Turkmenistan is a physically large country (slightly larger than the state of California) but sparsely inhabited with an official population of just over six million. Although Turkmenistan’s vast natural gas and oil resources continue to attract some foreign companies, the Government of Turkmenistan has yet to implement reforms needed to create an inviting business climate where foreign investment is truly welcomed and property rights are guaranteed.
The government is centralized and non-transparent. Turkmenistan publishes limited national statistics and its data collection and evaluation methodologies are often not credible. The World Bank does not use the Government of Turkmenistan’s GDP data in its global and regional analytical reports, due to lack of reliable official statistics. The IMF also uses its own calculations for GDP growth which often differ from official Turkmen statistics. The Government of Turkmenistan cooperates with the IMF on economic reports but has not recently consented to the IMF publicly releasing the reports.
Turkmenistan continues to be a major producer and exporter of natural gas. Roughly half of Turkmenistan’s natural gas production is used domestically and the remainder is exported, mainly to China. Reliable and timely trade data is not available, but most sources agree that Turkmenistan typically runs a trade surplus due to natural gas sales.
In 2022 Turkmenistan’s largest import partners were Turkiye and the EU, followed closely by Russia. Turkmenistan’s largest export partner after China is Turkiye. The top U.S. exports to Turkmenistan in 2022 were agricultural machines and chemical products. The top U.S. imports from Turkmenistan were miscellaneous petrochemical products including fertilizer, and vegetable extracts. The top four reasons for U.S. companies to consider exporting to Turkmenistan include Turkmenistan’s preference for reliable western industrial and heavy equipment, plans to increase manufacturing of consumer goods, diversification of its agricultural sector, and its strategic geographic location to take advantage of increased regional trade.
Turkmenistan’s economy is centrally managed and most decisions that involve large business deals require approval from the top levels of the Turkmen government. Turkmenistan allows only limited private ownership of land, and many of its large industries are state-owned. Retail trade, services, processing and production, and agriculture are the main sectors in which private ownership is permitted although sometimes with government-set price controls. In 2012, Turkmenistan announced plans to privatize state-held properties under the State Program for Privatization of Enterprises and Objects of State Property. However, the process has so far proceeded slowly with few buyers willing to meet the government’s asking prices. A limited number of foreign petroleum companies successfully operate under production sharing agreements (PSAs), currently Petronas, ENI, Dragon Oil, and CNPC.
Turkmenistan’s currency is the manat (TMT). Foreign exchange is rationed and very few businesses or individuals can convert currency at the official rate of 3.5 TMT/USD. In fact, there is a government controlled secondary market rate that has remained stable at around 19 TMT/USD since mid 2022. This secondary market rate, while unofficial, is commonly used for routine transactions.
In recent years, U.S. businesses have reported increasing difficulties converting manat into U.S. dollars. Currency conversion usually requires a company (or individual) to receive specific approval from a government bank and even then is usually limited to as little as 1.5-2% of the value of the company’s bank account per week. Limitations on interational transfers in USD have also occurred at most state owned banks in 2023.
Political Environment
Visit State Department’s website for background on the country’s political and economic environment. https://www.state.gov/countries-areas/turkmenistan/
Political & Economic Environment: State Department’s website for background on the country’s political environment