Turkmenistan - Country Commercial Guide
Investment Climate Statement
Last published date:

The U.S. Department of State’s Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world. They analyze a variety of economies that are or could be markets for U.S. businesses.  The Investment Climate Statements are also references for working with partner governments to create enabling business environments that are not only economically sound, but address issues of labor, human rights, responsible business conduct, and steps taken to combat corruption.  The reports cover topics including Openness to Investment, Legal and Regulatory Systems, Protection of Real and Intellectual Property Rights, Financial Sector, State-Owned Enterprises, Responsible Business Conduct, and Corruption.

To access the ICS, visit the U.S. Department of State Investment Climate Statements website.

Executive Summary

Turkmenistan is currently considered high risk for U.S. foreign direct investment due to near total government control of the economy, strict foreign currency controls, endemic corruption, opaque and onerous bureaucratic processes, and a weak commercial law and regulatory regime.  The government has not taken serious measures to attract or incentivize foreign direct investment (FDI) and there is no significant U.S. or other FDI in the country aside from several petroleum related production sharing agreements (PSAs).  Turkmenistan’s reported $45 billion in foreign currency held outside the country and almost $10 billion in annual natural gas sales to China appear to reduce the country’s interest in FDI and working as partners with multinational companies to share in operations and profits.  However, the government of Turkmenistan may eventually be interested in U.S. and other foreign investors that can provide value to Turkmenistan’s economy by opening new export markets, providing operational expertise, offering advanced training for Turkmenistan’s workforce, and supplying the latest technologies.

Turkmenistan has potential to attract significant FDI as it has the fourth largest natural gas reserves in the world and a modern Caspian Seaport to export refined and manufactured products.  However, in practice the Government has chosen to finance the construction of new projects and allow state owned enterprises to manage their operations and sales of end products.  This has contributed to Turkmenistan remaining outside the top ten largest natural gas producers, having a comparatively small petrochemical sector, and state-owned enterprises dominating Turkmenistan’s manufacturing sector. 

The most serious impediment to any investment in Turkmenistan is the government’s strict foreign currency controls which have resulted in a widely used secondary exchange rate for U.S. dollars that averaged over 5 times the official rate in 2023.  This unofficial secondary rate, which appears controlled by the government, is not accessible through any financial institutions.  This results in foreign investors being unable to repatriate profits or to convert local currency to USD to import supplies or equipment.  It also distorts data, especially GDP, contributing to the widely held view that most economic indicators released by the government are unreliable. 

Internet access is also a barrier for multinational companies.  The Government of Turkmenistan indiscriminately blocks company intranets and portals, as well as commonly used news, messaging, social media, coding, and educational websites.  VPNs are banned and largely inaccessible, and while tech-savvy individuals find work arounds, the government regularly finds and closes them..  Turkmenistan’s internet has been ranked among the slowest in the world.  Internet access for foreign companies costs 35 times more than local companies and has limited availability outside of major cities.  

Foreign companies face numerous other restrictions and challenges, especially obtaining visas and hiring skilled workers.  There is no independent judiciary or meaningful legal protections against government expropriation of assets.  Weak education and healthcare systems, as well as underdeveloped physical infrastructure are also challenges.

The government, when discussing investment, often counts foreign loans as FDI.  However, outside of the oil and gas sector, there is only one known example of significant FDI in Turkmenistan where a foreign company manages operations and shares in profits, though it has not been able to repatriate profits for more than five years due to Turkmen government restrictions on currency conversion.  The government has promoted efforts to expand downstream petrochemical production, reduce greenhouse gasses, especially methane, and improve energy and water efficiency, all offering promising investment options if the Government of Turkmenistan chooses to seek international partners.