Verified Facts
Doing business in Turkmenistan can be challenging due to its complex regulatory environment and limited economic transparency, but the country offers significant investment opportunities in key sectors such as energy, agriculture, and manufacturing.
Quick Facts
Business Environment
Turkmenistan's business environment is characterized by a complex regulatory framework and a high level of bureaucracy, which can make it difficult for foreign investors to navigate. The government has implemented various measures to attract foreign investment, including the creation of special economic zones and the introduction of tax incentives. However, the country's state-dominated economy and limited economic transparency can create challenges for investors. Corruption is also a significant issue in Turkmenistan, and companies may encounter bribery and other forms of corruption when dealing with government officials.
The government's attitude towards foreign investment is generally positive, and the country has signed several agreements to promote foreign investment, including the Foreign Investment Law. However, the implementation of these agreements can be slow, and investors may face significant delays and bureaucratic hurdles when trying to establish a business in the country. Despite these challenges, Turkmenistan offers significant opportunities for investment, particularly in the energy and agriculture sectors.
Turkmenistan's economy is heavily reliant on natural gas exports, and the country has significant reserves of oil and gas. The government has implemented various measures to diversify the economy, including the development of the manufacturing and agriculture sectors. However, the country's lack of economic transparency and limited access to credit can create challenges for investors.
Starting a Business
| Step | Requirement | Time | Cost (USD) |
|---|---|---|---|
| 1 | Obtain a business license | 30 days | 500 |
| 2 | Register with the tax authority | 10 days | 100 |
| 3 | Open a bank account | 5 days | 50 |
| 4 | Obtain a visa for foreign employees | 20 days | 200 |
| 5 | Register with the social security authority | 10 days | 100 |
| 6 | Obtain any necessary permits and licenses | 30 days | 500 |
| 7 | Register with the statistics authority | 5 days | 50 |
| 8 | Obtain a certificate of incorporation | 10 days | 100 |
Investment Opportunities
| Sector | Opportunity | Growth Potential | Notes |
|---|---|---|---|
| Energy | Development of oil and gas fields | High | Significant reserves of oil and gas |
| Agriculture | Development of agricultural production and processing | Medium | Significant potential for growth |
| Manufacturing | Development of manufacturing industries, such as textiles and food processing | Medium | Government support for development of manufacturing sector |
| Tourism | Development of tourism infrastructure, such as hotels and resorts | Low | Limited tourist infrastructure |
| Transportation | Development of transportation infrastructure, such as roads and railways | Medium | Government support for development of transportation sector |
| Construction | Development of construction industry, including residential and commercial building | Medium | Significant demand for housing and commercial space |
Foreign Direct Investment
- FDI inflows have been increasing in recent years, with a total of $2.5 billion in 2020
- The main investing countries are China, Turkey, and the United Arab Emirates
- The government offers various incentives for foreign investors, including tax breaks and subsidies
- Restricted sectors include defense and security, as well as certain areas of the energy sector
- The government has established a number of free economic zones to attract foreign investment
Legal & Regulatory Framework
- The Civil Code provides the framework for business and commercial activities
- The Foreign Investment Law provides protection for foreign investors and outlines the procedures for establishing a business
- The Tax Code outlines the tax regime for businesses, including corporate tax rates and exemptions
- The Labor Code provides protection for workers and outlines the procedures for hiring and firing employees
- The Arbitration Law provides a framework for resolving disputes between businesses
- The Intellectual Property Law provides protection for intellectual property rights, including patents and trademarks
Challenges & Risks
- Corruption is a significant risk for businesses, and companies may encounter bribery and other forms of corruption
- The regulatory environment can be complex and bureaucratic, making it difficult for businesses to navigate
- The currency can be volatile, and exchange rates can fluctuate significantly
- The energy sector is dominated by the state, and private companies may face significant competition from state-owned enterprises
- The infrastructure can be underdeveloped, particularly outside of the capital city
- The political risk is significant, and the government has a history of instability and authoritarianism
Free Zones & Incentives
- The government has established a number of free economic zones to attract foreign investment, including the Turkmenbashi Free Economic Zone and the Mary Free Economic Zone
- The government offers various tax incentives, including exemptions from corporate tax and value-added tax
- The government provides subsidies for businesses, including support for the development of infrastructure and the purchase of equipment
- The government has established an investment promotion agency to attract foreign investment and provide support for investors
- The government offers visas and work permits for foreign employees, making it easier for companies to hire international staff