Privatization is the activity conducted in a prescribed manner by the government to transfer the ownership/property rights to the legal bodies or individuals.
The main essence of the economic transformations begins with the state property privatization which aimed at developing diverse forms of ownership. Privatization of state property is one of the main stages of transition to a market economy. The Government of Tajikistan has commenced the process of state property privatization from the first days of gaining its independence and still, continues up now.
The Law ‘on Denationalization and State Property Privatization’ has built a foundation for the implementation of economic reforms. Furthermore, a number of legal acts were adopted that led this process into a new direction. Firstly, the government had adopted the Law "on Property", then the Law ‘on Denationalization and Privatization of State Property” and the Law “on Privatization of State Property". These laws have laid foundation for the creation of various forms of ownership in Tajikistan, as one of the main pillars in transition to the market economy.
Privatization has prepared the ground for transition to a market economy and created favorable conditions for development of various forms of entrepreneurship. The transfer of property to the entrepreneurs, separate initiatives, hardworking individuals can serve as a basis for economic recovery. In addition, privatization of property creates a favorable environment for attracting investments.
The process of state property privatization in the Republic of Tajikistan was held in two phases depending the goals and objectives. The first phase was focused on small-scale privatization which included privatization of trade enterprises, public catering facilities, household services and transportation and, presently, one of the main objectives of privatization is aimed at privatization and restructurization of medium and large industry, transport, communications and construction enterprises. Privatization process of such enterprises has been focused primarily on transformation of the state enterprises into joint stock companies and subsequent sale of the shares at the auctions.
The experience around the world shows that the private company management in comparison with the state management is more efficient. Private entrepreneurs are more responsible, they have wider networks and they can easily access new markets and resource bases for raw materials.
Thus, there were nine thousand six hundred ninety one (9,691) small enterprises and one thousand three hundred seven (1,307) medium and major enterprises privatized in the Republic of Tajikistan since beginning of 1991.
For the purpose of privatization process acceleration and greater attraction of investments, a Strategic Plan for privatization of medium and large enterprises and restructuring the subjects of natural monopolies and large enterprises for 2003-2012 was approved by the decision of the Government of the Republic of Tajikistan as of November 7, 2003 (under ¹ 486).
The main purpose of the Strategic Plan is to assist in gradual denationalization of all medium-sized and large enterprises to further the ongoing market reforms implementing by the Government of the Republic of Tajikistan; in creation of necessary conditions for a more dynamic private sector development, in creation of modern forms of economy; in attraction of domestic and foreign investments in the country; in formation of stock market and the efficient use of enterprise assets; in burden reduction on the state budget and in creation of new jobs and increase of employment opportunities.
It should be noted that the implementation of the Strategic Plan is carried out in three directions:
1. privatization of medium-size and large enterprises with usage of English auctions;
2. privatization of medium and large enterprises in investment tenders;
3. restructurization of the subjects of natural monopolies and large enterprises.
It is worth to mention that the process of privatization is guided by the principles of transparency, openness and competitiveness.
According to Annexes 1 and 2 of the Strategic Plan, there were four hundred twenty (420) state medium-size and large enterprises privatized from 2003 to 2009. To oversee the privatized large enterprises, which are of great economic importance for the country and as specified by the Annex 2 of the Strategic Plan, the sale of such shares is made only at investment tenders. As a result, the shares of sixty eight (68) companies were sold from 2004 to 2009. During this period, the investors have invested more than $17 million US dollars to develop the production and increase job places and they have created more than three thousand (3,000) new job places.
Forms of property, in the Republic of Tajikistan, can be private and public as specified in the Article 236 of the Civil Code. Foreign states, international organizations, foreign legal entities and citizens can own property in the territory of Tajikistan according to legislation. Merge of property owned by individuals, legal entities and creation of mixed forms of ownership is allowed in the Republic of Tajikistan and, in addition, it includes the ownership of joint enterprises with participation of local legal entities and individuals. The property can be, by common property rights (shared or joint), owned by multiple persons, regardless of ownership.
Thus, Tajikistan creates equal conditions necessary for the development of diverse forms of ownership, and ensures its protection.