Humanity has entered the era of the “electronic digit” and in this reality the action and image of many social institutions and regulators, including law, are refracted. (Khabrieva, 2018). The impact of digital transformation has spread to the legal system, both nationally and internationally.
For many years, developed countries have been improving the system of legal norms in the field of the digital economy.
The formation of a favorable investment climate largely depends on the predictability of legal regulation, its soundness and stability.
It is worth noting that even in the midst of the COVID-19 pandemic, investment in digital services continues to flow at a high level globally, outpacing investment in nearly all other sectors.
The Constitution in Tajikistan recognizes, protects and guarantees human rights and freedoms by the state, and guarantees freedom of economic and entrepreneurial activity, equality and legal protection of all forms of ownership, including private. Also, the Constitution establishes the right of everyone to privacy, ensures the privacy of correspondence, telephone conversations, postal telephone, telegraph and other messages, and also prohibits the collection, storage, use and dissemination of information about a person’s personal life without his consent. These constitutional provisions are directly related to the legal regulation of the digital economy and fully apply to it. That is, all other regulatory legal acts adopted in the field of the digital economy must comply with these constitutional norms.
The system of law and legislation, in order not to lose its effectiveness in the course of regulating new social relations, it is necessary to develop the function of reproducing new structural elements that allow to streamline the processes of digitalization of all spheres of public life and even manage them, if possible (Tanimov, 2019). But unfortunately, there is little theoretical research in the field of law on the digital economy in Tajikistan. This issue is especially relevant when implementing the Concept of Digital Economy that was officially adopted by the Government of Tajikistan on December 30, 2019.
It should be noted that one of the priorities in this concept is to strengthen the legal framework, develop a political and legal framework for such key processes of the digital economy as identification / authentication, privacy, control of personal data, regulation of data exchange, regulation of open data, work with digital contracts and other legal instruments and the regulation of information security and cybersecurity issues. Regulatory regulation of the digital economy is aimed at streamlining social, digital economic, organizational, managerial and legal relations based on the rules of behaviour of the state, business, IT organizations, IT specialists, the population, all participants in IT processes.
Back in 2011, the Concept for the formation of electronic government in the country was approved, and, in this regard, a number of projects were implemented. Significant among them, according to the author, is the implementation at the Tax Committee of the “Single Window” registration system for legal entities and individual entrepreneurs. Also, an electronic tax declaration system has been introduced, which allows payers to facilitate the reporting process and fully automate the process of submitting tax returns to the tax authorities. The next initiative of the state, the creation of a Unified Electronic Register of Information and Information on Licenses and Permits, containing complete and reliable information on the process of obtaining licenses and permits for certain types of activities in the Republic of Tajikistan.
By the resolution of the Majlisi Namoyandagon Majlisi Oli of the Republic of Tajikistan in 2016, the country approved the National Development Strategy of the Republic of Tajikistan for the period up to 2030, where one of the basic principles in the strategy is innovation (development based on innovations in all spheres of the country’s socio-economic life).
Speaking about the country’s innovative development strategy, I would like to note the draft Law of the Republic of Tajikistan “On Electronic Commerce”, directed to the consideration of the Majlisi Namoyandagon Majlisi Oli of the Republic of Tajikistan.
The development of e-commerce is beneficial to all parties. For the state, this is a transparent economy and a way out of business from the shadows. The consumer creates comfortable conditions for receiving the desired services and goods. For the bank and business, this is additional income, process automation and increased sales.
Unfortunately, at the state level in Tajikistan, digital transformation is not properly supported, and it is often difficult to overcome certain barriers.
In accordance with the laws of the Republic of Tajikistan “On the National Bank of Tajikistan”, “On banking” and “On the liquidation of credit institutions” by the resolution of the Board of the National Bank of Tajikistan dated May 21, 2021, the licenses of Agroinvestbank OJSC and Tojiksodirotbonk OJSC were revoked. (National Bank of Tajikistan, 2021).
In particular, due to the liquidation of the two largest banks in Tajikistan – Agroinvestbank and Tochiksodirotbank, due to the downgrading of the rating in the banking sector, “foreign” money costs us more. By the way, the National Bank could not clearly explain the reasons for the bankruptcy of these two large banks. Foreign lenders have many questions about their confidence in our banking sector. It is necessary to develop legal norms taking into account internationally recognized requirements. For example, to attract foreign capital to the financial sector, changes are needed in the laws of the Republic of Tajikistan “On payment services and payment system”, “On currency regulation and currency control” and “On the national bank of Tajikistan.” – Firdavs Kholmatov, The head of the Analytical Department – CJSC MDO “Imon International”.
Tajik commercial companies, for example, operate on their own, often losing out to foreign competitors. Nevertheless, examples of Tajik companies following the path of digital transformation already exist, for example, in the field of information technology, in the banking sector and in education.
| Example One of the striking examples in the banking sector of the country is the Alif Capital company, which was founded in 2014. The company launched the first in Tajikistan online store of goods in installments – alif shop. Alif entered the market with new products, which had no analogues in Tajikistan. Also, a mobile wallet “alif mobi” has been developed, which is the most popular application in the “Finance” category in the App Store and Play Market in Tajikistan. In addition, the unique automated banking system Alif-core developed by the company is of interest to foreign banks. In 2019, Alif opened a subsidiary company Alif Tech in Uzbekistan to work in the field of POS financing (installments) using a multifunctional online retail platform. In the same year, Hafiz Shahidi, director and co-founder of the financial organization Jefferson Capital Ltd, invested in the company’s share capital and became the owner of 25% of the shares (ASIA Plus, 2019). The demand for innovative Alif products has made it possible to develop at a rapid pace. Proof of this is the fact that in 6 years Alif has increased the number of his employees 100 times. |
Successful start-ups and large companies are examples of how you can take advantage of the digital revolution – to come up with and implement completely new business patterns.
Legal Aspects of cryptocurrencies, big data and blockchain technologies
Such phenomena of the digital economy as cryptocurrencies today do not have clear, specific (or do not have) legal regulation.
On the one hand, the lack of legal regulation of relations on the use of cryptocurrency significantly slows down the process of digitalization of the economy, on the other hand, the use of cryptocurrency in many cases is the cause of violation of the rights of citizens, business entities and non-observance of public law interests (Makarchuk, 2018).
In some jurisdictions (e.g., Australia) government licensing of cryptocurrency activities does not exist for these reasons.
And in Germany, on the contrary, persons providing services in the cryptocurrency market (platforms, etc.) and carrying out operations with cryptocurrencies on a permanent and commercial basis (carrying out speculative activities) must obtain an appropriate BaFin license (Global Legal Insights, 2019).
As well as German, Italian law considers cryptocurrency as a medium of exchange for a product or service. At the same time, Italian acts emphasize that the key task of legal regulation is to protect public interests related to the laundering of criminal proceeds. In Italy, they seek to control the cryptocurrency market, for this purpose in 2012 such a state body as the Italian Digital Development Agency was created, authorized to regulate this sector of the economy.
In Tajikistan, cryptocurrency is also not officially a means of exchange and savings, as well as a unit of account. In the country, all financial transactions are carried out only in the national currency – somoni.
Most countries have followed the path of targeted legislative regulation of certain aspects in the field of cryptocurrencies, and therefore it is important for Tajikistan to study the experience of these countries and draw certain conclusions and steps in this direction.
Hans Timmer, the World Bank’s Chief Economist for Europe and Central Asia, at the presentation of the report in Tbilisi, noted – “Many countries in the Europe and Central Asia region have proved fertile ground for the development of cryptocurrencies and blockchain technology” (The World Bank, 2018).
Blockchain technology is able to provide trust between the parties without any intermediaries and also free of charge. After all, new decentralized business models no longer require third-party intermediaries.
Three reasons are normally cited for the blockchain’s revolutionary capacity. First, the ‘blockchain could radically alter the existing distribution of social and economic power’ through the disintermediation of powerful intermediaries such as banks. Secondly, for advanced industrialised economies, it could enhance operational efficiencies in commerce and beyond. Thirdly, owing to the trustless trust they supposedly instil, blockchains ‘may deliver the most significant transformational change’ to developing economies absent trustworthy legal institutions (Low & Mik, 2020).
We believe that in the longer term, blockchain can lead to various changes in legal regulations, for example in the case of Tajikistan – the basic law of the Republic of Tajikistan “On public services”, or industry-specific (for example, the Law of the Republic of Tajikistan dated March 20, 2008 No. 375 “On state registration of real estate and rights to it”. But at this stage of its development, blockchain still looks like another technology that poses complex problems in terms of interpretation, regulation, and application of existing rules.
The economic impact and the specific nature of big data have already shown the need for a timely response. Reasonable, in the long term, seems to be the Law of the Republic of Tajikistan dated December 2, 2002, No. 71 “On the protection of information”, the Law of the Republic of Tajikistan dated May 10, 2002, No. 55 “On information” and the Law of the Republic of Tajikistan dated August 3, 2018 No. 1537 “On the Protection of Personal Data” of the new concept of “Big Data”, to further determine the conditions for applying a restricted access regime to them and establish the obligations of the person processing such information to ensure its confidentiality and safety.
Investment climate and perspectives
Tajikistan in the World Bank’s Doing Business 2020 rating received 61.3 points and is in 106th place, lagging behind developed countries.
Therefore, the issues of foreign investment are important for the socio-economic development of the republic.
According to the Agency on Statistics under the President of the Republic of Tajikistan, from 2007 to 2019, the inflow of foreign investment into the economy of Tajikistan amounted to 9 billion 865.7 million US dollars, of which 4 billion 345.9 million US dollars are direct investments
Also, in order to attract foreign investment and create a business environment, during the period of independence, more than 100 normative legal acts have been adopted that regulate this area, including the Laws “On State Support of Entrepreneurship”, “On Investments”, “On Foreign Economic Activity”, “On Financial lease (leasing)”, “On investment agreements”, “On free economic zones”, and other regulations. These laws are aimed at legal protection of investments, providing investors with tax and non-fiscal incentives, ensuring their participation in the privatization process and infrastructure development.
In order to ensure favorable conditions for attracting foreign investment and supporting the private sector in Tajikistan, five free economic zones have been created and the creation of information technology parks (for example, on the territory of such special zones) have much more opportunities to increase business activity and attract business. In addition, if the state provides various benefits (tax, consulting, administrative, documentary) supporting the initiatives to create precisely IT parks, then, for example, the physical isolation of the country from the landlocked is compensated. Indeed, in the IT-sphere there are no such concepts as a border, distance, etc. IT parks provide an opportunity for young talents of the country to reveal their talents, and foreign companies can help them, for example, by providing local IT companies with various orders in the field of IT.
It is worth noting that the emphasis on information technology outsourcing is one of the important elements of IT parks. For example, the total contract value of the IT outsourcing market is projected to grow to more than $ 409 billion by 2022. And according to the latest statistics, IT / software workers account for 60% of the global outsourcing market.
In parallel with the activities of IT Park, the legal framework in the field of venture financing will be improved. It is important to strengthen cooperation with international donors and firms. A dialogue is needed between the state, business, organizations and people.
To increase trust, we consider it necessary, for example, to create a platform (online portal), where representatives of the state (representatives of the presidential and government apparatus, as well as law enforcement and oversight bodies) and various business circles and associations will be included as observers.
The evolution of the digital society and the virtual space, forms network forms of communication, which, developing, allow more and more people to satisfy individual and social needs through interaction on the Internet.
Concluding remarks
By removing various barriers and introducing a consistent transformation of traditional legal mechanisms to modern realities in the field of digital relations, as well as creating a more favorable business environment, Tajikistan could attract more investment.
In addition to the digitalization of the economy, important factors are the gradual strengthening of the rule of law, increasing transparency, leveling the conditions for market competition – the key to integration into the global economy.
References
- Khabrieva T. Y. (2018). Law facing the challenges of digital reality. Journal of Russian Law, 9 (261), 5-16.
- The impact of digital technologies on the emergence of new structural elements of the legal system. Russian justice, 7, 2-5.
- Global Legal Insights. (2019). Blockchain & Cryptocurrency regulation. Retrieved March 30, 2021 from https://www.acc.com/sites/default/files/resources/vl/membersonly/Article/1489775_1.pdf
- Countries in Europe and Central Asia Can Provide Better Opportunities and Services for Citizens by Leveraging Blockchain Technologies. Retrieved June 6, 2021 from
- Low K., Mik E. (2020). Pause the blockchain legal revolution. International and Comparative Law Quarterly, 69(1), 135-175. doi:10.1017/S0020589319000502