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Executive Summary

Over the past several years, Armenia has received respectable rankings in international indices that review country business environments and investment climates.  Significant U.S. investments are increasingly present in Armenia, most notably ContourGlobal’s acquisition of the Vorotan Hydroelectric Cascade and Lydian International’s efforts to develop a major gold mine.  New U.S. investors in the banking, energy, pharmaceutical, information technology, and mining sectors have entered or acquired assets in Armenia. Armenia presents a variety of opportunities for investors, and the country’s legal framework and government policy aim to attract investment, but the investment climate is not without challenges.  Obstacles include Armenia’s small market size, relative geographic isolation due to closed borders with Turkey and Azerbaijan, weaknesses in the rule of law, and legacy of corruption. Armenia is a member of the Eurasian Economic Union, an association that brings Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia together in an integrated single market.  In May 2015, Armenia signed a Trade and Investment Framework Agreement (TIFA) with the United States. The TIFA establishes a United States-Armenia Council on Trade and Investment to discuss bilateral trade and investment and related issues. In November 2017, Armenia signed a Comprehensive and Enhanced Partnership Agreement with the European Union, which aims in part to improve Armenia’s investment climate and business environment.

Armenia imposes few restrictions on foreign control and rights to private ownership and establishment.  There are no restrictions on the rights of foreign nationals to acquire, establish, or dispose of business interests in Armenia.  Business registration procedures are straightforward. According to foreign companies, regulations, policies, and laws that are otherwise sound are sometimes undermined by problems such as the lack of independence, capacity, or professionalism in key institutions, most critically the judiciary.  Armenia does not limit the conversion and transfer of money or the repatriation of capital and earnings, including branch profits, dividends, interest, royalties, and management or technical service fees. The banking system in Armenia is sound and well-regulated, but investors have notes that Armenia’s financial sector is not highly developed.  The U.S.–Armenia Bilateral Investment Treaty provides U.S. investors with a variety of protections. Although Armenian legislation complies with the Trade Related Aspects of Intellectual Properties Agreement and offers protection for intellectual property, enforcement efforts and recourse through the courts require improvement.

Armenia experienced a dramatic change of government in April/May 2018.  Parliamentary elections in December 2018 led to the exit from power of numerous parliamentarians known to hold significant business holdings in Armenia and exercise outsized sway over large sections of the economy.  A massive anti-corruption campaign is underway as part of efforts to eliminate systemic corruption. Overall, the competitive environment in Armenia is improving, but several businesses have reported that broader reforms across the judiciary, tax and customs, health, education, military, and law enforcement sectors will be necessary to shore up these gains.  Despite progress in the fight against corruption and improvements in some areas that influence the attractiveness of Armenia’s investment climate, investors claim that numerous concerns remain and must be addressed to ensure a transparent, fair, and predictable business climate. The emergence of a dispute in June 2018 connected with the actions of protestors to halt Lydian International’s mining project has attracted significant attention from international investors as they evaluate Armenia as an investment destination.

Table 1: Key Metrics and Rankings

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2018 105 of 180 
World Bank’s Doing Business Report 2019 41 of 190
Global Innovation Index 2018 68 of 126 
U.S. FDI in partner country ($M USD, stock positions) 2018 $7 
World Bank GNI per capita 2017 $3,990 

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The government of Armenia officially welcomes foreign investment.  The Ministry of Economic Development and Investments is the main government body responsible for the development of investment policy in Armenia.  Armenia has achieved respectable rankings on some global indices measuring the country’s business climate. Armenia’s investment and trade policy is relatively open; foreign companies are entitled by law to the same treatment as Armenian companies.  Armenia has strong human capital and a well-educated population, particularly in the science, technology, engineering, and mathematics fields, leading to significant investment in the high-tech and information technology sectors. Many international companies have established branches or subsidiaries in Armenia to take advantage of the country’s pool of qualified specialists and trade preferences with Russia and the Eurasian Economic Union (EAEU).  However, many businesses have identified the challenges to Armenia’s investment climate as the country’s small market (with a population of less than three million), relative geographic isolation due to closed borders with Turkey and Azerbaijan, per capita gross national income of USD 3,990, and concerns related to weaknesses in the rule of law.

After a dramatic change in government in April/May 2018, major sectors of Armenia’s economy have presumably become more open to competition.  According to third parties, large businesses backed by oligarchic interests are less able to draw on government support to prop up their market positions.  A massive anti-corruption campaign was launched after the 2018 change of government, and a series of high-profile cases have resulted as part of efforts to eliminate systemic corruption.  These developments serve to improve Armenia’s investment climate and competitive environment; however, some report that the fight against corruption needs to be ongoing and institutionalized in the long term in critical areas such as the judiciary, tax and customs operations, health, education, military, and law enforcement sectors.  Moreover, foreign investors are still concerned about the rule of law and equal treatment. U.S companies have also reported that the investment climate is tainted by a failure to protect intellectual property rights. There have been concerns of lack of an independent and strong judiciary, which have undermined the government’s assurances of equal treatment and transparency and reduced businesses’ recourse in the instances of contract or tax disputes.

Limits on Foreign Control and Right to Private Ownership and Establishment

There are no limitations on foreign ownership or control of commercial enterprises.  There are also no sector-specific restrictions.

The Armenian government does not screen foreign direct investment.

Other Investment Policy Reviews

As of the end of 2018, Armenia has not undergone investment policy reviews by either the Organization of Economic Cooperation and Development (OECD) or U.N. Conference on Trade and Development (UNCTAD).  The World Trade Organization (WTO) conducted a Trade Policy Review in 2018, which can be found at

Business Facilitation

Armenia has traditionally fared well in the World Bank’s Ease of Doing Business report.  Companies can register electronically at  .  This single window service was launched in 2011 and allows individual entrepreneurs and companies to complete name reservation, business registration, and tax identification processes all at once.  The legal time limit for the process is two working days, but the application may be completed in one day. However, an electronic signature is needed in order to be able to register online. Foreign citizens can obtain an e-signature and more detailed information from the e-signature portal at  .  A foreign partner is not required to obtain approval to invest.

Outward Investment

The Armenian government does not restrict domestic investors from investing abroad.

2. Bilateral Investment Agreements and Taxation Treaties

Basic provisions covering U.S. investments are set by the U.S.-Armenia Bilateral Investment Treaty (BIT), in force since 1996.  The U.S.–Armenia BIT stipulates that conditions for investors of each party be no less favorable than for the party’s own national investors or for investors from any third state.  It provides for the option of international arbitration in the case of investment disputes. Armenia has BITs in force with the following additional countries: Argentina, Austria, Belarus, Belgium, Bulgaria, Canada, China, Cyprus, Egypt, Finland, France, Georgia, Germany, Greece, Iran, Israel, Kuwait, Kyrgyzstan, Latvia, Lebanon, Lithuania, the Netherlands, Luxembourg, Romania, Russia, Spain, Sweden, Switzerland, Syria, Ukraine, the United Kingdom, Uruguay, and Vietnam.  According to UNCTAD, Armenia has also signed BITs with Iraq, Japan, Jordan, Kazakhstan, Qatar, Tajikistan, Turkmenistan, and the United Arab Emirates, but these agreements have not yet entered into force. Armenia is signatory to the Commonwealth of Independent States Multilateral Convention on the Protection of Investor Rights.

Armenia became a member of the EAEU in January 2015, together with Russia, Belarus, Kyrgyzstan, and Kazakhstan.  Armenia also entered into a Comprehensive and Enhanced Partnership Agreement (CEPA) with the EU in November 2017.  While CEPA will not affect customs or tax rates, it will, over time, align Armenia’s regulatory system and standards with those of the EU, as much as is possible under Armenia’s EAEU obligations.

There is no free trade agreement between the United States and Armenia, through Armenian exports to the United States may be eligible for preferential treatment under the Generalized System of Preferences program.  In May 2015, Armenia signed a Trade and Investment Framework Agreement (TIFA) with the United States. The TIFA establishes a United States-Armenia Council on Trade and Investment to discuss bilateral trade, investment, and related issues and examine ways to strengthen the trade and investment relationship between the two countries.

Armenia does not issue foreign tax credits and does not recognize the existing 1973 double taxation treaty signed by the Union of Soviet Socialist Republics (USSR) and the United States.  The United States considers Armenia to be party to this treaty by virtue of state succession to treaties and Armenia’s declaration of its commitment to fulfill the international treaty obligations of the former USSR as expressed in the Alma Ata Declaration of 1991.  The government of Armenia has expressed interest in negotiating a new double taxation treaty with the United States, but there is no strong evidence at this time that the lack of such an agreement deters new investments.

4. Industrial Policies

Investment Incentives

Armenia offers incentives for exporters (e.g. no export duty, VAT refund on goods and services exported) and foreign investors (e.g. income tax holidays, the ability to carry forward losses indefinitely, VAT deferral, and exemptions from customs duties for investment projects).    Starting from January 1, 2018, the Armenian government exempted imports of capital investment-related goods from VAT payments at the border. In 2015, the Armenian government exempted from customs duties investment-related import of equipment and raw materials from non-EAEU member countries.  VAT and customs duties exemptions are implemented based on government decisions made on a case-by-case basis. Also, in accordance with the Law on Foreign Investment, several ad hoc incentives may be negotiated on a case-by-case basis for investments that are targeted at certain sectors of the economy or are of strategic interest.

Foreign Trade Zones/Free Ports/Trade Facilitation

In June 2011, Armenia adopted a Law on Free Economic Zones (FEZ), amended in October 2018, and developed several key regulations to attract foreign investments into FEZs:  exemptions from VAT, profit tax, customs duties, and property tax. The Alliance FEZ was opened in August 2013 and currently hosts sixteen businesses taking advantage of its facilities. The focus of Alliance FEZ is on high-tech industries, which include information and communication technologies, electronics, pharmaceuticals and biotechnology, architecture and engineering, industrial design, and alternative energy.  In 2014, the government expanded operations in the Alliance FEZ to include industrial production. In 2015, the Meridian FEZ, focused on jewelry production, watchmaking, and diamond cutting, opened in Yerevan, with six businesses operating in it. The Meghri FEZ, located on Armenia’s border with Iran, opened in 2017. A new FEZ, located in Hrazdan, opened in late 2018 and is focused on the high-tech and information technology sectors.

Performance and Data Localization Requirements

There are no performance requirements for investment in terms of mandating local employment.  The processes for obtaining visas, residence, or work permits are straightforward. There are no government-imposed conditions on permission to invest, including tariff and non-tariff barriers.

Armenia does not follow any policy that would force foreign investors to use domestic content in goods and technology.  There are no requirements for foreign information technology providers to turn over source code or provide keys for encryption.  There are no requirements to store data within the country.

5. Protection of Property Rights

Real Property

Armenian law protects secured interests in property, both personal and real.  Armenian legislation provides a basic framework for secured lending, collateral, and pledges and provides a mechanism to support modern lending practices and title registration.  According to Armenia’s constitution, foreign citizens are prohibited from owning land, though they may take out long-term leases. In the World Bank’s 2019 Ease of Doing Business report, Armenia ranked 14th among 190 economies for the ease of registering property.  Lack of clear title to land is not an issue in Armenia.

Intellectual Property Rights

Armenia has a strong intellectual property rights (IPR) framework.  Domestic legislation, including the 2006 Law on Copyright and Related Rights, provides for the protection of IPR on literary, scientific, and artistic works (including computer programs and databases), patents and other rights of invention, industrial design, know-how, trade secrets, trademarks, and service marks.  The Intellectual Property Agency (IPA) in the Ministry of Economic Development and Investments is responsible for granting patents and overseeing other IPR-related matters. Armenia requires no state registration for copyright. The collective management organization ARMAUTHOR manages authors’ economic rights. Trademarks and patents require state registration by the IPA.  There is no special trade secret law in Armenia, but protection of trade secrets is partially covered by patent registration. Formal registration is easy and transparent, the database of IPR registrations is public, and applications to register intellectual property are published online for two months for comment by third parties.

Armenia’s legislation is in compliance with the Trade Related Aspects of Intellectual Properties Agreement.  In 2005, Armenia created an IPR Enforcement Unit in the Organized Crime Department of the Armenian Police, which does not, however, exercise ex-officio powers and acts only based on complaints from right holders.

Despite the existence of relevant legislation and executive government structures, the concept of IPR remains unrecognized by a large part of the local population. The onus for IPR complaints remains with the offended party.  The police assert that the majority of cases are settled through out-of-court proceedings. While the Armenian government has made some progress on IPR issues, strengthening enforcement mechanisms remains necessary.

A new Law on Copyright has been drafted and submitted to the government.  It includes provisions from new international agreements and provides additional detail on many of the provisions in the current law.  Copyright contract rights are better defined and examples of contracts between the user and the rights-holder are included. Phonogram producers’ rights are harmonized with copyright holders’ rights and are extended to 70 years.  The new legislation includes specific provisions from the Marrakesh and Beijing Treaties that regulate the rights of disabled artists and orphan works. Two new laws, the Law on Patents and Law on Industrial Design, have also been drafted by the IPA and submitted to the government.

The Armenian customs authorities track statistics related to the seizure of counterfeit goods, but the reports are not regularly updated.  The latest relevant information can be found at  .

Armenia is not listed in USTR’s Special 301 Report or Notorious Markets List.

6. Financial Sector

Capital Markets and Portfolio Investment

The banking system in Armenia is sound and well-regulated, but the financial sector is not highly developed, according to investors.  IMF estimates suggest that banking sector assets account for about 90 percent of total financial sector assets, however, financial intermediation is poor. Nearly all banks require collateral located in Armenia, and large collateral requirements often prevent potential borrowers from entering the market.  U.S. businesses have noted that this creates a significant barrier for small- and medium-sized enterprises and start-up companies.

The Armenian government welcomes foreign portfolio investment and there is a supporting system and legal framework in place. Armenia’s securities market is not well developed and has only minimal trading activity through the NASDAQ-OMX exchange, though efforts to develop capital markets are underway.  Liquidity sufficient for the entry and exit of sizeable positions is often difficult to achieve due to the small size of the Armenian market. The Armenian government hopes that as a result of pension reforms in 2014, which brought two international asset managers to Armenia, capital markets will play a more prominent role in the financial sector of the country.  Armenia adheres to its IMF Article VIII commitments by refraining from restrictions on payments and transfers for current international transactions. Credit is allocated on market terms and foreign investors are able to access credit locally.

Money and Banking System

The banking sector is healthy and indicators of financial soundness have increased in recent years.  The sector is well capitalized and liquid, though dollarization is high. Non-performing loans have fallen to below 10 percent of total loans.  There are 17 commercial banks in Armenia and 13 universal credit organizations, and there are extensive branch networks throughout Armenia. As of the end of 2018, the top three Armenian banks by assets are Ameriabank (779.7 billion AMD, or USD 1.59 billion), Ardshinbank (678.6 billion AMD, or USD 1.38 billion,) and Armbusinessbank (642.8 billion AMD, or USD 1.31 billion).  The minimum capital requirement for banks is 30 billion AMD (62.5 million USD). There are no restrictions on foreigners to open bank accounts. Residents and foreign nationals can hold foreign currency accounts and import, export, and exchange foreign currency relatively freely in accordance with the Law on Currency Regulation and Currency Control. Foreign banks may establish a subsidiary, a branch, or representative office, and subsidiaries of foreign banks are allowed to provide the same types of services as domestically-owned banks.

The Central Bank of Armenia (CBA) is responsible for the regulation and supervision of the financial sector.  The authority and responsibilities of the CBA are established under the Law on Central Bank of Armenia. Numerous other articles of legislation and supporting regulations provide for financial sector oversight and supervision.

Foreign Exchange and Remittances

Foreign Exchange

Armenia has no limitations on the conversion and transfer of money or the repatriation of capital and earnings, including branch profits, dividends, interest, royalties, or management or technical service fees.  Most banks can transfer funds internationally within two to four days. Armenia maintains the Armenian dram (AMD) as a freely convertible currency under a managed float. The AMD/USD exchange rate has proven generally stable in recent years, though it has not been without occasional sharp movements.

According to the Law on Currency Regulation and Currency Control, prices for all goods and services, property, and wages must be set in AMD.  There are exceptions in the law, however, for transactions between resident and non-resident businesses and for certain transactions involving goods traded at world market prices.  The law requires that interest on foreign currency accounts be calculated in that currency, but paid in AMD.

Remittance Policies

Armenia has no limitations on the conversion and transfer of money or the repatriation of capital and earnings, including branch profits, dividends, interest, royalties, lease payments, private foreign debt, or management or technical service fees.

Sovereign Wealth Funds

Armenia does not have a sovereign wealth fund, though the government is considering plans to create one.

7. State-Owned Enterprises

Most of Armenia’s state-owned enterprises (SOEs) were privatized in the 1990s and early 2000s, yet SOEs are still active in a number of sectors.  SOEs in Armenia operate as state-owned closed joint stock companies that are managed by the Department of State Property and state non-commercial organizations.  There are no laws or rules that ensure a primary or leading role for SOEs in any specific industry. Armenia is a party to the WTO’s Government Procurement Agreement and SOEs are covered under that agreement.  SOEs in Armenia are subject to the same tax regime as their private competitors, and private enterprises in Armenia can compete with SOEs under the same terms and conditions. A public list of state-owned closed joint stock companies can be found on the website of the Department of State Property (  ).

Privatization Program

Most of Armenia’s state owned enterprises were privatized in the 1990s and early 2000s.  Many of the privatization processes for Armenia’s large assets were reported to be neither competitive nor transparent, and political considerations in some instances prevailed over fair tender processes.  The current law on privatization, the fifth, is the Law on the 2017–2020 Program for State Property Privatization, which lists 47 entities for privatization, of which 24 are new additions and 23 were noted in earlier laws but not privatized.  The Department of State Property Management is responsible for managing the state’s share of the entities in the privatization program.

8. Responsible Business Conduct

There is not a widespread understanding of responsible business conduct (RBC) in Armenia, but several larger companies with foreign ownership or management are introducing the concept.  It is rare to see examples of Armenian companies that contribute to local communities through charity, employee service days, or other similar programs. However, RBC programs that do exist are viewed favorably.  Some NGOs, notably business associations, are playing a more active role to promote responsible business conduct. Armenia joined the Extractive Industries Transparency Initiative (EITI) in March 2017 as a candidate country.  The first EITI national report for Armenia was published in January 2019. As part of its EITI membership aspirations, the government in March 2018 adopted a roadmap to disclose beneficial owners in the metal ore mining industry.  Armenia is not an adherent to the OECD Guidelines for Multi-National Enterprises or the UN Guiding Principles for Business and Human Rights.

Some information is available regarding corporate governance, accounting, and internal controls to protect shareholders.  Major pillars of corporate governance in Armenia include the Law on Joint Stock Companies, the Law on Banks and Banking Activity, the Law on Securities Market, and a Corporate Governance Code.  International observers note inconsistencies in this legislation and generally rate corporate governance practices as weak to fair.

Domestic laws related to labor, employment rights, consumer protection, and environmental protection are not always enforced effectively.  These laws and regulations cannot be waived to attract foreign investments.

9. Corruption

Resources to Report Corruption

Armenia experienced a peaceful revolution in April/May 2018 that led to the arrival of a new government with an explicit anti-corruption mandate.  The current government released a new official plan in January 2019 that includes a section on combatting corruption. The government has increased corruption investigations against mid- to high-level government officials since the revolution.  Numerous high-ranking officials have stated publicly that corruption within their respective institutions will no longer be tolerated. Though some report that the government has mainly targeted ex-government officials in corruption investigations, there is no indication that Armenia’s anti-corruption laws are being applied by the post-revolutionary government in a discriminatory manner.  Armenia’s anti-corruption laws extend to all Armenian citizens.

Corruption, particularly in areas that have been reported to be critical such as the justice system, as well as concerns related to the rule of law, enforcement of existing legislation, and equal treatment, remain a significant obstacle to U.S. investment in Armenia.  Investors claim that the health, education, military, corrections, and law enforcement sectors lack transparency in procurement and have in the past used selective enforcement to elicit bribes. Civil courts are still widely perceived to be corrupt by the general public.  Although bribery is illegal in Armenia for all citizens, the government does not actively encourage private companies to establish internal codes of conduct. Several multinational companies, select local companies, and foreign and local companies working with international financial institutions have implemented corporate governance mechanisms to tackle corruption internally.  However, such corporate governance principles are not widely implemented among local companies.

According to Transparency International’s 2018 Corruption Perceptions Index, Armenia received a score of 35 out of 100, ranking it 105th among 180 countries.

Armenia’s ability to counter, deter, and prosecute corruption is noted to be hindered by the lack of robust enforcement of official disclosure laws to prevent the entrance and retention of corrupt officials in positions of authority and influence.  The objective and systematic scrutiny of declarations by government officials is generally considered to be lacking. According to international evaluations, Armenian authorities have limited capacities to investigate money laundering and bring such cases to prosecution.

The Law on Civil Service, in force since 2002, as well as the Laws on Municipal Service (2005) and on Local Self-Government (2002), prohibit the participation of civil and municipal servants, as well as local government elected officials such as mayors and councilors, in commercial activities.  However, powerful officials at the national, district, or local levels often acquire direct, partial, or indirect control over private firms. Such control is exercised through a hidden partner or through majority ownership of fully private parent companies. This involvement can also be indirect, including through close relatives and friends. According to foreign investors, these practices reinforce protectionism, encourage the creation of monopolies or oligopolies, hinder competition, and undermine the image of the government as a facilitator of private sector growth.  Because of the strong interconnectedness of the political and economic spheres, Armenia has historically struggled to introduce legislation to encourage strict ethical codes of conduct and the prevention of bribery in the business field. In 2016, the Armenia adopted legislation on criminal penalties for noncompliance or filing of false declarations and illicit enrichment.

Armenia is a member of the UN Anticorruption Convention.  While not a party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, Armenia is a member of the OECD Anti-Corruption Network for Eastern Europe and Central Asia and has signed the Istanbul Action Plan.  A monitoring report released by the OECD in 2018 cited Armenia’s lack of enforcement of anti-corruption laws, together with continued presence of oligopolistic interests in the economy, as points of serious concern. The report contained a series of recommendations, including to take bold measures to ensure judicial and prosecutorial independence and integrity, introduce corporate liability for corruption offenses, investigate and prosecute high-profile and complex corruption cases, and increase transparency and strengthen monitoring in public procurement.  Armenia has also joined the global Open Government Partnership initiative.

No specific law exists to protect NGOs dealing with anti-corruption investigations.  The government, in close coordination with civil society, approved new legislation on public organizations in December 2016.  The new law gives NGOs the right to engage in economic activities.

Resources to Report Corruption

For investigating corruption:

Investigation Department of Corruption, Organized and Official Crimes
Special Investigation Service of Armenia
13A Vagharsh Vagharshyan Street
Yerevan, Armenia
[+374 11] 900 002

For prosecuting corruption:

Arsen Simonyan
Head of Department for Combating Corruption
and Economic Crimes
RA Prosecutor General’s Office
5 V. Sargsyan Street
Yerevan, Armenia
(37410) 511-655

For financial and asset declarations of high level officials:

Armen Khudaverdyan
Deputy Chairperson
Ethics Commission
26 Baghramyan Street
Yerevan, Armenia
374 10 524689

Watchdog organization:

Varuzhan Hoktanyan
Executive Director
Transparency International (Armenia)
164/1 Antarayin Street
Yerevan, Armenia
374 10 569589

10. Political and Security Environment

Armenia has a history of political demonstrations, some of which have turned into violent confrontations between the police and protesters.  However, the frequency of violent protests has significantly decreased. The last major violent protest occurred in July 2016, when an armed group, Sasna Tsrer, stormed and occupied a police compound in Yerevan.  Three police officers were killed as a result. During the two-week standoff that followed, Sasna Tsrer took hostage additional police and medical personnel, demanding political changes.  During the standoff, demonstrations in support of Sasna Tsrer took place in Yerevan and clashes between law enforcement officers and protesters occurred.  These clashes did not pose any damage to businesses. In 2018, Armenia experienced a peaceful revolution that led to a change of government.  Acts of peaceful civic disobedience in Yerevan and some other cities led to street closures, including on the road to Yerevan’s international airport, but did not impede the ordinary functioning of business or harm the country’s macroeconomic stability.  These actions did not result in any damage to projects or installations.

The state of conflict between Armenia and Azerbaijan, including the regular exchanges of fire along the international border and the disputed territory of Nagorno-Karabakh, presents some potential political risk, according to investors and businesses.  A cease-fire with Azerbaijan has been in effect since 1994 for the conflict surrounding the disputed region of Nagorno-Karabakh.  However, intermittent gunfire along the cease-fire line and along the border with Azerbaijan continues, often resulting in injuries and/or deaths.  There was an increase in violence along the Line of Contact and Armenian-Azerbaijan international border on April 2-5, 2016.  The heavy clashes led to the highest death toll since the signing of the 1994 cease-fire agreement. There have been no threats to commercial enterprises from skirmishes in the border areas.  It is unlikely that civil disturbances, should they occur, would be directed against U.S. businesses or the U.S. community.  The government of Azerbaijan has suspended the importation and operations of U.S. companies in Azerbaijan if the companies’ products or services are provided in Nagorno-Karabakh and has banned the entry into Azerbaijan of some persons who have visited Nagorno-Karabakh.  Due to the existing state of hostilities, consular services are not available to U.S. citizens in Nagorno-Karabakh.

11. Labor Policies and Practices

Armenia’s human capital is one of its strongest resources.  The labor force is generally well educated, particularly in the science, technology, engineering, and mathematics fields.  Almost one hundred percent of Armenia’s population is literate.  According to official information, enrollment in secondary school is over 90 percent, and enrollment in senior school (essentially equivalent to American high school) is about 85 percent.  Despite this, official statistics indicate a high rate of unemployment, at around 18 percent.  Unemployment is particularly pronounced among women and youth, and significant underemployment is also a problem.

Considerable foreign investment in Armenia has occurred in the high-tech sector.  High-tech companies have established branches or subsidiaries in Armenia to take advantage of the country’s pool of qualified specialists in electrical and computer engineering, optical engineering, and software design.  There is a shortage of workers with vocational educations.  About 20 percent of the non-agricultural workforce is employed in the informal economy, primarily in the services sector.  Armenian law protects the rights of workers to form and to join independent unions, with exceptions for personnel of the armed forces and law enforcement agencies.  The law also provides for the right to strike, with the same exceptions, and permits collective bargaining.  The law stipulates that workers’ rights cannot be restricted because of membership in a union.  It also differentiates between layoffs and firing with severance. According to some reports, labor organizations remain weak because of employer resistance, high unemployment, and poor economic conditions; collective bargaining is not common in Armenia.  However, since the 2018 change of government, there have been consistent reports of grassroots movements to create unions in various spheres, including for doctors, teachers, and academics. Still, traditional labor unions are generally inactive with the exception of those connected with the mining and chemical industries.  Labor laws are not waived to retain or attract investments.

The current Labor Code is considered to be largely consistent with international standards.  The law sets a standard 40-hour work week, with 20 days of mandatory annual paid leave.  However, there are consistent reports that many private sector employees, particularly in the service sector, are unable to obtain paid leave and are required to work more than eight hours a day without additional compensation.  The treatment of labor in free economic zones is no different than elsewhere in the country.  Employers are generally able to adjust employment in light of fluctuating market conditions.  Severance in general does not exceed 60 working days.  Benefits for workers laid off for economic reasons are mostly limited to offering qualification trainings to the unemployed and job search assistance.

Individual labor disputes can usually be resolved through courts; however, the courts are often overburdened, causing significant delays.  Collective labor disputes should be resolved through collective bargaining.  Armenia’s Health and Labor Inspection Body (HLIB) has a mandate to monitor health and occupational safety issues, but its enforcement powers have been undermined by continuous restructuring of the body and the absence of a legal framework and regulations to guide HLIB functions.  No labor inspections have been completed since 2015.

Amendments to the Labor Code of Armenia that entered into force in 2015 clarified the procedures for making changes in labor contracts and further specified the provisions required in labor contracts, notably those relating to probationary periods, vacation, and wage calculations.

The current legal minimum wage is AMD 55,000 (USD 115) per month.  Most companies pay an unofficial extra-month bonus for the New Year’s holiday.  Wages in the public sector are often significantly lower than those in the private sector.

12. OPIC and Other Investment Insurance Programs

Armenia has an agreement with the Overseas Private Investment Corporation (OPIC), signed in 1992. OPIC mobilizes private capital to help solve critical development challenges, providing investors with financing, guarantees, political risk insurance, and support for private equity investment funds.  OPIC has been involved in several projects in Armenia, including the expansion of the Yerevan Marriott and lending operations at several financial institutions. In 2019, OPIC concluded a deal to extend USD 10 million in financing to First Mortgage Company to expand the origination of long-term home mortgage loans.  Armenia is a member of the World Bank Group’s Multilateral Investment Guarantee Agency (MIGA).

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

Host Country Statistical Source* USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2017 $11,537 2017 $11,537   
Foreign Direct Investment Host Country Statistical Source* USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2017 $247.7 2017 $7 BEA data available at  
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A 2017 $3 BEA data available at  
Total inbound stock of FDI as % host GDP 2017 42.3% 2016 44.1% UNCTAD data available at  

* Source for Host Country Data:  Statistical Committee of the Republic of Armenia

Table 3: Sources and Destination of FDI

Direct Investment From/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward $4,323 100% Total Outward $161 100%
Russia $1,374 31.8% Latvia $56 34.8%
Cyprus $410 9.5% Bulgaria $36 22.3%
Jersey $329 7.6% United States $3 1.8%
United Kingdom $295 6.8%
United States $250 5.8%

Source:  IMF Coordinated Direct Investment Survey (CDIS), 2017

A significant portion of outward investment is not disaggregated by destination in the CDIS.

Table 4: Sources of Portfolio Investment

Data not available.

14. Contact for More Information

Economic & Commercial Officer
U.S. Embassy, American Avenue 1, Yerevan 0082, Armenia



Executive Summary

The overall investment climate in Azerbaijan continues to improve, although significant challenges remain.  Over the past few years, the Government of Azerbaijan has sought to integrate the country more fully into the global marketplace, attract foreign investment, diversify its economy, undertake needed market economic reforms, and stimulate growth.  However, the Azerbaijani economy is heavily dependent on oil and gas output, which account for roughly 91 percent of export revenue. Real GDP grew 1.4 percent in 2018 as oil prices increased.

While the oil and gas sector has historically attracted the majority of foreign investment, the Azerbaijani government has targeted four non-oil sectors to diversify the economy:  agriculture, tourism, information and communications technology (ICT), and transportation. Measures taken in recent years to improve the business climate and reform the overall economy include eliminating redundant business license categories, empowering the popular “ASAN” government service centers with licensing authority, simplifying customs procedures, suspending certain business inspections, and reforming the tax regime.  These measures helped Azerbaijan rise from 57 to 25 in the World Bank’s Doing Business Report. However, progress on structural reforms required to create a diversified and competitive private sector is mixed. A small group of government-connected holding companies dominate the economy, intellectual property protections are insufficient, and judicial transparency is lacking.

Under Azerbaijani law, foreign investments enjoy complete and unreserved legal protection and may not be nationalized or appropriated, except under specific circumstances.   Private entities may freely establish, acquire, and dispose of interests in business enterprises. Foreign citizens, organizations, and enterprises may lease, but not own, land.  Azerbaijan’s government has not shown any pattern of discriminating against U.S. persons or entities through illegal expropriation. The Bilateral Investment Treaty (BIT) between the United States and Azerbaijan provides U.S. investors with recourse to settle investment disputes using the International Center for the Settlement of Investment Disputes (ICSID).  The average time needed to resolve international business disputes through domestic courts or alternative dispute resolution varies widely.

Azerbaijan considers travel to the region of Nagorno-Karabakh and the surrounding territories unlawful.  Engaging in any commercial activities in Nagorno-Karabakh and the surrounding territories, whether directly or through business subsidiaries, can result in criminal prosecution and/or other legal action against individuals and/or businesses in Azerbaijan; it may also affect the ability to travel to Azerbaijan in the future.

Table 1: Key Metrics and Rankings

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2018 152 of 180 
World Bank’s Doing Business Report 2019 25 of 190
Global Innovation Index 2018 82 of 126 
U.S. FDI in partner country ($M USD, stock positions) 2018 N/A 
World Bank GNI per capita 2017 $4,080

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

Over the past few years, the Azerbaijani government has sought to integrate the country more fully into the global economic marketplace and attract foreign investment.  Flows of foreign direct investment to Azerbaijan have risen steadily in recent years, primarily in the energy sector.  Foreign investment in the government’s priority sectors for economic diversification (agriculture, transportation, tourism, and ICT) has thus far been limited.

Foreign investments enjoy complete and unreserved legal protection under the Law on the Protection of Foreign Investment, the Law on Investment Activity, and guarantees contained within international agreements and treaties.  In accordance with these laws, Azerbaijan will treat foreign investors, including foreign partners in joint ventures, in a manner no less favorable than the treatment accorded to national investors. Azerbaijan’s Law on the Protection of Foreign Investments protects foreign investors against nationalization and requisition, except under specific circumstances.  The Azerbaijani government has not shown any pattern of discriminating against U.S. persons or entities through illegal expropriation.

Azerbaijan’s primary body responsible for investment promotion is the Azerbaijan Export and Investment Promotion Foundation (AzPromo).  AzPromo is a joint public-private initiative, established by the Ministry of Economy and Industry in 2003 to foster the country’s economic development and diversification by attracting foreign investment into the non-oil sector and stimulating non-oil exports.  A January 2018 decree called for new legislation, which has not yet been introduced, to ensure Azerbaijan conforms to international standards to protect foreign investor rights. The Azerbaijani government meets regularly with the American Chamber of Commerce (AmCham) to solicit the input from the business community, particularly as part of AmCham’s biennial white paper process.  AmCham completed the 2018 edition and is waiting to present the paper to President Aliyev.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreigners are allowed to register business entities by opening a fully-owned subsidiary, acquiring shares of an existing company, or creating a joint venture with a local partner.  Foreign companies are also permitted to operate in Azerbaijan without creating a local legal entity by registering a representative or branch office with the Taxes Ministry.

Foreigners are not permitted to own land in Azerbaijan, but are permitted to lease land and own real estate.  Under Azerbaijani laws, the state must retain a controlling stake in companies operating in the mining, oil and gas, satellite communication, and military arms sectors, limiting foreign or domestic private ownership to a 49 percent share of companies in these industries.  Foreign ownership in the media sector is also strictly limited. Unless there is an international agreement with Azerbaijan providing otherwise, foreign shareholding in media companies is limited to 33 percent in newspaper publishing and is prohibited in TV broadcasting companies.  Restrictions on foreign equity ownership in the financial services sectors (banking and insurance) have been abolished; however, there are still limits within these sectors for how much total foreign capital participation is permitted.  Furthermore, a special license to conduct business is required for foreign or domestic companies operating in telecommunications, sea and air transportation, insurance, and other regulated industries.  Azerbaijan does not screen inbound foreign investment and U.S. investors are not specifically disadvantaged by any existing control mechanisms.

Other Investment Policy Reviews

Azerbaijan has not conducted an Organization for Economic Cooperation and Development (OECD) investment policy review, a United Nations Conference on Trade and Development (UNCTAD) investment policy review, nor a WTO Trade Policy Review.

Business Facilitation

Azerbaijani law requires all companies operating in the country to register.  Without formal registration, a company may not maintain a bank account, or clear goods through customs.  As part of the ongoing business law reforms, a “Single Window” principle was introduced January 1, 2008, significantly streamlining the registration process.  Businesses must now only register with the Taxes Ministry, which takes approximately three days for commercial organizations. Since 2011, companies have also been able to e-register at  .

Azerbaijan ranks 25th in the World Bank’s Doing Business Report (rankings are available at:  ).  Azerbaijan’s improvement in the Doing Business Report ranking was largely due to the creation of a credit registry, the opening of a single window for construction permits, and streamlining the process of connecting to the electricity grid.

Outward Investment

Azerbaijan does not actively promote or incentivize outward investment, though Azerbaijani entities, particularly the State Oil Company of Azerbaijan (SOCAR) and the State Oil Fund of Azerbaijan (SOFAZ), have invested in various countries, including the United States.  SOFAZ investment is typically limited to real estate, precious metals, and low-yield government securities.  SOCAR has invested heavily in oil and gas infrastructure and petrochemicals processing in Turkey and Georgia.  The government does not restrict domestic investors from investing overseas.

2. Bilateral Investment Agreements and Taxation Treaties

Azerbaijan has signed 51 Bilateral Investment Treaties (BIT).  The 2001 BIT in force between the United States and Azerbaijan encourages the reciprocal protection of investment.  Azerbaijan also has bilateral investment treaties currently in force with: Austria, Belgium-Luxembourg Economic Union, China, Croatia, Czech Republic, Finland, France, Georgia, Germany, Greece, Hungary, Iran, Israel, Jordan, Kazakhstan, South Korea, Kuwait, Kyrgyzstan, Latvia, Lithuania, Moldova, Montenegro, Poland, Romania, Russia, San Marino, Serbia, Spain, Switzerland, Syria, Tajikistan, Turkey, Ukraine, UAE, the United Kingdom, and Uzbekistan.

Azerbaijan has free trade agreements (FTAs) with: Russia, Ukraine, Georgia, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Moldova, and Belarus.  Under the FTAs, goods can be imported from those countries free of customs duties.

The United States signed a tax treaty with the USSR, to which Azerbaijan is considered a successor state.  The United States and Azerbaijan do not have a separate bilateral taxation treaty. The United States and Azerbaijan are parties to the OECD Convention on Mutual Administrative Assistance in Tax Matters.  Azerbaijan signed an intergovernmental agreement with the United States to implement the Foreign Account Tax Compliance Act (FATCA) on October 9, 2015, based on the “IGA Model 1a” form.

Azerbaijan also has double taxation treaties with: Austria, Belarus, Belgium, Bosnia & Herzegovina, Bulgaria, Canada, China, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Great Britain, Greece, Hungary, Iran, Italy, Japan, Jordan, Kazakhstan, Kuwait, Latvia, Lithuania, Luxembourg, Macedonia, Malta, Moldova, Montenegro, Netherlands, Norway, Pakistan, Poland, Romania, Russia, San Marino, Saudi Arabia, Serbia, Slovenia, South Korea, Spain, Sweden, Switzerland, Tajikistan, Turkey, UAE, Ukraine, Uzbekistan, and Vietnam.  Treaties with Jordan, Spain, Sweden, Malta and Denmark are pending ratification by the parliament of Azerbaijan.

4. Industrial Policies

Investment Incentives

Since early 2016, the government has introduced tax and investment incentives for entrepreneurs and legal entities in non-oil export sectors as part of the overall economic reform/diversification effort.  These measures include certain partial, temporary exemptions from corporate and property taxes; favorable tax treatment for manufacturing facilities and imports of manufacturing equipment; and subsidies for certain exports.  Investment certificate holders are exempt from paying 50 percent of the assessed income tax; 100 percent of the land tax; and 100 percent of customs duties on imported machinery, equipment, and devices.  Certificates are issued for seven years to projects in priority non-oil sectors.

Foreign Trade Zones/Free Ports/Trade Facilitation

A government decree established a free trade zone (FTZ) next to the Port of Alat, located approximately 50 miles south of Baku in March 2016.  President Aliyev signed legislation setting forth the incentives and regulations governing the Alat FTZ in June 2018. The law exempts all businesses in the FTZ from taxes and customs; charges the FTZ’s administration with setting up its own employment, migration, dispute resolution, and arbitration regulations; provides protections from nationalization; and guarantees the free flow of funds in and out of the FTA.  While the legal framework is in place, implementing regulations are still pending.

The Ministry of Transport, Communications, and High Technologies has discussed plans to create other special economic zones, including a petrochemical complex and regional innovation zones to boost telecommunications sector development.

Performance and Data Localization Requirements

The Azerbaijani government does not mandate local employment, although some energy sector Production Sharing Agreements (PSAs) in the oil sector include localization provisions.  While performance requirements are not generally imposed on new investments, the government is seeking to increase the number of value-added services and processes performed in Azerbaijan.  American companies have reported that government-connected companies often pressure current or potential partners to establish joint ventures, initiate local production of certain components, or otherwise invest in Azerbaijan in order to maintain or expand cooperation.

Azerbaijan does not have any data localization requirements.

5. Protection of Property Rights

Real Property

International organizations, foreign citizens, and foreign legal entities may not own land or be granted a purchase option on a lease, but are permitted to lease land.  Following independence, the government implemented land reforms that divided state-owned farms into privately-held small plots. Due to poor record keeping and titling in rural areas, it is often difficult to determine definitively who owns a particular plot.  Amendments made to Azerbaijan’s Constitution in September 2016 enabled authorities to expropriate private property with compensation in instances where necessary for “social justice and efficient use of the land.”

Azerbaijan’s State Real Estate Registry Service at the Committee for Property Issues registers real estate.  April 2016 amendments to the Law on Immovable Property Register cut the time to register property from 20 to 10 working days.  The World Bank’s Doing Business Report ranked Azerbaijan 17 out of 190 countries in 2018 in its country rankings on the Ease of Registering Property.

Intellectual Property Rights

The legal structure covering intellectual property protections in Azerbaijan is relatively strong, but experts and business people report the level of enforcement within the country is weak.  Piracy and blatant infringements on intellectual property rights (IPR) of both digital and physical goods are commonplace and stifle foreign investment and local entrepreneurship. The Business Software Alliance estimated the prevalence of software piracy at 84 percent in 2015.  U.S. companies routinely list weak IPR protections as a key concern. Intellectual property rights in Azerbaijan are regulated by the Law on Copyrights and Related Rights, the Law on Trademarks and Geographic Designations, the Law on Patents, the Law on the Topology of Integrated Microcircuits, the Law on Unfair Competition, and the Law on Securing Intellectual Property Rights and Combating Piracy.

Azerbaijan is a party to the Convention Establishing the World Intellectual Property Organization (WIPO), the Paris Convention for Protection of Industrial Property, and the Berne Convention for the Protection of Literary and Artistic Works.  Azerbaijan is also a party to the Geneva Phonograms Convention and acceded to the two WIPO Internet treaties in 2005. Violation of IPR can result in civil, criminal, and administrative charges. Azerbaijan tracks and reports on seizures of counterfeit goods but does not publish statistics on this effort.  Azerbaijan is not listed in USTR’s Special 301 report, nor is it listed in the Notorious Markets report. For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at  .

6. Financial Sector

Capital Markets and Portfolio Investment

Access to capital is a critical impediment to business development in Azerbaijan.  An effective regulatory system that encourages and facilitates portfolio investment, foreign or domestic, is not fully in place.  Though the Baku Stock Exchange opened in 2000, there is insufficient liquidity in the markets to enter or exit sizeable positions.  In February 2016, the government established the Financial Market Supervisory Authority (FMSA) to combine the Azerbaijan State Committee for Securities, the State Insurance Supervision Service, and the Financial Monitoring Service.  The FMSA aims to license, regulate and control the securities market, investment funds, insurance, credit organizations (banks, non-banking credit organizations and operator of postal communication), and payment systems.  It also aims to improve the oversight system to combat money laundering and prevent the financing of terrorism as well as to provide transparency and efficiency in this sphere.

Non-bank financial sector staples such as capital markets, insurance, and private equity are in the early stages of development.  The Capital Market Modernization Project is an attempt by the government to build the foundation for a modern financial capital market, including developing market infrastructure and automation systems, and strengthening the legal and market frameworks for capital transactions.  One major hindrance to the stock market’s growth is the difficulty in encouraging established Azerbaijani businesses to adapt to standard investor-friendly disclosure practices, which are generally required for publicly listed companies.

Azerbaijan’s government and Central Bank do not restrict payments and transfers for  international transactions. Although foreign investors are permitted to obtain credit on the local market, bank lending remains extremely limited following the 2015 currency devaluations and heavy dollarization of deposits.  Limited access to capital remains a barrier to development, particularly for small and medium enterprises.

Money and Banking System

The country’s financial services sector – of which banking comprises more than 90 percent – is underdeveloped, which constrains economic growth and diversification.  The drop in world oil prices in 2014/2015 and the resulting strain on Azerbaijan’s foreign currency earnings and the state budget exacerbated existing problems in the country’s banking sector and led to rising non-performing loans (NPLs) and high dollarization NPLs accounted for 12 percent of all outstanding loans as of January 2019.  President Aliyev signed a decree in February 2019 to provide partial relief to retail borrowers on foreign-currency denominated loans that meet certain criteria.

As of December 2018, 30 banks were registered in Azerbaijan, including 15 banks with foreign capital and two state-owned banks.  These banks employ 17,415 people and have a combined 508 branches and 2,502 ATMs nationwide.  Total banking sector assets stood at approximately USD 17.3 billion as of December 2018, with the top five banks holding almost 58 percent of this amount.

The banking sector is still recovering from the drop in world oil prices which began in in 2014/2015 and the resulting devaluations.  The Financial Markets Supervisory Agency closed 10 insolvent banks in 2016. The government subsequently bailed-out the International Bank of Azerbaijan (IBA) which held approximately 40 percent of the country’s banking assets.  In January 2017, the Finance Ministry increased the government’s stake in the IBA from 54.96 percent to 76.73 percent.  The government undertook a substantial cleanup of IBA assets, transferring IBA’s non-performing assets at book value to AgrarKredit, a government-owned non-financial enterprise funded by the Central Bank.  The amount of transferred assets totaled USD 6 billion in 2015-2016 and a further USD 3 billion was transferred in 2017 (25 percent of 2016 GDP in total).  In May 2017, IBA entered formal restructuring, similar to U.S. Chapter 11 bankruptcy, and completed its restructuring process in September 2017.  IBA is still updating its commercial strategy.

Foreign banks are permitted in Azerbaijan and may take the form of representative offices, branches, joint ventures, and wholly-owned subsidiaries.  These banks are subject to the same regulations as domestic banks, with certain additional restrictions. Foreign individuals and entities are also permitted to open accounts with domestic or foreign banks in Azerbaijan.

Foreign Exchange and Remittances

Foreign Exchange

Azerbaijan’s Central Bank officially adopted a floating exchange rate in 2016, but continues to operate under an “interim regime” that effectively pegs the exchange rate at AZN 1.7 per USD.  Azerbaijan’s foreign currency reserves are based on the reserves of the Central Bank, those of the State Oil Fund of Azerbaijan (SOFAZ), and the assets of the State Treasury Agency under the Finance Ministry.  Foreign currency reserves of the Central Bank increased by 5 percent during 2018 and totaled USD 5.6 billion. Between January 2018 and January 2019, SOFAZ assets increased by 7 percent to reach USD 38.5 billion.

Foreign exchange transactions are governed by the Law on Currency Regulation.  The Central Bank administers the overall enforcement of currency regulation. Currency conversion is carried out through the Baku Interbank Currency Exchange Market and the Organized Interbank Currency Market.

There are no statutory restrictions on converting or transferring funds associated with an investment into freely usable currency at a legal, market-clearing rate.  The average time for remitting investment returns is two to three business days. Some requirements on disclosure of the source of currency transfers have been imposed in an effort to reduce illicit transactions.

Remittance Policies

Corporate branches of foreign investors are subject to a remittance tax of 10 percent on all profits derived from its business activities in Azerbaijan.  There have not been any recent changes or plans to change investment remittance policies that either tighten or relax access to foreign exchange for investment remittances.  There do not appear to be time limitations on remittances, including dividends, return on investment, interest and principal on private foreign debt, lease payments, royalties, and management fees.  Nor does there appear to be limits on the inflow or outflow of funds for remittances of profits or revenue.

Sovereign Wealth Funds

Azerbaijan’s sovereign wealth fund is the State Oil Fund of Azerbaijan (SOFAZ).  Its mission is to transform hydrocarbon reserves into financial assets generating perpetual income for current and future generations and to finance strategically important infrastructure and social projects of national scale.  Since it was established in 1999, SOFAZ has financed several projects relating to infrastructure, housing, energy infrastructure, and education. According to its bylaws, SOFAZ is not permitted to invest domestically.  A newly adopted fiscal rule aims to limit pro-cyclical spending and increase hydrocarbon revenue savings.  SOFAZ publishes an annual report which it submits for independent audit. The fund’s assets totaled USD 38.5 billion as of January 1, 2019. More information is available at  .

7. State-Owned Enterprises

In Azerbaijan, state-owned enterprises (SOEs) are active in the oil and gas, power generation, communications, water supply, railway, and air passenger and cargo sectors, among others.  There is no published list of SOEs. While there are no SOEs that officially have been delegated governmental powers, companies such as the State Oil Company of Azerbaijan (SOCAR), Azerenerji (the national electricity utility), and Azersu (the national water utility) – all of which are closed joint-stock companies with majority state ownership and limited private investment – enjoy quasi-governmental or near-monopoly status in their respective sectors.

SOCAR is wholly-owned by the government of Azerbaijan and takes part in all oil and gas activities in the country.  It publishes regular reports on production volumes, the value of its exports, estimates of investments in exploration and development, production costs, the names of foreign companies operating in the country, production data by company, quasi-fiscal activities, and the government’s portion of production-sharing contracts.  SOCAR’s annual financial reports are audited by an independent external auditor and include the consolidated accounts of all SOCAR’s subsidiaries, although revenue data is incomplete.

There have been instances where state-owned enterprises have used their regulatory authority to block new entrants into the market.  SOEs are, in principle, subject to the same tax burden and tax rebate policies as their private sector competitors.  However, in sectors that are open to both the private and foreign competition, SOEs generally receive a larger percentage of government contracts or business than their private sector competitors.  While SOEs regularly purchase or supply goods or services from private sector firms, domestic and foreign private enterprises have reported problems competing with SOEs under the same terms and conditions with respect to market share, information, products and services, and incentives.  Private enterprises do not have the same access (including terms) to financing as SOEs. SOEs are also afforded material advantages such as preferential access to land and raw materials, advantages that are not available to private enterprises. There is little information available on Azerbaijani SOEs’ budget constraints, due to the limited transparency in their financial accounts.

Privatization Program

A renewed privatization process started with the May 2016 presidential decree implementing additional measures to improve the process of state property privatization and the July 2016 decree on measures to accelerate privatization and improve the management efficiency of state property.  The State Committee on Property Issues launched a portal to provide privatization information,  , in July 2016.  The portal contains information about the properties, their addresses, location, and initial costs with the aim of facilitating privatization.  Azerbaijan’s current privatization efforts focus on smaller state-owned properties and there are no active plans to privatize large SOEs.

8. Responsible Business Conduct

Responsible business conduct (RBC) is a relatively new concept in Azerbaijan.  Producers and consumers tend not to prioritize responsible business conduct, including environmental, social, and governance issues.  No information is available on legal corporate governance, accounting, and executive compensation standards to protect shareholders in Azerbaijan.  Larger foreign entities tend to follow generally accepted RBC principles consistent with parent company guidelines and aim to educate their local partners, who generally consider basic charitable donations and paying taxes as acts of social responsibility.

The American Chamber of Commerce in Azerbaijan (AmCham) established a Corporate Social Responsibility (CSR) Committee in October 2011 to encourage companies to embrace social responsibility and encourage a positive impact through activities and dialogue with relevant stakeholders.  AmCham also published a guide on CSR for businesses in Azerbaijan.  In 2011, the Economy Ministry established standards for corporate governance, which included an evaluation methodology for these standards and a code of ethical behavior.  The Economy Ministry has been tasked with explaining the importance of corporate governance standards to entrepreneurs. Some companies report that government restrictions on NGO registration have complicated CSR efforts.

Azerbaijan’s Extractive Industries Transparency Initiative (EITI) status was downgraded from “compliant” to “candidate” in April 2015, due to concerns about Azerbaijani civil society’s ability to engage critically in the EITI process.  Following the EITI Secretariat’s evaluation in March 2017 that Azerbaijan had not sufficiently implemented required “corrective actions,” Azerbaijan withdrew from the EITI and established a domestic Extractive Industries Transparency Commission in April 2017 to ensure transparency and accountability in the extractive industries of the country.  The Commission has published two Reports on Transparency in the Extractive Industries.

9. Corruption

Pervasive corruption is a major challenge for firms operating in Azerbaijan and is a barrier to foreign investment, despite government efforts to reduce low-level corruption.  Azerbaijan does not require that private companies establish internal codes of conduct to prohibit bribery of public officials, nor does it provide protections to NGO’s involved in investigating corruption.  U.S. firms have identified corruption in government procurement, licensing, dispute settlement, regulation, customs, and taxation as significant obstacles to investment.

The Azerbaijani government publicly acknowledges problems with corruption, but has neither effectively nor consistently enforced anti-corruption laws and regulations.  Azerbaijan has made modest progress in implementing a 2005 Anticorruption Law, which created a commission with the authority to require full financial disclosure from government officials.  The government has achieved a degree of success reducing red tape and opportunities for bribery through a focus on e-government and government service delivery through centralized ASAN service centers, which first opened in February 2013.  ASAN centers provide more transparent, efficient, and accountable services through a “one window” model that reduces opportunities for rent-seeking and petty government corruption and have become a model for other initiatives aimed at improving government service delivery.

Despite progress in reducing corruption in public services delivery, the civil service, public procurement apparatus, and the judiciary still suffer from corruption.  Tax reforms announced in January 2019 are partially aimed at reducing corruption in tax administration.

Azerbaijan signed and ratified the UN Anticorruption Convention and is a signatory to the Council of Europe Criminal and Civil Law Conventions.  Azerbaijan is not currently a party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

Resources to Report Corruption

Kamal Jafarov
Acting Executive Secretary
Commission on Combating Corruption
Baku, Azerbaijan
(+994 12) 492-04-65

10. Political and Security Environment

There have been no known acts of political violence against U.S. businesses or assets, nor against any foreign owned entity.

A cease-fire with Armenia has been in effect since 1994 for the conflict surrounding the disputed region of Nagorno-Karabakh.  However, intermittent gunfire along the cease-fire line and along the border with Armenia continues, often resulting in injuries and/or deaths.  There have been no threats to commercial enterprises from skirmishes in the border areas. It is unlikely that civil disturbances, should they occur, would be directed against U.S. businesses or the U.S. community.  The Azerbaijani government has suspended or threatened to suspend the operations of U.S. companies in Azerbaijan if the companies’ products or services are provided in Nagorno-Karabakh. Azerbaijan considers travel to the region of Nagorno-Karabakh and the surrounding occupied territories unlawful.  Engaging in any commercial activities in Nagorno-Karabakh and the surrounding occupied territories, whether directly or through business subsidiaries, can result in criminal prosecution and/or other legal action being taken against individuals and/or businesses in Azerbaijan; it may also affect the ability to travel to Azerbaijan in the future.  Due to the existing state of hostilities, consular services are not available to U.S. citizens in Nagorno-Karabakh.

11. Labor Policies and Practices

The 1999 Labor Code regulates overall labor relations and recognizes international labor rights.  The work-week generally is considered to be 40 hours. The right to strike exists, though industrial strikes are rare.  Azerbaijan is a member of the International Labor Organization (ILO) and has ratified more than 57 ILO Conventions. In practice, labor unions are strongly tied to political interests.  Collective bargaining is not practiced. Azerbaijan has regulations to monitor labor abuses, health, and safety standards in low-wage assembly operations, but enforcement is less effective.

Employment relations are established by an employment contract, which, in most cases, does not necessarily indicate a fixed term of employment.  An employer must give an employee two months’ notice of termination, with certain exceptions. An employee can terminate his/her employment contract at any time, but must give one month’s notice.  Upon termination of formally registered employment, employers must pay departing employees monetary compensation for unused vacation leave. A formally registered employee who becomes unemployed is entitled to 70 percent of his/her average monthly wage, calculated over the past 12 months at the last place of work.  An employee must have worked under a valid labor contract in order to obtain unemployment benefits. The law “On Unemployment Insurance” signed in August 2017 allows for payments to unemployed individuals registered with the State Employment Fund.

Azerbaijan has an abundant supply of semi-skilled and unskilled laborers.  An estimated 40 percent of the Azerbaijani population works in agriculture, although this sector only contributes 6 percent of the country’s GDP.  The construction sector tends to use temporary and contract workers; reportedly many of these workers’ agreements are not formally registered with the government.  The relatively limited supply of highly skilled labor is one of the biggest challenges in Azerbaijan’s labor market. As of 2018, government sources reported 5 percent unemployment, but other sources estimate the figure at 15 percent or higher, with significant underemployment.  The average monthly wage as of December 2018 was AZN 545 (USD 320), and the official minimum wage increased in 2019 to AZN 180 (USD 106) per month, compared to the previous level of AZN 130 (USD 76) per month.

12. OPIC and Other Investment Insurance Programs

The Overseas Private Investment Corporation (OPIC) and the U.S. Export-Import (Ex-Im) Bank provide political risk insurance and financing and loan guarantees in Azerbaijan.  Azerbaijan is also a member of the Multilateral Investment Guarantee Agency (MIGA) and the European Bank for Reconstruction and Development (EBRD). The World Bank, Asian Development Bank, and other third-country institutions are active in providing financing and insurance for investment in Azerbaijan.

Over the past two decades, OPIC has invested around USD 230 million in Azerbaijan across 24 business projects.  While Azerbaijan’s financial services sector has been a major area for investments, OPIC-funded projects have included investments in the energy (such as the BTC oil pipeline completed in 2006), franchising, banking, microfinance, and hotel and hospitality sectors of Azerbaijan.  OPIC has repeatedly provided funds for numerous banks operating in Azerbaijan in order to expand their SME lending portfolios, including USD 4.8 million to Rabita Bank in 2008 and USD 7.3 million to Turan Bank in 2009.  In 2011, OPIC provided MuganBank a loan guarantee for USD 10 million to expand its operations, targeting SME borrowers. OPIC has also provided USD 1 million and USD 3 million to FinDev and CredAgro for microfinance lending, respectively.  In 2012, OPIC provided loan insurance to Viator Microcredit Azerbaijan LLC (USD 500,000), NBCO Vision Fund Azercredit LLC (USD 2 million), and FinDev again (USD 1 million). In 2013, OPIC signed a memorandum with Turan Bank for a loan in the amount of USD 7 million with a term of seven years for SME financing.  As of 2015, OPIC has active loan projects with two non-banking credit organizations, KredAgro and TBC Kredit.

In its 2014 annual report, Ex-Im Bank reported outstanding insurance and loan guarantees for Azerbaijan in the amount of USD 211.9 million, primarily in support of aviation sales.  In 2011, Ex-Im Bank closed a USD 116.6 million loan with a ten-year repayment period to finance the Azerbaijan space agency’s purchase of the AzerSat-1 satellite from Orbital Sciences.  In June 2015, Ex-Im Bank finalized a USD 211.9 million loan to finance Azerbaijan Airline’s purchase of Boeing commercial aircraft.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

Host Country Statistical Source* USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2018 $46,939 2017 $40,748  
Foreign Direct Investment Host Country Statistical Source* USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) No reliable data BEA data available at  
Host country’s FDI in the United States ($M USD, stock positions) No reliable data BEA data available at  
Total inbound stock of FDI as % host GDP No reliable data 2017 76.6% UNCTAD data available at    

* Source for Host Country Data:  Azerbaijan State Statistical Committee

Table 3: Sources and Destination of FDI

Direct Investment From/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward $29,314 100% Total Outward $20,461 100%
United Kingdom $6,317 22% Turkey $10,761 53%
Turkey $5,797 20% Georgia $2,984 15%
Norway $3,063 10% Switzerland $1,237 6%
Iran $2,523 9% United Kingdom $1,013 5%
Cyprus $1,907 7% United States $594 3%
“0” reflects amounts rounded to +/- USD 500,000.

Table 4: Sources of Portfolio Investment

Data not available.

14. Contact for More Information

Phil Guthrie
Commercial Officer
U.S. Embassy in Baku, Azerbaijan


Executive Summary

Georgia is located at the crossroads of Western Asia and Eastern Europe.  Georgia has made sweeping economic reforms since 1991 that have produced a relatively well-functioning market economy.  Through dramatic police and institutional reforms, the government has mostly eradicated low-level corruption. Georgia ranks 6th in the 2019 World Bank’s Ease of Doing Business index, 16th in the Heritage Foundations’ 2019 Economic Freedom Index, and 66th in the World Economic Forum’s Global Competitiveness Report.  Fiscal and monetary policy are focused on low deficits, low inflation, and a floating real exchange rate, although the latter has been affected by regional developments, including sanctions on Russia and other external factors such as a stronger dollar and weaker regional economies.  Public debt and budget deficits remain under control.

The Georgian government’s “Georgia 2020” economic strategy, initially published in 2014, outlines economic policy priorities.  It stresses the government’s commitment to business-friendly policies such as low taxes, but also pledges to invest in human capital and to strive for inclusive growth across the country, not just in Tbilisi.  The strategy also emphasizes Georgia’s geographic potential as a trade and logistics hub along the New Silk Road linking Asia and Europe via the Caucasus.

Overall, business and investment conditions are sound.  However, some companies have expressed an increasing lack of confidence in the judicial sector’s ability to adjudicate commercial cases independently or in a timely, competent manner, with business dispute cases languishing in the court system for years.  Other companies complain of inefficient decision-making processes at the municipal level, occasional shortcomings in the enforcement of intellectual property rights, lack of effective anti-trust policies, selective enforcement of economic laws, and difficulties resolving disputes over property rights.  Georgia’s government continues to work to address these issues and, despite these remaining challenges, Georgia stands far ahead of its post-Soviet peers as a good place to do business.

The United States and Georgia work to increase bilateral trade and investment through a High-Level Dialogue on Trade and Investment and through the Strategic Partnership Commission’s Economic Working Group.  Both countries signed a Bilateral Investment Treaty in 1994, and Georgia is eligible to export many products duty-free to the United States under the Generalized System of Preferences (GSP) program.

Georgia suffered considerable instability in the immediate post-Soviet period.  After independence in 1991, civil war and separatist conflicts flared up along the Russian border in the areas of Abkhazia and South Ossetia.  The status of each region remains contested, and the central government in Tbilisi does not have control over these areas. The United States supports the territorial integrity of Georgia within its internationally-recognized borders.  In August 2008, tensions in the region of South Ossetia culminated in a brief war between Georgia and Russia. Russia invaded undisputed Georgian territory and continues to occupy South Ossetia and Abkhazia. Tensions still exist both inside the occupied regions and near the administrative boundary lines, but other parts of Georgia, including Tbilisi, are not directly affected.

Transit and logistics are a priority sector as Georgia seeks to benefit from increased East/West trade through the country.  Georgia’s transit prospects have been boosted by the Baku-Tbilisi-Kars railroad. The Anaklia Deep Sea Port project, involving two U.S. companies, the Conti Group and SSA Marine, faced multiple delays and extensions, but the lead investor is still working towards meeting the 2020 completion date.  The port would add additional shipping and berthing options for larger vessels, such as Panamax sized vessels. Agriculture and tourism are also attractive areas for investment to respond to the increased inflow of international visitors and demands of local food processing industry.

Table 1: Key Metrics and Rankings

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2018 41of 180 
World Bank’s Doing Business Report 2019 6 of 190
Global Innovation Index 2018 59 of 126 
U.S. FDI in partner country ($M USD, stock positions) 2018 $22 
World Bank GNI per capita 2017 $3,780 

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

Georgia is open to foreign investment.  Legislation establishes favorable conditions for foreign investment, but not preferential treatment for foreign investors.  The Law on Promotion and Guarantee of Investment Activity protects foreign investors from subsequent legislation that alters the condition of their investments for a period of ten years.  Investment promotion authority is vested in the Investment Division of Enterprise Georgia, a legal entity of public law under the Ministry of Economic and Sustainable Development. The Investment Division’s primary role is to attract, promote, and develop direct foreign investment in Georgia.  For this purpose, it acts as the moderator between foreign investors and the Georgian government, ensures access to updated information, provides a means of communication with government bodies, and serves as a “one-stop-shop” to support investors throughout the investment process. (  ).

To enhance relations with investors, Georgia’s then-Prime Minister created the Investors Council in 2015, an independent advisory body, with the objective of promoting dialogue among the private business community, international organizations, donors and the Georgian government for the development of a favorable, non-discriminatory, transparent, and fair business and investment climate in Georgia. (  ).  The Business Ombudsman, who is a member of the Investors Council, is another tool for protecting investors’ rights in Georgia.  (  )

Limits on Foreign Control and Right to Private Ownership and Establishment

Georgia does not screen foreign investment in the country, other than imposing a registration requirement and certain licensing requirements as outlined below.  Foreign investors have participated in most major privatizations of state-owned property. Transparency of privatization has been an issue at times. No law or regulation authorizes private firms to adopt articles of incorporation or association that limit or prohibit foreign investment, participation, or control.  Cross-shareholder or stable-shareholder arrangements are not used by private firms in Georgia. Georgian legislation does not protect private firms from takeovers. There are no regulations authorizing private firms to restrict foreign partners’ investment activity or limit foreign partners’ ability to gain control over domestic enterprises.

There are no specific licensing requirements for foreign investment other than those that apply to all companies.  By law, the government has 30 days to make a decision on licenses, and if the licensing authority does not state a reasonable ground for rejection within that period, the government will approve the license or permit for issuance.  The government only requires licenses for activities that affect public health, national security, and the financial sector. The government currently requires licenses in the following areas: weapons and explosives production, narcotics, poisonous and pharmaceutical substances, exploration and exploitation of renewable or non-renewable substances, exploitation of natural resource deposits, establishment of casinos and gambling houses and the organization of games and lotteries, banking, insurance, securities trading, wireless communication services, and the establishment of radio and television channels.  The law requires the state to retain a controlling interest in air traffic control, shipping traffic control, railroad control systems, defense and weapons industries, and nuclear energy. Only the state may issue currency, banknotes, and certificates for goods made from precious metals, import narcotics for medical purposes, and produce control systems for the energy sector.

Other Investment Policy Reviews

In January 2016, the World Trade Organization (WTO) concluded its second Trade Policy Review of Georgia.  In this review, WTO members reiterated their approval of Georgia’s broadly open, transparent, and predictable trade and investment regimes.  During the review period, Members noted that Georgia had undertaken an impressive range of reform initiatives aimed at streamlining, liberalizing, and simplifying trade regulations and their implementation.  The review lauded Georgia’s trade openness and its commitment to the multilateral system through its responsible contribution to the work of the WTO.

WTO members commended Georgia for the ratification of the Trade Facilitation Agreement, which would benefit Georgia’s role as a trade transit corridor in the region, and the related notification to the WTO of Category A, B and C commitments.  Members also noted that Georgia was an observer to the Government Procurement Agreement and was currently assessing the prospects for joining the Agreement. Members welcomed the announcement that Georgia was considering joining the expanded Information Technology Agreement, which would constitute a significant step forward for attracting further investment.  See more at  

Business Facilitation

Registering a business in Georgia is relatively quick and streamlined, and Georgia ranks fourth in registering property among countries assessed in the World Bank’s 2019 Doing Business Report.  Registration takes one day to complete and Georgia has a single window registration process. Registration of companies is carried out by the National Agency of Public Registry   (NAPR) (   – webpage is in Georgian only), located in the Public Service Halls (PSH) under the Ministry of Justice of Georgia.  The web page of the PSH (  ) outlines procedures and requirements for business registration in English.  For registration purposes, the law does not require a document verifying the amount or existence of charter capital.  A company is not required to complete a separate tax registration. The initial registration includes both the state and tax registration.

The following information is required to register a business in Georgia:  personal information of the founder and principal officers, articles of incorporation, and the company’s area of business activity.  Other required documents depend on the type of entity to be established.

To register a business, the potential owner must first pay the registration fee, register the company with the Entrepreneurial Register and obtain an identification number and certificate of state and tax registration.  Registration fees are: GEL100 (around USD35) for regular registration, GEL200 (USD70) for expedited registration, plus GEL1 (bank fees). Second, the owner must open a bank account (free).

Georgia’s business facilitation mechanism provides equitable treatment of women and men.  There are a variety of state-run and donor-supported projects that aim to promote women entrepreneurs through specific training or other programs, including access to financing and business training.

Outward Investment

The Georgian government does not have any specific policy on promoting or restricting domestic investors from investing abroad and Georgia’s outward investment is insignificant.

2. Bilateral Investment Agreements and Taxation Treaties

Bilateral Investment Treaties

Georgia has bilateral agreements on investment promotion and mutual protection enforced with 31 countries, including:  the United States, Armenia, Austria, Azerbaijan, Belgium-Luxembourg Economic Union, Bulgaria, China, the Czech Republic, Estonia, Finland, France, Germany, Greece, Iran, Israel, Kazakhstan, Kuwait, Kyrgyzstan, Latvia, Lithuania, Moldova, the Netherlands, Romania, Spain, Sweden, Switzerland, Turkmenistan, Ukraine, the United Kingdom, and Uzbekistan.  Concluded agreements awaiting signing are with Egypt, Turkey, and the United Arab Emirates (UAE). Negotiations are underway with the governments of Canada, Hungary, Iceland, Italy, Japan, Qatar, and Slovenia.  Additionally, in 2007, Georgia signed a Trade and Investment Framework Agreement (TIFA) with the United States.

On June 27, 2014, Georgia signed an Association Agreement (AA) and a Deep and Comprehensive Free Trade Area (DCFTA) with the European Union.  In 2016, the government signed a free trade agreement with the European Free Trade Association (EFTA) countries of Iceland, Liechtenstein, Norway, and Switzerland.  Georgia’s free trade agreement with China entered into force in January 2018. A free trade agreement is in force with the Commonwealth of Independent States and others exist bilaterally with Ukraine, Russia (though trade is restricted by the Russian government), Kazakhstan, Azerbaijan, Armenia, Moldova, Uzbekistan, Turkmenistan, and Turkey.  Georgia has ongoing free trade agreement consultations with Belarus, Kyrgyzstan, the Cooperation Council of Gulf Arab States, India, and Tajikistan. Georgia and Hong Kong signed an agreement in 2018, which is awaiting ratification by Parliament.

The United States and Georgia established a High-Level Dialogue on Trade and Investment in 2012, a bilateral dialogue aimed toward identifying measures to increase bilateral trade and investment.  The United States and Georgia have shared a Bilateral Investment Treaty (BIT) since 1997, and Georgia can export many of its products duty-free to the United States under the Generalized System of Preferences (GSP) program.

Bilateral Taxation Treaties

The United States and Georgia are beneficiaries of the U.S.-Georgia Bilateral Taxation Treaty as Georgia is one of the former Soviet Republics, which is covered under the U.S. treaty with the former Union of Soviet Socialist Republics (USSR).  Double taxation issues are covered under the Convention with the Union of Soviet Socialist Republics on Matters of Taxation of 1973 ( ).

Georgia has concluded agreements for avoidance of double taxation with 55 countries:  Armenia, Austria, Azerbaijan, Bahrain, Belarus, Belgium, Bulgaria, China, Cyprus, the Czech Republic, Croatia, Denmark, Estonia, Egypt, Finland, France, Germany, Greece, Hungary, Iceland, India, Iran, Ireland, Italy, Israel, Japan, Kazakhstan, Kuwait, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Moldova, the Netherlands, Norway, Poland, Portugal, Qatar, Romania, San Marino, Serbia, Singapore, Slovakia, Slovenia, South Korea, Spain, Sweden, Switzerland, Turkey, Turkmenistan, UAE, Ukraine, the United Kingdom (UK), and Uzbekistan.  Treaties have been negotiated but are waiting to be ratified with Lebanon and Oman, and treaty negotiations have started with Jordan, Montenegro, Saudi Arabia, Vietnam, Iraq, Argentina, Indonesia, Malaysia, Mexico, Albania, Colombia, Mongolia, Morocco, New Zealand, Peru, the Philippines, Tajikistan, Uruguay, Brazil, Cuba, Ecuador, Canada, and South Africa. Georgia and Russia signed a double taxation avoidance treaty in 1999, which the Georgian Parliament ratified in 2000; although the Russian Duma has not ratified it, Russia regards it as an active agreement.

4. Industrial Policies

Investment Incentives

The Georgian government has created several tools to support investment in the country’s economy.  JSC Partnership Fund (PF) is a state owned investment fund, established in 2011. The fund owns the largest Georgian state owned enterprises operating in transportation, energy and infrastructure sectors.  PF’s main objective is to promote domestic and foreign investment in Georgia by providing co-financing (equity, mezzanine, etc.) in projects at their initial stage of development, with a focus on tourism, manufacturing, energy, and agriculture. (  )

In 2013, the Georgian Co-Investment Fund (GCF) was launched to promote foreign and domestic investments.  GCF was announced as a reported six billion USD private investment fund, with the mandate of providing investors with unique access, through a private equity structure, to opportunities in Georgia’s fastest growing industries and sectors. (   )

The government’s ‘Produce in Georgia’ program is another tool for jointly financing foreign investment, given that the investor sets up a limited liability company in Georgia.  The program aims to develop and support entrepreneurship, encourage creation of new enterprises, and increase export potential and investment in the country. Coordinated by the Ministry of Economy and Sustainable Development through its Entrepreneurship Development Agency, National Agency of State Property, and Technology and Innovation Agency of Georgia, the project provides the following support:

  • Access to finance
  • Access to real property
  • Technical assistance

For more information please visit:  

The National Agency of State Property is in charge of the Physical Infrastructure Transfer Component, i.e., free-of-charge transfer of government-owned real property to an entrepreneur under certain investment obligations.

Low labor costs contribute to the attractiveness of Georgia as a foreign investment destination.  It is also increasingly recognized as a regional transportation hub that provides access to the New Silk Road trade corridor linking Asia and Europe.

Georgia’s free trade regimes provide easy access for goods produced in Georgia to foreign markets.  In some cases, foreign investors can benefit from these agreements by producing goods targeting these markets.

In October 2018, Georgia’s Prime Minister introduced the concept of electronic residency, allowing citizens of 34 countries to register their companies electronically and open bank accounts in Georgia while not having a physical presence in the country.  Furthermore, the Prime Minister announced that as part of the government’s efforts to establish Georgia as a regional financial hub, the government will grant international companies significant tax benefits to open regional offices in Georgia. The government plans to launch the initiative in 2019.

Foreign Trade Zones/Free Ports/Trade Facilitation

In June 2007, the Parliament of Georgia adopted the Law on Free Industrial Zones, which defined the form and function of free industrial/economic zones.  Financial operations in such zones may be performed in any currency. Foreign companies operating in free industrial zones are exempt from taxes on profit, property, and VAT.  Currently, there are four free industrial zones (FIZ) in Georgia:

Poti Free Industrial Zone (FIZ):  This is the first free industrial zone in the Caucasus Region, established in 2008.  UAE-based RAK Investment Authority (Rakia) initially developed it, but in 2017, CEFC China Energy Company Limited purchased 75 percent of shares, and the Georgian government holds the remaining 25 percent.  Poti FIZ, a 300-hectare area, benefits from its close proximity to the Poti Sea Port.

A 27-hectare plot in Kutaisi is home to the Egyptian company Fresh Electric, which constructed a kitchen appliances factory in 2009.  The company has committed to building about one dozen textile, ceramics, and home appliances factories in the zone, and announced its intention to invest over USD 2billion.

Chinese private corporation “Hualing Group,” based in Urumqi, China, developed another FIZ in Kutaisi in 2015.  This FIZ is a 36-hectare area that houses businesses focused on sales of wood, furniture, stone, building materials, pharmaceuticals, auto spare parts, and beverages:

The Tbilisi Free Zone (TFZ) in Tbilisi and occupies 17 hectares divided into 28 plots. TFZ has access to the main cargo transportation highway, Tbilisi International Airport (30 km), and the Tbilisi city center (17 km).  For more information, visit:  .

Performance and Data Localization Requirements

Performance requirements are not a condition of establishing, maintaining, or expanding an investment, but have been imposed on a case-by-case basis in some privatizations, such as commitments to maintain employment levels or to make additional investments within a specified period of time.  Performance requirements such as the scope and time limit on licenses to extract natural resources or production sharing agreements have triggered complaints from some companies that transactions lacked transparency. Most types of performance requirements are prohibited by the U.S.-Georgia BIT.

The government does not follow a forced localization policy; foreign investors have no obligation to use domestic content in goods or technology.  In addition, there are no requirements for foreign IT providers to turn over source codes and/or provide access to surveillance.

The Data Exchange Agency (DEA), under the Ministry of Justice, coordinates e-governance development, data exchange infrastructure, unified governmental networks, informational and communication standards, and cybersecurity policy.  The DEA requires any company managing critical data to implement a number of security protocols to protect that information (see  ).

5. Protection of Property Rights

Real Property

Georgia ranks high in World Bank’s Doing Business 2019 report in general, but especially in the category of “registering property.”  Processes are streamlined and transparent, and takes minimal time. It takes one day and is conducted at Public Service Halls.

In June 2017, the Parliament adopted a legislative amendment that placed a moratorium on the sale of agricultural land to foreign citizens and stateless persons.  Under the amendment, foreigners, legal entities registered abroad, and legal entities registered by foreigners in Georgia were not able to purchase agricultural land in Georgia.  Furthermore, the new Constitution that came into force in December 2018, imposed restrictions on the sale of agricultural land. Currently the parliament is considering a draft law that would allow foreigners to purchase land under a relevant investment plan and other preconditions.

Mortgages and liens are registered through the public registry and information can be obtained from the webpage  .

The government has taken multiple steps to regulate land titling, including facilitating simplified procedures, free registration campaigns, and mediation services.  The National Public Registration Agency reported that from August 2016 through February 2019, 300 thousand hectares of land were registered under the land reform project, increasing the share of titled land to 45 percent.  Unclear or unregistered titling bears the potential to hamper investment projects.

Property ownership cannot revert to other owners when legally purchased property stays unoccupied.

Intellectual Property Rights

Georgia acceded to the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) in 2000.  The Ministry of Economy and Sustainable Development is responsible for WTO compliance.

The legal framework for protection of intellectual property rights (IPR) in Georgia is approximated to international standards.  Six laws regulate IPR in Georgia: the Law on Patents, the Law on Trademarks, the Law on Copyrights and Neighboring Rights, the Law on Appellation of Origin and Geographic Indication of Goods, the Law on Topographies of Integrated Circuits, and the Law on IP-Related Border Measures.  Georgian law now provides protection for works of literature, art, science, and sound recordings for 50 years.

The National Intellectual Property Center of Georgia (Sakpatenti) provides legal protection for IPR in Georgia:  it issues protective documents on invention, utility model, trademark, design, geographical indication and appellation of origin, new animal breeds and plant varieties, and ensures the deposit of copyrighted work.  The Revenue Service, which is part of the Ministry of Finance, is responsible for enforcing IPR listed in the Register of Intellectual Property Subject-Matter. The Revenue Service is responsible for border control and can halt import or export of items based on the register data.  After the registration procedure is complete, the Revenue Service is able to suspend the movement of counterfeit goods for up to 10 working days, which may be extended by the Revenue Service for an additional 10 working days. The Law of Georgia on Border Measures Related to Intellectual Property provides for the possibility of destruction of counterfeit goods on the basis of a court decision.

IPR infringement of industrial property rights, copyrights, performers’ rights, rights of makers of databases, trademarks or other illegal use of commercial indications can incur civil, criminal, and administrative penalties.  Depending on the type and extent of the violation, penalties include fines, corrective labor, social work, or imprisonment.

Sakpatenti is an active and engaged partner of the United States in training to educate the public on IPR issues.  Sakpatenti coordinates the government’s approach to IPR enforcement under the Interagency Coordination Council (Council) for IPR Enforcement.  The Council is an efficient platform for government institutions to exchange their views on IPR enforcement issues. Georgia is improving IPR enforcement, but some problems persist, especially software licensing and pirated content available online.  Many judges and lawyers lack sufficient knowledge of IPR laws and issues; pirated video and audio recordings, electronic games, and computer software are sometimes available; and unlicensed content free for users to download or stream is available on some websites. The U.S. government Commercial Law Development Program continues to provide assistance to Sakpatenti and other governmental entities to build capacity to effectively deal with IPR-related issues.

In line with Georgia’s commitments under the Deep and Comprehensive Free Trade Area (DCFTA) agreement with the EU, to prevent and suppress IPR infringement and to ensure the implementation of appropriate sanctions, Sakpatenti drafted a package of amendments to the IP legislation, which the Parliament adopted on December 23, 2017, and entered into force on January 11, 2018.  The amendments apply to the following legislative acts regulating intellectual property: the Patent Law of Georgia, the Law of Georgia on Copyright and Related Rights, the Law of Georgia on Design, the Trademark Law of Georgia, the Code of Civil Procedure of Georgia, the Law of Georgia on Pesticides and Agrochemicals, and the Law of Georgia on Drugs and Pharmaceutical Activity.

According to the new amendments, in the case of IPR infringement, the rights holder is endowed with authority to demand that infringing objects be removed from circulation or destroyed, any images related to the objects are destroyed and any related material published online that infringes on exclusive rights be deleted, and any technical devices used to make the infringing objects also be destroyed.  According to the amendments, the rights holder is entitled to define, at their discretion, the caused damage and received benefit, and can demand a lump sum compensation payment. The amendments also stipulate provisional measures to preserve relevant evidence related to protection of IPR subject-matter, which is especially important in terms of effective enforcement of rights.

Georgia also approximated laws on “border measures related to IPR” with the EU regulation N608/2013.  Amendments were introduced in 2017 and identify intellectual property objects to be protected at the border, including: design, patent, utility model, topographies of integrated circuits, new breeds of animals, and varieties of plants.  Under these new amendments, customs authorities are entitled to take ex-officio actions at the border and detain suspected IPR infringing goods. Parliament approved the amendments on December 13, 2017, and they entered into force on February 7, 2018.

Development of an effective system of Internet Service Providers (ISP) Liability is also an obligation under the DCFTA.  In order to implement an ISP Liability in Georgian legislation, in 2017, Sakpatenti drafted amendments to the Law of Georgia “On Copyright and Related Rights” that include ISP-related provisions.  The amendments were drafted on the basis of the draft Law of Georgia “On Electronic Commerce,” prepared by the Ministry of Economy and Sustainable Development of Georgia.

In 2018, the Ministry of Finance’s Investigation Service initiated 16 cases under Article 196 of the Criminal Code of Georgia (unlawful use of trademark, service marks, or other commercial designations).  Out of 16 cases, 12 were initiated ex-officio. As a result, 40,268 counterfeit goods were seized, with the total value of USD 45,000.

In 2018, the Revenue Service’s Customs Department issued 119 orders to suspend products.  In 82 of these cases the rights holder and the owner of the products agreed to destroy the products, with a total value of USD 30,500.  In 16 cases, the rights holder filed a lawsuit, and in 21 cases the goods were released, either because it was not proven that the goods were counterfeit or the rights holder did not file a lawsuit.

Georgia is not listed in USTR’s Special 301 Report.  Similarly, Georgia is not included in the Notorious Markets List.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at: .

For a list of lawyers in Georgia, please visit:

6. Financial Sector

Capital Markets and Portfolio Investment

The National Bank of Georgia regulates the securities market.  All market participants submit their reports in line with international standards.  All listed companies must make public filings, which are then uploaded to the National Bank’s website, allowing users to evaluate a company’s financial standing.  The Georgian securities market includes the following licensed participants: a Stock Exchange, a Central Securities Depository, nine brokerage companies, and six registrars.

The Georgian Stock Exchange (GSE) is the only organized securities market in Georgia. Designed and established with the help of USAID and operating under a legal framework drafted with the assistance of American experts, the GSE complies with global best practices in securities trading and offers an efficient investment facility to both local and foreign investors.  The GSE’s automated trading system can accommodate thousands of securities that can be traded by brokers from workstations on the GSE floor or remotely from their offices: 

No law or regulation authorizes private firms to adopt articles of incorporation or association that limit or prohibit foreign investment, participation or control.  Cross-shareholder or stable-shareholder arrangements are not used by private firms in Georgia. Georgian legislation does not protect private firms from takeovers. There are no regulations authorizing private firms to restrict the investment activity of foreign partners or to limit the ability of foreign partners to gain control over domestic enterprises.

The government and Central Bank (National Bank of Georgia) respect IMF Article VIII and impose no restrictions on payments and transfers in current international transactions.

Credit from commercial banks is available to foreign investors as well as domestic clients, although interest rates are high.  Banks continue offering business, consumer, and mortgage loans.

The government adopted a new law in 2018, that introduced an accumulative pension scheme, which became effective on January 1, 2019.  The government expects that that the new system will boost domestic capital market, as the pension funds will be invested within Georgia.

Money and Banking System

Banking is one of the fastest growing sectors in the Georgian economy.  The banking sector is well-regulated and capitalized despite regional and global challenges faced in many neighboring countries.  As of January 1, 2019, 15 commercial banks, including 14 foreign-controlled banks, made up the banking sector in Georgia, with 135 commercial bank branches and 794 service centers throughout the country.  In January 2019, the total assets of Georgian commercial banks were GEL38.8 billion (around USD14.4 billion).  As of early 2019, there were 17 insurance companies and 65 microfinance (MFI) organizations operating in Georgia.  The total assets of MFIs stood at USD 0.5 billion as of January 1, 2019. Two Georgian banks are listed on the London Stock Exchange:  TBC Bank (listed in 2014) and the Bank of Georgia (2006).

The National Bank of Georgia (NBG) is the central bank of Georgia, as defined by the Constitution.  The rights and obligations of the NBG as the central bank, the principles of its activity, and the guarantee of its independence are defined in the Organic Law of Georgia on the National Bank of Georgia.  The National Bank supervises the financial sector in order to facilitate the financial stability and transparency of the financial system, as well as to protect the rights of the sector’s consumers and investors.  Through the Financial Monitoring Service of Georgia, a separate legal entity, the NBG undertakes measures against illicit income legalization and the financing of terrorism. In addition, the NBG is the banker and fiscal agent of the government. (  ).

The International Finance Corporation (IFC), the European Bank for Reconstruction and Development (EBRD), the U.S. Overseas Private Investment Corporation (OPIC), the Millennium Challenge Corporation (MCC), the Asian Development Bank (ABD), and other international development agencies have a variety of lending programs that make credit available to large and small businesses in Georgia.  Georgia’s two largest banks – TBC and Bank of Georgia – have correspondent banking relationships with the United States through Citibank, N.A.

Foreign Exchange and Remittances

Foreign Exchange

Georgian law guarantees the right of an investor to convert and repatriate income after payment of all required taxes.  The investor is also entitled to convert and repatriate any compensation received for expropriated property. Georgia has accepted the obligations of Article VIII, Sections 2, 3, and 4 of the IMF Articles of Agreement, effective as of December 20, 1996, undertaking to refrain from imposing restrictions on payments and transfers for current international transactions and from engaging in discriminatory currency arrangements or multiple currency practices without IMF approval.  Parliament’s 2011 adoption of the Act of Economic Freedom further reinforced this provision.

Under the U.S.-Georgia BIT, the Georgian government guarantees that all money transfers relating to a covered investment by a U.S. investor can be made freely and without delay into and out of Georgia.

Foreign investors have the right to hold foreign currency accounts with authorized local banks. The sole legal tender in Georgia is the lari (GEL), which is traded on the Tbilisi Interbank Currency Exchange and in the foreign exchange bureau market.

The official exchange rate of the GEL is calculated based on transactions secured on the Interbank Foreign Exchange Market.  Interbank trading with foreign currencies is organized in an international trading system (Bloomberg). Taking into consideration secured transactions, the weighted average exchange rate of the GEL against the USD is calculated and announced as the official exchange rate for the next day.  The official exchange rate of the GEL against other foreign currencies is determined according to the rate on international markets or the issuer country’s domestic interbank currency market on the basis of cross-currency exchange rates. The cross-currency rates are acquired from the Reuters and Bloomberg information systems, and the corresponding webpages of central banks.  The information is automatically received, calculated, and disseminated from these systems.

Georgia has a floating exchange rate.  The National Bank of Georgia has said it does not intend to fix the exchange rate regime and does not generally intervene in the foreign exchange market, except under certain circumstances when the fluctuation has a high magnitude.

Remittance Policies

There is no difficulty in obtaining foreign currency, nor are there significant delays in remitting funds overseas through normal channels.  Several Georgian banks participate in the SWIFT and Western Union interbank communication networks. Businesses report that it takes a maximum of three days for money transferred abroad from Georgia to reach a beneficiary’s account, unless otherwise provided by a customer’s order.  There are no known plans to change remittance policies. Travelers must declare at the border currency and securities in their possession valued at more than GEL30,000 (around USD15,000).

Sovereign Wealth Funds

Georgia does not have a Sovereign Wealth Fund.

7. State-Owned Enterprises

After the fall of the Soviet Union, the new Georgian government privatized most state-owned enterprises (SOEs).  At the end of 2013, the major remaining SOEs were Georgian Railways, Georgian Oil and Gas Corporation (GOGC), Georgian State Electrosystem (GSE), Electricity System Commercial Operator (ESCO), and Enguri Hydropower plant.  Of these companies, only Georgian Railways is a major market player. The energy-related companies largely implement the government’s energy policies and help manage the electricity market. There are also a number of Legal Entities of Public Law (LEPLs), independent bodies that carry out government functions, such as the Public Service Halls.

During 2012, Georgian Railways, Georgian Oil and Gas Corporation (GOGC), Georgian State Electrosystem, and Electricity System Commercial Operator LLC assets were placed under the Partnership Fund, a state-run fund to facilitate foreign investment into new projects.  In addition, the fund controls 25 percent of shares in TELASI Electricity Distribution Company, but has stated its intention to sell those shares. The fund has not yet sold its shares, but still plans to do so:  .

Despite state ownership, SOEs act under the general terms of the Entrepreneurial Law.  Georgian Railway and GOGC have supervisory boards, while GSE and ESCO do not. Major procedures and policies are described in the charters of respective SOEs.  Georgia particularly encourages its SOEs to adhere to the OECD’s Guidelines on Corporate Governance for SOEs.

The senior management of SOEs report to Supervisory Boards where they exist (GRW, GOGC); in other cases they report to the line ministries.  Governmental officials can be on the supervisory board of the SOEs and the Partnership Fund has five key governmental officials on its board.  SOEs explicitly are not obligated to consult with government officials before making business decisions, but informal consultations take place depending on the scale and importance of the issue.

To ensure the transparency and accountability of state business decisions and operations, regular outside audits are conducted and annual reports are published.  SOEs with more than 50 percent state ownership are obliged to follow the State Procurement Law and make procurements via public tenders. The Partnership Fund, GRW and GOGC are subject to valuation by international rating agencies.  There is no legal requirement for SOEs to publish an annual report or to submit their books for independent audit, but this is still practiced. In addition, GRW and GOGC are Eurobonds issuer companies and therefore are required to publish reports.

SOEs are subject to the same domestic accounting standards and rules and these standards are comparable to international financial reporting standards.  There are no SOEs that exercise delegated governmental powers.

Privatization Program

Georgia’s government has privatized most large SOEs.  Successful privatization projects include major deals in energy generation and distribution, telecommunications, water utilities, port facilities, and real estate assets.  A list of entities available to be privatized can be found on the following website:  .  Foreign investors are welcome to participate in privatization programs.  Further information is also available at a website maintained by the American Chamber of Commerce in Georgia at:  .

8. Responsible Business Conduct

While the concept of Corporate Social Responsibility (CSR) is not highly developed in Georgia, it is growing.  Most large companies engage in charity projects and public outreach as part of their marketing strategy. The American Chamber of Commerce in Georgia has a Corporate CSR committee that works with member companies on CSR issues.  The Global Compact, a worldwide group of UN agencies, private businesses, and civil society groups promoting responsible corporate citizenship, is active in Georgia. The Eurasia Partnership Foundation launched a program on corporate social investment, promoting greater engagement of private companies in addressing Georgia’s development needs.

The Georgian government undertook an OECD CSR policy review in 2016, based on the OECD Policy Framework for Investment: (  ).  The report states that Georgia engages regularly with the OECD.  It participates in the OECD Eurasia Competitiveness Program, which works with countries in the region to help unleash their economic and employment potential through boosting country and regional competitiveness, capturing more and better investment, and developing SMEs.  It participates in the OECD Anti-Corruption Network for Eastern Europe and Central Asia, which provides a regional forum for promotion of anti-corruption activities, exchange of information, elaboration of best practices and donor coordination. It is a member of the Task Force for the Implementation of the Environmental Action Program (EAP Task Force), which aims to address the heavy environmental legacy of the Soviet model of development.  Additionally, the Support for Improvement in Governance and Management (SIGMA) program, a joint initiative of the EU and the OECD, has provided assistance to Georgia since 2008, to strengthen public governance systems and public administration capacities. Georgia participates in the OECD Committee on Fiscal Affairs’ Base Erosion and Profit Sharing (BEPS) Project.

Georgia has extractive industries as it operates manganese, gold, and copper ores, but it is not a party to the Extractive Industries Transparency Initiative (EITI) and/or Voluntary Principles on Security and Human Rights.  Among the local tools that promote CSR principles and policies in such industries are commercial chambers, the Public Defender’s office, and trade unions.

9. Corruption

Articles 332-342 of the Criminal Code criminalize bribery.  Senior public officials must file financial disclosure forms which are posted online, and Georgian legislation provides for civil forfeiture of the undocumented assets of public officials who are charged with corruption offenses.  Penalties for accepting a bribe start at six years in prison and can extend up to 15 years depending on the case’s circumstances. Penalties for giving a bribe can include a fine, a minimum prison sentence of two years, or both. In aggravated circumstances, when a bribe is given to commit an illegal act, the penalty can be from four to seven years.  Abuse of authority and exceeding authority by public servants are criminal acts under Articles 332 and 333 of the criminal code and carry a maximum penalty of eight years imprisonment. The definition of a public official includes foreign public officials and employees of international organizations and courts. White collar crimes such as bribery fall under the investigative jurisdiction of the Prosecutor’s Office.

Georgia is not a signatory to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.  Georgia has, however, ratified the UN Convention against Corruption. Georgia cooperates with the Group of States against Corruption (GRECO) and the OECD’s Anti-Corruption Network for Transition Economies (ACN).

Following its assessment of Georgia in June 2016, the OECD released a report in September 2016, that concluded Georgia had achieved remarkable progress in eliminating petty corruption in public administration and should now focus on combating high-level and complex corruption. The report commends Georgia’s mechanism for monitoring and evaluating the implementation of its Anti-Corruption Strategy and Action Plan as well as the important role given to civil society in this process.  It also welcomes the adoption of a new Law on Civil Service and recommends that the remaining legislation necessary for the implementation of civil service reforms is adopted without delay. The Civil Service Bureau and Human Resources units in state bodies should be strengthened in order to ensure the implementation of the required reforms. The report highlights Georgia’s good track record in prosecuting corruption crimes and in using modern methods to confiscate criminal proceeds.  It recommends that Georgia step up enforcement of corporate liability and the prosecution of foreign bribery in order to address the perception of alleged corruption among local government officials as well as at the political level. The full report is available at: .

Since 2003, Georgia has significantly improved its ranking in Transparency International’s (TI) Corruption Perceptions Index (CPI) report.  In 2018, Georgia’s CPI score was 58, improving two points over its 2017 score, and it ranked 41st out of 180 countries surveyed in the Corruption Perception Index.  Georgia is ahead of its regional and Eastern European peers in this regard, as it outscores the Czech Republic, Malta, Croatia, Slovakia, Greece, Romania, Italy, Turkey, Russia, Armenia, and Azerbaijan.

While Georgia has been successful in fighting visible, low-level corruption, Georgia remains vulnerable to what Transparency International calls “elite” corruption:  high-level officials exploiting legal loopholes for personal enrichment, status, or retribution.  Although evidence is mostly anecdotal, this form of corruption, or the perception of its existence, has the potential to erode public and investor confidence in Georgia’s institutions and the investment environment. Institutions most vulnerable to corruption in Georgia include government at the federal and local level, parliament, the judiciary, political parties, law enforcement, media, and private business.  Corruption remains a potential problem in public procurement processes, public administration practices, and the judicial system due to unclear laws and ethical standards.

 Resources to Report Corruption

Government agency responsible for combating corruption:

Mr. Zurab Sanikidze
Head of Analytical Department
Ministry of Justice of Georgia
24 A Gorgasali Street, Tbilisi, Georgia

Non-governmental organization:

Ms. Eka Gigauri
Director, Transparency International
26, Rustaveli Ave, 0108, Tbilisi, Georgia
Telephone: +995-32-292-14-03

10. Political and Security Environment

The United States established diplomatic relations with Georgia in 1992, following Georgia’s 1991 independence from the Soviet Union.  Since 1991, Georgia has made impressive progress fighting corruption, developing modern state institutions, and enhancing global security.  The United States is committed to helping Georgia deepen Euro-Atlantic ties and strengthen its democratic institutions. The United States supports Georgia’s sovereignty and territorial integrity within its internationally recognized borders, and does not recognize the Abkhazia and South Ossetia regions of Georgia, currently occupied by Russia, as independent.  The status of each region remains contested, and the Georgian central government does not have effective control over these areas.  In August 2008, tensions in the region of South Ossetia culminated in a brief war between Georgia and Russia. Russia invaded and occupied areas of undisputed Georgian territory.

While the separatist regions of South Ossetia and Abkhazia –which Russian troops and border guards have long occupied without Georgia’s consent – have declared independence, only Russia, Venezuela, Nicaragua, Syria, and Nauru recognize them as independent states.  Tensions still exist both inside the breakaway regions and near the administrative boundary lines (ABL), but other parts of Georgia, including Tbilisi, are not directly affected.  A number of attacks, criminal incidents, and kidnappings have occurred in and around the ABL. While none of the activity has been anti-American in nature, there is a high risk of travelers finding themselves in a wrong place/wrong time situation.  In addition, unexploded ordnance from previous conflicts poses a danger near the ABL of South Ossetia.

Violent street protests in Georgia are rare, though some smaller political skirmishes have occurred.  In recent years, police have fulfilled their duty to maintain order even in cases of unannounced protests.

11. Labor Policies and Practices

Georgia offers skilled and unskilled labor at attractive costs compared not only to Western European and American standards, but also to Eastern European standards.  Skilled labor availability in the engineering fields remains underdeveloped. The official unemployment rate was 12.7 percent in 2018, according to State Department of Statistics, but actual unemployment is considerably higher given significant underemployment in the working population, especially in rural regions where subsistence farmers are considered employed for statistical purposes and job creation has remained a particular challenge.  Some investment agreements between the Georgian government and private parties have included mandates for the contracting of local labor for positions below the management or executive level.

Georgia’s Labor Code defines the minimum age for employment (16), standard work hours (40 per week), and annual leave (24 calendar days).  Other wage and hour issues are to be agreed between the employer and employee. Amendments to the Labor Code in July 2013, defined grounds for termination; the code defines severance pay for an employee at the time of termination of a labor relation, including the payment term.  An employer is obliged to give compensation of not less than a month’s salary to an employee within thirty (30) days. An employer is obliged to give the dismissed employee a written description of the grounds for termination within seven days after an employee’s request. The labor code also prescribes rules for paying overtime labor (over 40 hours), which must be paid at an increased hourly rate.

The amended Labor Code specified essential terms for labor contracts, including:  the starting date and the duration of labor relations, working hours and holiday time, location of workplace, position and type of work, amount of salary and its payment, overtime work and its payment, the duration of paid and unpaid vacation and leave, and rules for granting leave.  The code states that the duration of a business day for an underage person (ages 16 to 18) should not exceed 36 hours per week. Regulations prohibit interference in union activities and discrimination of an employee due to union membership. The amendments also mandated that the government reestablish a labor inspectorate to ensure adherence to labor safety standards.  The labor inspection program under the Ministry of Labor, Health, and Social Affairs, employs 40 labor inspectors. On March 7, 2018, Parliament passed the Occupational Safety, and Health (OSH) Law that gives the government power to make unannounced inspections in some circumstances in companies operating among “hard, harmful, hazardous, and increased danger” occupations.

Employees are entitled to up to 183 days (six months) of paid maternity leave, which can be up to 24 months when combined with unpaid leave.  Leave taken for pregnancy, childbirth, childcare, and adoption of a newborn is subsidized by the state. An employer and employee may agree on additional compensation.  Under the Labor Code, non-competition clauses are permitted and sometimes used in contracts. This provision may remain in force even after the termination of labor relations.

The government adopted a new law in 2018, an accumulative pension scheme, which came into effect as of January 1, 2019.  The pension scheme is mandatory for legally employed people under 40; while for the self-employed and those above the age of 40 enrollment in the program is voluntary.  Each employee, employer, and the government must make a contribution of two percent of the employee’s gross income to an individual retirement account.  As for the self-employed, they will make a deposit of four percent of their income, and the state will match another two per cent.  Employees pay a flat 20 percent income tax.  The state social security system provides modest pension and maternity benefits.  The minimum monthly pension is GEL200 (USD75). The average monthly salary across the economy in Georgia in 2018 was GEL1,468 (around USD 545).  The minimum wage requirement for state sector employees is GEL115 (USD43) per month. Legislation on the official minimum wage in the private sector has not changed since the early 1990s and stands at GEL20 (USD8) per month, but is not applied in practice and is not being used for reference.

The law generally provides for the right of most workers, including government employees, to form and join independent unions, to legally strike, and to bargain collectively.  Employers are not obliged, however, to engage in collective bargaining, even if a trade union or a group of employees wishes to do so.  The law permits strikes only in cases of disputes where a collective agreement is already in place. While strikes are not limited in length, the law limits lockouts to 90 days. A court may determine the legality of a strike, and violators of strike rules can face up to two years in prison. Although the law prohibits employers from discriminating against union members or union-organizing activities in general terms, it does not explicitly require reinstatement of workers dismissed for union activity.  Certain categories of workers related to “human life and health,” as defined by the government, were not allowed to strike.  The International Labor Organization noted the government’s list of such services included some it did not believe constituted essential services directed related to human life and health. Workers generally exercised their right to strike in accordance with the law.

Georgia has ratified some ILO conventions, including the Forced Labor Convention of 1930; the Paid Holiday Convention of 1936; the Anti-Discrimination (Employment and Occupation) Convention of 1951; the Human Resources Development Convention of 1975; the Right to Organize and Collective Bargaining Convention of 1949; the Equal Remuneration Convention of 1951; the Abolition of Forced Labor Convention of 1957; the Employment Policy Convention of 1964; and the Minimum Age Convention of 1973.

Information on labor related issues is also available in the State Department’s annual reports:

12. OPIC and Other Investment Insurance Programs

The Overseas Private Investment Corporation (OPIC) is the U.S. Government’s development finance institution.  OPIC finance and political risk insurance programs assist U.S. companies with investing overseas. Since 1993, OPIC has committed over USD600 million in financing and political risk insurance for more than 60 projects in Georgia.  OPIC investment in Georgia has focused on the following sectors: credit for small and medium-sized enterprises, and projects in the infrastructure, franchising, education, manufacturing, tourism, agriculture, and health care sectors.  Some recent examples of OPIC projects include a USD50 million loan commitment to finance the development, construction, and operation of a multifunctional general cargo, dry bulk, and container port terminal at the Port of Poti–Pace Terminal, a USD18 million loan commitment to finance a new Marriott hotel in Tbilisi, and a USD21 million loan commitment to an investment fund for investments in small and medium high-growth businesses in Georgia.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

Host Country Statistical Source* USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2018 $16,200  2018 $15.5 bln   
Foreign Direct Investment Host Country Statistical Source* USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2018 $103.7 2018 N/A BEA data available at  
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A N/A N/A BEA data available at  
Total inbound stock of FDI as % host GDP N/A N/A  2018 108% UNCTAD data available at  

* Source for Host Country Data: GeoStat (Georgia National Statistics Office)

Table 3: Sources and Destination of FDI

Direct Investment From/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment N/A
Total Inward 17,266 100% Total Outward N/A 100%
Azerbaijan 3,760 21.8% N/A N/A N/A
UK 2,746 15.9% N/A N/A N/A
Netherlands 2,575 14.9% N/A N/A N/A
Turkey 1,140 6.6% N/A N/A N/A
China 644 3.7% N/A N/A N/A
“0” reflects amounts rounded to +/- USD 500,000.

Source: IMF Coordinated Direct Investment Survey

Table 4: Sources of Portfolio Investment

IMF Coordinated Portfolio Investment Survey data is not available for Georgia.

14. Contact for More Information

Mackenzie Rowe
Economic Unit Chief
U.S. Embassy Tbilisi, Georgia
Telephone: +995322277173


Executive Summary

Tajikistan presents high-risk, high-reward opportunities for foreign investors who have experience in the region, a long-term investment horizon, and the patience and resources to conduct significant research and due diligence.  At the most senior levels, the Tajik government has consistently expressed interest in attracting more U.S. investment, but has not implemented reforms that would make the poorest of the Central Asian countries a more competitive investment destination.

In 2016, the government introduced the 2016-2030 National Development Strategy and the 2016-2020 Mid-Term Economic Development Strategy.  These strategies emphasize the importance of investment as a driver of growth.  President Rahmon created an investment council in 2007 with European Bank for Reconstruction and Development (EBRD) support that includes government and private-sector stakeholders and conducts annual meetings.  Nonetheless, the council has not achieved tangible results in terms of increasing investment and improving the country’s business climate.  President Rahmon announced 300 days of reforms in January 2019, but has not made public a roadmap detailing what reforms this proposal would entail.

On January 15, President Rahmon announced a moratorium on all irregular inspections for the manufacturing sector for two years.  The moratorium applies to all inspection and law enforcement agencies, including the Prosecutor General’s office, Chamber of Accounts, Agency on State Financial Control and Fight Against Corruption, National Bank of Tajikistan, and Tax and Customs Authorities.

Tajikistan’s three main strategic goals are energy independence, transportation connectivity, and food security.  The Tajik government has made some progress on these fronts, mostly with grant support from International Financial Institutions (IFIs).  Tajikistan has also benefited from Chinese Belt and Road Initiative loans for infrastructure projects.  However, the terms of these loans remain opaque and the international community – through fora such as the Paris Club – has expressed concerns over Tajikistan’s ability to service the increasing debt burden.  Nonetheless, advancing these strategic goals would make Tajikistan a more competitive investment destination.

The main obstacles to increased investment flows are Tajikistan’s authoritarian policies, geographic isolation, bureaucratic and financial hurdles, widespread corruption, a dysfunctional banking sector, non-transparent tax system, and countless business inspections.  Absent private investment, Tajikistan uses fiscal stimulus to achieve GDP growth, which pressures the Tax Committee to meet ever-increasing revenue targets.  Investors complain most vocally about the Tax Committee, which they claim arbitrarily enforces the tax code to maximize revenue collection.  Potential investors say the uncertainty this causes is more of a deterrent than high taxes.

The Tajik government has dedicated significant financial resources to the construction of Roghun Dam, an ambitious hydropower plant whose 3,600 MW capacity would double Tajikistan’s energy output.  Once completed in 2032, Roghun Dam’s electricity will meet Tajikistan’s domestic energy needs, provide sufficient power for the expansion of industrial enterprises, and be exported to South Asia.  Nonetheless, Roghun’s USD 3.9 billion price tag and the Tajik government’s struggle to secure concessional loans or investor financing has led the government to rely on its budget to fund construction.  This has severely affected Tajikistan’s investment climate, as tax collectors turn to the private sector to meet revenue targets.

The Antimonopoly Service, in consultation with the Tax Committee, the Ministry of Finance, and the Telecommunication Service, has raised rates for internet-based telephone calls and for mobile internet, services on which average Tajiks and businesses rely.  The plan increased internet-based phone tariffs tenfold and in the best case tripled mobile internet tariffs.  Mobile internet now costs USD 6.50 per gigabyte, one of the highest prices for internet in the world.

Tajikistan’s banking sector, which had suffered from lower remittance flows during the 2015 Russian recession, began to stabilize in 2017 despite an official non-performing loan rate of 30.3 percent in December 2018.  Some Embassy contacts believe this rate should be closer to 70 percent of the total loan portfolio.  Nonetheless, the improved stability was more a result of a rebounding world economy and larger remittance volumes, and not structural, economic changes.  At present, the National Bank of Tajikistan (NBT)’s policy rate is at 14.75 percent, with nominal lending rates at about 26 percent for loans in local currency and 18 percent for dollar loans.  A low financial inclusion rate of about 11 percent has forced commercial banks to restrict loan amounts they make available to borrowers.  Loans are therefore unaffordable for small- and medium-sized businesses (SMEs).  Although IFIs have worked to make Tajikistan’s banking sector more resilient, many of the same vulnerabilities that led to Tajikistan’s 2015 liquidity crisis remain.  There are no U.S. or European banks in Tajikistan.  Tajik banks have not had correspondent banking accounts at U.S. or European banks since 2012.  Russian and Kazakh banks clear virtually all of Tajikistan’s international payments.

Despite Tajikistan’s March 2, 2013 accession to the World Trade Organization (WTO), contract sanctity and adequate intellectual property right protections remain elusive.  The Tajik government has not fully engaged with international stakeholders to provide these protections.  The Tajik government has also imposed arbitrary trade policy to protect fledgling, domestic industries without notifying its partners, as occurred with its ban on imported chicken meat in 2017.  It continues to develop its WTO post-accession plan, which requires adaptation and amendment of the legislation and regulation aspects for the post-accession period.  Tajikistan is still considering joining the Russian-led Eurasian Economic Union.  Should it apply for and receive membership, U.S. firms could experience higher trade tariffs.

Consumption is a major driver of Tajikistan’s GDP growth and household purchase power relies on migrant remittance flows, mostly from Russia where about one million labor migrants reside.  This reality heavily exposes Tajikistan’s economic performance to external shocks, especially to those from Russia.

Despite these challenges and risks to potential investors, Tajikistan is in the midst of historical opportunities.  Some economists believe the Tajik government recognizes the harm its tax and customs policies, as well as its fragile banking sector, pose to economic growth, and understand they will never finish Roghun’s construction without sustainable economic, structural changes.  Other experts are optimistic that improved regional cooperation might lead to supply and value chains and customs and standards harmonization.  For instance, Tajikistan and Uzbekistan signed a strategic partnership agreement in August 2018.  The Uzbekistan-Tajikistan energy and consumer trades have already experienced a surge since improved ties.

Table 1

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2018 152 of 180
World Bank’s Doing Business Report 2019 126 of 190
Global Innovation Index 2018 101 of 128
U.S. FDI in Partner Country ($M USD, stock positions) 2017 $41
World Bank GNI per capita 2017 $990


1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

Tajikistan has traditionally courted state-led investment and external loans from larger regional neighbors, including China, Russia, and Iran.  In 2018, China remained Tajikistan’s largest investor, with investments totaling USD 228 million, or 77 percent of total foreign direct investment (FDI) to Tajikistan.  For the last 10 years, China has invested over USD 2.25 billion in Tajikistan, making it Tajikistan’s largest investment partner.

In 2018, the Tajik government increased efforts to attract investments from the Gulf States.  Saudi Arabia invested USD 160.2 million in Tajikistan from 2007-2017.  In addition, Qatar has invested USD 384.5 million in a high-rise luxury apartment complex and the construction of the region’s largest mosque.  Qatar’s central bank is investigating banking opportunities in Tajikistan.

Anecdotally, dozens of foreign-owned companies in Tajikistan have complained to resident European and U.S. officials about continual inspections and arbitrary and discriminatory application of the tax code to exact burdensome payments.

Despite a general deterioration in the investment climate, progressive legislative action on a few issues may yield positive results.  The government abolished a cotton fiber tax in June 2016, reduced the sales tax by one percent in January 2017, and simplified the tax system making a larger population of small-scale entrepreneurs eligible for more favorable tax treatment.

Tajikistan’s Investment Law (Article 7) guarantees equal rights for both local and foreign investors.  According to this law, foreigners can invest by jointly owning shares in existing companies with other Tajik companies or Tajik citizens; by creating fully foreign-owned companies; or by concluding agreements with legal entities or citizens of Tajikistan that provide for other forms of foreign investment activity.  Foreign firms may acquire assets, including shares and other securities, as well as land leasing and mineral usage rights.  Foreign firms may also exercise all property rights to which they are entitled, either independently or shared with other Tajik companies and citizens of Tajikistan.  Most of Tajikistan’s current international agreements provide most-favored-nation status.

Although Tajik law recognizes the sanctity of contracts, the country’s judicial system is opaque and enforcement is poor.  The country’s tax policy is neither predictable nor always favorable to legitimate business interests.  Business representatives note that the Tajik government typically takes an opportunistic interest in private companies that turn a profit.

Tajikistan’s legal code does not discriminate against foreign investors by prohibiting, limiting, or conditioning foreign investment.  To receive permission and licenses for operation, however, a foreign investor must navigate a complicated, cumbersome, and often corrupt bureaucratic system.

Several Tajik government agencies are responsible for investment promotion, but they frequently have competing interests.  The Committee on Investments and State Property Management ( ) chiefly facilitates FDI.  In addition, state-owned enterprise Tajinvest under the Committee on Investments and State Property Management is responsible for attracting investment into Tajikistan ).

Tajikistan has established several formal mechanisms to maintain open channels of communication with existing and potential investors.  With EBRD support, the government established a Consultative Council on the Improvement of the Investment Climate in 2007.  This annual council provides a formal venue for dialogue with donors, international financial institutions, and members of the private sector ( 

In January 2015, the government established a National Entrepreneurship Day, annually celebrated in October.  Nevertheless, investors continue to claim that many of their complaints to the government go unheeded.

Limits on Foreign Control and Right to Private Ownership and Establishment

Tajikistan’s legislation provides a right for all forms of foreign and domestic ownership to establish business enterprises and engage in remunerative activity.  There are no limits on foreign ownership or control of firms and no sector-specific restrictions that discriminate against market access.  Local law considers all land and subsoil resources to belong exclusively to the state, although initial efforts to establish a private land market are underway.

Tajikistan’s legislation allows for 100 percent foreign ownership of local companies.  In the context of jointly-owned companies, local partners generally seek to possess a controlling share (51 percent or more) at the initial stage of business development and in some cases may seek to increase their stake over time.

All sectors of Tajikistan’s economy are open to foreign participation with the exception of aviation, defense, security, and law enforcement, which require special government permission for the operation of such types of businesses or services.  Tajikistan does not restrict foreign investment; it does not mandate local stakeholder equity positions or local partnership.  In some cases, the government requires specific licenses.  There are no mandatory IP/technology transfer requirements.

Tajikistan’s government maintains an investment screening mechanism for inbound foreign investments involving government interests, including investments into Free Economic Zones, issuing approval or rejection statements in particular for investments requiring government financial support or state guarantees.  The Committee on Investments and State Property Management is responsible for filing and coordinating foreign investment project proposals as they pass through the review pipeline.  The government takes particular interest in determining whether the proposed project may impact the county’s national security and/or economic performance.

Investors must submit their proposals for screening to all relevant government agencies.  This process can be lengthy and cumbersome.  The Committee on Investments and State Property Management circulates the investor’s proposal among the relevant government offices and ministries with instructions to review and then provide a formal opinion.  If a ministry objects to the proposed investment activity, it submits an official note to the Committee on Investments and State Property Management.

Screening proposals often involve background checks on the company, the person(s) representing the company, and identification of a financial source to comply with anti-money laundering regulations.  U.S. businesses have not identified screening mechanisms as a barrier to investment.

The purpose of the investment screening process is to ensure that a proposed investment/project does not violate Tajik laws.  The review process could reject the proposal and the Tajik government may flag it as “incomplete.”  Applicants may appeal the government’s decision by submitting a claim to the Tajik Economic Court.

Other Investment Policy Reviews

The United Nations Conference on Trade and Development (UNCTAD) presented a draft Investment Policy Review of Tajikistan in November 2015 to stakeholders from the government, local and international private sector, and civil society and development partners.  The final report was published on August 10, 2016 ( )

Tajikistan has not conducted a WTO Trade Policy Review and the WTO has not scheduled a review of Tajikistan in 2018.

Countries for which OECD, WTO (in context of a trade policy), and UNCTAD have conducted IPRs include:

( percent20Policy percent20Reviews/Investment-Policy-Reviews.aspx )

Some international and local consulting companies in the recent years produced ratings, guides and reports on investment and business in Tajikistan:

2018 Fitch Rating: 

2018 Fitch Rating: 

2017 RSM Guide to Doing Business ( )

2017 Tajik Chamber of Commerce ( )

2016 Deloitte Investment and Tax Guide ( )

Business Facilitation

Although the Tajik government has simplified the business registration process by adopting a single-window registration system, that process still requires significant legal and human resources, government connections, and time.  The Tax Committee is the primary agency responsible for business registration (  In addition to obtaining the state registration through a single-window, a company must also register with the Social Protection Agency (; Statistics Agency under the President of Tajikistan (; Ministry of Labor, Migration, and Employment (; Sanitary-Epidemiological Service at the Ministry of Health (; as well as with local authorities, municipal services, and other agencies.  According to the country’s regulations, registering a business should take less than five business days; in reality, it may take several days or even months due to the inappropriate and illegal actions of registering agencies.  The Tajik government must notarize all businesses.

The Committee on Investments and State Property Management is the key agency that collects information and project proposals from investors.  However, numerous other agencies are involved in the investment coordination process, making it cumbersome.

According to the Tajik Tax Code, there are three types of enterprises:  1. Small-scale businesses with turnover up to USD 100,000 during a 12 months period.  2. Medium-scale businesses with annual turnover from USD 100,000 to USD 2.5 million, and 3. Large-scale companies from USD 2.5 million annual turnover.  The international donor community, in coordination with the government, funds a number of projects that stimulate development of small and medium enterprises in Tajikistan.

Outward Investment

The Tajik government does not promote outward investments.  Private companies from Tajikistan have invested in Kazakhstan, Uzbekistan, Kyrgyzstan, Turkey, Russia, the United Kingdom, the United States, and the UAE, primarily in trade, food processing, real estate, and business development.

The Tajik government does not restrict domestic investors from investing abroad.

2. Bilateral Investment Agreements and Taxation Treaties

Tajikistan signed bilateral investment treaties (BITs) with Austria, Azerbaijan, Belarus, Belgium, China, the Czech Republic, France, Germany, India, the Islamic Republic of Iran, Kazakhstan, the Republic of Korea, Kuwait, Lithuania, Luxembourg, the Republic of Moldova, Mongolia, the Netherlands, Pakistan, Slovakia, Spain, Switzerland, and Turkey.  It has also signed BITs with Algeria, Armenia, the Belgium-Luxembourg Economic Union, Indonesia, Kyrgyzstan, Qatar, the Russian Federation, the Syrian Arab Republic, Thailand, Turkmenistan, Ukraine, the United Arab Emirates, and Vietnam that are awaiting parliamentarian approval.  BIT information is available at: 

Tajikistan’s other investment agreements include: the Eurasian Investment Agreement with Belarus, Kazakhstan, Kyrgyzstan, and the Russian Federation (came into force December 2, 2015); the Economic Cooperation Organization Investment Agreement (not yet in force); the European Community-Tajikistan Partnership Agreement with the European Union; the Commonwealth of Independent States Investor Rights Convention with Armenia, Belarus, Kazakhstan, Kyrgyzstan, and the Republic of Moldova; the Energy Charter Treaty; the Organization of the Islamic Conference Investment Agreement; and the U.S.-Central Asia Trade and Investment Framework Agreement (TIFA).

Tajikistan became a signatory to the Trade and Investment Framework Agreement among the United States, Uzbekistan, Turkmenistan, Kyrgyzstan, Kazakhstan, and Tajikistan in 2004.  Tajikistan does not have a bilateral Free Trade Agreement with the United States.  Moreover, Tajikistan is subject to the Jackson-Vanik amendment to the Trade Act of 1994.  Tajikistan does not participate in United States Trade Representative (USTR)’s Generalized System of Preferences program.

Tajikistan does not have a Free Trade Agreement or an Association Agreement in force with the European Union.  Tajikistan, however, is a beneficiary of the EU’s Generalized System of Preferences (GSP) program, a bilateral trade arrangement through which the EU provides preferential access to its market to developing countries and territories in the form of reduced tariffs for their goods when entering the EU market.  Tajikistan is also considering filing an application to the EU’s GSP+ program, which will provide it additional preferences when trading with EU countries.  Preferential imports from Tajikistan are heavily concentrated in two sectors, industrial products – such as base metals – and textiles.

Tajikistan currently has bilateral agreements to avoid double taxation with Armenia, Austria, Azerbaijan, Bahrain, Belarus, Belgium, Brunei, China, Czech Republic, Finland, India, Indonesia, the Islamic Republic of Iran, Japan, Kazakhstan, Kuwait, Kyrgyz Republic, Latvia, Luxembourg, Moldova, Pakistan, Poland, Romania, Russia, South Korea, Switzerland, Thailand, Turkey, Turkmenistan, Ukraine, the United Arab Emirates, and the United Kingdom.  The provisions of double tax agreements prevail over Tajik domestic law.  Although Tajikistan is not a member of the Eurasian Economic Union (ECC), and therefore not a party to its trade agreements, it nevertheless pledged in 1992 to uphold certain USSR treaty obligations, including an Income Tax Treaty that entered into force in 1976.

Although Tajikistan adopted a new national tax code in January 2013, its tax system remains internally inconsistent and administratively burdensome.  Investors should also be aware that any financial transfers from parent companies to branches within Tajikistan will be taxed as revenue.

Investors who qualify for a value-added tax (VAT) exemption on imported materials should be aware that they must submit applications for exemption no later than January 1 and that any exemption granted will expire December 31 of that year.  Often, the government does not grant exemptions until October, leaving a short window to file.  While the exemption applies retroactively for the calendar year, the Tajik government has said the tax code has no legal mechanism to authorize refunds of VAT paid prior to the date the government granted the exemption.

According to Article 110 of Tajikistan’s Tax Code, new production companies are profit tax exempt for 12 months from the date of state registration.  A company receives a two-year profit tax break if it invests USD 200,000-USD 500,000.  A company receives a three-year profit tax break if investments are USD 500,000-USD 2 million.  A company receives a four-year profit tax break if investment are USD 2-USD 5million.  A foreign company receives a five-year profit tax break if it invests over USD 5 million.  Should the government change its tax code after an investment is made, the investor has the right to keep the initial conditions.

The Convention between the United States of America and the Union of Soviet Socialist Republics on Matters of Taxation, signed in Washington, June 29, 1973, which entered into force January 29, 1976, is currently in force between the United States and Tajikistan based on principles of succession.  The Tajik government does not recognize this treaty and requested the United States sign a new double taxation treaty with Tajikistan.   ( ).

4. Industrial Policies

Investment Incentives

According to statements by President Rahmon, there are 240 tax, regulatory, and legal incentives for businesses.  According to IFC Business Regulation and Investment Policy project, there are 97 incentives for investments.  In practice, businesses and investors cannot access or utilize most of these incentives.

The Tajik government has officially expressed an interest in attracting FDI but has taken little practical action to do so.  In 2016, Tajikistan’s government approved an ambitious National Development Strategy 2016-2030, which highlights the critical role of private sector investment.  According to this strategy, the Tajik government plans to attract as much as USD 55 billion in FDI by 2030.  Given the country’s business and tax environment, however, this plan appears to be more aspirational than realistic.  The Committee on Investments and State Property Management’s website lists government-promoted investment opportunities ( ).

Foreign Trade Zones/Free Ports/Trade Facilitation

The Tajik government has established four Free Economic Zones (FEZs), which offer reduced taxes and customs fees to both foreign and domestic businesses.  To be eligible for preferential tax treatment, manufacturing companies must invest a minimum of USD 500,000, trading companies USD 50,000, and service and consulting companies USD 10,000.

Performance and Data Localization Requirements

According to the Tajik Law on Audits, at least 70 percent of the workforce must be local employees at local companies.  If the CEO of the company is foreign, then the percentage of local staff should be at least 75 percent.  The Tajik government can waive this requirement.

In June 2015, the Minister of Labor, Migration and Employment announced that for large-scale projects implemented in Tajikistan, which are signed between the Tajik government and either a company registered in another country or a government of another country, at least 80 percent of the workforce must be locally hired.  Depending on the qualifications of the local labor force, Tajik authorities may increase this requirement to 90 percent.

Tajik legislation permits foreigners to hold senior management and directorial positions.

It is possible to obtain visas and residence/work permits, but applicants are required to provide documentary support, and most permits cannot exceed one year.  According to Article 3 of government resolution #529, foreign worker permission procedures, investors and depositors with more than USD 500,000 in investments do not require work permits for one year from the date of state registration.

Relevant ministries must review and approve all investment proposals.

The government does not practice a forced localization policy.  The Tajik government requires all telecommunication service providers to install surveillance equipment.  Russia provides the equipment and technology as a part of the Collective Security Treaty Organization agreement.

The government does not impede the transmission of customer or other business-related data outside the economy/country’s territory unless the data violates anti-terrorist and anti-extremist laws and policies.

In 2017 Tajikistan’s Telecommunication’s agency formally completed a unified communication center (single gateway), monopolizing internet access.

5. Protection of Property Rights

Real Property

The Tajik government uses a cadaster system to record, protect, and facilitate acquisition and disposition of property, but it needs improvement.  Even when secured interests in property do exist, enforcement remains an issue.  Investors should be aware that establishing title might be a more involved process than in Western countries because title histories can be difficult to find.

Since 2007, the U.S. government has provided significant, sustained, and focused support to the Tajik government on market-driven land reforms.  Most recently, Tajikistan’s Land Market Development Activity (LMDA), a USD 9.7 million project, successfully launched “one-stop shops” for land registration throughout Khatlon, cutting wait times in half.  The activity also supports the launch of a new automated registration system designed to centralize records, streamline procedures, and further simplify land registration.  The Tajik government is replicating the one-stop-shop model throughout the country and has established a training center for Land Registration Department employees.

The government passed mortgage legislation in March 2008 that allows parties to use immovable property as collateral.  The government also adopted revised land code amendments in August 2012.

According to domestic law, all land belongs exclusively to the state; individuals or entities may be granted first or second-tier land-use rights.  The government restricts foreigners’ first-tier land-use rights to 50 years, while Tajik individuals and entities may have indefinite first-tier land-use rights.  Foreigners may request second-tier land-use rights from the government similar to the first-tier rights of Tajik individuals and entities, for periods of up to 50 years.  Tajik first-tier land-use rights holders may also grant foreigners lease agreements for up to 20 years.  Ownership of rural land-use rights can be particularly opaque, since many nominally privatized former collective farms continue to operate as a single entity.  Many of the new owners do not know where their land is and do not exercise their property rights.

Officially, Tajik authorities clearly demarcate land by title and affiliation to state-ownership or for private use.

Tajik law does not allow the sale of land.  All land is the property of the state.  If leaseholders do not use land in accordance with the purpose of the lease, then authorities can revert it to other owners.

Intellectual Property Rights

Tajikistan is a signatory to several international conventions that protect intellectual property rights (IPR), including the World International Property Organization (WIPO) Convention.  Tajikistan has signed 17 WIPO administered treaties.  Tajikistan’s enforcement of IPR violations needs strengthening (the Ministry of Economic Development and Trade, the Ministry of Interior, and the Ministry of Culture have regulatory authority).  Over 90 percent of software and other media products sold in Tajikistan are unlicensed copies, and many “brand name” consumer goods are counterfeit.

Tajikistan is a member of many international agreements and unions, but does not adhere to key international agreements on IPR and lacks effective protections for patents, copyrights, trademarks, and other intellectual property.  At present, IP does not represent a sizeable portion of the Tajik economy.  Both the Constitution of Tajikistan and the county’s criminal and civil codes have provisions for IPR protection, but enforcement of these provisions lags behind.

Despite existing legislation to protect IPR, infringement is widespread.  Enforcement remains weak and requires technical assistance from the international community to develop and strengthen enforcement and monitoring mechanisms.  The IPR Unit at the Ministry of Interior was established in 2006 and reorganized in 2011 under the new Unit to Combat IP Crimes.  Many brand name goods sold in Tajikistan, particularly clothing and DVDs, are counterfeit.  Since the Ministry of Interior has refused to release enforcement statistics since 2013, the latest available statistics date to 2011-2012.

The Tajik president’s October 31, 2018 decree mandating government agencies use licensed software demonstrates some progress on IPR enforcement.  This government resolution tasks relevant government ministries and agencies to consider introducing licensed software at all government institutions and seek financial assistance to procure the software.  A Microsoft delegation visited Tajikistan in January to discuss the remediation of unlicensed software in the country.

The Tajik government has an action plan for the implementation of World Trade Organization (WTO) obligations, which includes IPR enforcement provisions as part of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

Article 156 of the criminal code allows for seizures of counterfeit goods.  The Ministry of Interior has declined to report statistics on criminal cases opened for consumer fraud since 2013.  Information on successful prosecutions is likewise unavailable.

As part of its WTO accession process, Tajikistan amended Article 441 of its customs code to provide ex officio authority to its customs officers to seize and destroy counterfeit goods.  The Department on Disclosing and Seizing of Counterfeit Products within the Customs Service of Tajikistan has the responsibility to detect IPR-related violations.  The Customs Service did not publish public information on seizures of counterfeit goods in 2018.  Currently, the Customs Service has only three IPR products registered in its customs registry.  Tajikistan’s Law on Quality and Safety of Products requires IPR violators to pay all expenses for storage, transportation, and destruction of counterfeit goods.

To register a patent or trademark with the National Center for Patents and Information (NCPI), applicants must submit an application with all relevant information on the IP and pay a fee.  The NCPI ( will search its records for conflicts and, if none is found, register the IP within 30 days from the time the application is received.  In general, the issuance of a trademark might take four to seven months, while obtaining a patent for an invention could take up to two years.

Tajikistan’s weak implementation of its IPR laws makes it difficult for investors to protect their rights.  IPR enforcement has the potential to improve if the Tajik government effectively implements its action plan to comply with WTO TRIPS requirements.

In 2019, Tajikistan was removed from the USTR Special 301 Watch List due to concrete steps it took to improve its IP regime, specifically mandating ex officio authority for customs officials and issuing the presidential-level decree to facilitate use of licensed software in government agencies.  Tajikistan is not included in the Notorious Markets List.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at .

Resources for Rights Holders

U.S. Embassy
Economic Section
American Chamber of Commerce in Tajikistan
+992 (93) 577 23 23 +992 (93) 577 29 29

Public list of local lawyers:

6. Financial Sector

Capital Markets and Portfolio Investment

Foreign portfolio investment is not a priority of the Tajik government.  Tajikistan lacks a securities market.  According to government statistics, portfolio investment in Tajikistan by the end of 2018 totaled USD 576.2 million.  This includes the USD 500 million Eurobond the National Bank of Tajikistan issued in September 2017.  The Tajik government does not regard this sector as a significant part of the national economy.  The National Bank of Tajikistan made efforts to develop a system to encourage and facilitate portfolio investments, including credit rating mechanism implemented by Moody’s and S&P.  Tajikistan has not established policies to facilitate the free flow of financial resources into product and factor markets.

Tajikistan does not have an official stock market.  The National Bank of Tajikistan and Commercial banks in 2015 facilitated the creation of the new Central Asian Stock Exchange, but it is in the early stages of development.  ( ).

Tajikistan does not place any restrictions on payments and transfers for current international transactions, per IMF Article VIII.  It regards transfers from all international sources as revenue, however, and taxes them accordingly.

Commercial banks apply market terms for credits, but commercial banks are also under considerable pressure by the governing elites and their family and friends to provide favorable loans for commercially questionable projects.  An estimated 70 percent of Tajikistan’s commercial loans are non-performing, the official data from National Bank of Tajikistan reports 30.3 percent as non-performing loans as of January 1.

The private sector offers access to several different credit instruments.  Foreign investors can get credit on the local market, but those operating in Tajikistan do not obtain local credit because of comparatively high interest rates.

Money and Banking System

According to the latest National Bank of Tajikistan report from December 2018, 79 credit institutions, including 17 banks, 25 microcredit deposit organizations, six microcredit organizations, and 31 microcredit funds, function in Tajikistan.  Tajikistan has 332 bank branches, a 3.3 percent reduction since 2017.

Tajikistan’s banking system has not recovered from the 2015 financial crisis.  AgroInvestBank and TojikSodirotbank, two of Tajikistan’s largest, are in fact collapsed banks awaiting liquidation.  Tajikistan’s banking sector has assets of USD 2.24 billion as of December 2018, which is USD 130 million less than in 2017.  Total liabilities decreased in 2018, reaching USD 1.6 billion.  The National Bank of Tajikistan is the country’s central bank ( ).  Foreign banks can establish operations in country subject to National Bank of Tajikistan regulations.  United States commercial banks used to have correspondent banking relations with several Tajik commercial banks, but discontinued these relationships in 2012.

To establish a bank account, foreigners must submit a letter of application, a passport copy, and Tajik government-issued taxpayer identification number.

Foreign Exchange and Remittances

Foreign Exchange Policies

Tajikistan traditionally does not restrict conversion or transfer of monies if these sums are deemed to be reasonable.  Until 2015, “reasonable” meant no more than USD 10,000 per transaction.  Because of the current economic and financial crisis, the National Bank of Tajikistan is now determining “reasonableness” on a case-by-case basis.

Tajikistan places no legal limits on commercial or non-commercial money transfers, and investors may freely convert funds associated with any form of investment into any world currency.  However, since 2017 the National Bank of Tajikistan exercised stricter control of foreign currency operations and outflows due to the economic and financial crisis.  According to National Bank of Tajikistan regulations, anyone seeking to exchange an amount exceeding TJS 1,500 (approximately USD 159) must register the exchange, and present a passport and an explanation of the reason for the exchange (e.g., business trip abroad).

Businesses often find it difficult to conduct large currency transactions due to the limited amount of foreign currency available on the domestic financial market.  Investors are free to import currency, but once they deposit it in a Tajik bank account it may be difficult to withdraw.

In December 2015, the National Bank of Tajikistan reorganized foreign currency operations and shut down all private foreign exchange offices in Tajikistan.  Since that time, only commercial bank exchange offices operated as foreign currency exchange offices, which require registration of a foreign passport and other personal information.

The government’s policy supports a stable exchange rate.  The National Bank of Tajikistan maintained an average exchange rate at TJS 9.2 per U.S. dollar in 2018.  Defending the somoni’s rate to the dollar puts pressure on Tajikistan’s foreign currency and gold reserves, leaving the government with little capacity for systematic currency interventions.  Whereas a dollar could buy TJS 5.4 in 2015, the currency devalued to about TJS 9.43 per dollar by April 2019.

Remittance Policies

The National Bank of Tajikistan mandated that commercial banks disburse remittances in local currency since early 2016.  There are no official time or quantity limitations on the inflow or outflow of funds for remittances.  Tajikistan’s tax code classifies all inflows as revenue and taxes them accordingly; however, the Tajik government does not tax remittances from labor migrants.

Sovereign Wealth Funds

Tajikistan does not have a sovereign wealth fund.  The country does have a “Special Economic Reforms Fund,” but, according to official statistics, it is empty.

7. State-Owned Enterprises

State-owned enterprises (SOEs) are active in travel, automotive/ground transportation, energy, mining, metal manufacturing/products, food processing/packaging, agriculture, construction, building and heavy equipment, services, finance, and information and communication sectors.  The government divested itself of smaller SOEs in successive waves of privatization, but retained ownership of the largest Soviet-era enterprises and any sector deemed to be a natural monopoly.

The government appoints directors and boards to SOEs, but there are no clear governance and internal control procedures.  Tajik SOEs do not adhere to the Organisation for Economic Co-operation and Development (OECD) Guidelines on Corporate Governance for SOEs.  Tajik government fully controls SOEs.  When SOEs are involved in investment disputes, it is highly likely that the domestic courts will find in the SOE’s favor.  Court processes are generally non-transparent and discriminatory.

The Committee for Investments and State Property Management maintains a database of all SOEs in Tajikistan, but does not make this information publicly available.

Major SOEs include:

  • Travel: Tajik Air, Dushanbe International Airport, Kulob Airport, Qurghonteppa Airport, Khujand Airport, and Tajik Air Navigation;
  • Automotive & Ground Transportation: Tajik Railways;
  • Energy & Mining: Barqi Tojik, TajikTransGas, Oil, Gas, and Coal, and VostokRedMet;
  • Metal Manufacturing & Products: Tajik Aluminum Holding Company (TALCO), and several TALCO subsidiary companies
  • Agricultural, Construction, Building & Heavy Equipment: Tajik Cement; Food Processing & Packaging: Konservniy Combinat Isfara;
  • Services: Dushanbe Water and Sewer, Vodokanal Khujand, and ZhKX (water utility company);
  • Finance: AmonatBonk (state savings bank), TajikSarmoyaguzor (state investments), TajikSugurta (state insurance);
  • Information and Communication: Tajik Telecom, Tajik Postal Service, and TeleRadioCom

In sectors that are open to private sector and foreign competition, SOEs receive a larger percentage of government contracts/business than their private sector competitors.  As a general rule, private companies cannot compete successfully with SOEs unless they have good government connections.

SOEs purchase goods and services from, and supply them to, private sector and foreign firms through the Tajik government’s tender process.  Tajikistan has undertaken a commitment, as part of its WTO accession protocol, to initiate accession to the Government Procurement Agreement (GPA).  At present, however, GPA does not cover Tajik SOEs.

Per government policy, private enterprises cannot compete with SOEs under the same terms and conditions with respect to market share (since the government continually increases the role and number of SOEs in any market), products/services, and incentives.  Private enterprises do not have the same access to financing as SOEs.  Most lending from state-owned banks is politically directed.

Local tax law makes SOEs subject to the same tax burden and tax rebate policies as their private sector competitors, but the Tajik government favors SOEs and regularly writes off tax arrears for SOEs.

Privatization Program

The Tajik government conducted privatization on an ad-hoc basis in the 1990s, and then again in the early 2000s.  The government plans to split national electrical utility Barqi-Tojik into three public/private partnerships, responsible for generation, transmission, and distribution, by the end of 2020, but progress has been slow.

Foreign investors are able to participate in Tajikistan’s privatization programs.

There is a public bidding process, but the privatization process is not transparent.  Privatized properties have been subject to re-nationalization, often because Tajik authorities claim on illegal privatization process.

8. Responsible Business Conduct

The Tajik government officially protects consumer rights through its Law on Consumer Protection.  Citizens may file lawsuits against violators of consumer rights with the court system.  Tajikistan’s state labor union is responsible for safeguarding labor and employment rights.  In practice, no enforcement is in place.  The Tajik government does not fairly enforce domestic law to protect individuals from adverse business impacts.

The Tajik government lacks corporate governance, accounting, or executive compensation standards to protect shareholders.  The Tajik government does not encourage public disclosure of these issues.  The Tajik government does not enforce corporate governance practices.

There are no independent NGOs, investment funds, worker organizations/unions, or business associations in Tajikistan that promote or monitor responsible business conduct.

The Tajik government does not encourage adherence to the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Afflicted and High-Risk Areas.  The Extractive Industries Transparency Initiative (EITI) suspended Tajikistan in March 2016.

9. Corruption

Tajikistan has enacted anti-corruption legislation, but enforcement is selective, and generally ineffective in combating corruption of public officials.  Tajikistan’s parliament approved new amendments to the criminal code in February 2016.  Now, individuals convicted of crimes related to bribery may be released in return for payment of fines (roughly USD 25 for each day they would have served in prison had they been convicted under the previous criminal code).

Tajikistan’s anti-corruption laws officially extend to family members of officials and political parties.  Tajikistan’s laws provide conditions to counter conflict of interest in awarding contracts.

The Tajik government does not require private companies to establish internal codes of conduct that prohibit bribery of public officials.  Prosecutions for corruption are primarily politically motivated.

Private companies do not use internal controls, ethics, and compliance programs to detect and prevent bribery of government officials.

Tajikistan became a signatory to the UN’s Anticorruption Convention in 2006.  Tajikistan is not a party to the OECD Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions.

Tajik authorities do not provide protection to NGOs involved in investigating corruption.

U.S. firms have identified corruption as an obstacle to investment and have reported instances of corruption in government procurement, award of licenses and concessions, dispute settlements, regulations, customs, and taxation.

Resources to Report Corruption

Contact at government agency responsible for combating corruption:

Sulaimon Sultonzoda, Head
The Agency for State Financial Control and Fight with Corruption
78 Rudaki Avenue, Dushanbe
992 37 221-48-10; 992 27 234-3052;

(The agency requests that contact be made via a form on their website –

United Nations Development Program
39 Aini Street, Dushanbe
+992 44 600-56-00

10. Political and Security Environment

Tajikistan has a recent history of politically motivated violence.  Its civil war lasted from 1992 to 1997, resulting in the death of over 50,000 people.  Since the end of the country’s civil war in 1997, however, political violence has been rare.  There was a minor uprising in September 2015.

Tajikistan is governed by an authoritarian ruler who has consolidated power over the past years by silencing opposition voices and ending multi-party democracy.  As part of its security efforts, the Tajik government has placed numerous restrictions on religious, media, and civil freedoms.  The state, as an extension of the regime, furthers the interests of the ruling elite, often to the detriment of the business community.  The government demonstrates little appreciation for democratic principles, with many in authority advancing different views on political, social, and civil freedom issues: democratic reform by some is viewed as a threat to important political and financial interests.  Government institutions are often unwilling or unable to protect human rights, the judiciary is not independent, and the court system does not present Tajiks with a fair or effective forum in which to seek protection.  Law enforcement institutions often overuse their authority to monitor, question or detain a wide spectrum of individuals, and the State Committee on National Security (GKNB) exercises a wide degree of influence in all aspects of government.  Corruption is pervasive and endemic, and government officials are generally not held accountable for their actions.

11. Labor Policies and Practices

As of December 2018, the official unemployment rate in Tajikistan was 2.5 percent, but this does not include the roughly one million citizens (12.5 percent of the population) that seasonally migrate in search of work in other countries – primarily to Russia.

According to information provided by the Ministry of Labor, Migration, and Employment, Tajikistan’s labor force is 5.2 million workers strong.  Due to demographic growth, the World Bank estimates that demand for jobs exceeds job growth by a ratio of two to one.

Unskilled labor is widely available, but skilled labor is often in short supply, since many Tajiks with marketable skills have chosen to emigrate due to limited domestic employment opportunities.  Corruption in secondary schools and universities means degrees may not accurately reflect an applicant’s level of professional training or competency.

Due to its weak education system, Tajikistan’s domestic labor force is generally becoming less skilled, and is ill equipped to provide international standards of customer service and management.  Foreign businesses and NGOs report difficulty recruiting qualified staff for their organizations in all specialties.

The Ministry of Labor, Migration and Employment announced a plan to expand its network of training centers at which Tajik workers can become more marketable.  The curriculum at these centers is primarily focused on the migrant community, offering training in English, Russian, culture, and history.  It also provides certification of a worker’s existing skills, and short-term vocational training as welders, electricians, tractor operators, textile workers, and confectioners.

Article 36 of Tajikistan’s labor code gives employers the right to change workers’ contracts (remuneration, hours, responsibilities, etc.) due to fluctuating market conditions.  If the worker does not accept the amended contract, the employer may terminate the worker, but the worker can claim a severance payment equivalent to two months’ salary.

Tajikistan’s labor code does not include any provisions for waiving labor regulations to attract or retain investments, but the Tajik government has waived the 70 percent requirement for the employment of Tajik workers in some cases.

There are no special regulations regarding treatment of labor in Tajikistan’s four free economic zones.

The labor market favors employers.  Although the majority of workers are technically unionized, most are not aware of their rights, and few unions effectively advocate for workers’ rights.  The Tajik government controls unions.  The national trade union federation has not had many disputes with the government.  Tajikistan has no formal labor dispute resolution mechanisms.  Although collective bargaining can occur, it is rare. There were no significant labor strikes in Tajikistan.

Tajikistan’s labor code regulates employer-employee relations.  The domestic labor code includes reference to international labor standards but employers may frequently violate or misinterpret the procedure.

Tajik authorities did not officially register any strikes in 2018.

12. OPIC and Other Investment Insurance Programs

The Overseas Private Investment Corporation (OPIC) is active in Tajikistan. OPIC has recently supported a potato chip factory, the campus expansion at the University of Central Asia, and consulting companies.

Tajikistan signed an investment incentive agreement with the United States in 1992, with provisions for issuing investment insurance, loans, and guarantees administered by OPIC.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

Host Country Statistical Source USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount  
Host Country Gross Domestic Product (GDP) ($M USD) 2018 $7,300 2018 $7,523 
Foreign Direct Investment Host Country Statistical Source USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in Partner Country ($M USD, stock positions) 2017 $13.8 2017 N/A BEA data available at 
Host Country’s FDI in the United States ($M USD, stock positions) 2017 N/A 2017 N/A BEA data available at 
Total Inbound Stock of FDI as % host GDP 2018 4.48% 2017 5.14% N/A

Table 3: Sources and Destination of FDI

Direct Investment From/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward Amount 100% Total Outward Amount 100%
China 238.8 73% N/A Amount N/A
Great Britain 20.4 6% N/A Amount N/A
Cyprus 17 5% N/A Amount N/A
Turkey 17 5% N/A Amount N/A
Switzerland 16.9 5% N/A Amount N/A
“0” reflects amounts rounded to +/- USD 500,000.

Agency on Statistics at the President of Tajikistan

Table 4: Sources of Portfolio Investment

IMF’s Coordinated Portfolio Investment Survey (CPIS) does not list Tajikistan.

14. Contact for More Information

Mr. Andrew Bury
Economic Officer
109A I. Somoni
+992 37 2292504

Investment Climate Statements
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