This chapter presents an overview of Turkmenistan’s business climate drawing on a survey of private sector firms conducted by the OECD, as well as external data sources, including OECD interviews and open-access data. The analysis examines five critical aspects for a business: establishment procedures, workforce requirements, digitalisation needs, trade policy frameworks, and the overall operational environment. The findings highlight notable progress in several domains, while also pointing to persistent challenges. The chapter concludes with policy recommendations aimed at addressing these remaining issues.
Building a Competitive Investment Landscape in Turkmenistan
Abstract
This chapter offers an overview of the business climate in Turkmenistan, building on data collected by the OECD in late 2024. Grounded in a survey conducted among private-sector actors (Box 2.1), the OECD has assessed the progress and identified present challenges in the business climate of Turkmenistan. The OECD triangulated the results of the survey by relying on a variety of stakeholders: additional input is derived from a range of interviews conducted with development partners and foreign investors, while the government provided information on policy settings and plans in response to a written questionnaire sent by the OECD. This chapter captures firm-level, bottom-up insights on the business environment and private-sector development in Turkmenistan, with a particular focus on the operational environment for businesses.
The survey addressed 30 firms operating in Turkmenistan, including 27 local businesses and three EU companies. The questionnaire consisted of 35 questions divided into five thematic sections: the overall business climate, the operational environment, trade policy and WTO accession, business support, and outlook. It offered a valuable opportunity to capture firm-level insights into the business environment and private-sector development in Turkmenistan. Figure 2.1provides an overview of the surveyed firms in terms of size, age and activities. The survey did not capture firms that were unable to access the Turkmen market.
Source: OECD.
The sections of this chapter sequentially outline a succinct presentation of the country’s economy and main growth drivers, before turning to thematic analyses informed by the OECD survey. They provide specific policy recommendations along the following areas: market entry conditions for new firms, human capital development, digitalisation, trade policy and operational challenges encountered by firms on the Turkmen market.
Nearly half of the surveyed businesses expressed confidence that the business climate is evolving rapidly and positively for their activities. This optimism is reflected in a significant increase in workforce size, with companies reporting employment growth ranging from 20% to 50%. Twenty-one firms reported an increase in turnover over the past two years, with some estimating growth of 15-20%. Key drivers of this growth included the expansion of exports and an increase in online sales. These positive trends may account for the interest shown by exporting firms in pursuing investment opportunities within the country, with nearly 37% indicating they are "considering the possibility" of making investments (Figure 2.2).
Source: OECD Business climate assessment survey in Turkmenistan (2024)
Only a small number of companies reported that doing business in Turkmenistan is very or somewhat challenging. Sixteen percent of respondents highlighted external factors, such as “changes in the global environment””, as key challenges, particularly for businesses reliant on imports. While bureaucratic hurdles, including customs procedures, were noted, the responses suggest that businesses have adapted to these challenges, planning their activities to accommodate expected delays and procedural stages.
The ease of starting a business was rated as moderate by participants in the survey, with issues varying according to the sector of the respondent
There has been growth in entrepreneurship in Turkmenistan since 2022. According to the data provided by the government of Turkmenistan, 823 and 1016 new individual entrepreneurs were registered in 2023 and 2024 respectively, while 248 and 255 business entities (khozyaystvennye obshchestva, associations of two or more individuals and (or) legal entities) were established in the same period.
Most respondents to the survey consider that the procedures for opening a business as an entrepreneur are of moderate difficulty (Figure 2.3). It was reported that opening a business only requires applying to the tax service and obtaining a patent, with some respondents indicating that they were able to complete the process over three days. Yet a mixed attitude prevails: while some indicated that the procedures were simple per se, others considered bureaucratic hurdles to be a significant issue or pointed out that not all procedures can be conducted online. The respondents’ reported estimates of the time involved in starting up a company ranged between a week and 20 days.
Business representatives mention difficulties related to the extensive documentation required for obtaining licenses, a process that can take between 4 to 6 months. Some respondents reported that the process has become easier to handle, as some consulting and legal firms can now provide assistance with company registration in their services lists. However, the very fact that professional services firms, which tend to be expensive, view this activity as a lucrative market niche suggests that there is considerable scope for reducing the time and cost involved. There were also concerns about the need to have a substantial amount of money to launch a business, but it is probable that this is not relevant for all sectors, as it was not a frequently expressed concern.
The survey results also point to issues arising from the size of the country’s market. Firms report a “demography” issue, stating that it might be difficult to attract enough clients in certain sectors of the economy, requiring careful business analysis of the market before opening a firm. This was cited by one respondent as an “always challenging” step. Several respondents indicated industrial activity as the hardest to launch because of the need to ensure supplies of primary goods and to acquire machinery and equipment abroad, while also securing a consumer base.
However, state support measures were identified among facilitating factors. Respondents indicated that the state provides various forms of assistance, including financing opportunities. Some mentioned that the state even offers training necessary for obtaining a patent, typically in a 3-day course.
Source: OECD Business climate assessment survey in Turkmenistan (2024)
Several mechanisms were introduced by the government to support new firms. In accordance with the Law on State Support to Small and Medium Enterprises (Mejlis of Turkmenistan, 2023[1]), SMEs benefit from preferential customs tariffs (Business Turkmenistan, 2021[2]). Firms involved in the primary sector can benefit from loans at 1% of annual interest for a duration of up to 10 years for the purchase of necessary equipment (bulldozers, irrigation pipelines), and at 5% of annual interest also for up to 10 years for farming activities (State Bank of Turkmenistan for Foreign Economic Activity, 2025[3]). It seems that for other types of activity, both for individuals aspiring to open new businesses and for those seeking to expand existing ones, the annual rate is 7% (State Bank of Turkmenistan for Foreign Economic Activity, 2025[4]). In its response to the OECD questionnaire, the government also mentioned two presidential decrees of 2021. The first provides the opportunity to request a loan equivalent to a maximum of 500 times the minimum wage at a 5% interest rate for seven years with a two-year grace period without the need to establish a legal entity. The second grants special five-year loans at 2% to local firms providing digital products.
Competition levels are cited as satisfying, yet should be interpreted with caution given limited exposure to genuine market dynamics
Interviews conducted by the OECD with foreign firms did not reveal a consistent perception of the level of market competition. Nearly half of the survey respondents consider that the competitive environment is favourable for new businesses, with relatively easy and straightforward market entry. However, nearly a third of respondents indicated some perceived limits to competition and market entry. Concerns were raised about what respondents called “price dumping” in the logistics sector because new companies often offer lower prices to attract customers. Firms indicated that while this might seem good for consumers at first, it can lead to lower service quality and financial difficulties for established logistics providers. However, the prevailing business environment still leaves room for market-oriented practices, and firms’ concerns might conflate true price dumping (sales below actual costs) with legitimate competitive pricing strategies.
SMEs in Turkmenistan feel the presence of dominant players, but this does not always seem to constitute an issue for them. While some interviewees indicated that the presence of state-owned enterprises (SOEs) did not constrain their activities, others highlighted the positive aspect of having a significant number of both established companies and new entrants in the market. As one respondent to the survey indicated, despite having big enterprises in his sector, smaller ones are “still” able to access the market. Most firms interviewed reported few direct interactions with state-owned enterprises (SOEs), with contact limited mostly to the utilities (electricity and water) sector. Among those that have worked with SOEs, the majority expressed satisfaction, describing them as reliable partners. However, some concerns were raised about the unequal dynamics in such partnerships, noting a lack of clarity and feeling of being treated as inferior partners.
Source: OECD Business climate assessment survey in Turkmenistan (2024).
Yet, other data sources suggest that more can be done to strengthen competition, as Turkmenistan lacks a comprehensive competition law and enforcement. While some provisions addressing competition can be found in the Law on Entrepreneurship (Mejlis of Turkmenistan, 2018[5]) and in article 17 of the Law on State Support to Small and Medium Enterprises (Mejlis of Turkmenistan, 2023[1]), interviewees noted that competition law remains underdeveloped. There is no available information on any government review of the country’s competition environment or on any competition-related cases (U.S. Department of State, 2024[6]). While there are some general provisions forbidding monopolistic activity and unfair competition, such provisions are not comprehensive and do not address issues such as the aforementioned case of price dumping. Challenges with competition law are part of a broader concern related to the consistency, transparency and implementation of business-related legislation (U.S. International Trade Administration, 2023[7]). The lack of a specific legal framework may hinder the authorities’ ability to address anti-competitive behaviours and ensure a level playing field for businesses operating in the country.
Businesses report enabling macro-financial conditions overall, but differ in their assessment of access to finance
Firms find the financial environment to be relatively stable, citing stable exchange rates and manageable inflation over the past two years. Most respondents consider the informal exchange rate less problematic than in previous years, with the rate largely remaining stable at 19.5 manat since 2016, which has improved confidence in business planning.
However, businesses in Turkmenistan report mixed experiences with access to finance. On one hand, the government offers substantial support, such as 99-year land leases at no cost for agricultural enterprises and favourable taxation for the sector. However, banks primarily provide credit to specific industries, such as agriculture, while others, such as import-based retail, struggle to secure loans. Addressing credit limitations and improving financial mechanisms could further enhance the business climate and investment potential in the country.
Key challenges include high interest rates, rigid requirements, and extensive documentation processes. Some businesses expressed dissatisfaction with what they consider to be the undervaluation of pledged assets during the loan process. Companies hope for future agreements to unlock new investment opportunities and stimulate production.
Recommendations
Recommendation 1.1: Consider easing the regulatory burden for the registration of new businesses
Firms reported that the main complication for setting up a new business comes from the documentation requirements, which can be lengthy to fulfil. Several solutions can be proposed to ease this regulatory burden. The 2024 OECD Recommendation of the Council on Human-Centred Public Administrative Services suggests the implementation of the “once-only principle”, meaning that citizens are not required to provide the same information over and over to different public bodies (OECD, 2024[8]). This step can be complemented by a consolidation of document submission procedures by setting up one-stop-shops and a single window for businesses to handle all their procedures in one place.
Recommendation 1.2: Develop a competition framework to promote fair market access
Turkmenistan could consider further developing its competition framework to ensure a proper functioning of the market and prevent anti-competitive outcomes. Although Turkmen legislation has provisions on competition, these have not yet been translated into an explicit and coherent policy. A robust competition framework is essential for identifying and eliminating policies that restrict competition, which in turn supports market efficiency and economic growth. Governments need to be aware of the policies that are harmful to competition to adjust regulatory policies and help protect the proper functioning of the market. The OECD’s Recommendation of the Council on Competition Assessment highlights the importance of involving officials with competition expertise in regular assessments of public policies when reviewing their effectiveness and/or designing new measures (OECD, 2019[9]). Regular competition assessments help identify barriers to entry, market power or other unfair advantages, and regulatory gaps that may hinder SMEs’ ability to compete and grow. The government could also consider assessing the cost of preferential treatment and subsidies provided to SOEs.
The OECD Recommendation of the Council on Competition Assessment provides contains a list of recommendations for government on designing efficient competition policies. It is organised around three main parts:
Identification of existing or proposed public policies that unduly restrict competition: governments should establish a process to identify public policies restricting competition, making sure that exceptions are granted only to achieve the country’s public interest objectives and that regulatory bodies and policies designed to promote competition do not harm it when implemented.
Revision of public policies that unduly restrict competition: governments should introduce appropriate processes for revising both existing and proposed public policies unduly restricting competition, as well as aim at adopting pro-competitive alternatives if they have a positive assessment of cost and benefits of implementation.
Institutional setting: governments should carry out competition assessments as part of public policy reviews and take into consideration the results when designing new policies.
Source: (OECD, 2019[9])
Recommendation 1.3: Design a targeted business support strategy with a multi-sector approach that allows equal access to finance regardless of the sector of activity
The government should develop and implement a comprehensive, targeted business support strategy that encompasses all aspects and challenges of entrepreneurship. The proposed strategy should focus on enhancing productivity and innovation across the entire business spectrum, by presenting solutions that will help firms deal with contemporary challenges to ensure that they will be able to meet their potential. The example of the Czech Republic, positively assessed in the OECD Scoreboard on Financing SMEs and Entrepreneurs (OECD, 2024[10]), could be considered as a possible model (Box 2.3).
The Strategy to Support Small- and Medium- Sized Enterprises in the Czech Republic (2021-2027) is organised around several topics that were considered as priority by the government:
Business environment, providing broad objectives.
Access to financing, diversifying SME financing sources of financing over the course of their activity.
Access to markets, aiming to support Czech producers in thriving in foreign markets.
Workforce, skills and education to adapt the pupils to the needs of the labour market and ensure a continuous access to further education and building-up of skills.
Research, development and innovation to help SMEs fulfil their innovation potential.
Digitalisation to assist the SMEs in the digital transition.
Low-carbon economy and resource efficiency incentives through the setting of an appropriate legislative and financial framework.
The strategy also contains provisions on how it should be implemented and managed, but also how it can be evaluated, through the provision of a monitoring and evaluation section.
Kazakhstan has also developed a framework that could also be useful for this purpose. The Business Roadmap 2025 is a state programme that aspires to help entrepreneurs through four different action pillars. Among them, there is a support to firms engaged in a priority economic sector. Measures include various subsidies, such as lower interest rates on loans issued by banks and leasing companies or for programmes providing long-term liquidity, partial state guarantees on bank loans, provision of government grants, and the establishment of industrial zones (Government of the Republic of Kazakhstan, 2022[12]).
As firms reported difficulties in obtaining loans in some sectors, Turkmenistan could consider providing solutions for firms to access additional financing. For instance, in Kazakhstan, the Fund for the Development of Entrepreneurship, DAMU, has mechanisms to subsidise the loans contracted by enterprises with third-party banks under its Unified Integrated Programme. The key feature of this mechanism is its openness and adaptability to every kind of business, adjusting for each one the maximum sum and the interest rate. It can help micro enterprises (up to KZT 20 million), SMEs (up to KZT 3 billion), big firms (up to KZT 15 billion), and even rural areas and cities (up to KZT 1.5 billion). It also can provide up to KZT 5 billion through the stock market. The application process is simplified by allowing firms to apply online (DAMU, 2025[13]).
Survey results reveal concerns about the level of skills found on the labour market
The survey highlights significant skills gaps across sectors. In the logistics industry, a notable shortage of specialists in transport and multimodal logistics was reported, particularly those skilled in handling hazardous materials. The manufacturing sector struggles to find local technologists for specialised products, such as chips and skincare cosmetics, often resorting to the employment of foreign experts. High-skilled professionals in digital technologies are often hired from abroad.
The expansion of production lines has created demand for operators that exceeds local supply. According to OECD interviews and private-sector survey, creative services face a scarcity of experienced professionals, while the sales and marketing sector suffers from a lack of qualified personnel and relevant university programmes. In the confectionery industry, firms provide in-house training for workers due to the shortage of skilled labour, which increases operational costs. Financial consulting also experiences knowledge gaps, particularly in the use of essential tools like the 1C accounting software and proficiency in foreign languages. These shortages across sectors indicate the need for targeted educational and training initiatives to address skills mismatches.
These findings are corroborated by available data on youth employment and tertiary education. According to the Asian Development Bank, the country's tertiary education institutions could accommodate only about 15% of school graduates annually in the early 2020s (ADB, 2024[14]). This limited access to higher education likely contributes to skills gaps in the workforce. Even fewer school-leavers follow vocational training (Central Asia Program, 2025[15]), which is critical to supplying needed technical specialists. Furthermore, youth (ages 15-24) unemployment rate is estimated to have reached 14.1% among males and 5.8% among females in 2024, suggesting that more needs to be done to integrate young people into the labour market (World Bank, 2025[16]).
The authorities are taking steps to increase access to education. The government reported that in 2024 19.5% of school graduates entered high education institutions in the country. The creation of a proper vocational training system is included in the President’s Programme for the Socio-Economic Development of Turkmenistan (2022-2028), with the objective of bringing it to UNESCO standards in the national and regional (welaýat) capitals, with a focus on including vulnerable youth and increasing the digital and technological knowledge and skills of the pupils (UNDP, 2023[17]). The Tax Code has been amended to encourage young people to open businesses, as they benefit from a 50% reduction in the tax rate during the first year of operation and a 25% reduction in the second and third years. The same three-year system, with the same advantages, is used to encourage business owners to hire young people, as they can benefit from tax reductions if no less than 75% of their staff is composed of people under 35 years of age.
Firms in Turkmenistan are also implementing various strategies to tackle recruitment and retention challenges. These include offering more competitive salaries for skilled workers, providing training opportunities, and implementing bonus systems. Additionally, firms are focusing on transparent communication, regular feedback, employee recognition programmes, workplace flexibility, and investment in employee development.
Recommendations
Recommendation 2.1: Consider developing and expanding comprehensive vocational education and training (VET) programmes
Involving a wide range of stakeholders in any overhaul of the VET system will be critical in ensuring that it better meets employers’ needs. The OECD’s 2023 Building Future-Ready Vocational Education and Training Systems addresses the challenge of identifying skills needs, involving the different actors of the economy in designing training programmes adapted to their economic context (Box 2.4).
In a 2023 report, the OECD provided some guidance to help governments and businesses in ensuring appropriate education and training for operators. It involves inputs from labour market data, as well as from social partners in order to have a clearer understanding of needed qualifications.
Using a wide range of data sources, such as surveys, vacancies data, graduate tracers, is important to ensure constant awareness of the labour market needs. Implemented by educational facilities, tracer studies require recent graduates to update their institution with various job-related data, such as the duration of search, income level, type of contract, required knowledge and skills. Collecting such feedback can help these institutions in adapting their offer to the labour market needs.
Making the data accessible is key for informing the population of prospective new sectors and allowing them to timely inquire about enhancing their skills. Among recommended best practices, there is the publication of a document presenting occupations experiencing shortages and/or employment growth, such as the List of Occupations in High Demand in South Africa.
Engaging social partners in the design of VET policies and programmes implies giving a bigger role in VET design to professional associations and trade unions. For instance, New Zealand opted for the creation of six different Workforce Development Councils (WDC) being currently rearranged into six to eight Industry Skills Boards (ISB), each corresponding to a specific industry, so that they could set standards for VET according to the needs of the incorporated industries.
Designing effective governance arrangements to involve social partners at various levels could take, as in Sweden, the form of advisory bodies to the government composed of employers, local state agents, teachers and regional organisations, or, as in Norway, of involving employers into apprenticeship programmes, giving them more importance when the apprentice actually starts to work after a preliminary schooling phase.
Providing more and better opportunities for work-based learning by, for instance, having schools design individual curricula for apprentices and having specialised VET teachers that are able to instruct in-company trainers improving therefore the supervision during the apprenticeship, as it is done in Estonia.
Companies working together to provide training, as in Brazil, where firms from each sector are subjected to a specific contribution to a common fund, which allows to collectively bear the costs for apprenticeships.
Subsidising apprenticeships by providing directly funding to companies engaged in this process, as it is done in Austria, or by paying the apprentices wages as it is done in Türkiye.
Making higher vocational and professional tertiary education programmes accessible and relevant by creating a strong engagement with employers. This could take the form of having private-sector representatives in higher education institution boards, as it is the case in France, or having practitioners undergo a partial pedagogical training and share their skills to students as a part-time activity, such as in Spain.
Source: (OECD, 2023[18])
The experience of OECD countries suggests that the Union of Industrialists and Entrepreneurs (UIE) and other such organisations could play a crucial role in identifying skills gaps. As it is essential to align educational programmes with sectoral demand and SME development needs, the UIE could, for instance, survey its members periodically to assess their evolving needs and submit the results to the government. This could contribute to the design of better-informed policies to involve more young people on the labour market and create a skilled workforce capable of driving innovation and economic growth.
Recommendation 2.2: Consider developing and expanding comprehensive entrepreneurship education and training (EET) programmes
Turkmenistan could also develop an integrated approach to entrepreneurship education and training to help budding entrepreneurs build their businesses. In order to determine the most suitable approaches, Turkmenistan could refer to the conceptual framework for entrepreneurship educational and training (EET) programmes developed by the World Bank (Box 2.5), adapting as needed to fit the needs of entrepreneurs and operators. A more systemic approach will benefit firms by providing solutions better adapted to their needs. Skilled entrepreneurs and workers still need appropriate economic infrastructure and resources, such as a good digital infrastructure, a healthy investment climate, market opportunities, and access to finance (World Bank, 2014[19]).
The World Bank’s Conceptual Framework proposes to assess potential EET programmes through four different outcome types.
Entrepreneurial Mindsets
Covering socio-emotional skills, as well as the broad understanding of motivation and expected success, this outcome is needed to build confidence in participants. For this, programmes need to focus on developing skills for individual (self-confidence, leadership, creativity, self-efficacy, resilience) and group (teamwork) professional growth. It is also important to ensure that participants have a positive vision of entrepreneurial activity, to improve the desirability of work tasks.
Entrepreneurial Capabilities
Related to the technical side of entrepreneurial activity, this outcome is centred on building technical skills. As the Conceptual Framework deals with entrepreneurs, it includes topics such as general business knowledge, information on business opening and operation, management skills, risk assessment and additional sector-related knowledge.
Entrepreneurial Status
This outcome is measuring how do participants behave after their training and the integration of mindset and capabilities. For people starting a business, it meant their decision to attract new capital, start ventures, better deal with income and savings.
Entrepreneurial Performance
Assessing the effectiveness of the intervention, this fourth outcome analyses the changes taking place after the education or training. It mainly assesses quantitative indicators looking at increases in profit and sales, as well as the number of employees and customers.
Source: (World Bank, 2014[19])
Recommendation 2.3: Improve youth integration into the labour market by adapting existing policies
A systematic approach to support skills development and school-to-work transitions could improve youth employment outcomes. The OECD has produced guidance specifically targeted at creating professional opportunities for the youth. The general framework listing several recommendations for that was laid in the 2022 OECD Recommendation of Council on Creating Better Opportunities for Young People, while the 2024 OECD Youth Policy Toolkit aims at complementing it by providing clearly set policy goals, relevant OECD indicators and case studies to help policymakers design long-term comprehensive strategies (OECD, 2024[20]).
The Youth Policy Toolkit is made of five pillars, each subdivided in detailed recommendations which contain different information relevant for policymakers, including the reasons to support youth, young people’s comments, as well as international best practices.
Skills and competencies. This pillar focuses on learning in all its aspects such as access to learning (including during employment) and barriers to it (including financial constraints), its content (including digital skills), the flexibility of the curriculum, teachers and students’ well-being, availability of equipment, possibilities for smooth transition between education and work, adaptation opportunities for early leavers, career guidance.
Support for young people within the labour market. This pillar focuses on the labour market, with incentives to job creation and improved support to employment services, a fair and safe environment at the workplace, and equal access to entrepreneurship (including to financing and networks).
Social inclusion and youth well-being. This pillar addresses income support for youth with insufficient means to facilitate independent living, tax systems to be planned in a way not to discourage people from (re-)entering the labour market, support provided by various stakeholders to young people in disadvantaged circumstances, affordable housing for all young people, mental and physical health,
Trust of young people in government and public institutions. This pillar recommends enhancing youth participation in democratic institutions and in decision-making to ensure inclusiveness, promote intergenerational learning (including by integrating youth in the public sector), provide opportunities for civic participation.
Administrative and technical capacities to address age-based discrimination. This pillar is about tracking inequalities faced by young people through better data collection, adopting an all-encompassing approach to policymaking which will consider the impact on youth, ensuring inclusive policy measures for all age groups.
Source: (OECD, 2024[20])
Moreover, it is important to monitor closely the relevance of tax incentives to prevent fraud. Although tax incentives may provide a good stimulus for firms to hire youth, they may also encourage firms to take advantage of the legal framework by creating new small enterprises instead of making an existing firms grow. Such incentives require careful evaluation to minimise “deadweight losses” – i.e., to ensure that they do not merely subsidise investment and activity that would have taken place anyway – and to avoid creating incentives for agents to try to manipulate the system simply to gain tax advantages.
Survey results show that improving digital infrastructure is a priority for businesses
Respondents to the survey generally view the state of infrastructure – particularly internet connectivity – as a critical enabling factor for their operations. Internet access was highlighted as one of the most essential elements for business success by numerous firms at various points in the survey, and many respondents indicated that they wished to see faster development of digital technologies. A third of respondents mentioned that the technological area where innovation and investment would bring the most benefit to their activity is the digital sector. Moreover, when asked about the type of infrastructure where improvements would benefit business activity, nearly 40% of respondents cited internet infrastructure (Figure 2.5). Respondents reported issues with digital connectivity, as the internet remains inaccessible in some areas of the country, and digital literacy, as local firms were often requesting the assistance of foreigners in dealing with digital services. Foreign firms reported facing significantly higher tariffs for internet compared with local firms.
Many companies emphasised the importance of further advances in logistics and investment in infrastructure. While respondents mentioned tools like ChatGPT as valuable for business operations, some reported that access to this service is not always possible. Nonetheless, businesses are optimistic about the ongoing progress and the potential for future infrastructure developments to better support their needs. While challenges with internet quality persist, businesses expressed overall satisfaction, noting significant improvements over the past decade.
Source: OECD Business climate assessment survey in Turkmenistan (2024).
The uptake of online business transactions is constrained not only by limited Internet access but also by a low rate of adoption among the population and high internet costs, especially for foreign firms. Mobile banking usage in the country remains low, amounting to around 92 000 users at the beginning of May 2025 (Central Bank of Turkmenistan, 2025[21]).Using the costs of the fixed-broadband baskets, most representative of the basket type used by business because of its stable connection, it appears that Turkmenistan ranks similarly to other regional peers (except Kazakhstan) in the price as percentage of the Gross National Income (GNI) per capita at around 5%. Yet, OECD interviewees mentioned that internet prices are prohibitively expensive for foreign firms. For instance, unlimited internet at 10 Mbps/s cost foreign companies more than 4,000 USD a month against 2,000 TMT (around 570 USD at the official exchange rate) (Table 2.1). In comparison, the cost of basic broadband at 10 Mbps or higher in middle-income countries ranges between 30 and 40 USD a month according to the ITU and the World Bank1.
Note: monthly charged for unlimited internet (ADSL/VDSL) except where § indicates monthly rent for a dedicated IFO channel.
Source: (Turkmen Telecom, 2025[22]), AOZT "Ashgabadskaya Gorodskaya Telefonnaya Set'"; data downloaded 31 July 2025
Source: (ITU, 2025[23])
Recommendations
Recommendation 3.1: Expand broadband coverage to ensure internet accessibility throughout the country
The issue of internet accessibility and speed was raised by respondents to the OECD survey. To address these concerns, the government could consult the OECD Recommendation of the Council on Broadband Connectivity. Enhancing internet infrastructure and accessibility nationwide are critical to support digital business growth and ensure equal opportunities for local and international companies, as well as to improve the overall well-being of citizens. Expanding broadband coverage to rural areas will help close the urban-rural digital divide, while continuing to upgrade the national backbone network will further improve connectivity. Simplified licensing and permit procedures for broadband deployment could be used as incentives for broadband deployment (OECD, 2021[24]).
The OECD Recommendation of the Council on Broadband Connectivity, as amended in 2021, contains five general principles.
I. Competition, investment and innovation in broadband development. This recommendation focuses on promoting non-discriminatory policies, network sharing and co-investment which lead to competitive prices. It encourages investment in resilient infrastructure which facilitates broadband availability. It supports non-discriminatory regulations to foster innovation, and research to improve connectivity. It further suggests resorting to multi-stakeholder dialogue, especially when phasing out legacy networks, and implementing robust legal frameworks for connectivity, reviewed periodically for adequacy.
II. Broadband network deployment and closing the digital divide. This recommendation is centred on providing advanced broadband services at affordable prices, making it available for every citizen, including the low-income ones. It supposes timely action to connect underserved locations. It also encourages to strengthen consumer rights by providing fair contracts and ensuring regulatory supervision. Reducing barriers by streamlining licensing procedures, simplifying access to passive infrastructure, and engaging network operators in network development activities is also recommended. It is suggested to support efficient spectrum management and to promote digital skills improvement, including locally relevant applications, to ensure effective broadband use for all citizens.
III. Resilient, reliable, secure, and high-capacity networks. This recommendation is focused on data transparency to ensure that networks are continuously improved, network diversification to ensure the resilience of communication towards natural and digital risks.
IV. Environmental impact of networks. This recommendation suggests giving preference to the sustainability of the networks and devices, and encouraging operators to make efforts towards an environmentally-friendly connectivity.
V. Regular assessments of broadband markets. This recommendation builds upon data collection and analysis of the performance of the services and infrastructure used on the market to determine how related public policies should evolve.
Source: (OECD, 2021[24])
The OECD conducted an analysis of broadband financing practices in 2024. Among the good practices of OECD countries that could be of interest to Turkmenistan is the allocation of state aid according to programmes developed at the national level, such as in Chile, where the Telecommunications Development Fund ensures the provision of communication services in rural areas where there is little incentive for the private sector to invest on its own (OECD, 2024[25]).
Recommendation 3.2: Consider lowering the prices to access internet services
Transparent pricing policies for Internet services are essential elements of a competitive economy with equal opportunities for firms. Despite some improvement in recent years, Turkmenistan has one of the world's most expensive mobile internet systems. Clear regulations should be developed to guarantee equal treatment and pricing for both local and international businesses accessing internet services and to encourage entry and competition in the market, which would put downward pressure on prices and benefit users. The Broadband Commission for Sustainable Development, a joint project of the International Telecommunications Union (ITU) and UNESCO, set in its 2025 recommendations a recommended target of less than 2% of the monthly Gross National Income per capita as a desirable price for broadband entry-level access for low- and middle-income countries (Broadband Commission, 2025[26]), a group to which Turkmenistan belongs (UNDP, 2025[27]). Figure 2.6 shows that there is room for Turkmenistan to bring internet prices closer to the affordability target.
Recommendation 3.3: Improve digital literacy to make full use of the digital transition opportunities
The government should respond to the private sector’s concerns by providing support with digital skills development. Turkmenistan can learn from regional peers and refer to findings and recommendations of OECD work on digital skills for the private sector in Uzbekistan and on the framework conditions for the development of digital infrastructure in Kazakhstan (OECD, 2023[28]) (OECD, 2023[29]). Among its recommendations, the OECD suggested to introduce a digital skills self-assessment tool on a website accessible to all businesses. The tool consists of a questionnaire covering common business functions, such as, for instance, marketing, accounting, logistics, to allow businesses to better understand their digital needs. Upon completion of the self-assessment, firms could receive some initial standardised guidance based on their results, as well as further information on how to liaise with contact points for more specific trainings and personalised assistance with targeted digital issues. (OECD, 2023[30]). Designing such a tool and implementing it on the website(s) of the Union of Industrialists and Entrepreneurs and/or of the Chamber of Commerce and Industry could be a solution to ensure a nation-wide reach to the tool.
Businesses are positive about government export support and optimistic about WTO accession
Trade is facilitated by government support, but barriers remain, including in border procedures
Survey results confirm that business values government support. Notably, small businesses benefit from a low (2%) income tax rate. Agricultural companies have access to long-term leases of up to 99 years, which has encouraged some firms to shift from trade to production. For example, an interviewee reported plans to establish a greenhouse for cultivating tomatoes and cucumbers, reflecting a growing trend toward enhancing domestic production capabilities. Turkmenistan's export destinations have expanded over the last few years to include Ukraine, Russia, Uzbekistan, Iran, the United Arab Emirates (UAE), and Kazakhstan, reflecting its intention to integrating SMEs into regional and global markets.
The implementation of the ASYCUDA World customs automation system has accelerated customs declarations processing 14-fold (UNCTAD, 2024[31]). These improvements, along with the development of a Trade Information Portal with ITC support and with financial support from the EU, and government-led international trade exhibitions, demonstrate the authorities’ commitment to trade facilitation and economic integration, likely reinforcing businesses' positive outlook on WTO accession.
However, businesses involved in export-import operations reported difficulties when dealing with customs authorities. The survey respondents highlighted several key concerns among businesses, one of which is the requirement for paper documents to bear official stamps. Additionally, contracts must be provided in both Turkmen and Russian languages, adding administrative burden for companies. Among interviewees, some mentioned severe fines for exceeding limits set on the transport of certain types of goods, while others reported that obtaining transit permits (dozvoly) was subject to having fully loaded trucks and that such permits were issued in limited numbers at increasing prices. Others indicated problems arising because of the number of documents to prepare for customs clearance, which complicates and slows down operations. These challenges underscore the need for reforms in customs procedures to facilitate smoother trade operations and align with international standards as Turkmenistan moves towards WTO membership.
The prospect of WTO accession is met with overall enthusiasm but also some criticism
Overall, survey respondents are positive about the country's potential accession to the World Trade Organisation (WTO). This optimism is likely fuelled by the government's proactive efforts to prepare for WTO membership and enhance trade facilitation. They anticipate significant benefits from WTO accession, including easier access to foreign markets for exporters and reduced tariffs on imported equipment, particularly benefitting industries like construction and manufacturing by facilitating the import of raw materials and machinery. Accession is also seen as beneficial for competitiveness, investment attraction and access to new technologies. Overall, respondents considered that it would help them streamline their operations and improve the efficiency of their spending, allowing them to hire new employees and grow their business faster.
However, some respondents, while acknowledging the economic importance of joining the WTO, expressed concerns about the broader implications of the membership. They argued that the needed convergence of standards with WTO members might lead to an increase in prices in Turkmenistan with consequences for the competitiveness of local services, wages, and overall economic structures of their businesses. Others expressed concern about the need to comply with the rules set by an international organisation, which might go against the interests of local producers.
Import-substitution policies may prove hard to reconcile with WTO accession plans
Import-substitution is one of the pillars of Turkmenistan’s economic policy. The State Programme to Support SMEs (2018–2024) emphasises import-substitution measures to enhance local production by supporting the production and the promotion on the market of import-substituting goods, technologies and equipment (Mejlis of Turkmenistan, 2023[1]). For instance, the Turkmen government's commitment to enhancing agricultural productivity is evident in public investments in greenhouses, with 800 hectares currently focused on tomato production and an additional 600-650 hectares under construction (Ballyev, 2023[32]).
However, the IMF recommended in 2019 to phase out import-substitution policies and to enhance export competitiveness in order to promote economic diversification (IMF, 2019[33]). This advice aligns with the principles of trade liberalisation and free trade advocated by the WTO. It also reflects the economic geography of Turkmenistan, as discussed in Box 1.2. By shifting focus from import substitution to export-oriented growth, Turkmenistan could potentially achieve greater economic benefits while adhering to WTO principles.
The government has also taken significant steps to support SMEs as part of its export-promotion strategy. The government has designed support measures to export-oriented industries in the State Programme to Support SMEs (2018–2024) by offering incentives such as tax exemptions for private agricultural producers or ease their access to finance, although no further indications are provided in the document (Mejlis of Turkmenistan, 2023[1]). Another key initiative was the launch of a single digital window for export-import operations in July 2024, which aims to streamline trade processes, reduce transaction costs, and simplify licensing and certification procedures (EBRD, 2025[34]). At launch, about 5,000 firms were registered on the platform, while applications amounted to 20,000 (State Customs Service of Turkmenistan, 2024[35]).
Recommendations
Recommendation 4.1: Turkmenistan could advance the digitalisation of its customs procedures by introducing online authentication tools
As businesses express concern about the need to resort to paper documents with official stamps, Turkmenistan could further advance the digitalisation of its procedures to simplify them. The gradual phase-out of paper-based document requirements would allow closer alignment with the objective set in the Recommendation No. 14 Authentication of Trade Documents of the UNECE and the UN/CEFACT. Possible solutions include, for instance, biometric methods, digital signatures and third-party validations (UNECE, 2014[36]). The Cross-border Paperless Trade Toolkit developed by the WTO also provides information and guidance on the establishment of digital identity (WTO, 2022[37]).
The digitalisation of procedures will facilitate co-operation on a regional level with neighbouring countries and ease transit through Turkmenistan. OECD work on the development of the Trans-Caspian Transport Corridor finds that the digitalisation of procedures has been welcomed by private-sector respondents (OECD, forthcoming[38]). Closer cross-border co-operation with customs agencies, would further reduce trade costs (OECD, 2023[39]) (OECD, forthcoming[38]). Seamless customs procedures will be critical if Turkmenistan is to achieve its ambition of becoming a successful and attractive transit country (UNCTAD, 2024[31]).
Recommendation 4.2: Turkmenistan could consider phasing out import-substitution support
The OECD has long argued that import substitution policies generally do not deliver the intended economic benefits (OECD, 2000[40]). Such policies often lead to inefficiencies, reduced competitiveness and slower growth compared with export-oriented strategies (OECD, 2024[41]). As noted in chapter 1, they are also self-limiting, especially in a small economy, which, other things being equal, will typically rely on trade more than a larger one. Support for local producers should be resorted to as a means towards building an industry able to compete on export markets rather than constituting a goal in its own. Orienting the firms towards export through better access to finance, which encompasses financing licenses for technology transfers, grant support from public research institutes or tax incentives could aim at increasing the revenues of the firms operating in the sectors engaged in export operations and could be an incentive for businesses to innovate to better perform in their target markets, gradually making them less sensitive to the opening of the economy under WTO rules (IMF, 2024[42]).
Survey results indicate that the state has an enabling role in market activity despite being confronted with challenges
Surveyed firms are mostly satisfied with recent progress in tax legislation and tax administration, finding it fair and transparent, yet not always efficient
Firms recognise the favourable tax regime, and highlighted clear and timely communication from tax authorities, often facilitated by updates on their website. The twice-yearly tax filing process is seen as straightforward, and many respondents noted the responsiveness of tax authorities when businesses are properly registered. Businesses also rely on newspapers for updates on legislative changes, however, which points to the need for more modern communication channels.
There are ongoing efforts to avoid tax evasion through the improvement of the audit framework. International development partners are assisting Turkmenistan in this regard by providing technical assistance. For example, the Caucasus, Central Asia, and Mongolia Regional Capacity Development Centre (CCAMTAC) of the IMF has conducted an audit training for officials engaged in tax administration in October 2024 (IMF-CCAMTAC, 2024[43]).
Many firms suggested the further digitalisation of tax services to improve efficiency, including online banking for tax payments, real-time information on inspections, and online consultations for accountants. Businesses also expressed a desire for faster processing times at tax offices, more flexibility in cash withdrawals and deposits, and reduced administrative fines. Recent reforms, such as differentiated inspection intervals (every 3–5 years), were welcomed as positive steps, but additional improvements could make tax administration even more business-friendly. The introduction of a new public services portal (e.fineconomic.gov.tm) and mobile application by the Ministry of Finance and Economy allows legal entities and entrepreneurs to submit tax documents online, reducing the need for in-person visits to tax offices.
Tax administration is being progressively digitalised. The introduction of an online platform for taxpayers by the Ministry of Finance and Economy is a welcome step for faster and simpler tax administration. However, as of May 2025, it seemed to exist only in a Turkmen version, making it difficult for foreign firms to use, and can contain outdated information, as the last annual report goes back to 2022 (Tax Department of the Ministry of Finance and Economy of Turkmenistan, 2025[44]). The website also had several malfunctioning links at the time of drafting the report.
Firms prefer out-of-court dispute resolution mechanisms, as court proceedings are considered opaque and costly
The judicial process is perceived as opaque and complicated, which further exacerbates the legal situation for businesses. In one illustrative case reported during one of the interviews conducted by the OECD, a dispute over USD 15,000 was resolved with a judicial ruling requiring that payment be made in manats at the official exchange rate. Consequently, the business received only about USD 2,000, a fraction of the amount owed. The process took nearly four years, highlighting issues with the timeliness and objectivity of the judiciary and the challenges posed by the dual exchange-rate system.
Businesses in Turkmenistan tend to favour alternative methods of dispute resolution, primarily through direct, informal negotiations rather than through courts (Figure 2.7). From the perspective of business owners, taking a dispute to court is often seen as an unnecessary operational cost and negotiations in an informal setting to settle any disagreements are preferred. However, the Union of Industrialists and Entrepreneurs pointed out that the country lacks an institutionalised system for out-of-court dispute resolution, although its creation is being considered.
Source: OECD Business climate assessment survey in Turkmenistan (2024).
The development of alternative dispute resolution (ADR) mechanisms is still ongoing. The OECD (2023[45]) found that ADR mechanisms were still insufficient in Turkmenistan, which could be dissuasive for investors, because of the delays and costs associated with litigation in national courts. Nonetheless, there have been visible efforts by the government to address this problem. One of them is the country’s accession in 2022 to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also called the “New York Convention”, which is expected to strengthen the trust of the foreign investors (Ministry of Foreign Affairs of Turkmenistan, 2022[46]). This concords with educational efforts to familiarise officials with ADR as evidenced by an online course on the topic “International Commercial Arbitration and Mediation” delivered to students of the Civil Service Academy in November 2024 in the framework of the USAID programme “Governance Activity in Turkmenistan” (GAT) (Turkmenistan Altyn Asyr, 2024[47]).
The dual exchange-rate system in Turkmenistan is differently perceived by business depending on activity
Survey results indicate that access to foreign currency varies depending on whether firms are engaged in domestic or international activities. Firms operating domestically generally do not view currency controls or the dual exchange rate as problematic, as they rarely require foreign currency—payments, even from foreign clients, are typically made in Turkmen manats. Some domestic firms maintain foreign currency accounts but report little or no need to use them. While a few respondents acknowledged that currency controls can sometimes cause minor difficulties, most felt they could adapt to these challenges. In contrast, firms involved in international trade frequently cited restricted access to foreign currency as a significant barrier, and some expressed a desire for a freer, market-based exchange rate system.
The government seems to have implemented a prioritisation system for currency conversion, favouring certain sectors over others. According to respondents, entrepreneurs in food production receive priority, followed by those in industrial goods production. However, importers of finished products face greater challenges, as they have no guaranteed entitlement to currency conversion. Instead, it was reported during interviews that importers must rely on the discretion of authorised banks, subject to the availability of foreign exchange.
Therefore, producers can face severe restrictions when attempting to acquire foreign currency for essential imports. Firms are limited in their ability to convert currency, with conversion authorisations of 2% of the total contract value granted on a biweekly basis, which severely hampers their ability to purchase machinery, equipment, and inputs from abroad. Foreign firms have also faced non-payments or delays because of currency controls (U.S. Department of State, 2022[48]). This constraint forces businesses to delay crucial investments and upgrades, ultimately affecting their competitiveness and growth potential.
Recommendations
Recommendation 5.1: Evaluate opportunities to increase the effectiveness of tax administration through digitalisation and the adoption of international audit standards
Turkmenistan should consider implementing the possibility to pay taxes online, a recurring request by firms. It could consider the case of Tajikistan, which recently introduced such an online service with the services.andoz.tj website and on the related app “Andozi Man” (OECD, 2023[45]). Now, alongside the possibility to submit forms online, users, both legal persons and individuals, can also pay their taxes online. The implementation of this dematerialised procedure on the already existing website (e.fineconomic.gov.tm) would greatly help streamline the process, as respondents to the survey considered the need to reach the office of a tax administration and queue there before being able to proceed a waste of time.
The government could consider closer application by SOEs of international reporting standards, such as the International Financial Reporting Standards (IFRS), to improve tax administration. Despite the official recognition and partial adoption of the IFRS and the presence of independent auditors in the country, including offices of some international professional services companies, the current application of financial reporting standards does not meet its function of providing comparable information. The production of standardised financial statements and accounting can contribute to making audited information more reliable for tax assessments and investment decisions. The use of such standards can be used by firms to signal their quality and is reassuring for foreign investors, as it lowers the “information asymmetry” between investors and firms (Bertrand, de Brebisson and Burietz, 2021[49]). Focusing first on large SOEs could pave the way for easier access to financing from international developments partners as well as to cross-border investment flows. In parallel, IFRS-related university courses could also be introduced.
Recommendation 5.2: Consider establishing the office of the Business Ombudsman
Survey respondents suggested creating a business ombudsman or similar institution to help address disputes and provide guidance. According to a presidential decree adopted in June 2024, a department for the protection of human rights in the private sector was established under the apparatus of the Ombudsman. It is not clear yet if this department can address business disputes, offer independent consultations, or mediate conflicts before they escalate to lengthy and unpredictable court proceedings (OECD, 2024[50]). Turkmenistan could refer to the example of Kazakhstan’s Business Ombudsman (Box 2.8). A business ombudsman would not only help individual companies navigate legal complexities, but it could also serve as a catalyst for broader judicial and regulatory reforms, ultimately helping to improve the overall business environment in Turkmenistan.
Legal regime
The office of the Business Ombudsman in Kazakhstan is set into a clear legal framework. It is regulated by a special chapter in the Entrepreneurial Code. The President appoints the Business Ombudsman for a four-year term, which can be followed by another term, but there cannot be more than two terms in a row. Working in close co-operation with the National Chamber of Entrepreneurs (Atameken), the Business Ombudsman has representatives across all the regions of the country. He is accountable only to the President.
Powers
Being a key link between the private sector and government representatives, the Business Ombudsman has wide competencies, including:
making proposals to state bodies regarding new measures able to better protect the rights of entrepreneurs,
suggesting measures to restore entrepreneurial rights, if they were violated,
petitioning the prosecution on behalf of the business community in case he considers that the state bodies do not make appropriate measures to restore entrepreneurial rights,
requesting information from state bodies, except cases foreseen by law.
The Business Ombudsman has 30 days to answer filled complaints, yet this deadline can be extended as long as the sender has been notified of it.
Statistics
The Business Ombudsman is actively engaged in the protection of entrepreneurial rights. From 2020 to 2023, the office received 17 205 requests out of which 6043 (35%) claims were granted (e.g., recognition of a fine issued against a firm by a state agency as null or the recognition by the Supreme Court of an increase in tax for a company as illegal), representing litigation amounting to a total of 174 billion Kazakhstani tenge (approximately 348 million euros). He is also engaged in close co-operation with ministries: there are consultations with the prosecution bodies to amend criminal legislation, joint fora with the Anti-corruption Agency and the Supreme Court attended by the private sector to discuss, clarify and improve the legal framework. There are also contacts with foreign Business Ombudsman institutions across Europe and Asia to share best practices and protect Kazakh businesses abroad.
Recommendation 5.3: Consider unifying the official and parallel exchange rates
Turkmenistan could consider easing currency controls as it approaches WTO accession. Economic reforms in Uzbekistan were mentioned by some respondents as worthy of being taken as an example. Indeed, the country unified the official and informal exchange rates in late 2017, effectively eliminating the parallel currency market (Box 2.9). Together with tax cuts that followed two years later, this step was welcomed as the removal of “a top binding constraint to business” (World Bank, 2019[53]).
The IMF has long advised Turkmenistan to unify exchange rates. This would support the country’s diversification objectives and reduce economic distortions (IMF, 2025[54]). A single exchange rate would eliminate privileged access to foreign currency and would level the playing field among firms and across sectors. Where the authorities see a need to offer support to certain sectors that may be adversely affected by the unification of exchange rates, they may want to consider other policy measures that can provide such support in a fashion that is less likely to create distortions across the economy (e.g., accelerated depreciation, subsidised lending, tax credits, etc).
The path towards the liberalisation of the exchange rate can differ from country to country to better adapt to the specific features of an economy. In a World Bank blog publication (Estevao et al., 2021[55]), analysts propose two possible approaches: large and quick (also called a “big bang”) or slow and gradual. The first is a one-time measure and no further devaluation needs to be expected, but it will temporarily disrupt trade and may lead to some inflation and to the dollarisation of the economy if the authorities do not maintain a firm grip on monetary policy. Exchange rate unification thus needs to be accompanied by a monetary policy framework that can manage exchange rate volatility and limit post-liberalisation inflation. The second approach usually leads to improvements in trade and does not produce any considerable negative shock, but its success depends on the elaboration and implementation of a credible devaluation path by the central bank, e.g., via a crawling-peg exchange rate, and on sufficient levels of foreign exchange reserves, as well as flanking reforms to enhance competitiveness and facilitate export growth.
Uzbekistan started to liberalise its economy in 2017 and eliminated the parallel currency market. Under President Shavkat Mirziyoyev, the authorities allowed the Uzbek sum to float freely, leading initially to high inflation (peaking at 20% in early 2018) and slower growth (from 5.9% to 4.4%), reflecting limited trust towards national currency. However, growth soon recovered, exceeding 6% since 2023, indicating that the reform ultimately contributed to strengthening macroeconomic fundamentals.
The sharp devaluation of the sum in September 2017 prompted a surge in dollarisation: the share of foreign currency deposits in the money supply rose from 23% to 33% within a month, reaching 38% in early 2018. In response, financial authorities introduced a tighter monetary policy, steps toward inflation targeting, and higher reserve requirements on foreign exchange deposits to encourage de‑dollarisation.
By the early 2020s, these measures, alongside more stable inflation and a market-based exchange rate, helped reduce dollarisation, though it remains significant according to official and IMF assessments. As of September 2025, the share of foreign currency deposits had fallen to 23% and foreign currency loans to 37% (from 41% in early 2021), reflecting both the depreciation of the U.S. dollar and improved confidence in the national currency through stronger expectations management frameworks.
Source: (World Bank, 2025[56]) (World Bank, 2019[53]) (World Bank, 2019[53]) (IMF, 2024[57]).
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← 1. The ITU’s official target is that entry-level broadband services should be made affordable in low- and middle-income countries (LMICs) at less than 2% of monthly Gross National Income (GNI). If monthly GNI per capita is $1,500 in a typical middle-income country, 2% is $30.