local products made it possible to increase the production of cotton thread by 2.8 times, carpet and carpet products by 1.6 times and fabrics by 42%.
In this context, it is necessary to undertake additional measures to supply the country's textile companies with local raw materials, ensure final processing of cotton fiber and to increase cotton production in the country constantly.
The industrial products structure analysis shows that the coal extraction is dynamically growing in the country and this year for the first time during the independence period its extraction reached 1.7m tones.
Though the industrial growth made 21%, the production of 36 types of products decreased in 2017. This situation will make the implementation of export oriented and import substitution public programs difficult.
The analysis shows that the export has mostly been developing thanks to the recently established industries. Only during 2016-2017 minerals export doubled and its share made more than 45% within the export.
This situation shows that we have not ensured the export diversification at the necessary level yet, which increases the dependence of the country on external factors. Therefore, the Government needs to undertake necessary measures to analyze the possibilities of the value added export development, introduction of import substituting production, and develop the draft law of Tajikistan on support of export and competitiveness improvement.
Ladies and Gentlemen,
Tajikistan is one of the countries implementing green economy at the international stage and is the sixth top country in the world in terms of the use of renewable energy since it generates 98% of its power in hydropower plants.
Alongside with construction of new power facilities, there is a need for rehabilitation of existing assets, which requires substantial investment. The Project on Rehabilitation of Nurek HPP amounting TJS 6bn (equivalent to USD $ 700m) is envisaged in two phases, the first phase of which started already.
The activities on rehabilitation of Sarband HPP amounting TJS 1.1bn already started and we will launch its first unit in 2018. Kayrokkum HPP is one of the oldest facilities, which has been serving since 1957. We mobilized TJS 600m for the rehabilitation of this facility and the Project activities will start next year. We will channel more than TJS 8bn (almost US $1bn) for rehabilitation of operative facilities overall. We spent TJS 4.7bn (more than US $500m) from all sources for the construction of Roghun HPP in 2017 and envisage more than TJS 5bn (almost US $600m) for this purpose in 2018.
In addition to this, we have been implementing seven public investment projects on renovation of the country's energy grid and construction of necessary facilities for power export amounting TJS 8.1bn and we channeled more than TJS 21bn (US $2.4bn) overall for the sector's development.
The measures undertaken by the Government in this area made it possible for the first time to supply the population and social and economic sectors of the country with power 24 hours.
Alongside with this, consumers and all citizens of the country need to make efforts to ensure energy loss reduction and its efficiency through wider utilization of energy efficient technologies. This approach will make it possible for us to achieve full energy security within the next three years. Therefore, the Government has to undertake necessary measures to improve power system management and administration, including measures on Barqi Tojik Company unbundling, metering, energy loss reduction and improvement of population's awareness on energy efficiency.
Normal tariff for 1kw of power for population in CIS countries, is TJS 0.30 in Kazakhstan, TJS 0.38-0.40 in Russia, TJS 0.44-0.45 in Belarus, TJS 0.53-0.55 in Uzbekistan, TJS 0.80 in Armenia, and in Europe is even TJS 2,8-3 in Denmark, Germany, Belgium and other countries while in our country one kw of electricity costs TJS 0,17 only.
Distinguished Members of Parliament,
The Government, with a view to achieving its objective to turn Tajikistan into a transit country by 2030, has implemented public investment project amounting more than TJS 12bn.
Currently, public investment projects on reconstruction of Dushanbe-Qurghon-Teppa, Khujand-Isfara, Kulob-Shamsiddini Shohin, Shkev-Qal'aikhumb, and Temurmalik-Baljuvon-Khovaling highways and other sections amounting TJS 7.7bn are ongoing.
Projects on reconstruction and construction of Obi Garm-Nurobod (86km), Qal'aikhumb-Vanj (93km), Khujand-Konibodom section of Khujand-Isfara highway (130km), and Qurghonteppa-Danghara-Kulob (155km) highways and overall more than 500km of roads are under study and design now.
The World Economic Forum within its Global Competitiveness Index granted Tajikistan with a good rank and recognized it as a leading country in terms of quality of roads and infrastructure development. However, we still need to do a lot in construction of roads and bring them in line with international standards.
As I outlined in my Address of the last year, we plan to rehabilitate and reconstruct more than 2000km of roads and bring them in line with international standards in the mid-term period.
Alongside with this, I would like to highlight once again that the local executive authorities in provinces, towns and districts are in charge of repair, rehabilitation and maintenance of urban and trans-regional roads and they need to strengthen their activities in this area.
In this regard, the Ministry of Transport jointly with relevant agencies and authorities, by attracting local and foreign investments, need to draft and implement relevant projects on establishment of border terminals, logistic centers and transport corridors and bring the services in line with international standards.
Supply of population with quality products, which is the main criterion of public health, is an important issue. However, there are some cases of import of low quality products to the consumption market of our country through different ways and tools by our entrepreneurs, which is harmful for the health of population.
The Government needs to introduce necessary structural changes to improve the system of public sanitary and phytosanitary, standardization, certification and veterinary control.
With a view to preventing the import of low quality and non-standard products, the designated authorities need to undertake immediate measures on strict enforcement of the Law of Tajikistan on protection of consumers' rights, and draft and implement Food Safety Program.
According to the Prosecutor General's Office, the Working Group on inspection of imported goods quality inspected 196 commercial companies and revealed that 90% of 500 to 600 tons of toys annually imported from twenty countries of the world do not meet safety standards and are harmful to health of children.
With a view to developing the poultry in the country and supplying the consumption market with local quality products it is necessary to introduce incentives and tax preferences. In this regard, the poultry sector needs to be declared as a priority sector in food production area and import of technologies and equipment and input for the sector should be released from all taxes and duties.
Alongside with this, the meet products storage technology meeting standards is not in place sufficiently, and entrepreneurs need to undertake measures in this regard.
Fruits and vegetables production has been increasing during the recent year, however their export during the 11 months of this year decreased by 23%. This means that despite the great demand of our main trade partners in our environmentally clean fruits and vegetables, the existing potential for their processing, packaging and export has not been used adequately and the relevant agencies and authorities need to constantly undertake measures in this regard.
The Government needs to develop and implement a new public program on food security by taking into account the real need of population in food products and ensuring their access to quality food.
Effective use of water and land resources and increasing agricultural products will be impossible without the import of new technologies and application of the latest agricultural methods of crop production.
We imported more than 10 000 units of agricultural machinery amounting TJS 570m during the last five years and provided preferences amounting more than TJS 200m for this purpose.
In this regard, the Government and the Ministry of Industry and Innovative Technologies have to undertake measures to establish joint enterprises on production of agricultural machinery in the country.
The Ministry of Agriculture, the State Committee for Land Management and Geodesy, Agency for Land Reclamation and Irrigation and local executive authorities, by involving local and foreign entrepreneurs, need to undertake measures on improvement of land reclamation practices, introduction of intensive agricultural production methods, ensuring full-fledged agricultural use of rain-fed lands, and particularly improvement of land use culture.
It is also necessary to undertake measures to increase the area of horticulture and viticulture and thereby to increase the production of environmentally clean export-targeted fruits meeting international standards.
In this regard, it is very important to establish enterprises for agricultural products processing, logistic centers and cold storages and improve marketing activities by attracting local and foreign investments.
Source: President of Republic of Tajikistan