This chapter provides an overview of recent economic developments in Turkmenistan, with an emphasis on trade, private-sector development and foreign direct investments. Like other economies in the region, Turkmenistan is trying to adjust to the challenges of positive yet decelerating growth trends in the wake of the COVID-19 pandemic and Russia’s full-scale invasion of Ukraine. With growing interest in alternative transport routes, the North-South and East-West corridors present significant opportunities for Turkmenistan. Yet it must be able first to implement the necessary reforms to develop a more diversified economy and improve the investment climate.
Building a Competitive Investment Landscape in Turkmenistan
Abstract
Endowed with the fourth-largest proven reserves of natural gas in the world, Turkmenistan has benefited since independence from rising hydrocarbon exports. The country has been classified as upper-middle-income since 2012, with a GDP of 64.2 billion current USD in 2024 (World Bank, 2025[1]).1 !Since the 2000s, it continuously ranks second in Central Asia by the amount of GDP per capita in purchasing power parity (PPP) (Figure 1.1). Turkmenistan's gas reserves are estimated to be about 10% of global reserves, making it a significant player in the energy sector (World Bank, 2018[2]). Turkmenistan also appears to be rich in critical raw materials in its soil, such as supposed reserves of lithium needed for the production of batteries, and there are estimates of around 70 million tons of iron ore in the West of the country (Symeonidis, 2024[3]).
Source: (IMF, 2025[4])
Turkmenistan experienced economic challenges in the mid-2010s (Figure 1.2), triggered by the end of the commodity super-cycle and the ensuing reduction in hydrocarbon export revenues in 2015-18. This prompted a devaluation of the manat’s official exchange rate, which had been pegged at 2.85 TMT to the US dollar since 2009, to a level of 3.5 TMT/USD from 2015. While the official exchange rate has remained fixed since that time, the parallel market exchange rate has experienced significant fluctuations over time, reaching as high as 38 TMT per USD in April 2021 before recovering to around 18.5 (Gogoberishvili and Bayar, 2023[5]).
Nevertheless, the economy showed resilience in the face of recent shocks, including the commodity-price adjustments of the mid-2010s, the COVID-19 pandemic and the fall-out from Russia’s full-scale invasion of Ukraine in February 2022. In 2024, growth stabilised, with the IMF projecting continued growth, albeit with recommendations for economic diversification and reforms (IMF, 2024[6]).
Economic growth has been positive although decelerating in the last years
Turkmenistan's economy remains heavily reliant on its hydrocarbon sector, with natural gas exports being the primary driver of economic growth. However, in recent years, the country seems to have experienced a slowdown in growth, with GDP growth decelerating from 5.3% in 2022 to 2% in 2023, as estimated by the International Monetary Fund (Figure 1.2). This slowdown reflects both global and domestic challenges, including fluctuating global energy prices and limited economic diversification (IMF, 2024[6]). As can be seen from Figure 1.2, the authorities’ official data presents a different picture, with the economy experiencing growth driven by the industrial, services, and agricultural sectors. Box 1.1 provides an overview of the issues surrounding these data. Additionally, official reports indicate that real wages increased by 10% during this period, which in turn bolstered consumer spending (Turkmenistan Altyn Asyr, 2024[7]).
Source: (IMF, 2024[8]) and official data provided by the government of Turkmenistan.
Official and IMF data on Turkmenistan show disparities. For instance, the GDP estimates provided by the IMF significantly differ from the official data provided by the government (Figure 1.2).
IMF analysts have provided several reasons for the difference between their results and official data. One issue was simply that published official data relied on official exchange rates, despite the fact that parallel market exchange rates were very different. A working paper published in 2023 indicated that the concerns of international observers and partners (e.g., international organisations, bilateral trade and investment partners, credit rating agencies, and independent forecasters) about GDP data for Turkmenistan intensified during the first year of the COVID-19 pandemic, as the official data showed uninterrupted strong growth (around 6%) despite the large global shock and limited policy response. This led analysts to develop a bottom-up methodology drawing not only on Turkmen official information, but also from external sources, chiefly trade data, which permits reliance on the “mirror statistics” of trade partners.
The OECD acknowledges the existence of a difference in approach between the IMF and Turkmenistan. At present, the IMF and Turkmen authorities are in discussions to resolve these disparities. This report uses IMF data for consistency and international comparability, but provides the Turkmen authorities’ data, as well, where there are important differences.
Source: Bayar and Gogoberishvili (2023[9]).
The export basket is dominated by hydrocarbon exports to China
Natural gas, mineral oils and products from their distillation constituted on average 90% of the country’s total export from 2012 to 2022. China remained the main trading partner, accounting for 75% of Turkmen export on average over the period (Figure 1.3), and bought up to 93% of Turkmen gas in 2024 (Economist Intelligence Unit, 2024[10]). Such an important reliance on one country and a highly concentrated export basket make the economy vulnerable to trade shocks affecting links with China, as was the case during the COVID-19 pandemic with the value of Turkmen exports to China falling by almost 30% (Observatory of Economic Complexity, 2025[11]).
Authorities have pursued economic diversification albeit with limited progress
The authorities have been working to diversify the country’s export basket, with other sectors experiencing strong growth, such as agriculture. For example, they report that the production of tomatoes has experienced an unprecedented growth in recent years, with exports more than tripling between 2020 and 2023 (Turkmenistan Habarlary Portaly, 2024[12]). According to interviews conducted by the OECD, tomatoes are grown in gas-heated greenhouses, making the business model attractive to local entrepreneurs due to low energy prices. Thanks to low production costs, Turkmen tomatoes have proven to be highly competitive on foreign markets. Their export is currently directed towards Central Asia and Russia, sometimes even achieving leading positions, such as in the Kyrgyz Republic, where the top-3 import origins of tomatoes are Turkmenistan (15.2 thousand tons), Uzbekistan (3.5 thousand tons) and China (722 tons) (Turkmenistan Habarlary Portaly, 2025[13]). Overall, vegetable exports in 2024 grew 41-fold compared to the value of their export in 2015 (ITC, 2025[14]).
Despite some growth in other sectors, the country’s export basket remains heavily dominated by hydrocarbons, which have increased their share in exports since 2010 (Figure 1.4). OECD survey results and interviews with private-sector firms reveal trends such as the rising significance of fertilisers and vegetables among export commodities. However, mineral fuels still accounted for over 90% of exports in 2023. There have been notable increases in the export of fertilisers—some, like sulfuric fertilisers, are by-products of gas production —with fertiliser exports growing more than 18-fold since 2015 and inorganic chemical exports rising by three times during the same period (ITC, 2025[14]). These fertilisers are mainly derived from gas production, so the link to the hydrocarbons sector remains strong. Nevertheless, this growth represents a positive, if modest, step towards diversification of production, employment and exports and official data provided to the OECD by the government also illustrates the same trend.
Source: (ITC, 2025[14])
Turkmenistan has worked to diversify its export destinations (Figure 1.5). According to the Observatory of Economic Complexity data, Turkmenistan has increased its export volume to all its Central Asian neighbours, reaching about 950 million USD with Uzbekistan in 2023 and 165 million USD the same year with Kazakhstan. These efforts are not confined to the region, as Turkmenistan has entered other markets, with increased presence noticeable over the last years in Türkiye and in Azerbaijan.
The diversification of production, output and exports will be critical to Turkmenistan’s long-term future prosperity, particularly as the world economy shifts from hydrocarbons to more sustainable forms of energy. Yet it is a daunting challenge for Turkmenistan in view of its location, size and endowments (Box 1.2).
An export-oriented economy like Turkmenistan’s, located far from the major centres of global demand, faces an exceptional competitiveness challenge, particularly in manufacturing sectors. Tradable goods producers require an edge in terms of efficiency to offset the handicap of distance. If they are to cover higher transport and capital costs and then compete on distant markets with rivals who source inputs and services in deeper, more competitive markets, then they need to be better than their rivals; being just as good may not be enough. Moreover, the limited scope for pursuing economies of scale in a large number of sectors, given the overall size of the economy, suggests that producers in the country’s non-resource tradable goods sector will need other sources of competitive advantage, e.g., focusing on unique qualities of products, where scarcity can add value. They will also need – despite the issue of transport costs – to focus on external markets, because a strategy focused on import-substitution, in a small economy, is inherently self-limiting. Diversification strategies need to be export-oriented to some degree, though the overriding concern should be neither export promotion nor import substitution but rather competitiveness in tradable goods and services.
Economic diversification is, in essence, about identifying one or more new and profitable niches in the international division of labour. While cutting-edge innovations might meet this challenge, for many economies, all that is needed is to discover new potential for producing established products profitably. This is not easy. It is difficult to know ex ante what new activities might be competitive, given the cost structure of the economy, because the existing set of market prices in an economy reveal nothing about the potential profitability of alternative (as yet hypothetical) allocations of resources (Rodrik, 2004).
Diversification efforts are likely to involve a great deal of trial-and-error; outcomes cannot generally be determined and planned ex ante. This implies that the outcomes of successful diversification policies will be difficult to predict, so policymakers should resist the temptation to try to define the production structure towards which they believe the economy should evolve. The emphasis should be not on pre-determined “strategic sectors” but on fostering the emergence of new activities – some of which will fail and others of which will take root. For most mining and hydrocarbon regions, this is likely to involve, to some extent, helping industrial producers to move up the value chain, thus diversifying on the basis of existing strengths. However, the particular directions this evolution will take are impossible to foresee, and other new activities are also likely to take off, given the right conditions.
Source: (OECD, 2014[15]).
Investment opportunities exist beyond the hydrocarbons sector
Turkmenistan offers opportunities for investment beyond hydrocarbons, particularly in sectors such as energy and water efficiency and the modernisation of agriculture, where technological upgrading is a policy priority. While successful entry requires a reliable local partner, often with established links to state institutions, opportunities can be enhanced by the availability of risk-mitigation tools. In particular, foreign businesses can rely on officially supported export credit insurance and guarantees, as well as the protections afforded through bilateral investment treaties (BITs), which the country has signed with 24 countries and which provide additional security in case of litigation (Khadim and Goddard, 2024[16]).
The current legislation provides de jure a protective framework for investors but enforcement remains an issue. Investors’ rights are protected under the Law on Investment Activity: a law restricting investment can enter into force only 10 years after their publication, the losses suffered because of a violation of the investors’ rights by state authorities are to be compensated by a court decision, and state authorities are not to intervene in the firms’ activity, except in cases foreseen by the law. Moreover, the law protects the equal rights of all investors by excluding the application of discriminatory measures that could hinder the management, use and liquidation of investments and by affirming the rule that investment-related assets cannot be nationalised without compensation reflecting their value (Mejlis of Turkmenistan, 2015[17]). Despite regulatory and legislative improvements, the OECD and other international partners note that business- and investment-related legislation is not consistently implemented nor enforced (OECD, 2023[18]). In addition, restrictions on currency conversion and the resulting difficulties in repatriating profits remain a practical obstacle for any FDI in Turkmenistan.
Turkmenistan aims to join the WTO by 2030
As part of its trade diversification efforts, Turkmenistan became a candidate for WTO accession in 2022. This led to several improvements in the legal environment for business and investment, such as the translation of its laws into both English and Russian to improve access to legislation for investors (OECD, 2023[18]). Several new programmes aimed at improving the country’s trade performance have also been adopted, such as the Programme for the Development of the Foreign Economic Activity of Turkmenistan for 2020-2025. Other programmes are still being drafted, for instance the Memorandum on the Foreign Trade Regime (Ministry of Foreign Affairs of Turkmenistan, 2024[19]).
The Programme outlines Turkmenistan's strategic plan for enhancing its foreign economic activities until 2025. It aims to align with Turkmenistan's broader socio-economic development goals, focusing on expanding international economic relations and enhancing the country's presence in the global market, by easing export, as well as attracting import and foreign direct investment. This is expected to be achieved through extensive co-operation with international partners.
The Programme is centred around several key priorities responding to local and foreign businesses’ needs. It addresses the questions of logistics and the capacity of Turkmenistan to become a transport hub in the region, the necessity of strategic planning, international co-operation, digitalisation and simplification of administrative procedures, enhanced co-operation with foreign firms and investment attraction.
The development of international co-operation holds a prominent place in the Programme. It involves increased interaction with UN bodies to further improve customs services, develop several industry sectors and conduct reforms to expand trade. Turkmenistan also aims at more co-operation with the OECD, in order to implement the best practices of the organisation’s member states and to establish a better partnership. The Programme also prioritises engagement with rating agencies to further establish the country as a credible partner on the world stage.
Source: Unpublished government document provided to the OECD.
WTO accession should strengthen adherence to international trade standards. Government and private stakeholders undertake various training sessions on the expected changes induced by WTO accession. For instance, the United Nations Economic Commission for Europe (UNECE) has conducted training to officials to better understand the regulatory aspects of the WTO procedures (UNECE, 2023[20]). Furthermore, with support from international development actors, such as the EU-funded project “Turkmenistan: Enhancing Trade Resilience and Integration” implemented by the International Trade Centre (ITC), government officials, policymakers, and private sector representatives have the opportunity to learn more about the WTO rules and accession benefits for Turkmen businesses (ITC, 2025[21]). The United States Agency for International Development (USAID) also organised seminars with the government to help businesses understand the WTO framework, rules and practices (Business Turkmenistan, 2024[22]).
Trade and transport connectivity have improved
Turkmenistan benefits from its location at the nexus of multiple inter-regional trade routes. Turkmenistan is located on the southern branch of the TRACECA corridor and of the Trans-Caspian Transport Corridor (TCTC) linking Europe and China, a route that has attracted increasing attention in recent years, particularly since Russia’s full-scale invasion of Ukraine in February 2022 (OECD, 2023[23]). The country also participates in the eastern branch of the International North-South Transport Corridor (INSTC) running along the shore of the Caspian Sea and being the alternative to the Western branch going through Azerbaijan (Caspian News, 2023[24]). Turkmenistan has also been involved in the Lapis Lazuli Corridor, which connects Afghanistan to Türkiye (OECD, 2023[25]).
Turkmenistan intends to position itself as a key player astride regional trade routes by developing its infrastructure. Road transport has benefitted from significant upgrades over the last few years. Examples include the “Ashgabat-Turkmenabad” highway, the 109 km-long second section of which was completed in April 2024 and a 288 km-long third section currently being worked on (News Central Asia, 2024[26]). An agreement for the construction of the 450 km-long high-speed “Sarahs-Mary-Serhetabat” highway was also signed with Chinese partners in September 2024 (Balkan Shipyard, 2024[27]). Moreover, according to the EBRD, the seaport of Turkmenbashi recorded a 2.5-fold increase in transit cargo volumes in 2022 due to the increase in the transit of petroleum products, metals, machinery, food, spare parts, chemical cargo, and construction materials (EBRD, 2023[28]). Turkmenistan seeks to expand its presence in the Caspian Sea by modernising its fleet with the construction of vessels with the support of international financial institutions and foreign shipbuilding companies (Turkmenistan Golden Age, 2025[29]). However, to capitalise on Turkmenistan’s geographic opportunities, the government will need to address existing infrastructure bottlenecks, for instance by expanding the country’s railways through electrification, signalling and rolling-stock upgrades, as well as facilitate trade by liberalising the visa regime for truck drivers and easing the obtention of transit permits (OECD, forthcoming[30]).
While import tariffs are relatively low, non-tariff barriers, such as administrative obstacles, remain an important issue for importers. There are fixed customs duties for the import of a list of goods, on top of which firms also bear costs due to the need to pay for contract registration and excise taxes (State Customs Service of Tukmenistan, 2025[31]). Firms cite other obstacles to trade, including cumbersome registration procedures for import and export activities and the need to obtain numerous approvals from different government bodies before being scrutinised by the State Commodity and Raw Materials Exchange, which evaluates price justification and contract feasibility (International Trade Administration, 2023[32]). The Single Window could help address some of these issues, as discussed below.
Trade facilitation reforms are being conducted in co-operation with international partners
Turkmenistan participated in the OECD Trade Facilitation Indicators (TFI) for the first time. This first analysis, published in 2023, shows preliminary results, as data could be collected for only about two-thirds of the 11 indicators. Although Turkmenistan did not take part in the subsequent round of data collection, its participation in the first round was an encouraging testimony to the country’s determination to improve both its cooperation with international actors, its trade profile and data access. It helped to identify areas for improvement in trade policy and drew attention to the need to collect further information in areas such as documentation procedures, governance and impartiality, appeal procedures, fees and charges, and other procedures (OECD, 2023[25]). Scarcity of information appears among the significant challenges that businesses, particularly SMEs, encounter in establishing and expanding their operations.
OECD Trade Facilitation Indicators database
The TFIs are tools used to assist policymakers to assess the state of trade facilitation to better observe the ongoing progress and confront the challenges. There are 11 TFIs classified in 4 categories:
Transparency and predictability. It covers the indicators A to E, related to information availability, involvement of the trade community, advance rulings, appeal procedures, as well as fees and charges.
Automating and streamlining procedures. It comprises indicators F to H, namely: documents, automation, and procedures.
Border agency co-operation. It is composed by indicators I and J respectively reflecting internal and external border agency co-operation.
Governance and impartiality. Constituted by the single eponym indicator K.
Central Asia has significantly enhanced trade facilitation in recent years. Between 2017 and 2019, impressive results were achieved in documents (+121.2%), procedures (+54.8%), and fees and charges (+25.3%). Between 2019 and 2022, among the three indicators that witnessed the most impressive increase in their score were internal border agency co-operation (+47.1%), governance and impartiality (+35.2%) and information availability (+28.2%). The most noticeable overall improvements between 2017 and 2022 were in documents (+150.9%), procedures (+69.7%) and internal agency co-operation (+35.1%). Therefore, although progress remains unequal between countries, it spans across various areas across the four categories of the TFIs giving hope that the region will continue its advances towards a facilitated trade environment.
Still, there are some areas for improvement at the regional level. The OECD report identifies three main priorities for further development to accelerate trade facilitation: work on reforming and making available trade-related legislation, digitalising and automating the related procedures, and further deepen cross-border co-operation.
Source: (OECD, 2023[25])
Turkmenistan scored lower than the regional average in the 2023 TFI findings, but this was to some extent a result of data scarcity. The country was below the regional averages for the involvement of the trade community (B) and appeal procedures (D), where the difference between the results of Turkmenistan and of the region were substantial. Some indicators, such as advance rulings (C) and documents (F) could not be verified because of a lack of data. Notable exceptions were the country’s performance in external border agency co-operation (J), which nearly corresponds to the regional result, and internal border agency co-operation (I), where it even outperforms the regional average (Figure 1.6).
Note: 2 is the maximum score. Central Asia includes information for Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan. Provisional information only for Turkmenistan. Dimensions marked with * include less than half of the OECD TFI sub-indicators, while those marked with ** are not presented at all due to insufficient data.
Legend: A - Information availability, B - Involvement of the trade community, C - Advance rulings, D - Appeal procedures, E - Fees and charges, F - Documents, G - Automation, H - Procedures, I - Internal border agency co-operation, J - External border agency co-operation, K - Governance and impartiality.
Source: (OECD, 2023[25]).
The government is working to make trade and investment-related procedures more accessible. Turkmenistan has been actively working since 2020 to modernise the web infrastructure of government bodies related to trade and investment activities. This is illustrated by the implementation of the Trade Information Portal in April 2023 as a result of a regional effort – the Ready4Trade Central Asia (R4TCA) project funded by the EU and implemented by ITC. Later in 2023, the Single Window for Export-Import Operations was launched with UNCTAD support. Its purpose is to allow users to perform all the required administrative tasks for export and import operations on a single platform (State Customs Service of Turkmenistan, 2024[33]). Effort has been put into making these resources accessible for foreign companies as well, as both websites are accessible in Turkmen, English and Russian.
Turkmenistan is taking steps towards “greening” its economy
The economy remains carbon-intensive, but the authorities are working to reduce carbon and methane emissions in co-operation with international partners. The country officially joined the Global Methane Pledge on 1 December 2023 at the COP28 climate summit in Dubai, committing to reduce methane emissions by at least 30% from 2020 levels by 2030 (Turkmenistan Altyn Asyr, 2025[34]). In 2024, the green transition became the first pillar of the ADB Turkmenistan 2024-2028 country strategy, which augurs well for future action on this front (Asian Development Bank, 2024[35]). However, Turkmenistan ranked first in the world according to the number of methane plumes recorded in the first half of 2025 by the International Methane Emissions Observatory of the United Nations Environment Programme (UNEP) (Figure 1.7).
Note a): The UNEP database is regularly updated. The values represented here reflect the situation in early July 2025.
Note b): The data in the chart correspond to the number of observed methane plumes, followed by the share they constitute on the global scale.
Note c): All countries where the number of observed methane plumes was equal to or below 50 are grouped in the category “Others”.
The EU supports the government to “green” the economy. The EU launched a programme to develop the green economy in Turkmenistan with the “EU for a green Turkmenistan: Policy Dialogue and Climate Action 2024-2028”, a project conducted by GIZ with funding from both the EU and Germany. The purpose of the project is to establish a productive dialogue between Turkmenistan and the EU by “promoting renewable energy sources and improving energy efficiency by reducing methane and greenhouse gas emissions, building national capacity, and raising public awareness, with a special focus on women and youth” (Green Central Asia, 2024[37]).
Turkmenistan has untapped potential in green electricity generation, yet it requires significant investment and time. Up to 40% of the country’s territory is deemed suitable for wind energy generation, while the intensity of sun light is estimated to be sufficient to produce around 70 billion tonnes of oil equivalent of energy per year. The government has announced the construction of a 10-megawatt hybrid solar-wind power plant in the Serdar district, but it is unclear whether the project has been commissioned yet (Altyn Asyr, 2024[38]; UNDP, 2019[39]).
Phasing out direct subsidies could make the economy more competitive
The government has implemented a series of targeted measures to support domestic industries and promote import substitution. The country had set in a state programme in 2015 the objective of increasing its production capacity to improve its export results and to be able to proceed with import substitution in several economic sectors, such as manufacturing, agriculture or chemicals (Turkmenistan Altyn Asyr, 2015[40]). Over the years, this resulted in an increase in the production of various goods, with most recent progress in sectors such as vegetables (+8.4%), cotton fabric (+27.1%) and cotton yarn (+46.7%) (Orient, 2025[41]). The government also cites sausages, detergents and cleaning products as sectors which also saw an important production increase.
The government has also implemented price controls on essential goods to stabilise prices and encourage domestic manufacturing, complemented by significant investments in industrial projects. In an attempt to reduce inflation, the government resorted to price controls on basic products largely through subsidies (ADB, 2024[42]). Yet untargeted subsidies and price controls tend to generate high fiscal costs and do not effectively target the most vulnerable (World Bank Policy Research Working Paper, 2020[43]).
These efforts have yielded some positive results, with latest available data showing Turkmenistan's manufacturing value added at 14% of GDP in 2022 (Government of Turkmenistan, 2023[44]). While this figure is somewhat below the global average and OECD benchmarks, it aligns with many emerging economies and indicates potential for growth in industrial diversification and modernisation. The industrial sector, including construction, has been a significant contributor to growth, with industrial value added reported at 23,9 billion USD in 2022 (World Bank, 2024[45]).
However, the efficiency of import substitution strategies has been largely contested. Turkmenistan has resorted to protectionist measures to support production (Business Turkmenistan, 2024[46]). For instance, the state has limited import competition for local producers by denying importers of competing goods access to foreign exchange or raised import tariffs (EBRD, 2019[47]). Such an approach can lead to negative outcomes, such as resource misallocation and shortages, reduced competitiveness and innovation, lower product quality, higher costs and prices, with obvious negative impact for consumers and potential investors (Cherif and Hasanov, 2024[48]) (Baldwin, 2000[49]).
Private sector development is hampered by a challenging business environment
The business environment in Turkmenistan remains challenging, particularly for private and foreign enterprises. Currency controls (Box 1.5) and issues with property rights constrain business operations. Moreover, disagreements over the reliability of economic data hamper informed decision-making and weaken investor confidence (Box 1.1). The 2025 IMF Article IV consultation confirms that the government has made some efforts to improve the business climate, but finds that significant barriers remain, such as bureaucratic hurdles, corruption, access to foreign currency, and the opaque legal framework (IMF, 2025[50]).
Currency conversion in Turkmenistan is regulated by the government. Official mechanisms for converting the Turkmen manat (TMT) to US dollars (or other foreign currency) have long been under state supervision. These controls were intensified in the mid-2010s. Since 2016, the Central Bank of Turkmenistan has imposed strict limitations on access to foreign currency, restricting the exchange of manats for US dollars. Access to US dollars is primarily permitted for authorised individuals or entities and is sometimes conditional on specific circumstances, such as the use of internet-based transactions (U.S. Department of State, 2016[51]). There also appear to be sectoral differences in ease of access to foreign exchange, reflecting government policy priorities.
The foreign-exchange regime is reinforced by other policy instruments. As in many jurisdictions, businesses operating in Turkmenistan are typically required to conduct international transactions predominantly using the national currency, compelling enterprises to convert their forex revenues into Manats. Moreover, repatriation of profits or dividends earned in Turkmenistan requires firms or investors to present the present necessary documentation, including proof of tax compliance and financial statements and evidence of the source of the funds, to the State Bank of Turkmenistan. Such requirements are aimed at combatting fraud, tax evasion and money-laundering, but they also make it more difficult to circumvent the exchange-rate regulations.
These controls have contributed to the development of a de facto dual exchange rate system. The official exchange rate, set by the Central Bank since 2015 at 3.5 TMT per USD, coexists with an unofficial (parallel) rate that is significantly higher—typically four to five times the official rate. Conducting currency exchange outside official channels is prohibited under Turkmenistan’s Administrative Offenses Code, although enforcement appears to be rare. While many firms operate successfully within the arrangements as they stand, the existence of a dual exchange rate system has been noted as a source of economic distortions, discouraging private sector development and complicating trade (U.S. Department of State, 2024[52]).
These regulations present challenges for companies operating in Turkmenistan, particularly with regard to repatriating profits and managing international financial obligations, which has been highlighted as a barrier to foreign investment and business operations (U.S. Department of State, 2024[52]). Unequal access to foreign exchange also compromises any attempt to ensure a level competitive playing field. The exchange-rate regulations may also deter potential foreign investors (or even local investors with an eye on export markets) from entry, since they require certainty with respect to issues like profit repatriation and cross-border transactions before investing.
As this overview shows, Turkmenistan has been advancing reforms in some key policy areas, with a new impetus observed in private sector development, but there remain opportunities for further improvement. Reforms should focus on reducing the state's dominant role in the economy and fostering transparency in both data and governance. Additionally, promoting private sector development and increasing the efficiency of public spending—particularly through targeted social programmes—will be crucial. This is especially important in light of the challenges faced by Turkmen labour migrants, who have been affected by the end of Türkiye's visa-free regime (EIU, 2024[53]; Ministry of Foreign Affairs of Turkmenistan, 2022[54]). Based on surveys conducted by the OECD, this report explores the recent evolutions in Turkmenistan’s business (Chapter 2) and investment (Chapter 3) environments. It analyses the achievements of the last few years, notes areas for improvement and proposes recommendations to address them.
This report draws on a private sector survey conducted by the OECD to assess progress and identify ongoing challenges in the country’s business environment from the perspective of private domestic firms. By capturing firm-level, bottom-up insights, the report provides a comprehensive view of the operational environment for businesses, shedding light on the practical experiences and concerns of private enterprises in Turkmenistan. This analysis helps pinpoint the key barriers and opportunities that shape private sector development.
Second, the report explores strategies to attract diversified foreign investment, with a particular emphasis on the potential establishment of an Investment Promotion Agency (IPA). Given the importance of FDI for fostering innovation, job creation, and economic diversification, the creation of an IPA could play a pivotal role in positioning Turkmenistan as an attractive investment destination. By offering tailored recommendations and highlighting OECD best practices, the report aims to support efforts to improve investment outreach and facilitation, ultimately enhancing the country’s competitiveness.
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← 1. The official Turkmen data present a higher figure of 68.7 billion USD.