The Turkmenistan business community still carries clear
traces of the central planning of the Soviet period. The
privatization program, which started in 1992, has only
included small businesses in commerce, crafts and other
services. The extraction of gas and oil, which accounts for
80 percent of Turkmenistan's export revenue and the
expanding textile and food industry, is owned by the state.
Private ownership of agricultural and industrial land is not
allowed, nor is sales. Cotton and grain are bought at
state-set prices that are below market prices and half of
the population living in the countryside lives only
partially in a monetary economy. Food rationing has occurred
several times in northern and western Turkmenistan during
the 1990s. The currency is not convertible.
The establishment of private companies is limited by a
complicated regulatory framework. Personal contacts often
determine which decisions the permit authorities make.
Foreign investments are only allowed in certain sectors,
including: the extraction of oil and gas where Turkmenistan
is in need of both capital and technology. According to
Transparency International, Turkmenistan is one of the most
corrupt states in the world.
Increased privatization of business, outside the oil and
gas sector, was promised by the regime that took over after
the dictator Nijazov's death in late 2006, but reform
efforts have so far been slow.
The importance of the primary sector to the economy as a
whole has declined rapidly. However, the sector still
accounts for a third of employment. Agricultural production,
which was previously mainly organized in state and
collective agriculture, has begun to be transformed in the
direction of small farming units. Arable and pasture land is
still state-owned, but contracts that allow private use
rights are common.
Only 3 percent of Turkmenistan's territory is suitable
for arable farming. Half of this area is irrigated, mainly
with water from Amu-Darja, which is led via the Karakum
Canal. The dominant crop is cotton. Other crops that are
grown to a significant extent are cereals, vegetables,
fruits and grapes. In addition to agriculture, livestock
management (mainly cattle, sheep and poultry) plays a
significant role in the country's food supply. The country
is also known for its breeding of caracal sheep and
Minerals and energy
countryaah, Turkmenistan has large deposits of recoverable raw
material resources. Sulfur and salt are found in quarantined
quantities, as are minerals with use primarily in the
construction industry. However, it is energy resources that
make up the country's great resource; Turkmenistan has very
large assets of oil and above all natural gas. Oil
production has significant potential. Extraction takes place
both on land and in the Caspian Sea. However, hopes for the
future are primarily linked to natural gas assets.
Extraction takes place in the middle parts of the country,
in the west in and near the Caspian Sea and in the Lolotan
field in the eastern parts of the country. Gas reserves are
considered to be among the largest in the world. The sector
is therefore predicted a bright future, and the country's
economy with it. Transport capacity has been limited for a
long time. To remedy this, a gas pipeline was inaugurated to
China in 2009, a gas pipeline to Iran and an oil pipeline to
Azerbaijan and Georgia in 2010. From the latter countries,
the oil is then transported to the Turkish port city of
Ceyhan. Turkmenistan itself has a shortage of oil
In view of the country's large supply of fossil fuels, it
is natural that the energy supply is built up around this
resource. Electricity and heat for both industrial and
domestic use are provided by oil and gas power plants.
Industrial production consists mainly of the textile and
petrochemical industries. Together with the natural gas, oil
also forms the basis of the country's chemical-technical
In addition to petrochemical production, the textile
industry, which accounted for about 1/3 of the total
production value and the majority of industrial employment,
is the country's leading industry. The basis for the
operation is the cotton grown domestically, which is,
however, only to a small extent refined on the spot.
Traditionally, carpet production is also important, and it
still plays a significant role in the small business sector.
Other things include food industry and a limited workshop
Few of the former Soviet republics depended more on their
foreign trade than Turkmenistan. This relationship still
applies. Dominant export goods are gas, oil products,
electricity and cotton and cotton products; natural gas and
oil account for 85 percent of the total export value. Most
of these exports go to China and Turkey. Imports are mainly
machinery, chemicals and food.