Tajikistan Reduces Capital Requirements for Small Business

Earlier this month Tajik President Emomali Rahmon issued a law reducing the minimum capital requirement for new businesses from approximately $2,000 to $73 (500 Tajik som). To put it differently, a new business previously had to pay more than twice the average income per capita (219%, to be exact), while now the requirement is equivalent to only 16%. Quite a jump.

A recent survey on reforms in entry regulation, written by Simeon Djankov, finds that Tajikistan joins a large number of countries who have recently made this jump. For good reason, it is hard to argue about what benefits such minimum capital requirements bring except that they make it difficult or impossible for poorer entrepreneurs to start a business. This is the type of regulation no sensible government wants to have on its conscience.