Tajikistan Opens up to Foreign Banks
Saturday, 5 May, 2007
Tajikistan Opens up to Foreign Banks
Saturday, 5 May, 2007
On April 30, President Imomali Rahmon used his annual address to parliament to formally announce that Tajikistan’s financial market had been opened up to foreign banks.
Rahmon said that the move would encourage people to save more, make the banks more competitive, and increase their lending, including for microcredit schemes in remote areas of the country.
Experts polled by NBCentralAsia say the president’s statement reflects his drive to attract foreign investment and push ahead with major hydroelectricity projects.
“Without foreign investors, these projects won’t happen,” said Turakul Haknazarov, head of banking supervision and licensing at the National Bank of Tajikistan.
Most of the banks that have already shown an interest in getting into the market belong to countries that are investing in the Tajik economy.
Three of the largest Kazak banks are already represented in Tajikistan. Kazkommerzbank and BankTuranAlem have opened offices in Dushanbe, while ATF-bank has bought control shares in the local Sohibkorbank.
Iran’s Tijarat Bank has a Dushanbe branch, and Habib Bank from Pakistan and the Development Bank of China are keen to follow suit.
NBCentralAsia experts have welcomed the change, saying local banks do not have enough liquidity to promote economic growth and are not in a position to invest in large-scale projects.
The nine banks registered in Tajikistan have combined charter capital of no more than 55 million US dollars, compared with the 17 billion dollars of TuranAlem alone.
Jamshed Yusupov, head of the department for monetary policy and statistics at the National Bank, says the arrival of foreign banks will benefit customers and boost the economy.
“Our own banks are not capable of meeting all of people’s needs,” he said. “For example, the lack of resources means Tajikistan’s financial institutions are unable to offer mortgages.”
Another senior official at the central bank said Tajik commercial banks are prepared to meet the competition. Initially, he said, they may survive, but “market conditions can change suddenly, and weaker players who are unable to cope will leave, while new ones will take their place”.
Independent economist Rustam Babajanov argues that local banks would do well to put money into projects for which the Tajik government is currently borrowing from international financial institutions and foreign governments. The government puts economic development and the national interest first, and if banks used their money in this way they could make it harder for foreigners to enter the market.
Umed Davlatzod, deputy chairman of one of the republic’s largest banks, Orienbank, is sceptical about opening up the financial market, saying Tajikistan is unlikely to benefit from the move for several years, except by becoming more attractive to potential partners.
Davlatzod says he would welcome foreign banks as long as they did not duplicate the role of existing ones. Foreign financial institutions could, for example, create a secondary market in securities, or offer factoring services, through which intermediary banks offer advances for commercial transactions liable to suffer payment delays.
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
