The poorest of the former-Soviet Central Asian countries, Tajikistan has an economy reliant on the export of metals – particularly raw aluminum, gold, zinc ore, and lead ore – and cotton. Despite a growing economy and significant poverty reduction, job-growth is slow, and remittances from Tajiks working abroad equal over a third of the country’s GDP. Industrial production fell after the dissolution of the Soviet Union, with a third of industrial facilities running idle and most operating below full capacity.
To increase industrial productivity, diversify the economy, and create jobs, Tajikistan created a Free Economic Zone (FEZ) scheme in 2008. Today, Tajikistan has four FEZs that wave customs duties and taxes: Sughd, Panj, Danghara, and Ishkoshim. Sughd FEZ, located in Khujand, Tajikistan’s second-largest city, covers an area of 320 hectares, of which 110 are occupied by tenants. Danghara SEZ has attracted significant Chinese investment. A Chinese company produces yarn in Danghara FEZ, adding value to Tajikistan’s cotton and providing jobs for 600 people. Another Chinese company announced in 2015 that it would construct an oil refinery in the Danghara zone, with the first phase opening in June 2019.
In 2019, China State Machinery Industry Construction Group Inc announced that it would invest USD 300 million to develop a cotton processing operation that is expected to create 5,500 jobs. In February, the Tajik government approved the creation of a new FEZ, called Kulyab FEZ, specifically for this project.