Reliable transportation routes to and through Turkmenistan are limited but improving. New highways are currently under construction connecting Ashgabat to Uzbekistan and the Caspian sea; recently built or expanded airports and a sea port can accommodate international cargo; and programs to upgrade railways are underway, including with support of the Asian Development Bank (ADB).
The bulk of air cargo enters the country via the Ashgabat airport or Turkmenbashi airport, although there are domestic commercial airports in all provincial centers that are considered international ports of entry, although used as such on exceptional basis. Airports in Ashgabat, Mary, Turkmenbashy and Turkmenabat can handle cargo aircraft, with limited cargo capacity at Kerki airport that opened in 2021. A new international airport is under construction outside of the provincial capital of Balkanabat.
The port of Turkmenbashy on the Caspian Sea, located 270 kilometers (170 miles) east of and across the Caspian from Baku, Azerbaijan, is the most active seaport. The renovated and expanded port opened in May 2018 and has a total annual capacity of 17 million tons of dry cargo, 300,000 passengers, and 75,000 vehicles.
Turkmenistan has a number of rail links including the North-South Railway connecting Iran, Kazakhstan and Turkmenistan as well as multiple lines linking Turkmenistan with Uzbekistan and Afghanistan. Most cargo transportation within the country is by truck.
Using an Agent or Distributor
The procurement of equipment, spare parts, and consumables for Turkmenistan’s major industries, such as oil and gas, power generation, railway, air transportation, and telecommunications is state controlled. However, the government does not have a centralized procurement and distribution agency. Individual ministries and state companies procure their needs via a tender process. Announcements in Russian and Turkmen are made in the local press and on some websites.
U.S. companies without a local office are recommended to use the services of a Turkmen consulting company to participate in tenders. Tenders offered by agencies in the state-controlled oil and gas sector can be found here: https://www.oilgas.gov.tm/en/
Producers of heavy equipment typically sell their goods in Turkmenistan by establishing a local office or through a locally established distributor. Most local distributors provide some repair and maintenance services.
Pharmaceuticals, food items, and consumer goods are sold mostly through quasi-private and public channels; distributorships are numerous and are often foreign based. Finding a reliable distributor is challenging because of a lack of accessible information on private companies. The Economic-Commercial section of the U.S. Embassy in Ashgabat can help identify potential partners for U.S. firms.
Establishing an Office
The laws regulating the establishment of a local office are the Law on Enterprises, the Civil Code, and the Law on Corporations (joint stock companies). A foreign investor may establish a:
- Representative office,
- Branch,
- Individual enterprise with 100 percent foreign capital, or a
- Joint venture (JV).
The process for establishing any of these entities is complicated and regulations can change with little notice. Businesses interested in creating such entities should consult with Turkmen law and/or accounting firms to ensure compliance.
For the latest Investment Climate Statement (ICS) which includes information on investment and business environments in foreign economies pertinent to establishing and operating an office and to hiring employees, visit the U.S. Department of Department of State’s Investment Climate Statements website.
Franchising
Turkmenistan’s small population, underdeveloped private sector, and severe limitations on currency conversion hinder franchising attempts. No U.S. franchised restaurants currently operate in Turkmenistan although a few foreign chains, notably Turkish, are present. There are currently no foreign branded hotels operating in Turkmenistan.
Joint Ventures/Licensing
Joint ventures can be established in the form of a corporation (also referred to in Turkmenistan as a “joint-stock company”) or as a partnership (also known as an “economic society”). Registration and activities of corporations are regulated by the Law on Corporations, the Law on Foreign Investment in Turkmenistan, and the Law on Investment Activity in Turkmenistan.
The Law on Enterprises and the Law on Corporations provide for mergers and acquisitions. However, Turkmenistan’s relevant legislation does not clearly define activities involving foreign parties, nor does it have specific provisions for disposition of interests in business enterprises, both local and those involving foreign participation. Government approval is necessary for acquisitions and mergers of certain enterprises, including those with state shares.
Most economic activities require licensing. There is no comprehensive licensing agency; licenses should be obtained from the relevant authorized government agencies.
Laws and regulations may change without notice. Companies entering into any business arrangement in Turkmenistan should consult with experienced law firms, accounting firms, and/or consultants to ensure compliance and to protect their rights.
Express Delivery
DHL and the Express Mailing Service (EMS) of the state-owned Turkmenpochta (Turkmen Postal Service) offer express delivery service.
Due Diligence
Due diligence is difficult to carry out because Turkmenistan does not have company disclosure requirements and companies in most cases do not publish their annual financial statements. The government does not publish lists of individuals or companies that are known to have violated tax, environmental, or other laws. The country does not have a professional business press that objectively covers the market or provides company reports. Hiring a local professional may help with collecting some data and anecdotal information on the ground. Consulting other outlets, like the Economist Intelligence Unit, may also be helpful.