According to UNCTAD's 2022 World Investment Report, FDI inflows to Turkmenistan increased by 24.2% year-on-year in 2021, reaching USD 1.45 billion. Nevertheless, the figure is still much lower than the three-year average recorded before the pandemic (USD 2 billion between 2017-19). In 2021, the estimated FDI stock stood at USD 40.7 billion, representing around 64.3% of the country's GDP. Oil and gas, agriculture and construction are the main investment sectors. Despite the obstacles in the country, hydrocarbons and petrochemicals are attracting foreign investment and there has recently been an interest in the manufacturing sector. China, Russia, Kazakhstan and Uzbekistan are the main investors in the country. China is increasingly investing in the gas sector, co-financing pipelines and refineries, and remains the largest gas buyer in the country. It has granted a USD 4.1 billion loan to build the Galkynysh field, the second-largest gas field in the world. During an official meeting, Chinese President Xi Jinping declared that China will support more capable Chinese companies in investing and doing business in Turkmenistan. At the same time, continued strict capital controls on FDI have further slowed down new hydrocarbon projects, in a context of declining international investment. Public investment in Turkmenistan significantly exceeds private investment, as just 10% of the investments come from the private sector, which is much lower compared to other countries of similar income levels. Of the total investments, foreign direct investment accounts for around 20%. According to government officials, the volume of investments in Turkmenistan increased by 14.2% and 4 thousand new jobs were created in 2022.
Although there are formally no limitations to foreign ownership of companies, the government has only allowed fully owned foreign operations in the oil sector, and foreigners cannot invest in the exploration and production of the country’s onshore gas resources. All land belongs to the state and other property rights are limited; moreover, the repatriation of revenues is difficult. The judicial system is subordinate to the president, who appoints and dismisses the judges without legislative review. Potential investors may be discouraged by several factors, including state control measures, exchange rate restrictions, excessive and inconsistent regulations, corruption, lack of established rule of law and lack of experience in dealing with foreign investors for international trade. In addition, essential technologies, such as the internet and telephone infrastructures, are not sufficiently developed. Turkmen citizens must make up 90% of the workforce of foreign-owned companies (30% for companies active in the oil and gas sector). The government encourages direct investment in order to diversify the economy, but the structures in place do not comply with international trade standards, and no commercial code has been adopted apart from the law on commercial activities of 2016. The law on Free Economic Zones has been recently amended; however, there are currently no active FEZs in the country. Foreign investors are disadvantaged because they face higher tax rates than most local companies. The value-added tax rate is 15%, an income tax of 8% is applied to JVs, and an income tax of 20% is applied to wholly-owned foreign companies and state-owned enterprises. Corruption is widespread and the country ranks 167th out of 180 in the 2022 Corruption Perception Index, whereas the 2023 Index of Economic Freedom ranks Turkmenistan as the country 161st out of 176 in terms of the business climate.
|Foreign Direct Investment
|FDI Inward Flow (million USD)
|FDI Stock (million USD)
|Number of Greenfield Investments*
|Value of Greenfield Investments (million USD)
Source: UNCTAD - Latest available data
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
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Latest Update: November 2023