One of the main priorities of the state is to increase foreign direct investment inflows. The only way to achieve this goal is to ensure social, political, legal and economic stability in the country. To this end, states make changes to their domestic legislation.
On March 18, 2008, the Law of Turkmenistan on Foreign Investments came into force. The law aims to encourage foreign investors and facilitate FDI inflows. On June 8, 2019, the law was revised with the changes made in some of its articles. Turkmenistan in 2009, after the entry into force of the law, managed to attract FDI inflows in the amount of 22.5% of its GDP.
In accordance with the Law of Turkmenistan on Foreign Investments, the legal regime of activity and post-investment income of investors and enterprises with foreign investment does not differ from the same legal regime of activity and post-investment income of local investors. This means that foreign investors can also take advantage of all the opportunities available to domestic investors.
Foreign investors in Turkmenistan are granted preferential visas. In addition, foreign individuals and stateless people with full ownership of foreign investment enterprises have the right to permanently reside in Turkmenistan in the manner prescribed by the legislation of the country.
After paying taxes and other mandatory payments, foreign investors have the right to freely use their incomes and profits in Turkmenistan or transfer them outside the country. Disputes arising in connection with the implementation of foreign investments in Turkmenistan are resolved through negotiations, arbitrage courts of Turkmenistan or any other court agreed by the parties.
Foreign investments play an important role in utilizing the experience of foreign investors in the exploration and extraction of natural resources and accelerating the introduction of new technologies into the country. Turkmenistan is rich in raw materials and attaches the most importance to its energy sector. Therefore, foreign investors are needed for the exploration and production of natural resources. In this area, the development of legal norms and the provision of preferential terms have created a favorable environment for foreign investors in Turkmenistan.
Turkmenistan’s energy sector presents an important potential for foreign investors. At the same time, Turkmenistan has been more successful in attracting foreign capital in the textile sector. The Turkmen government has stated that the country supports foreign investments and, in this regard, is working to ensure the political and macroeconomic reforms necessary to create a positive investment environment.
Investments of foreign companies in Turkmenistan should be assessed in two areas:
- Investments in oil and gas fields. In Turkmenistan, the main foreign investors in this area are Dragon Oil (UAE), Petronas (Malaysia) and ARETI (Russia), which operate in accordance with production sharing agreements.
- Construction and commissioning of production facilities, especially in textile sector, in Turkmenistan during the years of independence. The construction and commissioning of the production facilities led to a large-scale inflow of foreign capital into the country. The textile and chemical industries play an important role in attracting foreign capital. Since the first days of independence of Turkmenistan, the textile industry has been one of the main sectors attracting FDI.
Turkmenistan on various platforms presents the country's opportunities for foreign direct investments and provides the interested parties with necessary information in this area. Such platforms present the commercial opportunities in the six main sectors of the national economy of Turkmenistan – oil and gas, industry, telecommunications, chemicals industry, energy and construction.
Nurmyrat Mommayev,
PhD Candidate at Marmara University's Department of Political Science and International Relations in Istanbul, Turkey
