Regions and Countries

	Table of Contents
p. 14 of 20 BACK | NEXT I. Country Performance Assessment II. Country Operational Strategy III. Sector Strategies A. Agriculture B. Infrastructure C. Social Infrastructure and Environment D. Governance Dimensions of ADB Operations F. Gender Dimensions of ADB Operations G. Private Sector Development IV. Regional Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - Tajikistan : III. Sector Strategies

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F. Private Sector Development

57. ADB's public sector operations will support, where appropriate, improvement of incentives for private investment by enhancing the policy, legislative, regulatory, and institutional framework. ADB prepared a Private Sector Strategy for Central Asia in March 1998. The Strategy, which has subsequently been welcomed by the Government of Tajikistan, proposes that ADB respond to the region's needs by (i) focusing on private sector operations that would be directly complementary to public sector programs; (ii) developing programs in those sectors that can have a direct impact on reducing the costs of transition, particularly in the social sectors; and (iii) seeking the maximum involvement of other investors or participants. The Strategy recognizes that, given the existing programs of the ADB and other funding agencies, there are likely opportunities for ADB to provide direct assistance to the private sector in (i) the financial sector, especially to encourage good corporate governance; (ii) infrastructure, especially in rehabilitation and operation projects; (iii) company towns facing difficulties; (iv) agriculture, to encourage farm restructuring; (v) small- and medium-scale enterprise assistance; and (vi) social infrastructure, to help create private sector service providers.

58. Although privatization has been developed by the Government, private domestic investment and foreign direct investment (FDI) have remained low due to the weak banking sector and the high perceived country risk, despite a relatively liberal legal regime. The number of joint ventures has remained at about 200 since 1996 and an annual FDI inflow fluctuated between $20 million and $30 million in the past four years. Most foreign investment has been through joint ventures. Major investors are from United Kingdom (gold exploration), South Korea (textiles), India (pharmaceutical products), United Arab Emirates (consumer goods), Canada (gold and silver exploration), and Italy (cotton processing and textile). ADB plans to continue supporting the development of the private sector through TAs for strengthening the legal system, rural financial systems, and corporate governance. It is expected that a Private Sector Group (PSG) staff will participate in ADB missions to explain PSG assistance modalities and identify possible areas of assistance to stimulate entrepreneurial activities and FDI.

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