In an attempt to diversify the sources and destinations of foreign direct investment (FDI) and enhance its impact on the country's economic development, the government has been developing strategies and increasing Turkmenistan’s global visibility. This chapter provides insights into the investment framework with a focus on a key investment promotion tool the government does not have currently and could consider developing – an Investment Promotion Agency (IPA). It also addresses some priority areas identified by the government that an IPA could cover. The chapter provides other recommendations, to ensure a coherent general picture.
Building a Competitive Investment Landscape in Turkmenistan
Abstract
Turkmenistan has been pursuing a policy of external opening and investment promotion, as outlined in its Foreign Trade Strategy for 2021-2030. According to the strategy, Turkmenistan established new trade links with other countries and major foreign companies, fostering the development of trade and economic co-operation. It also states that Turkmenistan aims to create a competitive business environment and investment climate, focusing on attracting foreign direct investment to expand and diversify its foreign trade. The strategy emphasises several key measures to achieve these goals, including stimulating investment activity, increasing the presence of national brands in foreign markets, simplifying administrative procedures, and eliminating technical barriers.
Turkmenistan currently attracts investment at levels similar to those of its Central Asian peers (Figure 3.1). Taking into account the five-year moving average of FDI inflows as a share of GDP, it appears that after a spike in the early 2010s, FDI inflows have been steadily declining relative to GDP. Despite the rather positive investment attraction record, particularly in the late-2000s/early 2010s, Turkmenistan’s recent performance in attracting new investment has been weaker (Kepbanov, Horák and Ovezmyradov, 2022[1]).
Source: (World Bank, 2025[2])
Nevertheless, Turkmenistan’s FDI stock ranks among the highest in the region. Relative to GDP, Turkmenistan’s FDI stock has been 20-30 percentage points higher than the average for the region. Turkmenistan and Kazakhstan are the two leaders of FDI stock in the region, which indicates a long-lasting presence of investors and increased economic opportunities (Figure 3.2).
Source: (UNCTAD, 2025[3])
Data provided by the authorities to the OECD point to limited FDI attraction in sectors beyond hydrocarbons. According to the government’s responses to the OECD questionnaire, seven FDI projects are planned for 2025: four focused on constructing fertiliser production facilities and three in the gas industry. Notably, gas industry projects far surpass fertiliser initiatives - themselves a by-product of gas - in terms of project value, accounting for 98.7% of total FDI for that year.
Projections for 2026 point to greater diversification despite the continued dominance of the gas sector. In 2025, gas projects are set to attract around 98 billion TMT (or 28 billion USD), while investments in other sectors for 2026 are projected at just 4.1 billion TMT (or 1.2 billion USD). Planned investments for 2026 include not only continued development in established sectors but also new projects in medical facilities and the agribusiness industry. There is also a clear commitment to expanding renewable energy, with investments in hydropower and solar plants on the agenda.
Table 3.1, which sums up the findings presented above, suggests that Turkmenistan could benefit from further improvement in investment promotion to support diversification. The creation of an Investment Promotion Agency mandated to attract investment towards selected industries would provide a clear avenue to support the government’s ambition to diversify its economy and develop more export-oriented industries (Chapter 1).
The OECD has been asked by the government of Turkmenistan to provide recommendations on investment promotion. The focus of the present chapter is to explore the possibility of creating an Investment Promotion Agency (IPA) in the country. Recommendations are derived from the OECD Policy Framework for Investment (PFI), which offers guidance on the design of policies and institutions conducive to investment growth, as well as further OECD work on investment promotion and facilitation. The PFI presents an overview of the different aspects of investment policy and helps policymakers identify areas where reforms may be needed (Box 3.1). Figure 3.3 in particular presents a brief overview of the key elements of the design of an IPA, including organisational considerations, as well as the two pillars of the agency’s activity – investment promotion, which consists in presenting the country as a promising investment destination and attracting new investments, and investment facilitation, which refers to facilitating (re-)investment by easing the different processes in which a prospective investor must engage (OECD, 2015[4]). This Chapter will cover these three topics, while also exploring the possibility of including Special Economic Zones (SEZ) and the management of Public-Private Partnerships (PPP) in the functions of the IPA, as requested by the government of Turkmenistan.
The OECD's 2015 Policy Framework for Investment provides a comprehensive approach to help states design legislation enabling investment across twelve policy areas. The framework offers recommendations, core questions for identifying areas of improvement, and supplemental questions for deeper analysis. Key recommendations include:
Investment policy: Establish transparent, non-discriminatory rules protecting investors' rights and ensuring fair treatment.
Investment promotion and facilitation: Implement strategies to attract and retain investment, including creating an IPA and reducing administrative barriers.
Trade policy: Ensure trade policies complement investment objectives by facilitating market access and reducing trade barriers.
Competition policy: Promote fair competition through efficient competition law and enforcement.
Tax policy: Design transparent and efficient tax incentives while countering abusive tax planning.
Corporate governance: Establish frameworks for responsible corporate management and accountability.
Responsible business conduct: Encourage ethical business practices and contributions to sustainable development.
Human resources development: Enhance education and training systems to equip the workforce with needed skills.
Investment in infrastructure: Mobilise public and private investment in essential infrastructure.
Financing investment: Develop financial markets and institutions to provide accessible financing options.
Public governance: Ensure effective public institutions and simplified administration supporting policy coherence.
Investment framework for green growth: Promote investments in sustainable infrastructure and environmental goods and services.
Source: (OECD, 2015[4]).
Turkmenistan could benefit from the creation of an IPA and the formulation of a comprehensive national investment strategy to guide its work
The creation of an IPA could enhance Turkmenistan’s ability to attract and facilitate high quality FDI
IPAs play a crucial role in actively promoting the country and facilitating investor entry and expansion in line with national development goals. These agencies are particularly effective when they align investment promotion strategies with broader public policy objectives such as job creation, productivity growth, and economic diversification. For Turkmenistan, an IPA could support targeted attraction of investments in emerging sectors beyond hydrocarbons, such as agriculture, energy and water efficiency, while also providing essential services that reduce barriers for investors and prompt them to reinvest. Moreover, IPAs help governments navigate increasingly complex global economic conditions by focusing on higher-impact, sustainable, and inclusive investment opportunities (OECD, 2019[5]). Most OECD countries have created such agencies to enhance investment attraction.
Source: based on information in (OECD, 2015[4])
There is a broad vision for investment policy, but the strategic vision seems to be short-term
The government has been promoting foreign direct investment through a series of legal and regulatory reforms. It has adopted several economic strategies, namely the Programme “Revival of a new era of a powerful state: the National programme of socio-economic development of Turkmenistan for 2022 – 2052” and the Programme of the President of Turkmenistan for the Socio-Economic Development of the Country for 2022–2028. Key initiatives reported in the government’s responses to the OECD questionnaire include the establishment of special economic zones (SEZs), a simplified taxation system, programmes supporting digitalisation, and the promotion of public-private partnerships (PPPs). Mentioned reforms include the improved protection of intellectual property rights and the relaxation of restrictions on joint ventures, yet the OECD could not determine whether and to what extent these have been consistently applied.
Additionally, Turkmenistan’s investment policy is guided by a range of legislative acts aimed at regulating and promoting investment activities. The legal framework supporting investment includes laws on hydrocarbon resources, currency regulation, foreign investments, and investment activities1. In 2017, the government introduced legislation on SEZs to provide additional support for both local and foreign companies. Turkmenistan’s investment strategy focuses on attracting fixed capital investment and directing it toward innovation, high-value-added production, job creation, and human capital development, while also prioritising the country’s environmental and socio-economic security.
Specific investment strategies exist, but do not seem to reflect a unified long-term vision. In addition to the broad guidelines established by the economic and trade strategies mentioned above, Turkmenistan also has strategies tailored for investment policy. However, available information provides contradictory insights. Taking only the example of recent years, it seems there was an independent investment strategy in 2024 (Turkmenistan Altyn Asyr, 2024[6]), while in 2025 the investment strategy is part of the Programme for the Socio-Economic Development of Turkmenistan and Investment in 2025, which is said to contain some tasks to foster investment policy, including through the modernisation of the legislative framework (The State News Agency of Turkmenistan, 2025[7]), as well as technical data about the various investment projects planned for the year such as the description of the projects, their locations and costs (Turkmen Portal, 2025[8]). The existence of several unrelated strategies points to the lack of a long-term strategic vision on attracting FDI.
Responsibilities in investment policy are dispersed across several institutions in the absence of an IPA
The development and implementation of investment policy is primarily entrusted to the Cabinet of Ministers, with the Ministry of Finance and Economy playing a leading role. The Cabinet of Ministers, where the President personally instructs government members to work on improving the investment climate and increasing foreign investment inflow (The State News Agency of Turkmenistan, 2025[7]), makes decisions on priority investment projects and oversees the preparation and conclusion of investment agreements. Meanwhile, the Ministry of Finance and Economy (MFE) registers investment projects and economic entities, co-ordinates and analyses investment activities, and provides information and consulting support to investors. Moreover, the MFE collaborates with other ministries and departments to prepare the investment programme for the upcoming fiscal year and led the organisation of the first international investment forum in Ashgabat in 2024, as well as a second one in Avaza in 2025.
The Agency for Protection against Economic Risks under the MFE submits proposals to the Interdepartmental Commission for the Protection of the Economy from Risks on state registration, re-registration and refusal to register branches, representative offices of foreign legal entities and enterprises with foreign investment, and issues conclusions based on the decision of the Interdepartmental Commission. Thus, the MFE has a very broad mandate on investment, ranging from investment policy development to attracting and supporting foreign investment.
Banks also plays an important role in enabling the country’s investment activities. The State Bank for Foreign Economic Affairs of Turkmenistan is the government’s designated agent in international capital markets: it attracts medium- and long-term foreign loans to finance strategically important investment projects (State Bank for Foreign Economic Affairs of Turkmenistan, 2025[9]). The Central Bank of Turkmenistan also plays an important role in regard to investment : it exercises control over the country’s currency, including by restricting conversion operations from Turkmen manats (TMT) to U.S. dollars (USD) (U.S. Department of State, 2016[10]).
Investment policy efforts are supported by the Chamber of Commerce and Industry of Turkmenistan, which is responsible, among other functions, for attracting foreign businesses to the country. In 2024, the Chamber organised 27 exhibitions as part its promotional activities. International fora, comprising events in Turkmenistan and abroad, were used to promote legislative changes and to demonstrate opportunities for foreign investors (Chamber of Commerce and Industry of Turkmenistan, 2024[11]).
The Union of Industrialist and Entrepreneurs serves as a bridge between business and the government, acting as the government’s “listening” body. However, there is no dedicated Council under the President or the Cabinet of Ministers for investment, nor any high-level platform for regular dialogue with investors. This fragmented approach to investment promotion and facilitation highlights the need for a more streamlined and co-ordinated institutional framework to effectively attract and manage foreign investments in Turkmenistan.
Source: OECD analysis.
Recommendations
Recommendation 1.1: Establish an IPA
The government of Turkmenistan could establish an IPA. It should first clearly define the IPA’s mandate and align it with national development priorities, ensuring it can act as a one-stop shop for investors. Establishing a legal and institutional framework that grants the agency adequate autonomy and resources is essential for effectiveness, although there is no single path to follow as each country adjusts the mandate, accountability and resources of the IPA to its own institutional structure. Initial steps include appointing a skilled leadership team, creating inter-agency coordination mechanisms, and developing a comprehensive investment promotion strategy targeting priority sectors. The IPA’s basic functions should encompass proactive investor targeting and outreach, facilitation of investment procedures (including licensing and permits), provision of accurate market research and intelligence, aftercare services, and the monitoring of investment projects to ensure compliance and evaluate impact. Moreover, the agency should foster public-private dialogue to address investment climate challenges and leverage international cooperation and best practices (OECD, 2015[4]).
Recommendation 1.2: Craft a clear investment strategy, embedded within a broader economic development strategy
A coherent and structured investment strategy presenting key sectors and measures for FDI attraction could help Turkmenistan offer a clear direction for potential investors, ensuring that they understand the country’s economy-wide and sectoral priorities. The strategy could offer a roadmap outlining the steps required to promote and facilitate export-oriented FDI. The resources of the OECD’s FDI Qualities Policy Toolkit could help highlight measures that could ensure that FDI inflows contribute to skills and technology transfers, the integration of local firms into global value chains and other positive spill-over effects of FDI, such as in the digital transition and green development.
The mandate of the agency should align with the objectives laid out in the investment strategy. The strategy should also define FDI priorities, and the IPA needs to be structured and resourced with a stable budget to address them. A 2020 OECD report on Investment Promotion in Eurasia: A Mapping of Investment Promotion Agencies showed that IPAs in the Eurasia region were often struggling because of constrained resources, as it was found that IPA budgets are often correlated with the country’s GDP per capita. Nonetheless, Kazakh Invest in Kazakhstan constitutes a notable exception, operating with more than 100 staff members, which is nearly three times as much as the average among OECD countries, and has offices abroad to ensure a better representation of the country (OECD, 2020[12]).However, as the attractiveness of the economy depends on developments in a range of policy domains, the strategy also needs to define the roles and responsibilities of other government bodies, as was done in Türkiye, to foster co-ordination between the different institutions towards a common goal (Box 3.2).
Investment-related matters in Türkiye are dealt with by a state body reporting to the President – the Investment Office. The Office acts as an IPA responsible for the design of the nation-wide investment strategy, in which it does not play an exclusive role. Indeed, alongside the Office, the strategy envisions a considerable role for numerous Ministries, such as the Ministry of Treasury and Finance, the Ministry of Justice, the Ministry of Industry and Technology, the Ministry of Energy and Natural Resources, the Ministry of Environment, Urbanisation and Climate Change, the Ministry of Treasury and Finance, the Ministry of Transportation and Infrastructure, the Ministry of Trade, the Ministry of Employment and Social Security, the Ministry of National Education, the Ministry of Family and Social Services, as well as other bodies, such as the Council of Higher Education and the Digital Transformation Office of Türkiye.
Such a combination of different actors allows the Office to concentrate on specific tasks. These are mainly related to promotion, covering topics such as the conduct of communication activities, the development of the co-operation programs with national and international stakeholders alike or identifying prospective investment areas. Therefore, the facilitation efforts related to concrete policy areas are directly undertaken by the appropriate Ministry, while the Office’s contribution to facilitation is mainly manifested in dealing with the administrative difficulties faced by investors. Such an approach has an advantage as its frames a global vision, in which the actors are expected to act in a co-ordinated manner.
Recommendation 1.3: The structure of the IPA must be conducive to private sector engagement, but there is no single model that ensures success
There is no single model that constitutes a best practice with respect to IPAs’ institutional format. Successful agencies operate under various institutional arrangements: some are more or less autonomous bodies, while others are integrated into ministries or government departments. They may report directly to the President or Prime Minister or to a specific Ministry. The same is true with respect to authority and mandates: there are diverse models which seem to deliver. The effectiveness of IPAs depends not only on their institutional setting but also on the allocation of adequate human and financial resources. That said, clear and effective governance and reporting lines contribute significantly to an IPA’s effectiveness. Successful IPAs often operate with a high degree of autonomy and maintain strong ties to the private sector, frequently incorporating private sector representatives among their staff and on their boards, to ensure a deep understanding of investors’ needs and to deliver more relevant services (World Bank, 2023[14]). In Turkmenistan, the government could consider establishing an IPA either as part of the existing government structure or as a semi-autonomous body. Given the current institutional framework, the IPA could potentially report to the Ministry of Finance and Economy or directly to the Cabinet of Ministers.
Recommendation 1.4: The mandate of the IPA can go beyond investment
While the aspects of investment promotion and facilitation will be discussed below, it is worth mentioning that IPAs can perform other duties contributing to the development of the national economy. A 2020 survey of IPAs in Eastern Europe, the South Caucasus and Central Asia revealed that agencies in this region often have additional responsibilities beyond traditional investment promotion. These extra mandates include support for SMEs, export promotion, regional development promotion, PPPs, privatisation programmes and investment screening and approval activities (OECD, 2020[12]). For instance, the government of Turkmenistan could consider adding export support functions to the IPA’s mandates, aligning with the government’s policy of export promotion. For example, Azerbaijan’s IPA, AZPROMO, combines investment promotion with export promotion activities, a model also found in some OECD countries (Box 3.3). This approach could serve as a model for Turkmenistan to enhance its trade capacity and support its economic diversification efforts.
The Export and Investment Promotion Agency of the Republic of Azerbaijan (AZPROMO) plays a key role in boosting the country’s non-oil sector. Established in 2003 and reshaped in 2021, it serves as a single-window platform with a dual mandate: supporting exporting firms and attracting investment in non-oil production to increase this sector’s share in Azerbaijan’s GDP – a model that could support Turkmenistan’s economic diversification.
AZPROMO provides valuable information on the legal framework and investment opportunities. Its website (AZPROMO | AZPROMO) hosts all relevant legislation for investors and exporters, categorized by hierarchy of acts in Azerbaijan, including regulatory acts from executive authorities. This allows users to quickly and efficiently assess the necessary legal information, along with reports, investment project presentations, guides, and audit results.
The agency also actively engages with the private sector to promote exports. Through the Club of Exporters, it offers operational support and hosts meetings to enhance firms’ knowledge of formal procedures like packaging, labelling, and logistics. The Export Academy further strengthens this by providing a three-month online training program where state officials teach business export strategy, operations and procedures.
Source: (AZPROMO, 2025[15])
Turkmenistan relies on several methods for investment promotion, but it could benefit from a more centralised approach
Some investment promotion measures already exist
Currently, Turkmenistan offers targeted investment promotion measures by offering sector-specific incentives to attract foreign capital and drive economic growth. The government prioritises sectors, such as oil and gas, agriculture, and tourism, providing tailored benefits such as tax breaks, import duty exemptions, and access to special economic zones. Sector-targeted policies are important, as they constitute an incentive for FDI attraction. Box 3.4 presents the OECD perspective on the role of incentives in investment promotion. Additionally, the 2024 EBRD Transition report finds that sectors which benefitted from targeted policies tend to experience a 2.8-fold increase in FDI projects ten years after the roll out of the policy (EBRD, 2024[16]).
Investment incentives are used to provide investors with specific benefits that are not available to other businesses in a jurisdiction. They are a policy tool used by governments to promote investment according to their strategic policy goals by making conditions more attractive to prospective investors, often focusing on fostering productivity, innovation, and job creation. The OECD differentiates among four categories of incentives (Table 3.2).
However, investment incentives are but one of the factors entering into consideration in a firm’s decision to invest. Feedback from OECD IPAs shows that they find the effectiveness of investment incentives to attract investors rather low when compared to factors such as connectivity and infrastructure, highly skilled human capital, estimated growth, market size and an enabling legal and administrative environment. This shows that investment promotion is tightly linked to the general business climate of the country rather than to only one of its components.
Where it is deemed expedient to introduce specific fiscal incentives for investors, these should focus on forms of support that will foster new, self-sustaining activities. If direct tax incentives are considered, for example, they should be linked to the process of capital formation. Thus, accelerated depreciation, investment tax credits or temporary exemptions from duties on capital goods would be preferable. These can directly reduce the cost of capital for new investment projects, thereby encouraging investment that might not otherwise occur. Such cost-based measures can also be easier to phase out than income-based incentives like corporate income tax (CIT) holidays, as their significance tends to wane as the project matures.
By contrast, income-based incentives, such as CIT holidays and exemptions, are generally undesirable. They may offer little to start-ups, innovative firms or established firms engaged in large new projects that, in the early stages of development, may not generate a profit and may thus have no tax to pay. However, they can offer windfall benefits to already profitable projects and can often encourage tax planning and transfer pricing in an effort to shift activity from non-exempt to exempt enterprises. To the extent that they generate new investment at all, they tend to benefit projects with relatively short payback times (i.e., within the holiday period) at the expense of longer-term ventures. Moreover, international experience shows that such incentives can be difficult to phase out, as beneficiaries have strong incentives to press for their extension.
The effectiveness of tax incentives will also be affected by their interaction with losses carried forward by companies. This raises a number of design issues. Interactions may partially or fully neutralise the value of cost-based tax incentives, and the value of profit-based tax incentives will be reduced when losses can be carried forward.
Source: (OECD, 2024[17])
Both governmental and non-governmental institutions contribute to investment promotion
As discussed above, the responsibility for investment policy design and implementation is currently dispersed across a number of state bodies in Turkmenistan, and this situation is reflected when analysing investment promotion. According to the Law on Foreign Investment, the Cabinet of Ministers defines policy on international investment co-operation, as well as the state programmes aimed at attracting investment. The identification of priority targets, sectors, and areas for investment, a key prerequisite for efficient investment promotion, is also handled by the Cabinet of Ministers.
The Law also refers to the Ministry of Finance and National Economy as a “competent organ” tasked inter alia with coordinating government activity on foreign investment, managing the registration of foreign investment projects, and introducing to the Cabinet of Ministers proposals to improve the investment climate (Mejlis of Turkmenistan, 2019[18]). The Law does not define the competent organ any further than through its objectives, but its tasks seems to be divided between the Interdepartmental Commission for Foreign Investment, which is responsible for attracting foreign investment to ensure the country’s transition to “modern market relations” (The State News Agency of Turkmenistan, 2019[19]) and the Agency for Protection from Economic Risks under the Ministry of Finance and Economy of Turkmenistan, which extended its competence with the presidential resolution n°1370 of 9 August 2019 to the organisation of the activity of the Interdepartmental Commission for Foreign Investment (Ministry of Finance and Economy of Turkmenistan, 2022[20]). The Agency for Protection from Economic Risks collects information on foreign legal entities as well as enterprises with foreign investment, verifies their “reliability” and advises the Interdepartmental Commission on whether a company should be granted the right to carry out investment projects in the country. Ensuring that primary and secondary legislation governing these institutions and their activities was easily available online, ideally in multiple languages, would make it easier for potential investors to navigate their approach to Turkmenistan.
Investment promotion in Turkmenistan is also undertaken by non-governmental bodies. For instance, the Chamber of Commerce and Industry is responsible for attracting foreign businesses to Turkmenistan, which is mainly undertaken through the organisation of exhibitions and fairs, aiming at creating a positive impression about the country among foreign partners (Chamber of Commerce and Industry of Turkmenistan, 2025[21]). Its action is complemented by the Union of Industrialists and Entrepreneurs, which also plays an important role in investment promotion, ensuring (in addition to the defence of the local entrepreneurs’ interests) the organisation of various fora, fairs and exhibitions, providing help in establishing links between investors and local businesses, conducting marketing activities and matching interested investors with Turkmen entrepreneurs (Union of Industrialists and Entrepreneurs of Turkmenistan, 2025[22]).
Investment promotion is conducted at different levels, but further engagement with potential investors is needed
Investment promotion activity seems to focus on the organisation of international fora. The country organises investment forums in the country and abroad, such as the “Investment in the Future of Turkmenistan” (IFT) Forum 2025. These serve as platforms for experience exchange, establishing partnerships, and ‘’implementing ambitious projects across various economic sectors’’ (Government of Turkmenistan, 2024[23]). Turkmenistan has had the opportunity to engage in investment promotion in international fora organised by partners, such as the Investors Forum for EU-Central Asia Transport Connectivity, where a session dedicated to Turkmen investment projects in the transport sector was organised (Business Turkmenistan, 2024[24]). The presence of Turkmenistan on the international stage is increasing, as evidenced by the 16 investment promotion events planned for various sectors for 2025 (Business Turkmenistan, 2025[25]). Moreover, bilateral business council meetings, such as the France-Turkmenistan Business Council, are crucial for investors to learn more about Turkmenistan's investment opportunities and economic potential (MEDEF, 2025[26]).
Turkmenistan has developed a single website, www.invest.gov.tm, to improve investors’ access to information about investment opportunities, legislation, and procedures. It provides general information about investment policy (although this information needs more frequent updating), a description of legal support available to investors (albeit without reference to specific legal acts), as well as previous and currently available tenders. It also features an interactive investment map, although it does not seem to reflect all investment projects as of the time of writing (June 2025) (Invest in Turkmenistan, 2025[27]).
While the website is a commendable initiative, a number of changes could strengthen it. For instance, the "Industry" section of the Investor’s Guide is currently empty; filling it with explanations about priority projects and sectors as well as government stakeholders involved would address an important gap. Similarly, it would be good to provide content for the section dedicated to Turkmenistan’s regions, which was likewise empty as of mid-2025 to better present to prospective investors the country in which they are to invest.
It would also be helpful to potential investors to provide more information on such issues as the labour market, FDI statistics, and visa procedures. Moreover, although the website is available in three languages – Turkmen, English, and Russian – not all the external links it contains offer the same accessibility, as only six of nine websites referenced in the Investor’s guide had fully functioning English versions (Invest in Turkmenistan, 2025[27]). The available official information on investment performance is sometimes difficult to interpret, making it difficult to use such information to guide action. For example, the authorities announced that the 2024 investment plan for agriculture was fulfilled at 388.5% (Government of Turkmenistan, 2024[28]), but this raises more questions than it answers in the absence of information about the basis for the original plan, as well as the sources and destinations of the investment.
Foreign investors also report difficulties liaising with local partners and government institutions. Foreign investors interviewed by the OECD team reported challenges in sustaining effective communication with state institutions when following up on meetings at international fora or during visits to the country. Additionally, the interviewees reported difficulties finding local partners. An IPA could help establish such contacts and ensure effective follow-up with state bodies.
Recommendations
Recommendation 2.1: The IPA should provide investors with better information access and engage in outreach activities by organising international events
Turkmenistan is already advancing on the development of its investment promotion policy through international fora and should continue such outreach activities. Image-building measures such as public relations (PR) activities or advertising are helpful in building awareness of Turkmenistan among the international investors. Designing a targeted approach based on sectors would be beneficial, as it would present in more detail the national needs and objectives pertaining to specific sectors (GIZ, 2020[29]). The government could consider organising side events to connect local and international businesses and could also invite more international companies, as participants have to a large extent focused on development partners.
The existing website is a key instrument for promoting investment and should further concentrate on facilitating investors’ access to key data. Thus, the government should populate its website detailing investment opportunities by sector. The existing website could benefit from regularly updated and easily accessible content, which would focus on the main information needed by investors, eventually accompanying it with online guides. Providing tools allowing investors to benchmark Turkmenistan against its peers would be beneficial, as investors will be able to gain a better picture of the comparative advantages of the economy (UNCTAD, 2023[30]). The government can consult the website of the Estonian IPA, Invest in Estonia, which presents in its “Opportunities” section 20 categories belonging to different economic sectors, such as food, business services, health, financial technologies and even defence. Each category contains a description of the country’s advantages in the sector, an overview of the market, and several case studies (Invest in Estonia, 2025[31]).
Recommendation 2.2: Define an M&E system and clear KPIs to ensure the IPA’s work align with the government’s broader economic development objectives
Effective monitoring and evaluation (M&E) systems are essential for IPAs to attract quality investment and maximise the impact of FDI on national development. For Turkmenistan, robust M&E mechanisms could play a transformative role in enhancing transparency, guiding policy, and strengthening communication with investors. This requires access to relevant and regularly updated data, a common challenge for many IPAs. In an attempt to solve the issues created by potential biases in firms’ self-reporting, the OECD has suggested linking IPA support to firms with a requirement for them to properly report on their activity. For instance, Ireland’s Foreign Direct Investment Agency, IDA Ireland, uses this to gather employment and economic activity data through mandatory surveys with the results being available to third party users (OECD, 2024[32]). Engaging directly with investors to collect feedback and real-time data would thus allow Turkmenistan to enhance the accuracy and relevance of the information gathered (OECD, 2019[33]). .
However, internal data has limits for analysis. Therefore, the IPA could establish institutional links connecting it to external sources able to monitor parameters that are usually challenging to measure for IPAs, such as skills or innovation-related questions. Although private data providers can be seen in OECD countries for this type of operation, external data collection can also be performed by public entities. For instance, InvestChile is receiving data from the Ministry of Finance, the Internal Revenues Service and the National Customs Service, and its experience shows that IPAs can benefit from suggesting new targeted questions to their institutional partners, making the data collection process more precise (OECD, 2024[34]).
Among different available M&E tools, an IPA would benefit from the design of clear Key Performance Indicators (KPIs) to ensure that its work aligned with national investment strategies and the country’s broader economic development ambitions. These could include qualitative indicators such as economic diversification, regional development, and investment in research and development, decarbonisation, job quality and skills, gender equality, and productivity – all key aspects of FDI qualities. However, they are most easily tracked when linked to a quantitative indicator with a specific target, thus orienting the agency’s operations.
In addition, several global IPAs have adopted innovative approaches to track their impact against the Sustainable Development Goals (SDGs). For instance, ProColombia tracks investment projects contributing to at least three or more SDGs, while IDA Ireland monitors the percentage of clients with corporate climate action plans (OECD, 2024[34]). The Mongolian IPA uses an SDGs Investment Map (Box 3.5). Adopting similar practices would enable Turkmenistan’s IPA to monitor and evaluate its contribution to sustainable development and other policy goals, strengthening both investor confidence and long-term economic resilience.
Like Turkmenistan, Mongolia’s economy relies heavily on its extractive sector and on mining in particular. To attract investment, Mongolia provides detailed maps, a list of strategic deposits, key statistics, and links to a dedicated website for ongoing tenders, along with procedural explanations. The website also features standard IPA components, such as investment-related legislation, opportunities, and a guide for foreign firms to understand local conditions.
Mongolia’s experience offers valuable lessons, especially in increasing information availability. For example, the investor’s guide is available in multiple languages, including English, Chinese, Kyrgyz, and Russian, to maximise outreach. Additionally, the agency’s policy objectives and action plans are available online, promoting transparency and reassuring investors.
Another feature of Mongolia’s IPA is its focus on sustainability. The website includes a Sustainable Development Goals (SDG) Investor Map that categorises projects based on their direct and indirect impact on SDGs. Each project is presented with a business model, impact thesis, market study, and economic and risk profiles, offering a comprehensive approach to investment.
Recommendation 2.3: The IPA should more actively engage with prospective investors
Besides creating an appealing presentation of the country, the IPA could reach out directly to investors who had expressed interest in the country. “Lead generation campaigns” present an example of such action, with “lead” referring to the potential investor with an already expressed interest. The main purpose of such a campaign is to identify the decision-makers in the potential investor company and send them emails and contact packages. If they declare themselves unable to invest now, it is useful to ask them to provide a list of reasons why they cannot, which can serve as an additional input for improving the country’s investment framework (GIZ, 2020[29]).
Engagement with investors can also take place through intermediaries. Intermediaries can come from industry and cluster associations, from embassies or from finance, consulting or legal services firms, working as agents and consultants or even operating as industrial park residents. Being acquainted with firms of their activity sector and developing professional relationships with them, intermediaries can constitute an asset for an IPA and prove to be valuable links with foreign investors. Collaboration with them can take the form of joint events and announcements (GIZ, 2020[29]).
Facilitation mechanisms exist, but they do not seem to be specific to investment
Investment facilitation can improve the investment climate
Investment facilitation refers to a combination of tools, policies, and processes aimed at creating a transparent, predictable, and efficient regulatory and administrative framework that makes it easier for investors to establish, operate, and expand their investments (Novik and De Crombrugghe, 2018[36]). It focuses on reducing or eliminating barriers investors face once they have decided to invest, such as unclear legislation, complex administrative procedures, high costs in terms of time and resources, limited government capacity, and risks of corruption. For instance, the government is establishing a new online system called “e-Salgyt” for online tax declarations, making it more efficient and user-friendly for taxpayers. Unlike investment promotion, which is about marketing and attracting potential investors, investment facilitation starts at the pre-establishment phase and continues throughout the investment lifecycle, including aftercare and retention.
No institution or strategy is in place for investment facilitation in Turkmenistan
No institution currently specialises in investment facilitation, with only a few support tasks available on the Invest in Turkmenistan website. There is a contact section on the website with phone numbers, and electronic and physical addresses, as well as the possibility to submit a contact form, but it is not clear to which agency the query leads. Webpages that should redirect towards external resources, such as the State Bank for Foreign Economic Activity or the State Migration Service for assistance in visa procedures, often contain either outdated or invalid links as of May 2025 (Invest in Turkmenistan, 2025[27]).
In the Eurasia region, IPAs often prioritise image-building and promotional campaigns, while placing less focus on crucial functions like investment facilitation, aftercare and policy advocacy (OECD, 2020[12]). Turkmenistan, being less well-known to many potential investors from outside Central Asia, also emphasises promotional activities. Yet it should not concentrate on promotion alone. Turkmenistan would benefit from granting its IPA facilitation tasks as well.
Investment retention and after-care are important components of investment facilitation
After-care measures and investment retention strategies play an important role in retaining investors and can be a determining factor in a decision to reinvest, especially as attracting new investors can be more challenging and costly than supporting reinvestment and expansion activities. After-care services can include regular updates on relevant legislative reforms, legal support by establishing formal communication channels with top decision-makers and assessments to identify bottlenecks in the investment climate (OECD, 2015[4]).
Recommendations
Recommendation 3.1: Closing the information gap should be among the first priorities of the IPA
The first recommendation on investment facilitation concerns information availability. In investment promotion, closing the information gap means having clear and precise information to arouse the investor’s interest, but the concept takes a different meaning in investment facilitation, where the issue is to meet the specific needs an investor may encounter when wishing to proceed with a given investment. This requires the implementation of transparent communication channels, such as fast response to an enquiry comprising already available information and indicating the approximate time for the final response. It can also include the assignment of a staff member to develop personal contact and build trust with the investor and the introduction of standardised document and presentation templates that would be used by the agency’s staff in their interactions with businesses, showing a consistent and coordinated framework across the institution. The IPA could prepare in advance some service packages or brochures that detail key information points related to business activity, such as financing solutions or recruiting personnel (GIZ, 2020[29]).
Recommendation 3.2: The IPA’s investment facilitation mandate should focus on ensuring a smooth interaction of investors with authorities and business partners alike
The IPA’s investment facilitation tools could be developed and delivered, at least in part, via the implementation on its website of a Single Window where investors can interact with IPA staff to address questions and solve problems at every stage of the investment process. The objective is to establish a reliable and trusted connection of the investor with a defined interlocutor, who would not only be able to provide them with information about the different administrative procedures but also to support them in the fulfilment of these, cutting down the number of steps an investor would need to undertake on their own towards the administration (OECD, 2015[4]). Examples of this practice abound and are noticeable even within the region (Box 3.6).
In addition to assistance in the interaction with the government, the IPA could link investors with local firms. By acting as intermediaries, IPAs facilitate business-to-business matchmaking, creating opportunities for local suppliers to participate in the value chains of foreign investors. This linkage is important because it fosters technology transfer, capacity building, and the integration of domestic companies into wider markets, which ultimately stimulates local economic growth and job creation. To support this, IPAs often maintain databases of local firms’ capabilities, organise networking events, and provide mentoring and upgrading programmes to strengthen these connections. Effective linkage facilitation builds investor confidence by ensuring they can source reliable local inputs, while also enabling domestic enterprises to benefit from increased demand and improved standards. This will both support the national economy and reduce divestment risks (OECD, 2015[4]; Novik and De Crombrugghe, 2018[36]). In Cambodia for instance, the Suppliers Database with Sustainability Dimensions allows local suppliers to register in the database and be linked to investors who are keen to support sustainable development projects linked to specific SDGs (Council for the Development of Cambodia, 2025[37]).
Kazakh Invest, operating under the Ministry of Foreign Affairs, serves as Kazakhstan’s national investment promotion agency. It provides comprehensive support to foreign investors, offering information on legislation, business guides, and insights into priority sectors. Acting as a single point of contact, Kazakh Invest assists investors throughout the entire investment process, ensuring smooth market entry and operations. As the single negotiator on behalf of the government for investments, plays a pivotal role in the government's efforts to attract FDI. It is part of Kazakhstan's strategy to reach $150 billion in FDI over the next five years (Government of Kazakhstan, 2024[38]).
The agency’s website stands out for its detailed content and interactive features. It offers step-by-step guides for starting and running a business and valuable data, such as a list of insurance companies. Its interactive smart map allows investors to assess potential projects by overplaying key information, such as the locations of major cities, SEZs, industrial zones, hotels and population density.
A key strength of Kazakh Invest is its focused approach on investment facilitation. Rather than handling both investment promotion and facilitation, it concentrates solely on investment facilitation, outsourcing promotional activities to foreign representatives of the Ministry of Foreign Affairs. Users can find on Kazakh Invest website a section dedicated to their requests, which proposes four types of interactions: investing in Kazakhstan, connecting with partners, getting a consultation and filling a complaint. The digitalisation of investment facilitation is currently being expanded with the progressive introduction of the National Digital Investment Platform (NDPI), a new Single Window aimed at directly integrating online all government agencies to ensure fast-track communication and timely project support for prospective and established investors. This model encourages closer collaboration between the public and private sector and could serve as an example for other countries.
Recommendation 3.3: Ensure reinvestment by taking into consideration investors’ feedback and provide policy advice to the government
Investment retention is a key component of investment facilitation, designed to ensure that investors stay in the country and continue investing in other local projects. Close co-operation with other institutions is required to identify the sectors where it is most important to retain investment, based on employment numbers, location and current national strategies, and to dissuade possible divestment threats by actively engaging with investors. Moreover, the IPA should assess the existing divestment risks in order to be able to address proactively any emerging issues (World Bank, 2023[41]).
The IPA could take an active role in organising a foreign investor council to collect feedback from existing investors. It could, for instance, consider the approach of regional peers such as Uzbekistan and Kazakhstan, which have both established foreign investors’ councils subordinated to their respective Presidents (Box 3.7). Although in both cases the investors’ councils are not related to an IPA, it is possible to align this platform with the country's existing governance structure either as a governmental initiative or as a competence of the IPA.
Kazakhstan was the first country of the region to create a Foreign Investors’ Council (FIC) in 1998. Its main purpose is to ensure the existence of a direct dialogue between the government and the foreign investors to efficiently address any possible issues to their investment activities, contributing to an improved investment climate. To reach this objective, the Council formulates recommendations to the President and the government on the determination of the priority areas for the investment policy and the integration of the country into the global economy, the identification of issues encountered by the foreign firms operating in Kazakhstan, as well as the creation of a legal framework which favours investment and contributes to the diversification of the economy. The exchange of views takes place during annual plenary sessions chaired by the President of the Republic, but the preliminary results of the implementation of the decisions reached during the plenary sessions are addressed at interim sessions chaired by the Prime-Minister. There are also working groups on specific subjects, such as investment policy, labour legislation, energy and ecology, digitalisation, health and pharmaceuticals. They include the other members of the Council and are conducted throughout the year.
In Uzbekistan, the FIC holds similar functions to the one in Kazakhstan, yet it also has some differences in its organisation. Indeed, the FIC focuses as well on the analysis and the identification of the issues investors face in the country, as well as to their correction. However, while the President of the Republic is the chair of the annual plenary session, the President of the European Bank for Reconstruction and Development (EBRD) is the co-chair. The interim sessions held on a biannual basis are chaired in Uzbekistan by the Minister of Investments, Industry and Trade. The FIC in Uzbekistan also has some working group thematics not present in Kazakhstan, such as financial sector and banking, investing across borders and privatisation and Public-Private Partnerships (PPP), which illustrates that it is important to adapt the working groups to the needs of the country.
To communicate effectively with investors, Turkmenistan could also create something similar to Kazakhstan’s recently established investment headquarters, which helps address key issues faced by investment projects, ensuring they are promptly brought to the attention of government leadership for resolution. Moreover, under the Decree of the President of Kazakhstan (December 2023), the Investment Headquarters was granted the authority to make binding protocol decisions (Government of Kazakhstan, 2024[38]). This gives the Investment Headquarters significant decision-making power to address urgent matters related to investments.
Moreover, the IPA will need to implement mechanisms ensuring an easy way for investors to reach out in case of difficulties. For instance, the IPA of the Republic of Korea has introduced the office of the Foreign Investment Ombudsman, who has a website to receive investor’s grievances online and who provides confidential online consultation if requested (Office of the Foreign Investment Ombudsman, 2025[44]). In addition, Kazakhstan is introducing a Unified Registry of Problems and Investor Complaints, a tool that records and tracks challenges in investment projects, including any concerns raised by investors (UNCTAD, 2024[45]).
A further issue on the policy agenda in Turkmenistan is the question of granting the IPA additional competencies pertaining to Special Economic Zones (SEZs) and Public-Private Partnerships (PPPs).
Turkmenistan has various policies on SEZs and PPPs, but implementation remains unclear
SEZs are characterised by specific regulations to attract foreign investment, often for export
Special Economic Zones (SEZs) serve as geographically defined areas where governments offer tailored regulatory, fiscal, and administrative incentives to attract investment, stimulate exports, and promote industrial development. Their primary purpose is to create a better business environment compared to the rest of the country, often by providing streamlined customs procedures, tax holidays, and enhanced infrastructure, thereby directly influencing multinational enterprises’ location decisions. SEZs can support regional economic development and help reduce inequalities by concentrating investment in less developed areas (OECD, 2023[46]). However, SEZs also entail caveats: their benefits may remain geographically confined, limiting broader spillover effects; they require effective governance to avoid inefficiencies or rent-seeking behaviour; and reliance on fiscal incentives can be costly and subject to evolving international tax rules that increasingly constrain preferential tax regimes.
Turkmen legislation addresses SEZs at a national level, but not all provisions seem to be operational
Legislative provisions on SEZs are contained in several legal texts. The Law on Investment explains the role of SEZs as investment incentives through different protections of investors’ rights and benefits accessible in the zones. It includes the absence of the requirement to obtain a license if export and import operations are conducted for the firm’s needs, the right to rent land on certain conditions, as well as exemption from fees on various procedures (Mejlis of Turkmenistan, 2019[18]). Provisions from the Tax Code contribute to framing the legal framework concerning tax exemptions (Mejlis of Turkmenistan, n.d.[47]), while a dedicated Law on Free Economic Zones defines the different types of zones, their organisation, and the conditions for their creation and closure (Mejlis of Turkmenistan, 2019[48]).
However, certain important organisational aspects are not properly explained yet or do not lead to further action. An IPA could help address these lacunae. For instance, according to the Law on Free Economic Zones, the competence for the design of the SEZ strategy belongs to the Cabinet of Ministers, while its implementation is the prerogative of a “competent organ” («upolnomochennyy organ »), which corresponds to the Ministry of Finance and Economy (Mejlis of Turkmenistan, 2019[48]). The government indicated in its responses to the OECD questionnaire that the IPA should ideally be responsible for the design and implementation of the SEZ strategy as well, which could ease the burden of the Ministry through the creation of a specialised body.
The first “modern” zone was created in Ireland in 1959. Since then the number of SEZs has exponentially increased and has resulted in a lack of consensus on definition of the concept. A commonly agreed definition is based on the following key criteria for SEZs.
Spatial: A clearly demarcated geographical area of the national territory and/or legal space.
Regulatory: a regulatory regime distinct from the rest of the economy (most often customs and fiscal rules, but potentially covering other relevant regulations, such as foreign ownership rules, access to land or employment rules). The business environment in the zone is more liberal from a policy perspective and more efficient from an administrative perspective.
National governance of SEZs: a dedicated governance and institutional structure for efficient management.
Amenities: Infrastructure support offering physical infrastructure, facility services and provisions as well as (financial or fiscal) incentives.
Note: Classifications may vary according to the source used.
Source: (OECD, 2023[46])
Despite their popularity, international experience with special zones is mixed
Overall, the cross-country evidence on economic zones suggests the following general lessons that the IPA – or any other body charged with oversight of Turkmenistan’s zone programmes – should bear in mind in determining when, where and why to create new SEZs:
They are usually not a first-best solution. The first-best option is generally to improve the overall investment climate. Zones may make sense as an intermediate step, if their creation will facilitate progress towards that goal. However, because it is often easier to extend fiscal, regulatory and customs privileges than to tackle major institutional reforms, zones can easily become alternatives to reform rather than reform facilitators. Indeed, once privileges are provided to residents of special zones, a lobby begins to form with an interest in maintaining those privileges.
They are only one instrument among many for promoting export development and growth. They are most likely to be an attractive option if they are designed in co-ordination with other investment-promotion efforts and in such a way as to generate the broadest possible benefits for the economy as a whole rather than to operate as de facto offshore enclaves. For this reason, they work best in countries with good infrastructure and financial markets, where downward linkages can be developed to domestic economic activity. (Farole and Kweka, 2011[49])notes that SEZ investment, employment and exports tend to be strongly and positively correlated with a country’s overall score on the World Economic Forum’s Global Competitiveness Index – in other words, zones do not compensate for a poor surrounding investment climate; rather, they are more likely to succeed where the overall investment climate is good.
Zones are distortionary instruments with respect to foreign trade and domestic markets and need to be designed with WTO obligations, in particular, in mind. Even if wholly WTO-compliant, they can distort domestic competition and foster segmentation in domestic labour markets.
Successful zone programmes tend to share certain common features:
They require a high degree of policy consistency, across both time and policy domains. (Charitar and Narrainen, 2009[50]) highlight the extent to which the disappointing experience of many African zones is linked to lack of consistency in both the framework of rules for zones and implementation of zone programmes. These are highly relevant concerns for the IPA or any other institutions involved in SEZ governance.
Ensuring that zones develop positive linkages to the domestic economy often requires complementary, economy-wide policies in areas like skills development, knowledge-sharing and cluster policy (FIAS, 2008[51]).
Successful zones provide quality infrastructure and a good environment for doing business; they do not always require very highly geared fiscal incentives. A survey of zone investors in ten countries in 2009 found that levels of corporate taxation ranked fifth among their concerns, behind cost/quality of utilities, access to transport infrastructure, regulatory environment for business and trade facilitation (Farole and Kweka, 2011[49]). Given Turkmenistan’s overall low-tax regime, fiscal incentives would likely be still less important.
Special zones should bring significant benefits to those outside them. The case for SEZs rests on their success in generating positive externalities to the wider economy. These could, for example, involve upskilling segments of the work force, facilitating the absorption of technology and expertise from abroad or stimulating innovation.
Zones should respect the principle of non-discrimination between foreign and domestic investors. Failure to do so can lead to all manner of strategies for gaming the system, as investors seek to operate through structures that qualify for privileged treatment (e.g. domestic players using offshore holdings to gain benefits reserved to foreign investors) rather than generating truly new investment.
There is no track record of PPPs in either national or international investment projects in Turkmenistan
Turkmenistan recently adopted a law on PPPs, although it is not clear whether there is any existing or potential PPP project in the country. The Law “On Public-Private Partnership”, adopted in 2021 aims to expand private-sector participation by providing a legal framework for such co-operation. The promotion of public-private partnership is also among the objectives of the Programme of the President of Turkmenistan for the Socio-Economic Development of Turkmenistan (2022-2028).
The link between foreign direct investment activities in Turkmenistan and PPPs has also not been established yet. The website Invest in Turkmenistan does not have any specific information on PPPs, nor is there a category which would allow foreign direct investment in existing PPP projects (Invest in Turkmenistan, 2025[27]). Closing the information gap with modest efforts in this area could help Turkmenistan advance in its plans to rely more on PPPs.
As it implements its new PPP framework, Turkmenistan may want to consider a number of lessons emerging from international experience in the use of PPPs to provide services or infrastructure. PPPs are complex instruments that involve setting up a robust system of assessing value for money using a prudent public-sector comparator and transparent and consistent guidelines regarding non-quantifiable elements in the value for money judgement. The authorities must be able to classify, measure, and allocate risk to the party best able to manage it and to adhere to sound accounting and budgeting practises.
The starting point for assessing the desirability of a PPP is the public sector comparator, a comparison of the net present cost of bids for the PPP project against the most efficient form of delivery according to a traditionally procured public-sector reference project. The comparator takes into account the risks that are transferable to a probable private party, and those risks that will be retained by the government. Thus, the public sector comparator serves as a hypothetical risk-adjusted cost of public delivery of the project. The risk here is of manipulation in favour of PPPs, not least because much depends on the discount rate chosen or on the value attributed to a risk transferred. The evaluation, moreover, encompasses qualitative aspects that involve an element of judgement on the part of government.
The second challenge is risk management. To ensure that the private partner operates efficiently and in the public interest, a sufficient, but also appropriate, amount of risk needs to be transferred. In principle, risk should be carried by the party best able to manage it. In this context, “best” means the party able to manage the risk at least cost. This may mean the party best able to prevent a risk from materialising (ex ante risk management) or the party best able to deal with the results of realised risk (ex post risk management). However, not all risks can be managed and cases may exist where none of the parties to a contract are unable to manage a risk. To those parties, such unmanageable risks are exogenous risks (an example is uninsurable force majeure risk that affects all parties).
The third key issue is affordability. A project is affordable if government expenditure associated with a project (whether or not it is a PPP) can be accommodated within the intertemporal budget constraint of the government. A PPP can make a project affordable if it results in increased efficiency that causes a project that did not fit into an intertemporal budget constraint of the government under traditional public procurement to do so with a PPP. It can be tempting to ignore the affordability issue where PPPs are off budget, but PPPs should not be undertaken to keep future expenditure “hidden” in this way. The system of government budgeting and accounting should provide a clear, transparent and true record of PPP activities in such a way that there is no incentive take the PPP route based on its accounting treatment (OECD, 2011[52]).
With these challenges in mind, there are a number of specific steps the authorities can take to maximise the likelihood of success. Ultimately, they should aim for consistent adherence to the OECD principles for the governance of PPPs (Box 3.9).
Establish a clear, predictable and legitimate institutional framework supported by competent and well-resourced authorities
1. The political leadership should ensure public awareness of the relative costs, benefits and risks of Public-Private Partnerships and conventional procurement. Popular understanding of Public-Private Partnerships requires active consultation and engagement with stakeholders as well as involving end-users in defining the project and subsequently in monitoring service quality.
2. Key institutional roles and responsibilities should be maintained. This requires that procuring authorities, Public-Private Partnerships Units, the Central Budget Authority, the Supreme Audit Institution and sector regulators are entrusted with clear mandates and sufficient resources to ensure a prudent procurement process and clear lines of accountability.
3. Ensure that all significant regulation affecting the operation of Public-Private Partnerships is clear, transparent and enforced. Red tape should be minimised and new and existing regulations should be carefully evaluated.
Ground the selection of Public-Private Partnerships in Value for Money
4. All investment projects should be prioritised at senior political level. As there are many competing investment priorities, it is the responsibility of government to define and pursue strategic goals. The decision to invest should be based on a whole of government perspective and be separate from how to procure and finance the project. There should be no institutional, procedural or accounting bias either in favour of or against Public-Private Partnerships.
5. Carefully investigate which investment method is likely to yield most value for money. Key risk factors and characteristics of specific projects should be evaluated by conducting a procurement option pre-test. A procurement option pre-test should enable the government to decide on whether it is prudent to investigate a Public-Private Partnerships option further.
6. Transfer the risks to those that manage them best. Risk should be defined, identified and measured and carried by the party for whom it costs the least to prevent the risk from realising or for whom realised risk costs the least.
7. The procuring authorities should be prepared for the operational phase of the Public-Private Partnerships. Securing value for money requires vigilance and effort of the same intensity as that necessary during the pre-operational phase. Particular care should be taken when switching to the operational phase of the Public-Private Partnerships, as the actors on the public side are liable to change.
8. Value for money should be maintained when renegotiating. Only if conditions change due to discretionary public policy actions should the government consider compensating the private sector. Any re-negotiation should be made transparently and subject to the ordinary procedures of Public-Private Partnership approval. Clear, predictable and transparent rules for dispute resolution should be in place.
9. Government should ensure there is sufficient competition in the market by a competitive tender process and by possibly structuring the Public-Private Partnerships program so that there is an ongoing functional market. Where market operators are few, governments should ensure a level playing field in the tendering process so that non-incumbent operators can enter the market.
Use the budgetary process transparently to minimise fiscal risks and ensure the integrity of the procurement process
10. In line with the government’s fiscal policy, the Central Budget Authority should ensure that the project is affordable and the overall investment envelope is sustainable.
11. The project should be treated transparently in the budget process. The budget documentation should disclose all costs and contingent liabilities. Special care should be taken to ensure that budget transparency of Public-Private Partnerships covers the whole public sector.
12. Government should guard against waste and corruption by ensuring the integrity of the procurement process. The necessary procurement skills and powers should be made available to the relevant authorities.
Source: (OECD, 2012[53])
Recommendations
Recommendation 4.1: The integration of SEZ functions into IPAs is not common, but it is possible to draw some lessons from similar projects
The integration of SEZ management is not very common in OECD countries’ IPAs, opting instead for a co-ordination of the IPA with the authority responsible for the SEZ (OECD, 2015[4]). France, for instance, does not have any body co-ordinating its SEZs. Other members, such as Türkiye, do have some functions related to SEZs, but they are very scattered and are part of larger policy objectives, being a secondary element taken into consideration rather than the focus of a dedicated team in the IPA. The case of Türkiye, with its rather deconcentrated management of SEZ matters, can constitute for Turkmenistan an insightful example of an alternative institutional framework and provide a better picture of the variety of existing solutions to approaching the topic. In Türkiye, the FDI strategy developed by the Investment Office requires the Ministry of Transport and Infrastructure to ensure the connections between the different zones, while the Ministry of National Education and the Ministry of Industry and Technology in collaboration with other institutions, such as the Organised Industrial Zones (OIZ) Supreme Organisation, have objectives concerning the planning of vocational and technical education opportunities in SEZs. The Turkish example can also be used as a model for SEZ investment promotion, as it is a clearly visible category for the users upon entering on the website (Investment Office of the Presidency of the Republic of Türkiye, 2024[13]).
Although there are no examples among OECD economies of a truly united SEZ structure in an IPA, Turkmenistan can find some inspiration in the experience of SEZ promotion agencies. They function in a similar way to IPAs, but instead of attracting investment to the whole country, they concentrate on concrete economic zones (Box 3.10). As the example of the General Authority for Investment and Free Economic Zones (GAFI) in Egypt shows, such institutions could have a special committee dedicated to reviewing and approving firms’ applications to establish themselves in a zone, engaging the private sector to discuss the need for the design of a new zone, and offer investors a dedicated alternative dispute resolution (ADR) mechanisms (OECD, 2020[54]). However, the practice of having an SEZ promotion agency together with an IPA could lead to unwanted consequences, such as a parallel functioning and, therefore, reduced effectiveness (Farole and Kweka, 2011[49]).
Kenya has opted for the creation of a specific SEZ promotion authority independent of the country’s IPA. It transposes the functions of a classic IPA to the setting of SEZs. It conducts investment promotion in the zones by making accessible the policy framework and presenting market opportunities, as well as proposes facilitation services through the implementation of one-stop-shops. It puts an emphasis on the collaboration with both private and public stakeholders to ensure its advisory work on policies is performed efficiently and responds to market needs.
However, there are also tasks undertaken by the SEZA which exclusively belong to SEZ activity. For instance, the Authority performs advisory activity to the government on all aspects of SEZs, from their designation and approval to establishment and operation. This means that the SEZA is also responsible for identifying and mapping land areas to be used for the SEZ, making sure, if needed, of their availability.
Source: (SEZ Authority, 2025[55]).
Recommendation 4.2: If properly designed, the inclusion of PPP management among IPA functions can help attract private investment
PPP management functions do not typically belong to IPAs yet can constitute a welcome addition. Not many IPAs resort to the promotion and facilitation of PPP projects. However, the presence in an IPA of a dedicated team whose work is regulated by a clear mandate and accountability can be instrumental in project design and implementation, assistance in procurement processes, monitoring of the performance of the projects, the organisation of capacity-building measures, as well as stakeholder engagement (OECD, 2015[4]).
Prerogatives on PPPs can be integrated into the IPA’s functions, as evidenced from the experience of other countries. Turkmenistan could transfer some aspects of PPP management to the IPA to make full use of its new legal framework for PPPs (Box 3.11). The IPA could be tasked with the promotion and facilitation of PPPs, and this aspect does not require considerable additions compared to regular promotion and facilitation tasks. Indeed, promotion will still include access to information about the legal framework and the economic opportunities of the projects, while facilitation measures will require assisting interested investors in the practical questions they might have.
ProInversión is the Peruvian IPA, providing both promotion and facilitation services to domestic and foreign investors. Its website www.investinperu.pe/en contains the needed information on investment incentives, the legal framework (including indications on dispute resolution), labour regimes, as well as on taxes and tariffs.
The agency’s mandate clearly indicates its involvement in the design of PPP-related policies. Article 3 of the Regulation governing the activity of the agency specifically mentions the role of ProInversión regarding PPP. It may propose recommendations in investment policy based on lessons learned from implemented projects. It also provides specialised assistance to public entities (under the executive branch) and subnational governments in promotion processes, including those involving private investment in state projects.
ProInversión is also tasked with the implementation of PPP projects. It is therefore granted the right to reorganise into PPPs the public investment projects proposed in public infrastructure and priority public services, as long as they are not under execution yet. Based on its analysis and in co-operation with representatives of a sector of the economy related to public infrastructure and priority public services, ProInversión can also declare an interest in developing new co-financed private initiatives.
The agency’s website simplifies investment in PPPs. When opening the website, the user immediately sees a panel leading to various PPP formats, such as the Projects in Assets, executed with private money on public entities’ assets, or Self- and Co-financed Initiatives. There is also a portfolio of projects in which it is possible to participate. For transparency purposes, awarded projects are also accessible.
Source: (ProInversión, 2017[56])
Source: OECD analysis
References
[15] AZPROMO (2025), Export and Investment Promotion Agency of the Republic of Azerbaijan - AZPROMO, https://azpromo.az/en/page/haqqimizda/azpromo (accessed on 6 February 2025).
[25] Business Turkmenistan (2025), Туркменистан анонсировал масштабные международные выставки и форумы 2025 года, https://business.com.tm/ru/post/12936/turkmenistan-anonsiroval-masshtabnye-mezhdunarodnye-vystavki-i-forumy-2025-goda (accessed on 22 January 2025).
[24] Business Turkmenistan (2024), На инвестфоруме в Брюсселе представлен транспортный потенциал Туркменистана, https://www.business.com.tm/ru/post/11337/na-investforume-v-bryussele-predstavlen-transportnyi-potencial-turkmenistana (accessed on 21 January 2025).
[21] Chamber of Commerce and Industry of Turkmenistan (2025), О деятельности ТППT, https://cci.gov.tm/about/o-deyatelnosti-tppt (accessed on 1 July 2025).
[11] Chamber of Commerce and Industry of Turkmenistan (2024), Chamber of Commerce and Industry of Turkmenistan, https://cci.gov.tm/about/o-deyatelnosti-tppt.
[50] Charitar, C. and N. Narrainen (2009), Africa-Asia Experience Exchange on Special Economic Zones and Competitive Clusters, The World Bank.
[37] Council for the Development of Cambodia (2025), The Suppliers Database with Sustainability Dimensions (SD2), https://sd2.cdc.gov.kh/ (accessed on 12 May 2025).
[16] EBRD (2024), Transition Report 2024-25: Navigating industrial policy, https://www.ebrd.com/transition-report-2024-25.
[49] Farole, T. and J. Kweka (2011), Institutional Best Practices for Special Economic Zones: An Application to Tanzania, World Bank Group, https://documents1.worldbank.org/curated/en/885991468341087176/pdf/644830BRI0Tanz00Box0361538B0PUBLIC0.pdf.
[51] FIAS (2008), Special Economic Zones: Performance, Lessons Learned, and Implications for Zone Development, Foreign Investment Advisory Service, The World Bank Group.
[42] Foreign Investors Council chaired by the President of the Republic of Kazakhstan (2025), Mission of the FIC, https://fic.kz/en/fic/mission (accessed on 7 July 2025).
[43] Foreign Investors Council under the President of the Republic of Uzbekistan (2025), Foreign Investors Council under the President of the Republic of Uzbekistan, https://fics.uz/ (accessed on 7 July 2025).
[29] GIZ (2020), IPA Toolbox: A practical guide to support Investment Promotion Agencies, Deutsche Gesellschaft für Internationale Zusammenarbeit, https://www.giz.de/en/downloads/giz2020-en-toolbox-investment-promotion-agencies.pdf.
[38] Government of Kazakhstan (2024), On Approval of the Concept of Investment Policy of the Republic of Kazakhstan until 2029, https://adilet.zan.kz/rus/docs/P2400000868#z187.
[28] Government of Turkmenistan (2024), Extended meeting of the Cabinet of Ministers of Turkmenistan, https://turkmenistan.gov.tm/ru/post/91837/rasshirennoe-zasedanie-kabineta-ministrov-turkmenistana-26.
[23] Government of Turkmenistan (2024), Turkmenistan Investment Forum, https://tif-turkmenistan.com/storage/app/media/brochure/tif_brochure_eng.pdf.
[31] Invest in Estonia (2025), Game-changing business opportunities from tech to timber, https://investinestonia.com/business-opportunities/ (accessed on 6 May 2025).
[27] Invest in Turkmenistan (2025), Invest in Turkmenistan, https://invest.gov.tm/ (accessed on 28 February 2025).
[35] Investment and Trade Agency of Mongolia (2025), Investment and Trade Agency of Mongolia, https://investmongolia.gov.mn/ (accessed on 10 February 2025).
[13] Investment Office of the Presidency of the Republic of Türkiye (2024), Türkiye Foreign Direct Investment Strategy, Investment Office of the Presidency of the Republic of Türkiye, https://www.invest.gov.tr/en/Documents/turkiye-fdi-strategy-action-plans-2024.pdf.
[39] Kazakh Invest (2025), Invest in Kazakhstan, https://invest.gov.kz/ (accessed on 11 February 2025).
[1] Kepbanov, Y., S. Horák and B. Ovezmyradov (2022), The investment climate in Turkmenistan: Challenges and possible ways of attracting foreign investment, Lund University, https://lucris.lub.lu.se/ws/portalfiles/portal/116796662/web_RRSL_2022_3_The_investment.pdf.
[26] MEDEF (2025), Réunion du conseil d’entreprises France-TURKMÉNISTAN autour M. Philippe MERLIN, ambassadeur de France au Turkménistan, https://www.medefinternational.fr/actions/ambassadeur-de-france-85/.
[18] Mejlis of Turkmenistan (2019), Law of Turkmenistan on Foreign Investment, https://invest.gov.tm/norm/view?id=14.
[48] Mejlis of Turkmenistan (2019), Law of Turkmenistan on Free Economic Zones, https://mejlis.gov.tm/single-law/116?lang=ru (accessed on 2 May 2025).
[47] Mejlis of Turkmenistan (n.d.), Tax Code of Turkmenistan, https://fineconomic.gov.tm/ru/legal-act/9/88.
[20] Ministry of Finance and Economy of Turkmenistan (2022), Агентство по защите экономики от рисков при министерстве финансов и экономики Туркменистана, https://fineconomic.gov.tm/ru/static-pages/6/15 (accessed on 30 June 2025).
[40] National Digital Investment Platform (2025), National Digital Investment Platform - About Us, https://investkz.gov.kz/#/about-us (accessed on 29 September 2025).
[36] Novik, A. and A. De Crombrugghe (2018), “Towards an International Framework for Investment Facilitation”, OECD Business and Finance Policy Papers, https://www.oecd.org/en/publications/towards-an-international-framework-for-investment-facilitation_b82771dc-en.html (accessed on 24 September 2025).
[34] OECD (2024), “Monitoring and evaluating sustainability in investment promotion: Evolving practices in OECD member countries”, OECD Business and Finance Policy Papers, No. 74, OECD Publishing, https://www.oecd.org/content/dam/oecd/en/publications/reports/2024/12/monitoring-and-evaluating-sustainability-in-investment-promotion_79b829c9/da22c153-en.pdf.
[32] OECD (2024), The Role of Incentives in Investment Promotion. Trends and Practices in OECD Member Countries, OECD Publishing, https://www.oecd.org/en/publications/the-role-of-incentives-in-investment-promotion_e3338264-en.html.
[17] OECD (2024), The Role of Incentives in Investment Promotion: Trends and Practices in OECD Member Countries, OECD Publishing, https://www.oecd.org/content/dam/oecd/en/publications/reports/2024/12/the-role-of-incentives-in-investment-promotion_f27f6ff4/e3338264-en.pdf.
[46] OECD (2023), Best practices in investment promotion: An overview of regional state aid and special economic zones in Europe, OECD Publishing, https://doi.org/10.1787/0c8e6ca3-en (accessed on 15 September 2025).
[12] OECD (2020), Investment Promotion in Eurasia: A Mapping of Investment Promotion Agencies, OECD Publishing, https://www.oecd.org/content/dam/oecd/en/publications/reports/2020/09/investment-promotion-in-eurasia_c59d04a4/8e76dbc2-en.pdf.
[54] OECD (2020), OECD Investment Policy Review - Egypt, OECD Publishing, https://www.oecd.org/content/dam/oecd/en/publications/reports/2020/07/oecd-investment-policy-reviews-egypt-2020_dfdf7de2/9f9c589a-en.pdf (accessed on 2025).
[5] OECD (2019), Mapping of Investment Promotion Agencies: Middle East and North Africa, https://south.euneighbours.eu/wp-content/uploads/2022/07/Mapping-of-Investment-Promotion-Agencies-MED-1.pdf (accessed on 15 September 2025).
[33] OECD (2019), Monitoring and Evaluation: A Brief Guide for Investment Promotion Agencies, OECD Publishing, https://www.oecd.org/content/dam/oecd/en/publications/reports/2019/12/monitoring-and-evaluation_30a9e9a7/82d55c1a-en.pdf.
[53] OECD (2012), Recommendation of the Council on Principles for Public Governance of Public-Private Partnerships, OECD Publishing, https://legalinstruments.oecd.org/en/instruments/oecd-legal-0392 (accessed on 13 October 2025).
[52] OECD (2011), From Lessons to Principles for the Use of Public-Private Partnerships, OECD Publishing, http://www.oecd.org/gov/budgeting/48144872.pdf.
[44] Office of the Foreign Investment Ombudsman (2025), Organizational Chart, Office of the Foreign Investment Ombudsman, https://ombudsman.kotra.or.kr/ob-en/cntnts/i-2643/web.do (accessed on 12 May 2025).
[56] ProInversión (2017), Reglamento de organización y funciones de la agencia de promoción de la inversión privada – proinversión, ProInversión, https://www.investinperu.pe/RepositorioAPS/0/1/JER/REGLAMENTO_ROF/ROF%20Publicado%20Rectificado.pdf.
[4] Publishing, O. (ed.) (2015), Policy Framework for Investment, 2015 Edition, OECD Publishing, https://www.oecd.org/en/publications/policy-framework-for-investment-2015-edition_9789264208667-en.html (accessed on 2025).
[55] SEZ Authority (2025), About Us, https://www.sezauthority.go.ke/fr/about-us (accessed on 29 April 2025).
[9] State Bank for Foreign Economic Affairs of Turkmenistan (2025), , https://www.tfeb.gov.tm/.
[7] The State News Agency of Turkmenistan (2025), Заседание Кабинета Министров Туркменистана, https://www.tdh.gov.tm/ru/post/43714/zasedanie-kabineta-ministrov-turkmenistana-142 (accessed on 1 July 2025).
[19] The State News Agency of Turkmenistan (2019), Interdepartmental commission for foreign investments, https://www.tdh.gov.tm/en/post/18467/interdepartmental-commission-for-foreign-investments (accessed on 30 June 2025).
[8] Turkmen Portal (2025), Туркменистан представил инвестиционную программу развития на 2025 год с крупными инфраструктурными проектами, https://turkmenportal.com/blog/87205/turkmenistan-predstavil-investicionnuyu-programmu-razvitiya-na-2025-god-s-krupnymi-infrastrukturnymi-proektami (accessed on 1 July 2025).
[6] Turkmenistan Altyn Asyr (2024), Инвестиционная программа Туркменистана на 2024 годы предусматривает реализацию ряда масштабных проектов, https://turkmenistan.gov.tm/ru/post/79447/investicionnaya-programma-turkmenistana-na-2024-gody-predusmatrivaet-realizaciyu-ryada-masshtabnyh-proektov (accessed on 1 July 2025).
[10] U.S. Department of State (2016), 2016 Investment Climate Statements : Turkmenistan, https://2009-2017.state.gov/e/eb/rls/othr/ics/2016/sca/254495.htm (accessed on 16 July 2025).
[3] UNCTAD (2025), Foreign direct investment: Inward and outward flows and stock, annual, https://unctadstat.unctad.org/datacentre/dataviewer/US.FdiFlowsStock (accessed on 24 April 2025).
[45] UNCTAD (2024), Kazakhstan - Approves the Concept of Investment Policy 2024-2029, https://investmentpolicy.unctad.org/investment-policy-monitor/measures/4895/kazakhstan-approves-the-concept-of-investment-policy-2024-2029 (accessed on 12 May 2025).
[30] UNCTAD (2023), The Digital Transformation of Investment Promotion Agencies, UNCTAD, https://unctad.org/system/files/official-document/diaepcbinf2022d9_en.pdf.
[22] Union of Industrialists and Entrepreneurs of Turkmenistan (2025), About CCT activity, https://cci.gov.tm/about/o-deyatelnosti-tppt (accessed on 12 May 2025).
[2] World Bank (2025), Foreign direct investment, net inflows (% of GDP) - Turkmenistan, Uzbekistan, Kazakhstan, Kyrgyz Republic, Tajikistan, https://data.worldbank.org/indicator/BX.KLT.DINV.WD.GD.ZS?locations=TM-UZ-KZ-KG-TJ (accessed on 1 July 2025).
[41] World Bank (2023), Divestment Drivers and FDI Retention, World Bank Group, https://documents1.worldbank.org/curated/en/099090823160521679/pdf/P1755380f72a400b20b136007a5c61ac2b4.pdf.
[14] World Bank (2023), What makes an Investment Promotion Agency Effective? Findings from a Structural Gravity Model, https://documents1.worldbank.org/curated/en/099144501132320106/pdf/IDU0db197ce406d740471308edd040f4f19f6f35.pdf.
← 1. Namely the Laws ‘On Hydrocarbon Resources,’ ‘On Currency Regulation and Currency Control in Foreign Economic Relations,’ ‘On Foreign Investments’, ‘On Investment Activities in Turkmenistan’, and ‘On Free Economic Zones’