Since independence, the Turkmenistan government has sought to build a business environment that would attract foreign investment as well as facilitate the growth and privatization of its own businesses. Since 1992, Turkmenistan has developed several joint-ventures with international companies involved in the oil and gas industry, transportation, and agriculture. The government continues to look for interested parties who could build business relations with Turkmenistan in other industries such as agriculture, infrastructure, communication, food processing and packaging and many others.

While Turkmenistan is just as eager as any country in the region to take advantage of the potential markets for its own financial security, the country has a second reason to seek out new markets for the Central Asian region, and encourage the building of the infrastructural mechanisms to increase trade and investment. Turkmenistan will benefit not only from its own direct market growth, but also from the financial interactions of the markets around Central Asia that will need Turkmen communication and transportation support. Therefore it is important that the players analyze what new and current markets are ripe for trade in energy, mining and agriculture, and also how the various markets will interplay.

To this end, Turkmenistan is looking at every opportunity to encourage development, and at the same time maintain the countryís commitment to building stability and peace. While Turkmenistan is averse to alliances formed for the purpose of political or military cohesion, our country will seek to build bilateral and multilateral relations with countries that can, through mutual cooperation, help to build economic progress and stability. Bettering economic relations with such regional powers as India, Israel, Pakistan and Turkey, in addition to our existing strong relations with Russia, strengthen bonds. These bonds create a positive environment through economic interdependence, steadily increasing the standing and leverage of the regional countries.

It is also important to note that Turkmenistanís growing relationship with one country, does not affect, in any way, its relations with other competing countries. This is clearly a product of the countryís neutrality policy, and proof of its acceptance internationally. A prominent example is Turkmenistanís committed economic relationship with Iran in the trade of goods and the development of energy transport routes. At the same time Turkmenistan has a growing relationship with Israel. Currently an Israeli company is managing over $500 million in development of projects related to the upgrading of the Turkmenbashi Refinery.

Foreign Investment Environment

The government is anxious to attract foreign investments to meet the huge needs for capital and technology to develop its oil and gas industry. In 1992, the Government developed a list of goods and services whose import would be subject to licensing or prohibition. The goods and services included on the list do not constitute a barrier to US or other foreign exports.

Turkmenistan has also proven its commitment to the growth of its energy market by implementing favorable foreign investment laws. In 1993, Turkmenistan enacted the ìLaw on Foreign Investment.î It defines opportunities for foreign investment, and allows foreign investors to act as depositors, creditors and buyers. It protects foreign investors against changes in Turkmen legislation, and provides equal protection for property.

Turkmenistan is one of the few countries with substantial tax incentives for foreign investment. Investors are fully exempt from a profits tax the first year if at least 70 percent of their total revenue comes from production or processing of agricultural goods, production of consumer goods, or production of construction materials. This profits tax exemption can also be extended for up to three years.

Most recently, a comprehensive hydrocarbon law was passed in March 1997. This law regulates projects, licenses and contracts with foreign companies. It sets out duties for the government, such as defining a development strategy and organizing statistical reports on hydrocarbon resources. The law brings Turkmenistanís regulations into line with international petroleum projects standards.

Several major companies have taken advantage of the positive investment environment in Turkmenistan in other sectors as well. Turkmen farmers recently received $73.6 million worth of farm equipment from U.S. John Deere Company. A Japanese consortium, led by JGC Corp., Itochu and Nisso Iwai Corp., are upgrading refinery facilities and adding a polypropylene plant with an export potential of over $100 million annually.

Fueled by continued reforms and investment in the energy sectors, the Turkmen economy is expected to more than double by the year 2002. Reforms in privatization launched soon after the countryís independence have led to measured but effective private economy growth. The private sector now employs approximately 22 percent of the labor force and represents 18 percent of the Turkmenistan GDP.

Just this year, a law was passed privatizing state owned and collective farms. The law defines the basic legal principles for transferring land to the ownership of private citizens for the production of agricultural commodities.