BEE Coordination Working Group Meeting Minutes, 23 April 2008

Participants present at meeting:

1. BEE Working Group Terms of Reference

 Christine Bowers made a welcoming speech and introduced Shuhkrat Rahmatboev, chair of the working group, and Sherali Zardov, Head of Secretariat of the Investment Council. She described the purpose of the meeting - to discuss expectations for the working group, and begin to refamiliarize the group with the work of the various business enabling environment (BEE) projects. The BEE Coordination Working Group is a continuation of IFC SME Legal Environment working group established two years ago, which last met in March 2007. It will not cover all aspects of private sector development (PSD). For example, it will not focus on trade facilitation, WTO accession, land reform, or access to finance.

Ms. Bowers asked the participants for comments on the TOR circulated earlier (see attachments A & B). Anna Schwarz asked about the reporting procedures of the WG. As Ms. Schwarz heard from EBRD's recent mission, the WG will report to the President of Tajikistan. Ms. Bowers clarified that the WG will work under State Investment and State Property Management Committee (Goskominvest) and will not report to the President. In addition, the WG will be a sub-committee of the Donor Coordination Council and the PSD Coordination Council being set up by Goskominvest.

Daniel Lachat wondered whether his project is invited to participate in the group, since it addresses standardization as part of WTO accession conditions. Ms. Bowers replied that while the focus of the group will not be on WTO accession, some activities that help Tajikistan meet accession conditions will also improve the business environment. Sobir Qurbanov confirmed that the standardization project's activities are important to the group. Nurali Shukurov proposed Mr. Lachat to participate both in standardization and BEE WG groups simultaneously. Mr. Lachat said the PCA-II project might participate in the BEE WG if standardization issues are at stake.

2. Update on BEE-related projects- implementation status

A briefing on the status of BEE projects was given by project representatives:

The EC PCA-II project on standardization, as described by Mr. Lachat, is aiming at strengthening of Tajikstandart capacity and also at introducing the so-called 'new approach' to the Tajikistan standardization legal system. The project has been helping with draft laws and regulations but progress has been slow.

Zafar Khotamov, ADB Officer, informed that its technical assistance project recently funded by ADB and DFID is dedicated to private sector development. From late December 2007, the project has been providing support to Goskominvest. An international consultant/team leader will come early May to start his activities. The PSD project includes 3 components: policy advising, capacity building of Goskominvest for private sector development, and attraction of foreign and local investors. Shahlo Rahimova mentioned that due to several factors there was a delay in fielding international consultant/team leader, and conditions have changed. Ms. Rahimova said DFID's view is the project design should be modified to consider the current situation. Mr. Khotamov supported her idea and proposed to modify the project after team leader comes. Also Sobir Kurbanov stressed that the project should be verified with Government of Tajikistan for meeting to Private Sector Development Strategy implementation.

Manuchehr Gadoev, from the World Bank, described technical assistance funded by WB that includes 3 components: training and distance learning to Goskominvest main office and regional branches, development of mining strategy, and purchase of videoconference and other communication equipment. The project started its work in March, project duration is 3 years, and the hiring of international or local consultants is planned. On the question from Mr. Kurbanov on the project amount, Mr. Gadoev replied that it is $500,000 US dollars. Current status is that terms of reference have been drafted for each component and are under review by Goskominvest. Mr. Gadoev and Mr. Khomatov agreed that it would be good to coordinate their projects' delivery of capacity-building assistance to Goskominvest.

3. Presentation on Investment Council

Sherali Zardov, Head of the Secretariat of the newly created Investment Council, presented about plans for the Investment Council. The organizational chart was described (see attachment C). The Secretariat was established and funded by EBRD. The Secretariat is the working body of the Investment Council. The Council can be effective mechanism will simplify and facilitate the decision-making of vitally important issues on investment climate improvement and BEE. The Investment Council will have 9 members: 3 government members, 5 business and donor members, and the Head of the Secretariat. Other representatives will be invited as observers, but will not vote. The Council will report directly to the President. The Council will make recommendations on investment climate issues straight to the President, and draft instructions to individual ministries to be approved by the President.

The Secretariat is in the process of starting to select members from the business community, donors, and local and foreign investors. Each group will nominate individuals to be on the Investment Council. Membership of the Council will rotate, with different individuals representing donors, for example, depending on the agenda item of the meeting. The Secretariat is working on the rotation mechanism.

Meetings will be held every 3 months, and will focus on one or two issues that can be addressed or implemented in 6 months. The agenda item(s) will be selected from a list prepared by non-government members of the Investment Council. Two categories of issues will be addressed: (1) adapting and improving laws and regulations on private sector development, improvements to the business environment and support to entrepreneurship activities, and (2) monitoring the quality of implementation of current laws and regulations.

Before the first Investment Council meeting, the Secretariat will organize separate round table discussions with donors and business associations. Donors will propose several candidates to participate in the Council. The Secretariat is interested in mapping the institutions working on PSD. It will prepare a list of draft laws and recommendations that are ready for discussion by government. After each Investment Council meeting, the Council will issue a resolution.

Nurali Shukurov said that the Presidential Decree stipulates that businesses will be selected as IC members, and not business associations. Mr. Shukurov thinks it important that business associations, not individual businesses, are present on the Council. Sherali Zardov replied that the business associations can decide whom they propose as their members to IC. 

4. State Committee for Investment and State Property Management (Goskominvest)  

Shuhkrat Rahmatboev gave a briefing on the National Development Strategy and Poverty Reduction Strategy and explained Goskominvest's expectations of the working group. He mentioned that projects on capacity building, such as training programs, are very important for Goskominvest. He confirmed that Goskominvest hopes to speed up implementation of reforms and continue developing its action plan. The BEE working group is important, since it allows Goskominvest to spend more time on its primary focus by consolidating presentations.

Entrepreneurs have great expectations from Goskominvest on licensing, inspections and registration, and Goskominvest is trying to improve its ability to deliver services to entrepreneurs. There has already been some improvement in this regard, and Goskominvest continues trying to improve the regulatory environment and infrastructure to support business operations.

The working group is not designed to restrict the formation of new working groups on other topics.

All the projects have different approaches, however the outcome is to improve BEE in Tajikistan. The Poverty Reduction Strategy is the main development document in Tajikistan. The PRS' main provisions are largely covered by Pragma's BEI project, while the IFC project is also covering several areas. Some areas of the PRS are not being addressed, such as standardization and certification, and tourism development.

Goskominvest is not actively involved in the reform process of standardization and certification, covered by the PCA-II project. Tajikstandart is the main agency for this, according to Mr. Rahmatboev. He continued that Tajikstandart should do more to assist businesses and protect basic consumer rights.

The State Committee for Youth, Sport and Tourism has the mandate for improving tourism. However, it is not actively involved in investment climate improvement activities. Mr. Rahmatboev proposed to include SCYST to working groups related to these areas.

Another objective of the working group is to define and formulate priorities of reform areas, to enable Goskominvest and the working group to concentrate on the activities that could be implemented given current conditions of Tajikistan and to de-prioritize the activities that are unlikely to be achieved.

The main objective of the working group is to have active discussions and make good recommendations to Goskominvest to push the reform implementation process more effectively.

Mr. Rahmatboev offered to hold next BEE Coordination WG meeting in Goskominvest building to attract more employees of Goskominvest to learn more on the process.     

5. Other initiatives of interest related to donor coordination and BEE

 Nurali Shukurov mentioned the importance of Tajikistan's accession to the New York Convention on arbitration to improving the investment climate and attracting foreign investors. The Convention requires that decisions made in foreign courts on Tajik businesses are binding in Tajikistan. Accession to the Convention was not supported by the Ministry of Justice. Sherali Zardov stated that he was involved in the discussions and does not know the justification of stopping the accession process. Mr. Rahmatboev also noted that Goskominvest has not received or justification to stop the process. Mr. Zardov proposed this issue to be the subject of an upcoming Investment Council meeting where the Ministry of Justice specialist will be invited for clarification.  Mr. Lachat offered to disseminate a paper written by Ingo Risch, the team leader of the former PCA-I project (see attachment D and also E-H).     

6. Update on OSS

 A briefing on 'one-stop shop' business registration has been provided by Shahlo Rahimova. The World Bank Institute held a workshop on OSS on March 12-13, where the idea for a Government working group originated. At the workshop two models were presented: Georgia, where the OSS was located in the Tax Office, and Serbia, which has an autonomous OSS.

Last week, Heikki Auvinen, an EC consultant made a presentation on OSS to the international community. DFID will allocate funding to support the formation of the working group. The initial TOR for the OSS working group called for 2 components: (1) the working group to put forward 2 proposals for where in government the OSS would be located, and (2) the working group to undertake detailed legal analysis of regulations and laws to be changed to support the OSS. Ms. Rahimova said that the donors have agreed that these components should be amended. The OSS working group will make a single recommendation for where in government the OSS should be located, and it will not undertake detailed legal analysis. Pragma has already done quite a lot of legal analysis on the OSS.

Ms. Rahimova circulated a decision matrix (see attachment I) for the proposed OSS working group, establishing 7 key decisions that should be made by the group to enable a donor-funded technical assistance project to begin. Meeting attendees were asked to review the matrix and send any comments or suggestions to Christine Bowers after the meeting.

On April 25, there will be a Presidential Speech to TAJ Parliament and involved ministries and organizations wait for strong decision on OSS at this meeting. Sherali Zardov stated that it is very important for donors to respect and support the OSS as a local initiative. 

Nurali Shukurov pointed out that besides registration of business, it is also important to address rules for re-registration of business and closing of a business. This is something that Serbia forgot, and is now drafting new regulations to supplement the OSS. Mr. Shukurov also noted that the OSS WG members will not be able to conduct financial and economic analyses, because the data and statistics are not available. Important statistical data is confidential (such as the salary of state officials) and these indicators are very important for such type of analysis.

Sherali Zardov mentioned that on last meeting on OSS, WBI agreed to field 2 international experts for three weeks.

Frederick Coene said that it is very significant to know where OSS will be based, before technical assistance can be provided. Mr. Coene said that EC is leaning toward supplying technological equipment as part of its support package. The EC has postponed their decision on the OSS project by one week.

Mr. Zardov also indicated that during his meeting with Mr. Khamraliev, Head of Goskominvest also asked to wait until the Presidential Speech to be made on April 25th. There, it may become clear what agency will be selected for OSS set up.  
 

7. Concluding items

Christine Bowers introduced Iftekar Ahmed, WB consultant on sector mapping for JCSS, Financial and Private Sector Development. She asked BEE WG members to support the process by providing him with requested information.

Ms. Bowers apologized that not very many BEE projects were able to give updates about their workplans. The introductory meeting will continue at the next meeting, to begin with project presentations from Pragma, GTZ, and the other projects who didn't present today.

The BEE Coordination Working Group's next meeting will be Friday, May 30 at Goskominvest. The agenda will be shared in advance of the meeting.

List of attachments:

1. Terms of Reference for BEE Coordination Working Group (English)
2. Terms of Reference for BEE Coordination Working Group (Russian)
3. Structure of the Consultative Council  (English and Russian)
4. New York Convention on arbitration: "Arbitrary Court - An Essay on the Issue of Improving the Investment Climate in Tajikistan" by Ingo Risch, ITCA (English)
5. New York Convention on arbitration: Summary documents from UNCITRAL (English and Russian)
6. New York Convention on arbitration: Comparative analysis of international arbitration for Kazakhstan by Binura Baibatyrova, EU-TACIS - paper (English)
7. New York Convention on arbitration: Comparative analysis of international arbitration for Kazakhstan by Binura Baibatyrova, EU-TACIS - presentation (English)
8. New York Convention on arbitration: "Good Governance Matters: A New Look at the Problem of Enforcing Foreign Arbitral Awards" by Arthur Mitchell, ADB (English)
9. OSS Decision Outline/Matrix (English)
10. OSS Decision Outline/Matrix (Russian)

24.4.08/MS/C