Guidance

Overseas business risk: Turkmenistan

Updated 15 March 2023

1. Overview

Turkmenistan is located in a strategically important region, bordering Afghanistan, Iran, Uzbekistan and Kazakhstan. It is bounded on the west by the Caspian Sea. It gained independence from the USSR in 1991. Official statistics give the population as 5.9 million, but there is evidence that it has fallen substantially in recent years as people leave to find work, and may be as low as 4 million. The Karakum desert covers 80% of the country. Turkmenistan has the world’s fourth largest proven reserves of gas ^{[footnote 1]}. Gas export to China plays a major role in the national economy. Gas market diversification is a major government objective and recent years have seen increasing sales to Russia and signs of markets opening with Azerbaijan and Iran.

Turkmenistan’s current President is Serdar Berdimuhamedov, who was appointed President in March 2022, taking over from his father, Gurbanguly Berdimuhamedov, who held the post from 2006 to 2022. The volume of trade with the UK in the year to September 2022 was £43 million, in goods and services. Turkmenistan’s foreign policy is centred on its status of permanent neutrality. Turkmenistan is an FCDO Human Rights Priority country.

2. Political

2.1 Politics

Turkmenistan became a Soviet Republic in 1924. It gained its independence in October 1991 following the collapse of the USSR. The 2016 Constitution defines the country as a secular democracy and a presidential republic.

The Constitution laid down that the legislative, executive and judicial branches of government would be independent.

On 21 January 2023, 3 new Constitutional Laws were passed. The first established former President and Chair of the Halk Maslahaty (People’s Council) Gurbanguly Berdimuhamedov as National Leader of the Turkmen People. The new role gives extensive rights to address the people, speak at meetings of the Mejlis of Milli Gengesh (National Assembly) and at the Cabinet of Ministers and to chair the Halk Maslahaty.

The second law returned Turkmenistan to a unicameral parliamentary system with elected deputies sitting in the Mejlis. The third restored the Halk Maslahaty to its previous role as the highest representative body of the people of Turkmenistan. It will meet routinely once a year and can be convened at other times by the Chair. The Halk Maslahaty will be chaired by the National Leader of the Turkmen People and membership includes the President, Cabinet members, members of the Supreme Court, the Ombudswoman, members of the Mejlis, mayors and other provincial officials and representative members of the public.

On 13 January 2023, the Mejlis of Milli Gengesh announced that elections of deputies of the Mejlis would take place on 26 March 2023 and on the same day members of velayat, etrap and city People’s Councils, and members of Gengeshes (Councils) would also be elected.

In the 2018 parliamentary elections 3 political parties put forward candidates: the Democratic Party (the successor to the Communist Party), the Agrarian Party and the Union of Industrialists and Entrepreneurs. Independent citizens’ groups also put forward candidates.

All the parties supported the President, with only minor differences of emphasis. The Democratic Party won 54 seats, the Agrarian Party 11 seats, the Union of Industrialists and Entrepreneurs 11 seats and independent citizens’ group candidates the remaining 49 seats.

2.2 The President

Serdar Berdimuhamedov, son of the previous President, was elected President on 19 March 2022. He was declared winner with 72.97 % of the vote from a turnout of 97.12%

The OSCE’s Office for Democracy Institutions and Human Rights (ODIHR) did not observe the 2022 Presidential election. An assessment mission expressed concern that none of ODIHR’s previous recommendations on the conduct of elections had been implemented and that quarantine requirements imposed on ODIHR observers would prevent them from carrying out their mission. It therefore judged that election observation activity was not feasible. Observation missions from the Commonwealth of Independent States, Shanghai Cooperation Organisation, Organisation of Islamic Cooperation and the Turkic Council were assisted by the authorities to visit selected polling stations and expressed satisfaction with the election process.

The President is Supreme Commander of the Armed Forces and responsible for senior appointments in government, the judiciary and the major organs of state and religion.

The previous President Gurbanguly Berdimuhamedov was appointed acting President in December 2006 following the death of the country’s first president, Saparmurat Niyazov. He was confirmed in office following elections in early 2007 and again in 2012. He was re-elected for a third term in February 2017 with 97.7% of the vote. ODIHR noted in their 2017 observation report that the elections took place in a heavily controlled political environment and that a lack of genuine opposition or meaningful pluralism limited voters’ choices.

2.3 Development

Turkmenistan collaborates with the United Nations under the UN Sustainable Development Cooperation Framework that will guide development until 2025. The EU, the OSCE and individual countries, including the US and the UK, also run limited in-country development programmes. Turkmenistan has prepared a 30-year plan that sees it becoming a regional transport and energy hub.

2.4 Foreign policy

Turkmenistan attaches great importance to its policy of permanent neutrality, a status recognised in a United Nations General Assembly Resolution adopted in December 1995.

In 2022 the Ministry of Foreign Affairs described Turkmenistan’s foreign policy priorities as 5-fold:

• ensure regional security and stability
• promote neutrality in the international arena
• diversify Turkmen foreign economic relations
• promote stable development
• work for ‘humanisation’ of international relations. In this last respect, it noted the importance of promoting human rights to food, water, health, education and light

Turkmenistan’s major international trading partner is China. In January 2023, President Serdar Berdimuhamedov paid his first official visit to China, where the 2 Presidents discussed plans to bring the bilateral relationship to a comprehensive strategic partnership. Turkey is the next most significant, underpinned by historical, cultural, commercial, economic and political ties.

Turkmenistan cannot ignore Russia’s political weight and Russia still regards Turkmenistan as within its legitimate sphere of interest. In 2022 and 2023 several high-level visits to and from Russia took place. President Berdimuhamedov paid a visit to Moscow in June 2022. President Putin attended the sixth Caspian Summit in Ashgabat in June 2022.

In November 2022 the Speaker of the Halk Maslahaty Gurbanguly Berdimuhamedov was received by the Kremlin and presented with the Order for Service to the Fatherland. Turkmenistan has not voted in any UN General Assembly Resolutions concerning the illegal invasion of Ukraine by Russia. In April 2022 Turkmenistan sent a consignment of humanitarian aid to the people of Ukraine.

Turkmenistan shares 462 miles of border with Afghanistan. Some 1 million ethnic Turkmen live in Afghanistan along its borders with Turkmenistan and Uzbekistan. Relations with Afghanistan are generally good. Turkmenistan has played a small but positive role in its development and reconstruction, delivering humanitarian aid and supplying Afghanistan with cheap electricity, gas and oil. Taliban diplomats took charge of the Afghan Embassy in Ashgabat in early 2022.

Turkmenistan also shares 621 miles of border with Iran. There are at least 1 million ethnic Turkmen living in Iran, mostly in the border region of Turkmen Sahra. In June 2022 President Berdimuhamedov paid an official visit to Tehran to discuss bilateral cooperation and gas swap deals to third countries.

Following the efforts of Berdimuhamedov senior and then the new Uzbek leadership, relations between Turkmenistan and Uzbekistan improved in recent years. Building on his father’s foreign policy efforts, President Serdar Berdimuhamedov’s third official foreign visit was to Tashkent in July 2022. In October 2022 President Mirziyoyev paid a visit to Ashgabat.

The EU’s engagement in the region is governed by its Strategy for Central Asia. This supports peaceful, prosperous, sustainable and stable development and the promotion of good governance, human rights and the rule of law.

Relations with the United Kingdom focus on climate change, the green economy, gender equality, education, regional security and human rights.

3. Economy

No reliable economic data are published in Turkmenistan. Most sources cite figures that the government releases to international financial institutions. These do not always square with observation on the ground. Turkmenistan’s economy is based on the sale of gas and (some) oil. China is the main market for Turkmen gas. Turkmenistan exports some cotton, yarn, textiles and processed food.

The volume of trade with the UK declined from £123 million in 2011 to £43 million in 2022. The balance of trade is significantly in the UK’s favour.

In February 2023 Fitch Ratings reaffirmed Turkmenistan’s long-term foreign currency Issuer Default Rating (IDR) at “B+” and uprated the outlook from “stable” to “positive”.

The recommendations of the latest IMF mission to Ashgabat in 2019 remain relevant. The IMF noted that economic growth had slowed because of lower public investment and stringent exchange controls, which had reduced both demand and imports. This, and rising hydrocarbon prices, had resulted in a balance of trade surplus but the economic outlook was uncertain because of the disequilibrium between the official and non-official exchange rates. The mission made a number of recommendations, including:

• enhancing competitiveness and improving currency convertibility in order to achieve development goals without recreating a trade deficit, but sequencing changes and taking steps to protect the vulnerable
• accelerating moves towards a market-based economy, including privatising state-owned enterprises, promoting competition, enhancing the rule of law and reducing red tape
• phasing out import substitution policies to make exports more competitive and help diversify the economy
• greater transparency and better economic statistics to attract private foreign and domestic investment
• better regulation and supervision of the banking sector to preserve financial stability and integrity
• improved access to internet and greater use of digital technologies
• better policy frameworks, including for management of public finances, debt, and investment
• building human capital, in particular improving the education and health systems

The economic effects of sanctions imposed by the international community on Russia following its invasion of Ukraine in February 2022 appear to have been felt less in Turkmenistan than in other countries in the region. This is likely to due to the dominance of China in the economy and the growing economic relationship with Turkey.

The Government of Turkmenistan has not acknowledged any cases of COVID-19 on its territory but did impose large scale restrictions that are likely to have impacted the economy. Restrictions ended in late 2022 and current economic indicators are showing a positive trend.

In February 2022 Turkmenistan became a WTO accession country and in July 2022 a WTO delegation paid an official visit to Ashgabat to discuss Turkmenistan’s accession process.

4. Energy sector

Turkmenistan has the world’s fourth largest proven reserves of natural gas, 13.6 trillion cubic metres or 7.2% of the world’s total ^{[footnote 2]}. It has the world’s second largest single deposit in the Galkynysh field in the southeast of the country. In 2021, it produced 79.3 billion cubic metres of gas, of which about 36.7 billion cubic metres were consumed internally, mainly for power generation, chemical production and residential use. Much of the remainder was exported to China.

In 2019, the State Concern Turkmengaz signed a 5-year contract with Russia’s Gazprom for the supply of up to 5.5 billion cubic metres of natural gas per year. Exact offtake figures have not been released but are believed to be in the region of 3 to 4 billion cubic metres.

In late 2021, the Government agreed a gas swap deal of an annual amount of 1.5 to 2 billion cubic metres with Iran and Azerbaijan. In December 2022, Turkmenistan signed an export deal with Uzbekistan to supply 1.5 billion cubic meters of natural gas in the winter season. Turkmenistan also exports electricity to Uzbekistan.

Potentially, Turkmenistan’s gas reserves could provide an additional 30 billion cubic metres annually for the proposed Southern Gas Corridor (a project to bring gas to Europe through Turkey from Azerbaijan initially and possibly from Iran and/or Turkmenistan in the longer term). Moves over the last few years to build a Trans-Caspian pipeline to bring gas from Turkmenistan to Europe have faltered in the absence of progress on discussions and due to geopolitical considerations across the region. However, following more than2 decades of negotiations, Azerbaijan, Iran, Kazakhstan, Russia and Turkmenistan signed the Convention on the Legal Status of the Caspian Sea in August 2018.

Iran remains the only littoral state to ratify the agreement. In late 2022, heads of state from Azerbaijan, Turkey and Turkmenistan held a trilateral summit in Awaza to discuss options for the delivery of energy resources to global markets. The effects of this meeting are yet to be seen.

Launched in 1995, the Turkmenistan-Afghanistan-Pakistan-India pipeline project (TAPI) was developed to provide an alternative route for Turkmen gas. A preliminary engineering feasibility study has been completed and the project remains a high priority for the Government. The progress of securing financial support is slow, partly because of security concerns in Afghanistan and partly because of the reluctance on the part of Turkmenistan to allow foreign companies to take an equity share in onshore production facilities. In January 2023, Russia’s Energy Minister said that Russia could be interested in taking part in TAPI.

In January 2021, Turkmenistan and Azerbaijan signed a Memorandum of Understanding on joint development of a previously disputed offshore oil field in the Caspian Sea.

The energy sector is the main driver of the economy and is of commercial interest to both international energy companies and the service and supply chain. To date however many have been deterred from entering the market because of the difficult business environment (see 3.2 below) and because the terms proposed do not offer the security they need for the scale of investment required.

The Government of Turkmenistan has in recent times made statements about its intent to develop a renewable energy sector. Turkmenistan has significant solar and wind potential. With funding from the Abu Dhabi Fund for Development, work has begun on Turkmenistan’s first solar power plant with a capacity of 10 MW. In January 2022 the Government of Turkmenistan approved a roadmap 2022 to 2023 for the development of international cooperation in the field of hydrogen energy. In late 2022, UAE’s Masdar signed a joint development agreement with the State Power Corporation Turkmenenergo for the development of a 100 MW solar plant in Turkmenistan.

5. British business

There are challenges to doing business in Turkmenistan. Decision-making is centralised at the highest level, particularly if a project has foreign involvement. This reflects poor experience in the years after independence and a heightened concern to prevent foreign influence. The law does not adequately protect contracts and can be changed by decree or ignored with impunity by vested interests. Both domestic and foreign businesses can be forced out of the market for specious, or undisclosed, reasons. It can be difficult to obtain payment for goods and to remit in-country profits, exacerbated by lack of foreign reserves. Foreign exchange accounts and international transfers require state approval.

There remain opportunities, however. UK companies are advised to consult the Department for Business and Trade for advice on sectors where Turkmenistan is investing and to work through a trusted local partner to manage bureaucratic and political hurdles. It is advisable to obtain payment for goods and services in advance, splitting larger projects into tranches for this purpose. Those who are successful have built up relations over many years, and, reflecting the hierarchical nature of Turkmen society, been prepared to engage at the most senior level in business negotiations.

6. Visas

Obtaining a business visa requires a letter of invitation from a counterpart in Turkmenistan, making it difficult to pay an exploratory visit to assess business opportunities. One option is to sign up for a conference or exhibition held in-country for which visas are more easily available.

Nationals from conflict regions, including in the Middle East, North Africa and South Asia, face considerable difficulties in securing visas.

Stoppage of international flights to prevent the spread of COVID-19 has been progressively rolled back since June 2022. Scheduled flights have resumed to Dubai (UAE), Frankfurt (Germany), Kazan and Moscow (Russia), Istanbul (Turkey) and Minsk (Belarus). Most visitors are required to self-quarantine on arrival. The duration and location of quarantine is subject to change. Exceptions to these restrictions are rare. British citizens are advised to refer to the FCDO Travel Advice.

7. International business practices

Banking facilities are underdeveloped and banks cannot yet provide many basic services. ATMs are not widespread and often run out of money. Most visitors bring US dollars in cash, as other currencies are difficult to exchange. Few places accept bank or credit cards. The best-known foreign bank is the Turkmen Turkish Commercial Bank, part of the Ziraat Bank group. There is a large divergence between official and unofficial exchange rates. Strict controls and harsh penalties are applied to those who are caught breaking currency exchange regulations.

The UK/Turkmenistan Double Taxation Convention entered into force on 19 December 2016.

8. Communications

Access to the internet is limited, and most social media is blocked (see section 4). Most roaming services are blocked. The sole mobile phone service provider is state-owned.

Although it is against the law, VPNs are widely used in Turkmenistan but with continuous difficulties and blockages.

It is not possible to buy international newspapers or other foreign publications in Turkmenistan.

9. Business and human rights

Turkmenistan is a UK Human Rights Priority Country. Although it is a signatory to most of the international human rights instruments and its national legislation contains provisions for the protection of basic human rights, implementation remains problematic. Civil liberties and freedom of expression are severely curtailed. Freedom House consistently places Turkmenistan near the bottom of their global freedom rankings. Human rights activists work only outside the country. They make credible claims of torture and abuse in prisons.

The Government controls the media. In 2022, Reporters without Borders ranked Turkmenistan 177th of the 180 countries it covers. Estimates of the population with internet access are low and many sites are blocked. Almost all social media, including Facebook, WhatsApp and Twitter, are similarly blocked.

The Government of Turkmenistan participates in the OSCE Human Dimension meetings and in the UN Universal Periodic Review system. The Government’s National Human Rights Action Plan was launched in 2016 and updated in 2021. The Constitution contains human rights provisions, including for an independent human rights ombudsman. The gap between legislation and implementation nevertheless remains wide and the lack of government transparency makes monitoring difficult.

The British Embassy in Ashgabat engages with the Government of Turkmenistan on human rights issues in particular in the fields of justice, good governance, the rights of women and girls, freedom of expression, religion and belief and the use of forced labour. The Embassy works in partnership with the UN to fund projects on gender sensitivity. Further material on human rights can be found in the latest FCDO Human Rights and Democracy Report.

10. Bribery and corruption

Bribery is illegal. It is an offence for British nationals or anyone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership to solicit or accept or offer a bribe anywhere in the world. In addition, any commercial organisation carrying on a business in the UK can be liable under UK legislation for the conduct of a person who is neither a UK national nor resident in the UK nor a body incorporated or formed in the UK. In these circumstances, it does not matter whether the acts or omissions that form part of the offence take place in the UK or elsewhere.

The 2022 Transparency International Corruption Perception Index, which measures perceived levels of corruption, ranked Turkmenistan 167 out of 180 countries, 2 places lower than in 2020.

We have no reports of UK companies being asked to be complicit in corrupt practices, but there have been reports of agents or intermediaries seeking facilitation payments and of Turkmen organisations seeking to have their expenses met to pursue business in the UK.

11. Terrorism threat and protective security advice

Refer to the latest version of the FCDO’s Travel Advice for Turkmenistan.

12. Intellectual property

A number of pieces of legislation regulate the protection of intellectual property in Turkmenistan:

• Scientific Intellectual Property (1992)
• Legal Protection of Algorithms, Software, Databases, and IC Devices (1994)
• Inventions and Industrial Designs (2008)
• Trade and Service Marks and Places of Origin (2008)
• Copyright and Allied Rights (2012)
• Innovation (2014)
• Ownership (2015)
• Legal Protection of Inventions (2017)

Companies doing business in Turkmenistan are advised to take legal advice locally to ensure that their rights are protected under the appropriate provisions of these, and that contracts include non-competition clauses and confidentiality/non-disclosure provisions. The Chamber of Commerce and Industry of Turkmenistan and the State Agency for Intellectual Property Protection can also provide advice.

Read our Intellectual property guidance and read protecting your intellectual property abroad for further guidance.

13. Organised crime

Turkmenistan is neither a producer nor a source country for illegal drugs or precursor chemicals. It is however positioned along the western and northern routes for Afghan opiates travelling to Europe and Russia and is believed to be a conduit for this traffic.

Turkmenistan acceded to the 1961 UN Single Convention on Narcotic Drugs and the 1972 Protocol amending it, the 1971 UN Convention on Psychotropic Substances and the 1988 UN Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances. The Government of Turkmenistan has brought national laws and regulations in the field of drug control into conformity with these.

Turkmenistan is also a member of the regional mini-Dublin Group (The Dublin Group was established in 1990, under the auspices of the European Committee to Combat Drugs, to analyse and exchange information, make recommendations and co-ordinate action on the production and trafficking of illegal drugs).

Find more information on our Serious and Organised Crime Strategy page.

14. Contact

For further information contact the DBT office in Turkmenistan or email ukembassy.ashgabat@fcdo.gov.uk

1. https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/statistical-review/bp-stats-review-2022-full-report.pdf ↩

2. https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/statistical-review/bp-stats-review-2022-full-report.pdf ↩