Not so long ago, entrepreneurs opening businesses in Tajikistan would routinely complain of visits by government inspectors from myriad state agencies, each with a discerning eye for anything amiss and a voracious appetite for somoni, the local currency.

An official would enter the premises and notice the fire extinguisher, for example, was fastened too high or too low on the wall. Another would say some document hadn’t been stamped in the right place. Unless the appropriate bribe was proffered, the business would be closed for an investigation, or registration withheld.

These days, Tajikistan’s business climate is brightening, entrepreneurs report. New legislation introduced on July 1 has significantly streamlined the process of registering a business in the country. And opportunities for graft have been greatly reduced by new rules that allow entrepreneurs to deal with only the State Tax Committee during the registration process. Though widespread corruption is still a challenge to anyone wishing to invest in the country, the "one-stop shop," as the new process is known, is limiting the number of individuals reaching for a handout.

"The one-stop shop limits personal contacts. The businessman comes to register in only one place; he doesn’t have to go into five or six institutions," Temur Rakhimov, the executive director of the American Chamber of Commerce, told EurasiaNet. "Corruption exists when there is a person coming to another person with some problem. Either the applicant has some flaws in his documents, or some procedures need to be done quickly and there is the chance for bribes."

"You have to present three or four documents," continued Rakhimov. "In the past the law was not very clear. You had to go through 13 steps to get your business registered, at five or six offices."

Thanks to the new legislation, the country jumped up seven places in the World Bank’s latest Doing Business study, making the country a "top 10 reformer" worldwide.

Tajikistan’s rank rose from 159 to 152 out of 183 countries surveyed in the Doing Business 2010: Reforming through Difficult Times report, released by the International Finance Corporation (IFC), an arm of the World Bank, in September.

Most agree the situation is improving, though some say it is too early to celebrate. "If they’re a top 10 reformer, that must not be hard to do, or the country must be starting in a [poor position]," said a Dushanbe-based Western businessman who wished to remain anonymous. "The documents are one thing; but are people trained to implement them? The answer is no. You can pass a law, but if you’ve got some guy at customs who doesn’t know what he’s doing, it doesn’t mean anything."

"But the changes give hope," he added.

Tajikistan still fared poorer than its Central Asian neighbors, Uzbekistan, Kyrgyzstan and Kazakhstan. And the country landed a dismal 179th out of 183 places in the study’s "trading across borders" category. Turkmenistan was not rated.

Other government measures may be hurting Tajikistan’s ability to reform. A moratorium declared in July 2008 on tax inspections may be having an adverse effect on the business climate. Of particular concern is the attitude among some small business owners that the moratorium is a tax holiday. The moratorium was a bad idea, said a Western diplomat. "Inspectors are simply turning their attention elsewhere, to [harassing] universities, for example." After it ends, "it could be a free for all for tax collectors because many businesses have [incorrectly] seen this as a tax holiday," the diplomat said, speaking on condition of anonymity.

"Tajikistan is reforming a lot, but at the margins," the diplomat added, explaining that Dushanbe is not reforming in the area of property rights, rule of law, government appropriation, or easing access to finance.

Compounding the existing problems, government officials, many say, still have an underdeveloped sense of what makes a market economy function. "Some government officials, especially at medium to lower levels, do not really understand what investment is," said Rakhimov. "They consider investment as grants. ? They do not consider investment as something that leads to a profit and don’t really see that the investor wants something in return."

Citing the example of a local supermarket chain whose foreign partner was allegedly arrested and run out of town, the diplomat said that officials don’t realize "they need private business, or there will be nothing left to steal."

The country clearly has a long way to go to attract foreign investment. Over lunch in Dushanbe, a student squeezed a can of Coca-Cola, made in Afghanistan, and lamented: "How can the Afghans make Coke and we make nothing?"

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