Although 90 per cent of the land is occupied by the Kara-Kum desert, agriculture is important to the Turkmen economy. Substantial quantities of cotton - the country is the world's 10th-largest producer - are also produced under ecologically ruinous schemes established during the Soviet era. Grain, fruit and vegetables are widely grown and livestock breeding is an important source of employment. The other mainstay of the economy and its best prospect for the future is an abundance of oil and natural gas deposits, the scale of which rivals anything in the Persian and Mexican Gulfs. New pipelines are planned to supplement the sole existing one, which transports the products via Russia. Other commercially viable reserves include bromine, iodine salts and various other minerals. Most of Turkmenistan's industry is devoted to processing the country's principal raw materials: textiles are a key export industry and much of the extracted oil is refined within the country. Oil and gas account for 85 per cent of Turkmenistan's export income (under long-term contracts, 80 per cent of the gas goes to the Ukraine while 60 per cent of the oil is bought by Italy).
As one of the poorest republics of the former Soviet Union, Turkmenistan suffered considerable economic disruption and hardship after its demise in 1991 (GDP declined by 10 per cent per year between 1993 and 1998); the increasing inability of many of its former trade partners to pay for its products has also caused serious difficulties. The Government responded by seeking out new markets. In 1992, Turkmenistan joined the IMF and the World Bank, then the European Bank for Reconstruction and Development (as a 'Country of Operation') and the Islamic Development Bank. The following year a new national currency, the Manat, was introduced. In 1996, the Government introduced an economic reform programme aimed at controlling persistent inflation and promoting foreign investment, especially in the oil and gas sector. This has met with some success; inflation is now 11.6 per cent, while current annual GDP growth is 12 per cent. The government has also concentrated resources in developing Turkmenistan's previously poor infrastructure, especially the road network. Some aspects of the reform programme have been delayed, including land reform in which the major role was to be assumed by the private sector. Turkmenistan is a member of the Economic Co-operation Organisation, which brings together the former republics of the southern Soviet Union with Romania, Bulgaria, Albania, Greece and Turkey.

The Government is particularly interested in encouraging foreign investment in a number of areas, including oil and gas production and refining; agricultural production and processing (particularly in cotton); consumer goods; export-orientated products; research and development; environmental protection and infrastructure. The Turkmen government has put a number of measures in place to encourage foreign investment. Free Enterprise Economic Zones - one in each of the eight velayat (regions) - have been created with special incentives for companies that invest in them. These include: no import duties, a three-year tax holiday from the start of production, with a further 13 years of reduced taxes; full-profit repatriation and a swifter licensing procedure. Concerns which are 100 per cent foreign owned must be sited in Free Enterprise Economic Zones, but joint ventures may be set up anywhere. All foreign investments are protected by government guarantee from expropriation. All foreign companies and individuals wishing to invest in Turkmenistan must go through the Commission for International Economic Affairs of the Office of the President of Turkmenistan. Business is conducted formally and smart dress is required. Office hours: Mon-Fri 0900-1800.

Chamber of Commerce and Industry
B Karryev Street 17, Ashgabat 744000, Turkmenistan
Tel: (12) 354 717 or 355 594.
E-mail: expo@online.tm

US Department of Commerce
Business Information Service for the Newly Independent States
USA Trade Center, Stop R-Binis, Ronald Reagan Building, 1401 Constitution Avenue, NW, Washington, DC 20230, USA
Tel: (202) 482 4655.
Website: www.bisnis.doc.gov