Turkmenistan regularly announces its desire to attract more foreign investment, but tight state control of the economy, a lack of transparency, underdeveloped commercial law field, healthcare and infrastructure, and a restrictive visa regime have created a difficult foreign investment climate. There is extremely limited genuine foreign investment in the country outside the oil and gas sector. The government often incorrectly touts foreign loans as investment, which it repays fastidiously. Turkmenistan does not have a functional investment promotion agency.

The government selectively chooses its investment partners and establishing a strong relationship with a government official is often essential to achieving commercial success. Decisions to allow foreign participation in projects often appear politically driven. Officials reportedly may “seek rents” for permitting or assisting foreign investors to enter the local market. Some foreign investors have found success working through foreign business representatives who are able to leverage their personal relationships with senior leaders to advance their business interests.

A number of foreign companies though have been forced out of the market in recent years due to non-payment of invoices by the government or government connected suppliers and currency controls limiting their ability to repatriate profits.

There are no legal limits on foreign ownership or control of companies. In practice, however, the government has only allowed significant foreign ownership and foreign direct investment in the energy sector. The law permits foreigners to establish and own businesses and generally engage in business activities, but profit repatriation remains a major hurdle due to a near ban on official currency conversion.

All contractors operating in Turkmenistan for a period of at least 183 days a year must register with the Tax Department of the Ministry of Finance and Economy (formerly the Main State Tax Service). National accounting and international financial reporting standards apply to foreign investors. In the energy sector, Turkmenistan precludes foreign investors from investing in the exploration and production of its onshore gas resources. All land in Turkmenistan is government owned. Turkmenistan generally requires that citizens of Turkmenistan make up 90 percent of the workforce of foreign-owned companies (i.e., for every foreign worker, nine Turkmen citizen must be hired). This policy does not apply to foreign-owned oil and gas companies, which are subject to a more lenient policy requiring only 30 percent of the workforce to be Turkmen citizens, with the expectation that expats will also gradually be replaced by local workers through training programs.

Other governmental barriers that have reportedly been used to discriminate against investors include excessive and arbitrary tax examinations, arbitrary license extension denials, and customs clearance and visa issuance obstacles. In most cases, the government has insisted on maintaining a majority interest in any joint venture (JV). Foreign investors have been reluctant to enter JVs controlled by the government, mainly because of differing business cultures and conflicting management styles. Although there is no specific legislation requiring foreign investors to receive government approval to divest, in practice they are expected to coordinate such actions with the government.

Private entities in Turkmenistan have the right to establish and own business enterprises. The 2000 Law on Enterprises defines the legal forms of state and private businesses (state enterprises, sole proprietorships, cooperatives, partnerships, corporations, and enterprises of non-government organizations). The law allows foreign companies to establish subsidiaries, though the government does not currently register subsidiaries. The Civil Code of Turkmenistan and the Law on Enterprises govern the operation of representative and branch offices. Enterprises must be registered with the Registration Department of the Ministry of Finance and Economy. The 2008 Law on the Licensing of Certain Types of Activities (last amended in November 2015) lists 44 activities that require government licenses. The Law on Enterprises and the Law on Joint Stock Societies allow acquisitions and mergers. Turkmenistan’s legislation is not clear, however, about acquisitions and mergers involving foreign parties, nor does it have specific provisions for the disposition of interests in business enterprises, both solely domestic and those with foreign participation. Governmental approval is necessary for acquisitions and mergers of enterprises with state shares.

Foreign companies with approved government contracts and wishing to operate in Turkmenistan generally receive government support and do not face problems or significant delays when registering their operations in Turkmenistan. Under Turkmen law, all local and foreign entities operating in Turkmenistan are required to register with the Registration Department under the Ministry of Finance and Economy. Before the registration is granted, however, an inter-ministerial commission that includes the Ministry of Foreign Affairs, the Agency for Protection from Economic Risks, law enforcement agencies, and industry-specific ministries must approve it.

Foreign companies without approved government contracts that seek to establish a legal entity in Turkmenistan must go through a lengthy and cumbersome registration process involving the inter-ministerial commission mentioned above. The commission evaluates foreign companies based on their financial standing, work experience, reputation, and perceived political and legal risks. The inter-ministerial commission does not give a reason when denying the registration of a legal entity.

In order to participate in a government tender, companies are not required to be registered in Turkmenistan. However, a company interested in participating in the tender process must submit all the tender documents to the respective ministry or agency in person. Many foreign companies with no presence in Turkmenistan provide a limited power of attorney to local representatives who then submit tender documents on the company’s behalf. A list of required documents for screening is usually provided by the state agency announcing the tender. The tender process is opaque and difficult to navigate, particularly for companies outside Turkmenistan, and not all tenders are publicly announced. Many tenders are not fully available online and require a local agent to pay a fee to obtain the information on paper.

Before most contracts can be signed, the agreement must be approved by the State Commodity and Raw Materials Exchange, the Central Bank, the Supreme Control Chamber, and the Cabinet of Ministers. The approval process is not transparent and often appears politically driven. There is no legal guarantee that the information provided by companies to the government will be kept confidential.

After becoming an observer to the WTO in 2020, Turkmenistan submitted its formal application to join the WTO in 2021. However, the government has not yet undergone an investment policy review by the Organization for Economic Cooperation and Development (OECD) or World Trade Organization (WTO) trade policy review.

Post is not aware of a civil society organization that has provided review of investment policy related concerns.

Turkmenistan does not have a business registration website for use by domestic or foreign companies. Depending on the type of business activity a foreign company seeks in Turkmenistan, registration with the local statistics office, the Agency for Protection from Economic Risks, the Registration and Tax Departments under the Ministry of Finance and Economy, and the State Commodity and Raw Materials Exchange could all be required. Business registration usually takes about six months and often depends on personal connections in various government offices.

Development and implementation of public policies to attract foreign investment, investment coordination, and assistance to foreign investors are carried out by the Cabinet of Ministers of Turkmenistan. The Agency for Protection from Economic Risks under the Ministry of Finance and Economy makes decisions on providing any investment-related services to potential foreign investors based on criteria such as the financial status of the investor.

Turkmenistan’s Law on State Support to Small and Medium Enterprises (adopted in August 2009) defines small- and medium-sized enterprises as follows: in industry, power generation, construction, and gas and water supply sectors, small enterprises are defined as those with up to 50 employees and medium enterprises are those with up to 200 employees; in all other sectors small enterprises are those with up to 25 employees and medium enterprises are those with up to 100 people.

However, the benefits of the Law on State Support to Small and Medium Enterprises do not apply to: 1) state-owned enterprises; 2) enterprises with foreign investment carrying out banking or insurance activities; and 3) activities related to gambling and gaming for money.

As in many countries, business-related activities, particularly any large-scale contracts for goods or services, benefits from face-to-face contact. Foreigners wishing to visit Turkmenistan for business must request a letter of invitation issued by State Migration Service from the inviting Ministry/State Agency to travel to the country; permission also must be received from the government to meet with state ministries, agencies, and enterprises.

It is possible to conduct business with the government by hiring a local agent. The U.S. Embassy in Ashgabat can assist U.S. companies interested in identifying potential local partners and requesting a letter of invitation, which allows a traveler to board a plane for Turkmenistan and to request a visa on arrival at the airport.

Turkmenistan closed its borders to regularly scheduled international commercial air travel in March 2020 due to the COVID-19 pandemic (domestic flights are still available). It is unclear when scheduled international commercial flights will resume. Foreign embassies and some foreign companies arrange charter flights into and out of the country (Istanbul is the most common point of departure and arrival for charter flights). However, these flights are not typically permitted to land at Ashgabat International Airport and instead must land and take off from Turkmenabat or Turkmenbashi Airports. Private citizens are currently subject to 21-days quarantine upon entry. All travelers should refer to travel.state.gov for the most up-to-date information on travel restrictions and quarantine measures.

The government of Turkmenistan does not promote or incentivize outward investment and there is no investment promotion agency. The existing policies are aimed at reducing imports and promoting exports. According to unofficial reports, individual entrepreneurs have been known to invest in real estate abroad, namely in Turkey and the United Arab Emirates. Those entrepreneurs who invest abroad tend not to disclose such information, fearing possible retribution from the government.

The government does not use transparent policies to foster competition and foreign investment. Laws have frequent references to bylaws that are not publicly available. Most bylaws are passed in the form of presidential decrees. Such decrees are not categorized by subject, which makes it difficult to find relevant cross references. Personal relations with government officials can play a decisive role in determining how and when government regulations are applied. There is no information available on whether the government conducts any market studies or quantitative analysis of the impact of regulations. Regulations often appear to follow the government’s “try-and-see approach” to addressing issues. Arbitrary audits and investigations by government bodies are common in relation to both foreign and local companies.

Bureaucratic procedures are opaque, confusing, and onerous. The government does not generally provide informational support to investors. As a result, foreign companies may spend months conducting due diligence in Turkmenistan. A serious impediment to foreign investment is the lack of knowledge of internationally recognized business practices, as well as the limited number of fluent English speakers in Turkmenistan, especially outside Ashgabat. English-language material on legislation is scarce, and there are very few business consultants to assist investors. Proposed laws and regulations are not generally published in draft form for public comment.

There are no standards-setting consortia or organizations besides the Main State Standards Service. There is no independent body for filing complaints. Financial disclosure requirements are neither transparent nor consistent with international norms. Government enterprises are not required to publicize financial statements, even to foreign partners. Financial audits are often conducted by local auditors, not internationally recognized firms.

The legal framework contained in the Law on Petroleum (2008) was a partial step toward creating a more transparent policy in the energy sector. Turkmenistan’s banks completed the transition to International Financial Reporting Standards (IFRS). State-owned agencies began the transition to IFRS in 2012 and fully transitioned to National Financing Reporting Standards (NFRS) in January 2014, which is reportedly in accordance with IFRS. While IFRS may improve accounting standards by bringing them into compliance with international standards, they have no discernible impact on Turkmenistan’s fiscal transparency since fiscal data remains inaccessible to the public. There is no publicly available information regarding the budget’s conformity with IFRS. There is no public consultation process on draft bills and there are no informal regulatory processes managed by nongovernmental organizations or private sector associations. Public finances and debt obligations are not transparent.

Turkmenistan pursues a policy of neutrality (acknowledged by the United Nations in 1995) and generally does not join regional blocs. In drafting laws and regulations, the government usually includes a clause that states international agreements and laws will prevail in the case of a conflict between local and international legislation. Turkmenistan is not a member of Eurasian Economic Union. In July 2020, Turkmenistan became an observer to the WTO and in 2021 applied for full membership.

Turkmenistan is a civil law country, and the parliament adopts around 50 laws per year without involving the public, though Presidential decrees often supersede legislation. Most contracts negotiated with the government have an arbitration clause.

The Embassy strongly advises U.S. companies to include an arbitration clause identifying a dispute resolution venue outside Turkmenistan.

Investment and commercial disputes involving Turkmenistan have three common themes: nonpayment of debts, non-delivery of goods or services, and contract renegotiations. The government may claim the provider did not meet the terms of a contract as justification for nonpayment. Several disputes have centered on the government’s unwillingness to pay in freely convertible currency as contractually required. In cases where government entities have not delivered goods or services, the government has often ignored demands for delivery. Finally, a change in leadership in the government agency that signed the original contract routinely triggers the government’s desire to re-evaluate the entire contract, including profit distribution, management responsibilities, and payment schedules. The judicial branch is independent of the executive on paper only, but in practice is heavily influenced by the executive branch.

In February 2015, an updated law, “On the Chamber of Commerce and Industry of Turkmenistan” (first adopted in 1993) was signed. The new law redefined the legal and economic framework for the activities of the Chamber, defined the state support measures, and created a new body for international commercial arbitration under the Chamber’s purview. This body can consider disputes arising from contractual and other civil-legal relations in foreign trade and other forms of international economic relations, if at least one of the parties to the dispute is located outside of Turkmenistan. The enforcement of the decisions of commercial arbitration outside of Turkmenistan may be denied in Turkmenistan under certain conditions listed under Article 47 of the Law of Turkmenistan “On Commercial Arbitration” adopted in 2014 and in force as of 2016. According to the law, the parties in dispute can appeal the arbitration decision only to the Supreme Court of Turkmenistan and nowhere abroad. The government of Turkmenistan recognizes foreign court judgements on a case-by-case basis.

• According to the 2008 Law on Foreign Investment, all foreign and domestic companies and foreign investments must be registered at the Ministry of Finance and Economy.

• The Petroleum Law of 2008 (last amended in 2012) regulates offshore and onshore petroleum operations in Turkmenistan, including petroleum licensing, taxation, accounting, and other rights and obligations of state agencies and foreign partners. The Petroleum Law supersedes all other legislation pertaining to petroleum activities, including the Tax Code.

• According to the Land Code (last amended February 2017), foreign companies or individuals are permitted to lease land for non-agricultural purposes, but only the Cabinet of Ministers has the authority to grant the lease. Foreign companies may own structures and buildings.

• Turkmenistan adopted a Bankruptcy Law in 1993. Other laws affecting foreign investors include the Law on Investments (last amended in 1993), the Law on Joint Stock Societies (1999), the Law on Enterprises (2000), the Law on Business Activities (last amended in 1993), the Civil Code enforced since 2000, and the 1993 Law on Property.

Turkmenistan requires that import/export transactions and investment projects be registered at the State Commodity and Raw Materials Exchange (SCRME) and the Ministry of Finance and Economy. The procedure applies not only to contracts and agreements signed at SCRME, but also to contracts signed between third parties. SCRME is state-owned and is the only exchange in the country. The contract registration procedure includes an assessment of “price justification,” and while SCRME does not directly dictate pricing, it does generally set a ceiling for imports and a minimum price for exports. Import transactions must be registered before goods are delivered to Turkmenistan. The government generally favors long-term investment projects that do not require regular hard currency purchases of raw materials from foreign markets.

The Law on Foreign Investment, as amended in 2008, is the primary legal instrument defining the principles of investment. A foreign investor is defined in the law as an entity owning a minimum of 20 percent of a company’s assets.

Under Turkmenistan’s law, all local and foreign entities operating in Turkmenistan are required to register with the Registration Department under the Ministry of Finance and Economy. Before the registration is granted, however, an inter-ministerial commission that includes the Ministry of Foreign Affairs, the Agency for Protection from Economic Risks, law enforcement agencies, and industry-specific ministries must approve it. There is no “one-stop-shop” website for investment that provides relevant laws, rules, procedures, and reporting requirements for investors.

Foreign companies without approved government contracts that seek to establish a legal entity in Turkmenistan must go through a lengthy and cumbersome registration process involving the inter-ministerial commission mentioned above. The commission evaluates foreign companies based on their financial standing, work experience, reputation, and perceived political and legal risks.

There is no publicly available information on which agencies review transactions for competition-related concerns. The government does not publish information on any competition cases. While Turkmenistan does not have a specific law that governs competition, Article 17 (Development of Competition and Antimonopoly Activities) of the Law on State Support to Small and Medium Enterprises seeks to promote fair competition in the country.

The government has a history of arbitrarily expropriating the property of local businesses and individuals. Three known cases raise expropriation concerns for foreign businesses investing in Turkmenistan. In December 2016, the government expropriated the largest (and only foreign owned) grocery store in Ashgabat, Yimpaş (Yimpash) shopping and business center, without compensation or other legal remedy. In April 2017, the Turkish Hospital in Ashgabat was expropriated without compensation. In September 2017, Russian cell phone service provider MTS suspended its operations after the state-owned Turkmen Telecom cut the company off from the network over an alleged expired license. In each case the companies involved had valid licenses or leases.

Turkmenistan’s legislation does not provide for private ownership of land.

Turkmenistan adopted a Bankruptcy Law in 1993 (last amended March 2016), which protects certain rights of creditors, such as the satisfaction of creditors’ claims in case of the debtor’s inability or unwillingness to make payments. The law allows for criminal liability for intentional actions resulting in bankruptcy. The law does not specify the currency in which the monetary judgments are made.

According to the Law on Foreign Investments, foreign investors, especially those operating in the free economic zones, may enjoy some incentives and privileges, including license and tax exemptions, reduced registration and certification fees, land leasing rights, and extended visa validity. However, the law is inconsistently implemented and enforced, and currently no free economic zones are known to be in operation.

Foreign investors are disadvantaged because they face higher tax rates than most local companies. The value-added tax rate (VAT) is 15 percent, an income tax of eight percent is applied to JVs, and an income tax of 20 percent is applied to wholly owned foreign companies and state-owned enterprises. Dividends are taxed at 15 percent. The personal income tax rate is 10 percent. Under the Simplified Tax System of Turkmenistan, most individual entrepreneurs pay a flat two percent income tax.

The president has issued special decrees granting exemptions from taxation and other privileges to specific investors while they recoup their initial investments. The assets and property of foreign investors should be insured with the State Insurance Company of Turkmenistan pursuant to Article 53 of the 2008 Petroleum Law (if applicable) and Article 3 of the 1995 Insurance Law. National accounting and financial reporting requirements apply to foreign investors. All contractors operating in Turkmenistan for a period of at least 183 days a year must register at the Main State Tax Service. As of January 2017, 90 percent of the workforce of a company owned by a foreign investor must be composed of citizens of Turkmenistan.

Petroleum Production Sharing Agreement (PSA) holders are regulated by the 2008 Petroleum Law. They are subject to a 20 percent income tax and royalties up to 15 percent, depending on the level of production. The social welfare tax, which is 20 percent of the total local staff payroll, is paid by foreign investors and their subcontractors. PSA holders’ employees and their subcontractors pay a personal income tax of 10 percent. Subcontractors of PSA holders can bring their equipment into the country only for the duration of a valid contract. There is no specific legislation that regulates the operations of oil and gas subcontractors.

Turkmenistan currently lists 49 import and 20 export goods and materials that are subject to customs duties. The goods and materials on these lists are subject to a 0.2 percent customs fee payment and a charge of TMT 20 ($5.70) for every hour a Customs official spends inspecting the imported goods. The Customs Service maintains a list of goods subject to customs duty payment. State enterprises often receive preferential treatment; for example, wool carpets produced at state factories are exempt from customs duties. In contrast, private carpet producers pay $20 per square meter in customs duties to export a carpet. Foreign investors are required to adhere to the sanitary and environmental standards of Turkmenistan and should produce products of equal or higher quality than prescribed in national standards.

The Law on Free Economic Zones was enacted in October 2017. The law guarantees the rights of businesses, both foreign and domestic, to operate in free economic zones (FEZs) without profit ceilings. The law forbids the nationalization of enterprises operating in the zones and discrimination against foreign investors. The law does not list any FEZs currently in Turkmenistan. Previously there were ten FEZs, but these zones were not successful in drawing increased economic activity, to some extent because the government interfered in the business decisions of firms located in the zones and did not provide financing for FEZ infrastructure.

The Government of Turkmenistan does not follow forced localization policies for content in goods and technology. Some foreign companies working in the construction sector on government contracts reported that the government required them to use locally produced cement for their projects. However, this seems to be more of an exception than a rule. The government does not require foreign IT providers to turn over source code or encryption keys. We are not aware of any rules that require foreign companies to maintain a certain amount of data storage in Turkmenistan.

All land is owned by the government. Individuals and entities may own property on the land. The 1993 Law on Property (last amended November 2015) defines the following types of property owners: private, state, non-government organizations, cooperative, joint venture, foreign states, legal entities and citizens, international organizations, and mixed private and state. Some dwellings have been privatized, allowing Turkmenistan’s citizens to rent and sell apartments and houses. The Law on Privatization of State Housing came into force in January 2014. The October 2007 amendments to the Land Code (last amended February 2017) provide land leases for up to 40 years for hotels and recreational facilities in National Tourist Zones. Land and facilities subsequently built on the plot must be transferred to the state after the expiration of the contract. According to the Law on Foreign Investment, foreign investments in Turkmenistan are not subject to nationalization and requisition; foreign properties may be confiscated only following a court decision. However, this law has not been respected in practice.

Banks provide preferential mortgage loans (at an annual interest rate of 1% for up to 30 years, including a five-year grace period) for the purchase of a new residence. Only government employees qualify for such concessional loans. In addition, government entities often pay 15-50% of the price of the new residence for their employees. Until mid-2015, banks also provided regular mortgage loans (with an annual interest rate of 7-8% for up to 10 years) for housing in locations other than so-called “elite” apartments. Liens are not common in Turkmenistan.

While the legal structure to protect intellectual property (IP) is strong, enforcement is weak. IP infringement and theft are common. The government has enacted laws designed to protect intellectual property rights (IPR) domestically, but these laws are either arbitrarily implemented or not implemented at all. Turkmenistan has been on the United States government’s Special 301 Watch List  since 2000. Turkmenistan is not, however, listed in USTR’s notorious market report. There were no reports of seizures of counterfeit goods by the government.

For additional information about treaty obligations and points of contact at local IPR offices, please see WIPO’s country profiles at  http://www.wipo.int/directory/en/ .

The only stock market in the country is the Ashgabat Stock Exchange. The website, https://agb.com.tm/, is currently available only in Turkmen. According to the website, the only shares listed are in three state-controlled banks, and the five members of the exchange are all state controlled banks.

Over the past decade, the Government of Turkmenistan has adopted several laws, including the Law On Securities and Stock Exchanges of Turkmenistan (2014), the Law of Turkmenistan On Foreign Investments (2019), the State Program for the Development of the Banking System of Turkmenistan for 2011-2030. And the launch of the Ashgabat Stock Exchange in 2016. In 2021, USAID sponsored training and expert consultations for the development of the Ashgabat Stock Exchange in conjunction with the Rysgal Joint-Stock Bank.

Turkmenistan’s underdeveloped financial system and severe hard currency shortage significantly hinder the free flow of financial resources. There is no publicly available information to confirm whether the government or Central Bank respect IMF Article VIII.

There were no reported cases where foreign investors received credit on the local market. According to unofficial reports, credit is not allocated on market terms. The European Bank for Reconstruction and Development (EBRD) provides some loans to private small- and medium-sized enterprises (SMEs) in Turkmenistan.

The banking system is underdeveloped. The largest state banks include: The State Bank for Foreign Economic Relations (Vnesheconombank), Dayhanbank, Turkmenbashy Bank, Turkmenistan Bank, Halk Bank, Senagat Bank, and Rysgal bank. These banks generally operate within narrow specializations, such as foreign trade, agriculture, industry, social infrastructure, and savings and mortgages.

There are also four foreign commercial banks in the country: a joint Turkmen-Turkish bank (joint venture of Dayhanbank and Ziraat Bank), a branch of Saderat Bank of Iran, as well as Deutsche Bank and Commerzbank offices, which provide European bank guarantees for companies and for the Turkmen government; they do not provide general banking services. The National Bank of Pakistan permanently closed its Ashgabat branch.

State banks primarily service state enterprises and allocate credit on subsidized terms to state entities. Foreign investors are only able to secure credit on the local market through equity loans from EBRD and Turkmen-Turkish Bank. There are no capital markets in Turkmenistan, although the 1993 Law on Securities and Stock Exchanges outlines the main principles for issuing, selling, and circulating securities. The 1999 Law on Joint Stock Societies further provides for the issuance of common and preferred stock and bonds and convertible securities in Turkmenistan, but in the absence of a stock exchange or investment company, there is no market for securities. The Embassy is not aware of any official restrictions on a foreigner’s ability to establish a bank account based on residency status, though in practice foreigners may only open foreign currency accounts, and not manat accounts.

The country’s largest bank, Turkmenistan Bank for Foreign Economic Affairs, also known as Vnesheconombank, handles most transactions with foreign companies, especially in transactions involving the Government of Turkmenistan.

Vnesheconombank’s list of correspondent banks is available at: http://www.tfeb.gov.tm/index.php/en/about-bank-en/correspondent-relations .

All banks, including commercial banks, are tightly regulated by the state.

The government maintains a sovereign wealth fund known as the Stabilization Fund, which mainly holds state budget surpluses. The government also keeps a separate fund known as the Foreign Exchange Reserve Fund (FERF) for oil and gas revenues. There is no publicly available information about the size of these funds or how they are managed.

State-owned enterprises (SOEs) dominate Turkmenistan’s economy and control the lion’s share of the country’s industrial production, especially in onshore hydrocarbon production, transportation, refining, electricity generation and distribution, chemicals, transportation, and construction material production. Education, healthcare, and media enterprises are, with some rare exceptions, also state owned and tightly controlled. SOEs are also to varying degrees involved in agriculture, food processing, textiles, communications, construction, trade, and services.

Although SOEs are often inefficient, the government considers them strategically important. While there are some small-scale private enterprises in Turkmenistan, the government continues to exert significant influence on most economic sectors. There are no mechanisms to ensure transparency or accountability in the business decisions or operations of SOEs. There is no publicly available information on the total assets of SOEs, total net income of SOEs, the number of people employed by SOEs and the expenses these SOEs allocate to research and development (R&D). There is no published list of SOEs. Turkmenistan is not a party to the Government Procurement Agreement (GPA) within the framework of the WTO. SOEs are not uniformly subject to the same tax burden as their private sector competitors

Efforts to privatize former state enterprises have attracted little foreign or domestic investment. Outdated technology, poor infrastructure, and bureaucratic obstacles can make privatized enterprises unattractive for foreign and local investors.

Strategic facilities, as identified by the government, are not subject to privatization, including those related to natural resources. Other property not subject to privatization includes objects of cultural importance, the property of the armed and security forces, government institutions, research institutes, the facilities of the Academy of Sciences, the integrated energy system, and the public transportation system.

The rules and procedures governing privatization in Turkmenistan lack transparency. Foreign investors are allowed to participate in the bidding process only after they have been approved by the State Agency for Protection from Economic Risks under the Ministry of Finance and Economy. In December 2013, the parliament passed the Law on the Denationalization and Privatization of State Property, which took effect in July 2014.

Despite official comments emphasizing the importance of private sector growth, supporting privatization has been low on the government’s agenda. All land is government owned. Private citizens have some land usage rights, but these rights exclude the sale or mortgage of land. Land rights can be transferred only through inheritance. Foreign companies or individuals are permitted to lease land for non-agricultural purposes, but only the Cabinet of Ministers has the authority to grant leases. Since 2018, the government has offered some agricultural land for 99-year leases to farmers. As of 2019, 40 such leases existed. There was no information publicly available on the number of such leases in 2021.

The government implements various policies and regulations that it states promote socially responsible business conduct (RBC), though there is no point of contact or ombudsperson for stakeholders to raise concerns about RBC. In the past, foreign companies operating in Turkmenistan were not required to implement social projects. Social welfare activities connected with doing business in Turkmenistan generally take the form of financial sponsorship of cultural or athletic events, providing academic scholarships to Turkmen students, or the construction of small-scale facilities, such as medical clinics, to benefit the locality around a company’s facilities. Some large foreign firms have felt pressured to make significant contributions to government construction projects. There are no independent NGOs, investment funds, worker organizations/unions, or business associations promoting or monitoring RBC.

In March 2013, Turkmenistan introduced mandatory environmental insurance for all types of enterprises and organizations (with the exception of government-financed entities) carrying out activities that are potentially hazardous to the environment. This insurance program was adopted to raise environmental awareness and hold industries and businesses accountable for violating environmental laws and regulations.  The mandatory environmental insurance regulation includes a list of hazardous work and facilities subject to such insurance. The insurance is also required foreign legal entities, their branch offices, and entrepreneurs.  The State Committee for Environmental Protection and Land Resources conducts ecological inspections for companies’ compliance with regulations.

Turkmenistan is not a participant in the  Extractive Industries Transparency Initiative (EITI) . It is not clear if the government of Turkmenistan follows the OECD Guidelines for Multinational Enterprises and the United Nations Guiding Principles on Business and Human Rights.

Department of State

• Country Reports on Human Rights Practices;
• Trafficking in Persons Report;
• Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities;
• U.S. National Contact Point for the OECD Guidelines for Multinational Enterprises; and;
• Xinjiang Supply Chain Business Advisory 

Department of the Treasury

• OFAC Recent Actions

Department of Labor

• Findings on the Worst Forms of Child Labor Report;
• List of Goods Produced by Child Labor or Forced Labor;
• Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World and;
• Comply Chain.

The government of Turkmenistan announced its intention in Glasgow at COP26 to stop growth in greenhouse gas emissions by 2030, with significant reductions in following years. The statement singled out methane as an area of concern, but Turkmenistan did not sign the Global Methane Pledge and is not a member of the Global Methane Initiative or Climate and Clean Air Coalition. The government did not submit new nationally determined contributions to the United Nations for COP26, though has stated it intends to.

There is no single specifically designated government agency responsible for combating corruption. In June 2017, Turkmenistan set up the State Service for Combating Economic Crimes (SSCEC) to investigate officials and state-owned enterprises on corruption charges. SSCEC was later terminated by the President.

There is no independent corruption watchdog organization.

Anti-corruption laws are not generally enforced, and endemic corruption remains a problem. Formally, the Ministry of Internal Affairs (including the police), the Ministry of National Security, and the General Prosecutor’s Office are responsible for combating corruption. President Berdimuhamedov has publicly stated that corruption will not be tolerated.

In 2021, Transparency International ranked Turkmenistan 169 among 180 countries in its Corruption Perceptions Index. Foreign firms have identified widespread government corruption, including in the form of bribe seeking, as an obstacle to investment and business development throughout all economic sectors and regions. It is most pervasive in the areas of government procurement, the awarding of licenses, and customs.

In March 2014, the parliament adopted the Law on Combating Corruption to help identify and prosecute cases of corruption. The law prohibits government officials from accepting gifts (in person or through an intermediary) from foreign states, international organizations, and political parties. It also severely limits the ability of government officials to travel on business at the expense of foreign entities. Notwithstanding the 2014 law, corruption remains rampant. There are no NGOs involved in monitoring or investigating corruption. Certain government officials, including traffic police, are known to ask for bribes.

Turkmenistan’s political system has remained stable since Gurbanguly Berdimuhamedov became president in February 2007 and had a peaceful transfer of power to his son, Serdar Berdimuhamedov in 2022. With the exception of a reported coup attempt in 2002, there is no history of politically motivated violence. There have been no recorded examples of damage to projects or installations.

The government does not permit political opposition and maintains a tight grip on all politically sensitive issues, in part by requiring all organizations to register their activities. The Ministry of National Security and the Ministry of Internal Affairs actively monitor locals and foreigners. The country’s parliament passed a Law on Political Parties in January 2012 that defines the legal grounds for the establishment of political parties, including their rights and obligations. In August 2012, under the directive of President Berdimuhamedov, Turkmenistan created a second political party, the Party of Industrialists and Entrepreneurs. This pro-government party, created from the membership of the Union of Industrialists and Entrepreneurs, has a platform nearly identical to the President’s Democratic Party. The same is true for the Agrarian Party, which was created in September 2014 in an effort to move Turkmenistan towards a multi-party system.

Organized crime is rare, and authorities have effectively rooted out organized crime groups and syndicates. Turkmenistan does not publish crime statistics or information about crime.

Labor issues are governed by the Labor Code of Turkmenistan (last amended in July 2009), the Social Welfare code, and a number of regulations approved by presidential resolutions. Turkmenistan joined the International Labor Organization in 1993.

Unemployment and underemployment are major societal issues, particularly among Turkmenistan’s youth and in rural communities. Unofficial estimates of unemployment range from 10 to 50 percent. Due to a severe shortage of jobs and low salaries in the country, anecdotal evidence indicates that growing numbers of young Turkmen have emigrated or are emigrating to other countries, including Turkey, Russia, and other former Soviet republics. In order to stop outward migration, the State Migration Service of Turkmenistan on numerous occasions has arbitrarily denied exit to citizens at the airport and border points.

In February 2016, President Berdimuhamedov signed a decree “On Matters of Registration of the Individuals Arriving in Ashgabat for Employment Purposes,” making it more difficult for residents from other regions to seek employment in the capital city, Ashgabat. The decree introduces a work permit system by the Ministry of Labor and Social Protection, which may issue work permits for a maximum of one year. Ashgabat residents are given priority over non-residents for job openings in the city. The government has also introduced a requirement that 90 percent of any firm’s workforce be Turkmen citizens. The government continues to be the largest employer in the country. The Law on Child Labor (2004) prohibits the employment of children under the age of 16 and makes employment in hazardous and harmful labor illegal for any individual under the age of 18.

The National Center of Trade Unions of Turkmenistan, the successor to the Soviet-era system of government-controlled trade unions, is the only trade union association allowed in the country. When oil and gas prices fell in 2015, the government took steps to reduce expenses by laying off some public sector employees. There have been many reports of ministries not meeting payroll requirements for staff. Article 294 of the Labor Code of Turkmenistan states that the courts handle employer-employee labor disputes. Article 368 states that disputes arising out of collective bargaining and collective agreements can be investigated by commissions on labor disputes, trade unions of enterprises, and the court system. Although the Labor Code allows for collective bargaining, in practice it is not used and the courts do not perform the labor dispute resolution function they are assigned.

The official workday in Turkmenistan is eight hours, with the standard work week consisting of 40 hours over five days. The 2009 Labor Code reconfirmed a 40-hour work week, protected workers’ rights by promoting the role of trade unions, guaranteed job security by restricting short-term contracts, and extended the duration of annual leave from 24 calendar days to 30 calendar days.

In practice, however, government and many private sector employees are often required to work 10 hours per day and/or a sixth day without compensation. Health and safety regulations exist but are not commonly enforced. Foreigners with government permission to reside in Turkmenistan may work and are subject to the same labor regulations as citizens unless otherwise specified by law.

Ed O’Bryan
Economic Officer
U.S. Embassy Ashgabat
Economic-Commercial Section
9 Pushkin Street,
Ashgabat, Turkmenistan (+993 12) 94-00-45
trade-Ashgabat@state.gov