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Business Profile
Economy: Turkmenistan’s economy is predominantly agricultural, despite 90 per cent of the land being occupied by the Kara-Kum desert. Substantial quantities of cotton – the country is the world tenth-largest producer – are also produced under ecologically ruinous schemes established during the Soviet era. Grain, fruit and vegetables are widely grown and livestock breeding is an important source of employment. The other mainstay of the economy and its best prospect for the future is an abundance of oil and natural gas deposits, the scale of which rivals anything in the Persian and Mexican Gulfs. New pipelines are planned to supplement the sole existing one, which transports the products via Russia. Other commercially viable reserves include bromine and iodine salts and various other minerals. Most of Turkmenistan’s industry is devoted to processing the country’s principal raw materials: textiles are a key export industry and much of the extracted oil is refined within the country.
As one of the poorest republics of the former Soviet Union, Turkmenistan suffered considerable economic disruption and hardship after the Union’s demise in 1991; the increasing inability of many of its former partners to pay for its products has also caused serious difficulties. The Government responded by seeking out new markets for its products; in 1992, Turkmenistan joined the IMF and the World Bank, then the European Bank for Reconstruction and Development (as a ‘Country of Operation’) and the Islamic Development Bank. The following year, a new national currency, the Manat, was introduced. In 1996, the Government introduced an economic reform programme aimed at controlling persistent inflation and promoting foreign investment, especially in the oil and gas sector. This has met with some success; inflation is now 14 per cent, while annual growth was 16.5 per cent during 2001. This represents a considerable improvement over the 1993-98 period during which the economy contracted at an average annual rate of 10 per cent. The internal political situation and, more recently, serious political instability in Central Asia have stalled government plans to develop its resources. However, handled properly, these could eventually bring considerable prosperity to the country. Turkmenistan is a member of the Economic Co-operation Organisation, which brings together the former republics of the southern Soviet Union with Romania, Bulgaria, Albania, Greece and Turkey.
Business: The Government is particularly interested in encouraging foreign investment in a number of areas, including oil and gas production and refining; agricultural production and processing (particularly in cotton); consumer goods; export-orientated products; research and development; environmental protection and infrastructure. The Turkmen government has put a number of measures in place to encourage foreign investment. Eight Free Enterprise Economic Zones – one in each of the velayat (regions) – have been created with special incentives for companies that invest in them. These include: no import duties, a three-year tax holiday from the start of production, with a further 13 years of reduced taxes; full-profit repatriation and a swifter licensing procedure. Concerns which are 100 per cent foreign owned must be sited in Free Enterprise Economic Zones, but joint ventures may be set up anywhere. All foreign investments are protected by government guarantee from expropriation. All foreign companies and individuals wishing to invest in Turkmenistan must go through the Commission for International Economic Affairs of the Office of the President of Turkmenistan. Business is conducted formally and smart dress is required. Office hours: Mon-Fri 0900-1800.
Commercial Information: The following organisation can offer advice: Chamber of Commerce and Industry, B Karryev Street 17, Ashgabat 744000 (tel: (12) 354 717 or 355 594; fax: 351 352 or 355 381; e-mail: expo@online.tm). Information can also be obtained from the US Department of Commerce, Business Information Service for the Newly Independent States, USA Trade Center, Stop R-Binis, Ronald Reagan Building, 1401 Constitution Avenue, NW, Washington, DC 20230, USA (tel: (202) 482 4655; fax: (202) 482 2293; e-mail: bisnis@ita.doc.gov; website: www.bisnis.doc.gov).
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