Country Profile - Turkmenistan
Turkmenistan is located in Central Asia bordered by Kazakhstan, Uzbekistan, Afghanistan and Iran, with the landlocked Caspian Sea to the west. Sharing borders with these countries, especially Afghanistan, creates obvious security issues and complications. Turkmenistan is the world’s 52nd largest country with over 80% of the country covered by the Karakum Desert.
Turkmenistan gained independence in 1991 from the dissolution of the Soviet Union and has taken a position of neutrality since. There is a low threat from terrorism and the political situation is calm, however there is a relatively high level of security due to the bordering countries’ conflicts, especially the precarious border situation with Afghanistan and Uzbekistan due to extremist Islamist groups. The country’s business risk however is very high, making doing business in Turkmenistan very difficult.
Corruption exists at all levels of government in Turkmenistan and it ranks as one of the most corrupt countries in the world. Turkmenistan is ranked 192nd (out of 204) on the Corruptions Perceptions Index, and 197th regarding the rule of law. The governmental system is a secular democracy and presidential republic, however in reality it is highly authoritarian and the country is under full control of President Gurbanguly Berdimuhamedov and the Parliament. The government’s credibility remains very low. There is a general lack of knowledge of Western business procedures and professionals with adequate English language skills being scarce.
The current President, Berdimuhamedov, was appointed in 2006 and since his occupation of office the Constitution has been amended to allow him to stand for election again; in 2017 he won with 98% of votes, leaving no room for other political forces. He is likely to be a ‘president for life’ as was the previous President Niyazov. The electoral process does not meet international standards due to the limited choice between competing parties.
There is a lack of consistent and transparent business legislation, and the legislation that exists is subject to frequent change and various contradictory interpretations by multiple government agencies and organs.
Turkmenistan is a United Nations-recognised permanently neutral state, namely because of the geographical surroundings of more powerful states against whom Turkmenistan could not prevail in military conflict, plus the unwillingness to give up sovereignty by siding with Russia. This neutrality is set out in the Constitution of Turkmenistan to maintain its defensive character. The position of neutrality is security-focused as shown by the willingness to join non-security based institutions such as the Economic Cooperation Organisation and the Non-Aligned Movement.
The GDP in 2015 was US$ 54billion with the main industries being natural gas, oil, petroleum products, textiles and food processing. Currently 70-80 billion cubic metres of gas are produced annually in Turkmenistan, with it holding the 4th largest natural gas reserves globally, and 20-25% of this production is consumed internally. The economy however remains very much state-controlled, the private industry remains underdeveloped, and foreign investors and deterred by the general lack of transparency.
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