Thursday, Jun 27, 2019
Industry & Trade | Eastern Europe and the CIS | Tajikistan

Entering the market

5 years ago

Ilkhom Makhkambaev, Executive Director of the American Chamber of Commerce in Tajikistan
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Ilkhom Makhkambaev

Executive Director of the American Chamber of Commerce in Tajikistan

Ilkhom Makhkambaev, Executive Director of the American Chamber of Commerce in Tajikistan, discusses opportunities and approaches for doing business in the country.

What is your own background, professional experience, and how did this lead you to AmCham?

My experience is quite varied. I completed my MBA in the late 90s, and quickly found work with the United Nations. After that, I worked as country director for British-American Tobacco. I spent one and a half year years in their inter-regional training program, through which I worked in Kazakhstan, Kyrgyzstan and Uzbekistan. After that, I came back to Tajikistan and set up the office at British-American Tobacco. I worked there for five years. It was there that I gained experience in distribution, marketing and promoting brands.

In 2007, I got a job as the head of the Enterprise and Tourism Department for Mountain Support Development Program (MSDP) a project of the Aga-Khan Foundation. I worked there for 4 years, learning how different communities work, writing proposals, and working with small and medium-sized businesses. In 2012, I was offered a job as the executive director for American Chamber of Commerce, which I have now been heading for two years. Since then I have been doing my best to promote the local business climate and to bring in investments to the country.

What has been behind the expansion of AmCham of the last two years?

When I started at AmCham there were only a few member companies ––about 12 to 21––and there was quite a bit of frustration at that time. However, in 2012, we made a decision to change the way we do business at AmCham and how to deal with our member clients. Today we have 50 multinational companies: many of these are big brands which really contribute to strengthening the investment climate in our country. We mostly concentrate on those companies who are foreign and multinational, as well as big local companies. If and when we do work with smaller companies, they are generally those who are growing very rapidly.

The board of directors at AmCham is currently working on a project to make the administrative cost of running AmCham fully covered by the membership fee. For this reason, we are concentrating all our activity in acquiring more members in order to cover the cost of administration.

What are the kinds of events and services that AmCham provides for its members?

One of the major services we provide to member companies is an informational and networking platform, where our member companies can meet to share their experiences, exchange knowledge and make small transactions. It is all about networking and connecting people.

We host monthly events such as business cocktails which take place at Hyatt Regency Dushanbe. We also host happy hour events. Another important service we provide involves connecting multinational companies with government officials, because businesses are always dealing with government institutions. If barriers or obstacles are encountered, AmCham works to bring understanding to both sides of the dialogue.

We have another event that we call The Business Breakfast. This is where members come together in the morning to listen to political and business leaders speak. All members have the right to ask questions and state their concerns––sometimes the members solve their problems immediately over breakfast.

Also, we host a series of round table discussions. Last time, we hosted a gathering of individuals involved in the banking sector with various government officials from the tax authority, the National Bank of Tajikistan and the Ministry of Finance, to name just a few. As an executive office of AmCham, we are always doing our best to promote transactions between our members, and for this reason we offer a member to member program, by which each member association can purchase the products and services of another member at a discounted price; this really contributes to group cohesion.

Another activity that we are involved in at AmCham is advocating progressive business reform. By the popular demand of our member associations, we have started promoting the idea of joining the Hague Convention to the government. If Tajikistan is accepted, then the registration of new foreign businesses will take only 2 weeks. Over the course of the last year, we have promoted this idea in cooperation with the International Finance Corporation (IFC) and the Secretariat of the Consultative Council under the President of Tajikistan.

We are very hopeful that Tajikistan will join this convention by the end of the year. This will truly give an enormous boost to the business climate of our country, and it will be easier to open our doors to foreign businesses. As the situation currently stands, it takes around 6 weeks to register foreign businesses––this must change.

We also promote the interests of our member associations through several peer-to-peer activities, such as newsletters that are circulated on the internet though social media.

Based on your insights into the business environment here, where do you see the most lucrative opportunities for international investment?

One of the many priorities of the government of Tajikistan is the development of the country’s energy sector. I truly believe that it is currently the most attractive place for foreign investors. The mountains of Tajikistan hold 60% of the total water in Central Asia, and this is only part of what gives our country such a competitive edge. As it stands now, our infrastructure is not advanced enough to tap these resources, but in the long run and with the help of foreign investment, there is huge potential in the energy sector of Tajikistan.

There are a large number of construction sites in Dushanbe. Would you say that property development is an area that should be considered by foreign investors?

Yes, definitely! If you compare what is happening now with 5 years ago, the construction sector is simply booming. There are more and more high-rises and the change is very visible. The fast-growing construction sector of Tajikistan can certainly be seen as a very attractive sector for investors.

Tajikistan has one of the youngest populations in all of the former Soviet Union –– this is another one of our competitive advantages. This is one of the factors driving the construction boom.

How does the youth demographic affect the domestic education sector?

The government is definitely increasing spending on education. If you take a look at the government budget for education and compare it to just 10 years ago, it has increased some 60 or 70 times. Each year, the budget for education increases; the government is fully aware of the importance of a solid education for our youth. This is important for investors too, as it means that foreign investors will have a large pool of well-educated youth looking for employment in new industries.

Tajikistan has a distinct Persian influenced culture, ancient cities and incredible nature. What needs to be done to better develop tourism here?

I believe the government is well aware of the tourism-potential in Tajikistan, and has been taking the necessary steps to promote it as such. But there are still a number of things that must be done: for example, considering an open skies strategy that would encourage international travel to and from Tajikistan.

Is transport infrastructure, including the Dushanbe International Airport, up to the task?

Yes. Actually the new airport opened recently after being completed by the French company VINCI. They were scheduled to have finished in December, but they completed the project well ahead of time. The opening of this new and modern airport is another “brick” in the wall that will surely serve to increase the attractiveness of investment in our country. This airport will serve international as well as domestic flights, all conforming to international standards.

How has the hosting of the recent Shanghai Cooperation Organization summit affected the country’s image internationally?

First, it shows that Tajikistan maintains open doors for everybody; our country does not define people by their nationality, country or race; we just don’t do it. Everybody is welcome. I believe this is just part of what makes Tajikistan such an attractive market. Even though we are just 8.2 million people, we have many resources, and the country has huge potential, but it is somewhat underestimated by investors. We want investors to come and see what is happening for themselves, and not to judge our country by what they see on the internet and in the newspapers.

What’s your advice to our readers?

The first step is to come and see. Do not judge the country and its attractiveness by your first impression; to see the opportunities available, investors first have to find the right people and the right companies. Then they have to find the right focal point––like local associations and connections that will provide them with accurate information.

Depending on the objectives of the investors, working slowly with local partners to build a solid business relationship is a wise idea. One of the better ways to enter the market is to come and talk directly with government representatives. In this case they are most welcome to visit AmCham and we will try to assist them in making special agreements with the government. If it’s a smaller venture, it is better to find and work with local partners.




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