Investment Climate in Turkmenistan: Problems and Risks

In the 1990s Central Asian republics experienced enormous economic problems because their economies were heavily dependent on Russia and could not function separately. The collapse of the Soviet Union meant also the collapse of the Central Asian economic systems. The Leaders of former Soviet republics decided to carry out rapid economic and political reforms. They adopted economic policies which were known as “shock therapy”. Shock therapy caused the emergence of many socio-economic problems, as well as the growth of unemployment and infla-tion. It also increased social inequality and the gap between rich and poor. With regards to Turkmenistan, its transition from a centrally planned economy to a free market economy was a very slow process and the central government continued to play strong directive and protective roles in the economy. Much of the economy has not been exposed to market disciplines and remained under the firm control of central government. At first glance Turkmenistan seems a very attractive country for investors. It has immense amount of natural resources, especially oil and natural gas. Each year scientists discover large deposits of natural gas and oil in Turkmenistan. It is the fourth- largest producer of natural gas in the world. But, if one examines the country’s current socio-economic and political situation in details, he/she would discover that it is becoming increasingly an “investor unfriendly ” country. Turkmenistan is regarded as one of the most oppressive countries in the world. The country has a long tradition of dictatorial rule which is a main obstacle to any kind of economic and political reforms. Turkmenistan has a largely state-run economy and the country’s economy is still based on the system of state ownership. Government still controls the vast majority of lucrative busi-nesses and industrial assets. The economy of Turkmenistan is still characterized by state control of investment