Turkmenistan is about the size of the state of California and has an estimated population of 5 million people. The country gained independence in 1991 after the breakup of the Soviet Union. Turkmenistan does not publish national statistics consistent with international standards. According to international estimates (EBRD Transition Report 2008), the country’s GDP in 2008 was $12 billion. Turkmenistan is the second-largest producer of natural gas among the countries of the former Soviet Union, following Russia. The country produced about 70.4 billion cubic meters of natural gas in 2008. In 2008, Turkmenistan’s foreign trade totaled $15.2 billion, $9.8 billion of which consisted of exports. The dominant share of Turkmenistan's exports was natural gas sales to Russia. Other key sectors include oil, refined oil products, and textiles. U.S. direct investment in 2005 was $40 million (no statistics are available for subsequent years). The Government does not acknowledge an unemployment problem which could be as high as 50% of the labor force. Market reforms in Turkmenistan have been minimal and extremely slow. The country has been pursuing a policy of providing substantial Government subsidies to the general public, as well as to such industries as agriculture. President Berdimuhamedov, elected in 2007, has promised to open up the country and improve the investment climate. Turkmenistan does not have private ownership of land and most of its industries are state-owned. The domestic private sector’s share of the economy is estimated at around 25%, with retail trade and services being the only sectors in which private ownership is permitted. A limited number of foreign petroleum companies successfully operate under production sharing agreements (PSAs). Turkmenistan’s economy is centrally managed and many business decisions are politically motivated. Turkmenistan maintained an inflation rate at around 10-12% per year for the last several years. The Government of Turkmenistan redenominated its national currency – the manat – at the beginning of 2009. Following the redenomination, the value of one new manat was equivalent to 5,000 old manat. Turkmenistan has maintained a very stable political environment since independence in 1991. The country has a single-party political system with the President being both the Head of State and the head of Government.
Turkmenistan’s challenges are very similar to those of other former Soviet Union countries. The country lacks consistent and transparent business legislation. Laws and regulations are subject to frequent change and personal interpretation of various Government agencies and officials. The judiciary branch operates under direct instruction from the President. Presidential decrees and resolutions have the force of law and frequently supersede existing legislation. Corruption exists at all levels of the Government. Qualified human resources, particularly with English language skills, are extremely scarce. Turkmenistan’s labor force generally lacks knowledge of standard western business practices.
The hydrocarbon sector is the country’s largest industry. Opportunities exist for oil and gas service providers and related service companies such as freight forwarders and logistics firms. Turkmenistan attempts to maximize value for its oil and gas and invests substantially in petroleum refining and processing facilities. It has several LPG plants and plans to build more. With the development of new gas and oil fields and the rehabilitation of old fields, there is a need for new pipeline networks and related infrastructure such as compressor stations. Many lucrative prospects have opened up for engineering and construction companies with the country’s ambitious plans to invest in new transportation infrastructure and social projects. There is a growing need for various telecommunications services and equipment including mobile communications and the Internet.
Entering the market is extremely difficult. Due to a lack of accurate and comprehensive information on the market, company assessment visits are useful. Identifying and working through a local partner or agent is vital for a successful entry. Turkmenistan's visa procedures are exceptionally cumbersome and confusing.
Key Events in 2011:
For More Information, please contact:
U.S. Embassy Ashgabat
Tel: (+99312) 35 00 45; Fax: (+99312) 39 26 14
Patrick T. Slowinski, Economic and Commercial Officer, e-mail: SlowinskiPT@state.gov
Peter T. Eckstrom, Chief of Political-Economic Section, E-mail: EckstromPT@state.gov
Serdar Akyev, Economic Assistant, E-mail: AkyevSG@state.gov