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Economy :
Although 90 per cent of
the land is occupied by the Kara-Kum desert, agriculture is important
to the Turkmen economy. Substantial quantities of cotton - the country
is the world’s 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, 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. Oil and gas account for 85 per cent of Turkmenistan’s export
income (under long-term contracts, 80 per cent of the gas goes to the
Ukraine while 60 per cent of the oil is bought by Italy).
As one of the poorest republics of the former Soviet Union,
Turkmenistan suffered considerable economic disruption and hardship
after its demise in 1991 (GDP declined by 10 per cent per year between
1993 and 1998); the increasing inability of many of its former trade
partners to pay for its products has also caused serious difficulties.
The Government responded by seeking out new markets. 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 current annual GDP growth is over 10 per cent.
The government has also concentrated resources in developing
Turkmenistan’s previously poor infrastructure, especially the road
network. Some aspects of the reform programme have been delayed,
including land reform in which the major role was to be assumed by the
private sector. Turkmenistan is a member of the Economic Co-operation
Organization, 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. Free Enterprise Economic Zones - one in each of the eight
velayat (regions) - have been created with special incentives for
companies that invest in them. These include : no import duties, a
3-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
organization 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 :
http://www.bisnis.doc.gov). |
