Demand for U.S. exports is dampened by the shortage of hard currency and the lack of adequate banking transfer mechanisms to effect purchases, as well as a business culture that emphasizes personal contacts over competitive bidding. Although legislation encourages foreign investment, contradictory and unclear decrees make doing business in Tajikistan a labyrinthine process. The government conducts virtually all trade in Tajikistan. Fine fiber cotton and aluminum are the two main sources of hard currency. Trade is characterized by the amount of either product that the government has allocated for purchase of imports.
Foreign investors are able, with effort, to negotiate deals with the government.
In some instances, they have received benefits such as tax relief, longterm land leases and resource allocations without which it would be exceedingly difficult to do business in Tajikistan. Export Subsidies Policy Tajikistan is not a member of the World Trade Organization and does not subscribe to the WTO agreement on export subsidies. To a large extent, it retains the Soviet practice of indirect subsidies through inefficient socialist pricing and state order mechanisms. The holdover of socialist practices is very much apparent in the production of aluminum, one of Tajikistan's two main exports. Although the government made preliminary moves in 1995 to decontrol prices in some sectors, such as electrical power and telecommunications, these prices still do not reflect a true market value.