Turkmenistan 2018
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Turkmenistan 2018 1 Table of Contents Doing Business in Turkmenistan _________________________________________ 5 Market Overview _____________________________________________________________ 5 Market Challenges ___________________________________________________________ 6 Market Opportunities _________________________________________________________ 7 Market Entry Strategy _________________________________________________________ 7 Political Environment _________________________________________________________ 8 Selling US Products & Services __________________________________________ 8 Using an Agent to Sell US Products and Services _________________________________ 8 Establishing an Office ________________________________________________________ 8 Requirements for Establishing a Representative Office: ____________________________ 8 Requirements for Establishing a Branch: ________________________________________ 9 Requirements for Establishing a Joint Venture: ___________________________________ 9 Turkmenistan joint venture participants also must submit: _________________________ 10 Franchising ________________________________________________________________ 10 Direct Marketing ____________________________________________________________ 10 Joint Ventures/Licensing _____________________________________________________ 10 Selling to the Government ____________________________________________________ 11 Distribution & Sales Channels _________________________________________________ 12 Express Delivery ____________________________________________________________ 12 Selling Factors & Techniques _________________________________________________ 12 eCommerce ________________________________________________________________ 12 Trade Promotion & Advertising ________________________________________________ 13 Pricing ____________________________________________________________________ 13 Sales Service/Customer Support ______________________________________________ 13 Protecting Intellectual Property ________________________________________________ 13 Due Diligence ______________________________________________________________ 13 Local Professional Services __________________________________________________ 14 Principal Business Associations ______________________________________________ 15 Limitations on Selling US Products and Services _________________________________ 15 Web Resources _____________________________________________________________ 15 Leading Sectors for US Exports & Investments ____________________________ 16 Oil and Gas ________________________________________________________________ 16 Oil and Natural Gas Refining __________________________________________________ 17 2 Chemical Industry ___________________________________________________________ 18 Transportation______________________________________________________________ 19 Customs, Regulations & Standards ______________________________________ 21 Trade Barriers ______________________________________________________________ 21 Import Tariff ________________________________________________________________ 21 Import Requirements & Documentation _________________________________________ 22 Labeling/Marking Requirements _______________________________________________ 23 U.S. Export Controls _________________________________________________________ 23 Temporary Entry ____________________________________________________________ 23 Prohibited & Restricted Imports _______________________________________________ 23 Customs Regulations ________________________________________________________ 24 Standards for Trade _________________________________________________________ 25 Trade Agreements __________________________________________________________ 26 Licensing Requirements for Professional Services _______________________________ 26 Web Resources _____________________________________________________________ 26 Investment Climate Statement __________________________________________ 27 Executive Summary _________________________________________________________ 27 Openness to and Restrictions upon Foreign Investment ___________________________ 29 Policies Toward Foreign Direct Investment ______________________________________ 29 Bilateral Investment Agreements and Taxation Treaties ___________________________ 33 Legal Regime ______________________________________________________________ 34 Protection of Property Rights _________________________________________________ 40 Financial Sector ____________________________________________________________ 43 State-Owned Enterprises _____________________________________________________ 45 Responsible Business Conduct _______________________________________________ 47 Corruption _________________________________________________________________ 47 Political and Security Environment _____________________________________________ 48 Labor Policies and Practices __________________________________________________ 48 OPIC and Other Investment Insurance Programs _________________________________ 49 Foreign Direct Investment and Foreign Portfolio Investment Statistics _______________ 49 Contact for More Information on the Investment Climate Statement _________________ 50 Trade & Project Financing _____________________________________________ 52 Methods of Payment _________________________________________________________ 52 Banking Systems ___________________________________________________________ 52 Foreign Exchange Controls ___________________________________________________ 52 3 US Banks & Local Correspondent Banks ________________________________________ 52 Project Financing ___________________________________________________________ 52 Multilateral Development Banks: ______________________________________________ 52 Financing Web Resources ____________________________________________________ 53 Business Travel ______________________________________________________ 54 Business Customs __________________________________________________________ 54 Travel Advisory _____________________________________________________________ 54 Visa Requirements __________________________________________________________ 55 Currency __________________________________________________________________ 56 Telecommunications/Electronics ______________________________________________ 56 Transportation______________________________________________________________ 56 Language __________________________________________________________________ 57 Health _____________________________________________________________________ 57 Local Time, Business Hours and Holidays_______________________________________ 59 Temporary Entry of Materials or Personal Belongings _____________________________ 59 Travel Related Web Resources ________________________________________________ 59 INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2018. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES. 4 Doing Business in Turkmenistan Market Overview Turkmenistan is a physically large country (slightly larger than the state of California) but sparsely inhabited (about 5 million people). It gained independence in 1991 after the breakup of the Soviet Union. Although Turkmenistan’s vast natural gas and its oil resources continue to attract some foreign companies, the Government of Turkmenistan has yet to implement reforms needed to create an inviting business climate where foreign investment and foreign investors are truly welcomed and property rights guaranteed. In addition, the government is centralized and non-transparent, with much information that is readily available in most other countries classified as a “state secret.” Turkmenistan publishes limited national statistics, but its data collection and evaluation methodologies have not been verified by independent third parties and are often not credible. According to the 2017 Statistical Yearbook of Turkmenistan, the country’s 2016 Gross Domestic Product (GDP) was USD 36.18 billion (TMT126.6 billion) while 2015 GDP was USD 35.9 billion (TMT 125 billion), with official GDP figures as yet unavailable for 2017. The conversion from manat was done at the official rate of TMT3.5/USD. The government reported a GDP growth of 6.5 percent in 2017. These GDP figures and growth rate are implausible. Turkmenistan continues to be a major producer of natural gas and, according to the Statistical Yearbook of Turkmenistan, in 2016 produced an estimated 69.4 billion cubic meters. In 2015, Russia bought 4 bcm from Turkmenistan but ceased to import refined natural gas from Turkmenistan in January 2016. Turkmenistan stopped exporting gas to Iran on January 1, 2017. Other key sectors include oil and petroleum products, plastics and textiles. According to Turkmenistan’s State Statistics Committee, Turkmenistan’s exports rose from USD 7.5 billion in 2016 to USD 7.8 billion in 2017 while the country’s imports fell from approximately USD 13 billion in 2016 to USD 10 billion. The trade deficit was USD 2.4 billion. Turkmenistan’s largest importer is Turkey, with consumer goods, food, and construction materials. China is Turkmenistan’s largest export market. According to the U.S. Department of Commerce, in 2017 U.S. exports to Turkmenistan totaled USD 282 million while U.S. imports from Turkmenistan were USD 13.8 million. The highest valued U.S. export caterogy was civilian aircraft and spare parts, with industrial engines the second largest category. The U.S.’s largest import from Turkmenistan was cotton cloth and fabrics. Food