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Turkmenistan: Market Profile

Photo: Turkmenistan factsheet
Photo: Turkmenistan factsheet

1. Overview

Turkmenistan is a large but sparsely inhabited country with abundant hydrocarbon resources, particularly natural gas. Turkmenistan's gas reserves are estimated to be the world's fourth largest, representing about 10% of global reserves. In addition to cotton and natural gas, the country is rich in petroleum, sulphur, iodine, salt, bentonite clays, limestone, gypsum and cement – all potential inputs to chemical and construction industries. That said, Turkmenistan is still at an early stage of development. The public sector and state-owned entities continue to dominate the economy and the labour market. Apart from the hydrocarbon sector, foreign direct investment remains limited and principally linked to suppliers' contracts. The government's industrial policy looks to promote non-hydrocarbon activity. Nevertheless, tight administrative controls and the public sector's large overall role in economic activity remain the key obstacles to private sector development in Turkmenistan.

Sources: World Bank, Fitch Solutions

2. Major Economic/Political Events and Upcoming Elections

September 2016
Constitutional changes extended the presidential term limit from five to seven years ahead of a presidential vote on February 12, 2017. The constitutional amendment also included the removal of the 70-year age limit, and to allow the president to serve without term limits.

February 2017
President Berdymukhamedov gained a third term in office.

September 2017
Turkmenistan launched the USD1.5 billion GarabogazKarbamid nitrogen fertiliser plant, located near the Caspian coastal city of Garabogaz, Balkan Region. The project also involved the construction of a 50MW natural gas-fired combined heat and power plant, as well as an access road to Bekdash port and a new water treatment plant.

October 2017
Turkmenistan President Berdymukhamedov signed a decree to gradually phase out subsidies for water, gas and electricity. Berdymukhamedov stated that the savings obtained from phasing out these subsidies would help to fund a seven-year investment programme.

February 2018
Regional leaders strengthened construction work on the Afghan section of the natural gas pipeline that will link Turkmenistan through Afghanistan to Pakistan and India.

June 2018
The European Bank for Reconstruction and Development (EBRD) invested more than EUR250.0 million in various sectors of the Turkmen economy within 65 investment projects throughout the country and supported more than 200 enterprises within consulting projects.

August 2018
Five Caspian nations (Azerbaijan, Iran, Kazakhstan, Russia and Turkmenistan) signed a new Convention on the Legal Status of the Caspian Sea in Aktau, Kazakhstan. The convention focused on the legal status of the Caspian Sea and the rights of the five bordering nations, with key areas of interest including the division of natural resources, territorial rights and enhancing multilateral relations.

November 2018
The Asian Development Bank approved a USD500.0 million loan in November 2018 for the USD675.0 million National Power Grid Strengthening Project in Turkmenistan. The loan aimed to boost Turkmenistan's transmission network and made power supply in the country more reliable. When completed in 2023, this will help boost Turkmenistan's capacity to trade electricity and increase the volume of current electricity exports to Afghanistan.

Sources: BBC Country Profile – Timeline, Reuters, Fitch Solutions

3. Major Economic Indicators

Graph: Turkmenistan real GDP and inflation
Graph: Turkmenistan real GDP and inflation
Graph: Turkmenistan GDP by sector (2015)
Note: There are no complete data available for 2016 and 2017
Graph: Turkmenistan GDP by sector (2015)
Note: There are no complete data available for 2016 and 2017
Graph: Turkmenistan unemployment rate
Note: Data show total unemployment
Graph: Turkmenistan unemployment rate
Note: Data show total unemployment
Graph: Turkmenistan current account balance
Graph: Turkmenistan current account balance

e = estimate, f = forecast
Sources: IMF, World Bank, Fitch Solutions
Date last reviewed: December 6, 2018

4. External Trade

4.1 Merchandise Trade

Graph: Turkmenistan merchandise trade
Graph: Turkmenistan merchandise trade

e = estimate
Source: WTO
Date last reviewed: December 6, 2018

Graph: Turkmenistan major export commodities (2017)
Note: 2017 data derived from mirror data
Graph: Turkmenistan major export commodities (2017)
Note: 2017 data derived from mirror data
Graph: Turkmenistan major export markets (2017)
Graph: Turkmenistan major export markets (2017)
Graph: Turkmenistan major import commodities (2017)
Graph: Turkmenistan major import commodities (2017)
Graph: Turkmenistan major import markets (2017)
Graph: Turkmenistan major import markets (2017)

Sources: Trade Map, Fitch Solutions
Date last reviewed: December 6, 2018

4.2 Trade in Services

Graph: Turkmenistan trade in services
Graph: Turkmenistan trade in services

Note: There was no data available from the WTO/Trade Map for this indicator for years other than 1996-1997
Source: WTO
Date last reviewed: December 5, 2018

5. Trade Policies

  • Turkmenistan is not a member of World Trade Organisation (WTO), however, when drafting laws and regulations, the government usually includes a clause that states the international agreements and laws will prevail in case there is a conflict between local and international legislations.
  • Turkmenistan pursues a policy of neutrality (acknowledged by United Nations in 1995) and does not join regional blocs. Turkmenistan is currently a member of the Economic Cooperation Organisation (ECO), a 10-member intergovernmental organisation created in 1985 to promote trade and economic cooperation among its members.
  • Turkmenistan requires that all export and import contracts and investment projects be registered at the State Commodity and Raw Materials Exchange (SCRME) and at the Ministry of Economy. The procedure applies not only to the contracts signed at the SCRME, but also to contracts signed between third parties. The SCRME is state-owned and is the only exchange in the country. The contract registration procedure includes an assessment of price justification.
  • All import contracts must be registered before goods are delivered to Turkmenistan. The government generally favours long-term investment projects that do not require regular hard currency purchases of raw materials from foreign markets.
  • The import of goods into Turkmenistan is generally subject to 2% customs duty. The taxable base is determined as the customs value of imported goods. There is a list of certain items that are subject to specific customs duty (around 50 items), and the rates of specific customs duties may vary from 5% (for products such as cement) to 100% (carbonic acid) depending on the type of imported goods. In most cases, the customs duty is set on an ad valorem basis. There is also a customs clearance fee of 0.2% from the customs value of imported goods. Excise tax is paid on goods or products that are considered in the list of excised goods or products. Normally, excised goods consist of alcoholic beverages, tobacco products, and automobiles. Excise rates vary based on the type of goods as well as by domestic production or import.
  • In an attempt to diversify gas exports, Turkmenistan is embarking on the construction of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline and, after the recent summit of the heads of the Caspian states, is considering the Trans-Caspian Pipeline. In addition, the potential resumption of gas supplies to Russia, as well as and the possibility of exporting gas to the South Caucasus by using gas swaps with Iran, would help to diminish the risk of overreliance on a single client. The resumption of natural gas supplies to Russia will take pressure off the government to boost electricity exports to Pakistan, Afghanistan and Turkey to raise revenue.
  • The government introduced an amendment to the Administrative Offences Code that raises the fines for illegal foreign exchange transactions (selling and purchasing foreign currency via informal channels) and trading in foreign currency on the territory of Turkmenistan. The currency is not easily convertible, and an inability to convert enough TMT into hard currency is problematic for many companies operating in Turkmenistan.
  • In 2015, Turkmenistan launched a policy of import substitution and there are reports of rising customs duties. Turkmenistan has introduced new customs fees for a list of six types of imported goods, including vegetables, fruits, juices and other unannounced products. A presidential resolution may waive all or some customs duties and taxes, including the excise tax. There are no standards-setting consortia or organisations besides Turkmen State Standards and the licensing agency. There is no independent body for filing complaints. Financial disclosure requirements are neither transparent nor consistent with international norms.

Sources: WTO - Trade Policy Review, Fitch Solutions

6. Trade Agreement

6.1 Multinational Trade Agreements

Active

  1. Armenia-Turkmenistan Free Trade Agreement (FTA): This agreement was signed and came into effect in July 1996 and enables the free flow of goods between the two countries at preferential tariffs and trade terms. In May 2017, Armenian President Serzh Sarkisian called for the launch of large-scale joint economic projects by Armenia and Turkmenistan. Hydrocarbon-rich Turkmenistan was Armenia’s principal supplier of natural gas until the Armenian government signed a long-term deal with Russia’s Gazprom monopoly in the late 1990s. In 2017, the Armenian government indicated its desire to resume imports of Turkmen gas via neighbouring Iran.

  2. The Azerbaijan-Turkmenistan FTA: This FTA entered into force in March 1996, but had not been notified to the WTO. Trade between the countries remains limited.

  3. Russia-Turkmenistan FTA: This agreement was signed and came into force (GATT notified) in April 1993 and enables the free flow of goods between the two countries at preferential tariffs and terms.

  4. Georgia-Turkmenistan FTA: This agreement was signed and came into force in January 2000 and enables the free flow of goods between the two countries at preferential tariffs and terms and streamlines customs procedures.

Under Negotiation

  1. Commonwealth of Independent States Free Trade Area (CISFTA). The CISFTA's participating countries are Ukraine, Azerbaijan, Belarus, Armenia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan and Uzbekistan, and the agreement was signed on October 18, 2011 and ratified by Ukraine on July 13, 2012. The free trade zone area was designed to reduce all trade fees on a number of goods between participating countries. The agreement replaced existing bilateral and multilateral FTAs between the countries, although the ex-Soviet states of Azerbaijan, Turkmenistan and Georgia have not signed the agreement as full members. Turkmenistan is an associate member. The key areas of partnership among the countries are energy, transport and communications.

Sources: WTO Regional Trade Agreements database, UNESCAP, ADB

7. Investment Policy

7.1 Foreign Direct Investment

Graph: Turkmenistan FDI stock
Graph: Turkmenistan FDI stock
Graph: Turkmenistan FDI flow
Graph: Turkmenistan FDI flow

Note: Data not available for outward flows and stock
Source: UNCTAD
Date last reviewed: December 6, 2018

7.2 Foreign Direct Investment Policy

  1. In January 2013, Turkmenistan created the Agency for Protection from Economic Risks to oversee international investments in Turkmenistan. The agency is responsible for a comprehensive review of foreign companies wishing to enter Turkmenistan's market that includes assessment of the financial and political risks associated with allowing the company to do business in Turkmenistan. According to the 2008 Law on Foreign Investment, all foreign and domestic companies and foreign investments must be registered at the Ministry of Economy. Development and implementation of public policies to attract foreign investment, investment co-ordination, and assistance to foreign investors are carried out by the Cabinet of Ministers of Turkmenistan and its authorised state body. The Agency for Protection from Economic Risks under the Ministry of Economy and Development makes a decision on providing any investment-related services to potential foreign investors based on criteria such as the financial status of the investor.

  2. In 2018, Turkmenistan's president put out a seven-year economic and social development plan for 2018-2024, which shows some continued intention to continue with reforms in an effort to improve the country's macroeconomic prospects. Among other things the plan aims to encourage greater participation by the private sector and reduce the dominance of the public sector. This includes the privatisation of state-owned enterprises, the creation of special economic zones, and simplifying administrative procedures and regulations in an attempt to attract domestic and foreign private investment.

  3. Turkmenistan has entered in a five-year Country Partnership Strategy (CPS) with the ADB (which was announced in November 2017), and this should aid in the country's reform initiatives until 2021. The ADB stated that the CPS will support the country in three ways: promoting energy trade, diversifying non-hydrocarbon sectors by enhancing connectivity through investments in transport infrastructure and spurring the private sector, and providing knowledge on economic diversification and reforms.

  4. The Government of Turkmenistan has not undergone an investment policy review by the Organisation for Economic Cooperation and Development (OECD) or WTO. While Turkmenistan has expressed interest in exploring the WTO accession process and created an intergovernmental commission in January 2013 to review the benefits of accession, the country has not yet formally applied to join. Nevertheless, Turkmenistan has signed bilateral investment agreements with Armenia, Bahrain, Belgium, China, Egypt, France, Georgia, Germany, India, Indonesia, Iran, Israel, Italy, Luxembourg, Malaysia, Pakistan, Romania, Russia, Slovakia, Spain, Switzerland, Tajikistan, Turkey, Ukraine, the United Arab Emirates, the United Kingdom and Uzbekistan. In July 2009, European Union passed a trade agreement with Turkmenistan.

  5. The Petroleum Law of 2008 (last amended in 2012) regulates offshore and onshore petroleum operations in Turkmenistan, including petroleum licensing, taxation, accounting and other rights and obligations of state agencies and foreign partners. The Petroleum Law supersedes all other legislation pertaining to petroleum activities, including the Tax Code.

  6. According to the Land Code (2004), foreign companies or individuals are permitted to lease land for non-agricultural purposes, but only the president has the authority to grant the lease. Foreign companies may own structures and buildings.

  7. Incoming foreign investment is regulated by the Law on Foreign Investment (last amended in 2008), the Law on Investments (last amended in 1993), and the Law on Joint Stock Societies (1999), which pertains to start-up corporations, acquisitions, mergers and takeovers. Foreign investment activities are affected by bilateral or multilateral investment treaties, the Law on Enterprises (2000), the Law on Business Activities (last amended in 2008), and the Land Code (2004). Foreign investment in the energy sector is subject to the 2008 Petroleum Law (also known as the Law on Hydrocarbon Resources, which was amended in 2011 and 2012). The Tax Code provides the legal framework for the taxation of foreign investment. The Civil Code (2000) defines what constitutes a legal entity in Turkmenistan.

  8. Turkmenistan adopted a Bankruptcy Law in 1993. Other laws affecting foreign investors include the Law on Investments (last amended in 1993), the Law on Joint Stock Societies (1999), the Law on Enterprises (2000), the Law on Business Activities (last amended in 1993), the Civil Code enforced since 2000, and the 1993 Law on Property.

  9. Most foreign investment is governed by project-specific presidential decrees, which can grant privileges not provided by legislation. Legally, there are no limits on the foreign ownership of companies. Although Turkmenistan regularly amends its laws ostensibly to meet international standards, the country often fails to implement investment-related legislation.

  10. Tax and investment incentives may be negotiated on a case-by-case basis. The president has often issued special decrees granting taxation exemptions and other privileges to specific investors. However, since adopting a new edition of the Tax Code in 2004, such practice has been significantly reduced.

  11. The tax administration environment in Turkmenistan is form-driven; consequently, the quality of documentation supporting the deductions should be of particular importance. Cross-border transactions are normally scrutinised by tax authorities during statutory tax audits in view of withholding tax and reverse-charge value-added tax (VAT) implications. Foreign tax credits are available to tax residents of Turkmenistan based on the provisions of the respective tax treaties. The tax credited will not exceed the tax liability computed in accordance with Turkmenistan regulations.

  12. Private entities in Turkmenistan have the right to establish and own business enterprises. The 2000 Law on Enterprises defines the legal forms of state and private businesses (state enterprises, sole proprietorships, co-operatives, partnerships, corporations and enterprises of non-government organisations). The law allows foreign companies to establish subsidiaries, though the government does not currently register subsidiaries. The Civil Code of Turkmenistan and the Law on Enterprises govern the operation of representative and branch offices in Turkmenistan and all firms must be registered with the Ministry of Economy.

  13. The 2008 Law on the Licensing of Certain Types of Activities (last amended in November 2015) lists 44 activities that require government licences. The Law on Enterprises and the Law on Joint Stock Societies allow acquisitions and mergers. Turkmenistan's legislation is not clear, however, about acquisitions and mergers involving foreign parties, nor does it have specific provisions for the disposition of interests in business enterprises, both solely domestic and those with foreign participation. Governmental approval is necessary for acquisitions and mergers of enterprises with state shares.

  14. On January 1, 2012, Turkmenistan's banks switched to International Financial Reporting Standards (IFRS). Government agencies transitioned to National Financial Reporting Standards (NFRS) in January 2014. Despite these positive steps, Turkmenistan remains one of the most closed economies in the region and some financing of large projects remains off the banks' books.

  15. The nature of government-awarded contracts may vary in terms of the requirements for ownership of a local enterprises. All contractors operating in Turkmenistan for a period of at least 183 days a year must register at the Main State Tax Service. National accounting and IFRS apply to foreign investors. In the energy sector, Turkmenistan precludes foreign investors from investing in the exploration and production of its onshore gas resources. All land in Turkmenistan is government owned. The State Migration Service of Turkmenistan requires that citizens of Turkmenistan make up 90% of the workforce of a company owned by a foreign investor.

  16. Although there is no specific legislation requiring foreign investors to receive government approval to divest, in practice they are expected to coordinate such actions with the government. Moreover, there are several tax examinations, license extension permits, and customs clearance and visa issuance obstacles that investors face. In most cases, the government has insisted on maintaining a majority interest in any joint venture.

  17. There are no legal limits on the foreign ownership or control of companies. In practice, the government has only allowed fully-owned foreign operations in the oil sector and, in one case, in cellular communications. Foreigners may establish and own businesses and engage in business activities within the boundaries of domestic laws, but repatriation of revenues is very challenging as currency conversion remains a major issue in the country. According to the Law on Foreign Investments, foreign investors, especially those operating in the free economic zones (FEZs), may enjoy some incentives and privileges including licence and tax exemptions, reduced registration and certification fees, land leasing rights and extended visa validity.

  18. On October 9, 2017, Turkmenistan introduced a new Law on FEZs. The law provides simplified administrative procedures for establishing new ventures and provides significant tax, customs, licensing and other regulatory benefits.

Sources: WTO - Trade Policy Review, ITA, US Department of Commerce

7.3 Free Trade Zones and Investment Incentives

Free Trade Zone/Incentive ProgrammeMain Incentives Available
There are 10 FEZs in Turkmenistan: Mary-Bayramaly; Ekerem-Hazar; Turkmenabat-Seydi; Bakharly-Serdar; Ashgabat-Anew; Ashgabat-Abadan; Saragt; Guneshli; Ashgabat International Airport; and Dashoguz AirportThe Law on Economic Zones for Free Enterprise was enacted in 1993. The law guarantees the rights of businesses, both foreign and domestic, to operate in FEZs without profit ceilings. The law forbids the nationalisation of enterprises operating in the zones and discriminating against foreign investors.

In October 2017 the government announced that FEZs were exempt from:

- Land lease fees for the first three years of operation of land and 50% fee exemptions for the next seven years
- Business licence for the duration of FEZ membership
- VAT for the duration of FEZ membership
- Property tax exemption for the first ten years of operation at an FEZ
- Corporate income tax (CIT) exemption for the first ten years of operation at an FEZ
- Customs duty exemptions for both imported and exported goods
Awaza (Avaza) Tourist Zone (ATZ)In 2007, Turkmenistan created the ATZ to promote tourism and the development of its Caspian Sea coast. It granted some tax incentives to entities willing to invest in the construction of hotels and recreational facilities. Amendments to the Tax Code in October 2007 exempted construction and tourist facilities in the ATZ from VAT. Services offered at tourist facilities, including catering and room accommodations, are also exempt from VAT until 2020. In general, tax and investment incentives for the ATZ can be negotiated case by case. Turkmenistan also adopted multiple-year national development programmes in various sectors of economy, which might include separate sub-sections on attracting investment in these sectors. However, the country's visa regime is rigid.

Sources: US Department of Commerce, PwC Tax Summaries, Fitch Solutions

8. Taxation – 2018

NIL

9. Foreign Worker Requirements

9.1 Localisation

The Turkmen government seeks to implement a labour rule that requires foreign companies to hire nine local employees for every one international staff member employed in the country. The State Migration Service of Turkmenistan requires that citizens of Turkmenistan make up 90% of the workforce of a company owned by a foreign investor. The regulation on this ratio does not differentiate between senior management and other employees. Generally, with respect to the issuance of work permits to foreign individuals, the State Migration Service adheres to the principle of priority to Turkmenistan citizens regarding the filling of vacant positions, as well adherence to an established ratio of the number of Turkmenistan citizens and foreign individuals working at a company.

9.2 Requirements For Special Skills

An invitation to a foreign specialist to hold a position of the head of a company, division, department, workshop or similar unit must be accompanied by copies of documents confirming work positions held by such specialist within the last five years. The sponsor (inviting organisation) must submit the application for a work permit to the State Migration Service. A work permit is usually issued for one year and should be renewed each subsequent year. For each extension of a work permit, the same set of documents must be submitted. The maximum number of work permit renewals is not established in the Turkmenistan legislation. Foreign individuals or stateless persons can apply for residence permits if they have resided in Turkmenistan for at least the past two years.

9.3 Visa requirements

In accordance with the law, citizens of all countries require a visa to visit Turkmenistan. To obtain a tourist visa for Turkmenistan, all foreign nationals must supply an invitation letter issued by an agency licensed in Turkmenistan. A work permit is required if a person arrives in the country for business (employment) purposes and intends to stay in the country for more than one month. A business stay in the country for 30 days or less does not require a work permit. The State Migration Service controls access to the country and monitors the movement of foreign citizens. All visitors staying for more than three business days are required to register with the State Migration Service on entry. Visa-related decisions are not transparent. Often representatives of foreign businesses seeking to enter Turkmenistan for the first time often have difficulty obtaining an entry visa unless invited by a government agency or by a local business partner.  

Travel to most border areas requires a special permit. A special permit, issued prior to arrival by Ministry of Foreign Affairs, is required if visiting the following places: Atamurat, Cheleken, Dashoguz, Serakhs and Serhetabat

Foreign citizens and stateless persons may enter and stay in Turkmenistan on the basis of an entry visa to Turkmenistan, unless otherwise stipulated by international treaties of Turkmenistan. For members of diplomatic missions, consular offices and other equivalent representative offices of foreign states and international organisations in Turkmenistan and foreign journalists accredited in Turkmenistan and their families, an accreditation card issued by the Ministry of Foreign Affairs of Turkmenistan and written or electronic requests from these missions, agencies and organisations is required.

Sources: Government sources, Fitch Solutions

10. Risks

10.1 Sovereign Credit Ratings


Rating (Outlook)Rating Date
Moody's
Not rated
Not rated
Standard & Poor'sNot ratedNot rated
Fitch Ratings
Not ratedNot rated

 

10.2 Competitiveness and Efficiency Indicators


World Ranking
201620172018
Ease of Doing Business Index
N/AN/AN/A
Ease of Paying Taxes Index
N/AN/AN/A
Logistics Performance Index
140/160N/A126/160
Corruption Perception Index
154/176167/180N/A
IMD World CompetitivenessN/A
N/A
N/A

Sources: World Bank, IMD, Transparency International

10.3 Fitch Solutions Risk Indices


World Ranking
201620172018
Economic Risk Index Rank155/202
Short Term Economic Risk Score36.735.837.1
Long Term Economic Risk Score44.141.2
42.0
Political Risk Index Rank149/202
Short Term Political Risk Score76.573.173.1
Long Term Political Risk Score52.653.253.2
Operational Risk Index Rank146/201
Operational Risk Score36.035.837.7

Source: Fitch Solutions
Date last reviewed: December 6, 2018

10.4 Fitch Solutions Risk Summary

ECONOMIC RISK
Turkmenistan's economic growth prospects will remain flat over the coming years owing to its heavy reliance on hydrocarbon exports and a narrow economic base. Despite a ramp-up in Chinese demand for gas, Turkmenistan's gas exports to China are unlikely to increase significantly as a substantial part of this demand will be met by liquefied natural gas imports from Australia over the near term. Over the longer term, however, gas exports to China are likely to pick up following the completion of Line D of the Central Asia-China Pipeline set for 2020. Furthermore, Turkmenistan has shown a willingness to conduct reforms over the coming years as seen from its ambitious seven-year plan, and the government is likely to adopt them at a gradual pace, which will be positive for the business environment.

OPERATIONAL RISK
Turkmenistan imports the vast majority of its industrial equipment and consumer goods. The government's foreign-exchange reserves and foreign loans pay for industrial equipment and infrastructure projects; however, the country's exports remain heavily exposed to fluctuations in global oil and gas prices due to the narrow basket of key export products. The abundant gas deposits underneath the Karakum Desert, which occupies 70% of the land area of Turkmenistan, remain the backbone of Turkmenistan's economy. Logistics risks remain elevated due to the lack of sufficient overland connectivity and limitations in utilities infrastructure. Regional infrastructure development projects in the energy space bode well for logistics capacity enhancements in the years ahead. Furthermore, labour market risks remain elevated due to foreign worker limitations and relatively uncompetitive domestic skills development.

Source: Fitch Solutions
Date last reviewed: December 7, 2018

10.5 Fitch Solutions Political and Economic Risk Indicies

Graph: Turkmenistan short term political risk index
Graph: Turkmenistan short term political risk index
Graph: Turkmenistan long term political risk index
Graph: Turkmenistan long term political risk index
Graph: Turkmenistan short term economic risk index
Graph: Turkmenistan short term economic risk index
Graph: Turkmenistan long term economic risk index
Graph: Turkmenistan long term economic risk index

100 = Lowest risk; 0 = Highest risk
Source: Fitch Solutions Political and Economic Risk Indices
Date last reviewed: December 6, 2018

10.6 Fitch Solutions Operational Risk Index


Operational RiskLabour Market RiskTrade and Investment RiskLogistics RiskCrime and Security Risk
Turkmenistan score37.733.837.843.136.1
Caucasus and Central Asia Average49.654.952.046.644.9
Caucasus and Central Asia Position (out of 8)888
5
6
Emerging Europe Average56.954.158.458.556.8
Emerging Europe Position (out of 31)3131
31
2828
Global Average49.649.749.949.149.8
Global Position (out of 201)146
184
147
115
141

100 = Lowest risk; 0 = Highest risk
Source: Fitch Solutions Operational Risk Index

Graph: Turkmenistan vs global and regional averages
Graph: Turkmenistan vs global and regional averages
Country
Operational Risk Index
Labour Market Risk Index
Trade and Investment Risk IndexLogistics Risk IndexCrime and Security Risk Index
Georgia61.664.769.754.857.1
Kazakhstan57.771.656.054.049.3
Azerbaijan57.660.358.059.452.8
Armenia55.156.156.849.957.6
Tajikistan42.752.846.638.033.5
Kyrgyzstan43.051.241.838.8
40.1
Uzbekistan41.349.248.834.732.5
Turkmenistan37.733.837.843.136.1
Regional Averages49.654.952.046.644.9
Emerging Markets Averages46.848.047.545.746.0
Global Markets Averages49.649.749.949.149.8

100 = Lowest risk; 0 = Highest risk
Source: Fitch Solutions Operational Risk Index
Date last reviewed: December 6, 2018

11. Hong Kong Connection

11.1 Hong Kong’s Trade with Turkmenistan

Graph: Major export commodities to Turkmenistan (2017)
Graph: Major export commodities to Turkmenistan (2017)
Graph: Major import commodities from Turkmenistan (2017)
Graph: Major import commodities from Turkmenistan (2017)

Note: Graph shows the main Hong Kong export to/import from Turkmenistan (by consignment)

Graph: Merchandise exports to Turkmenistan
Graph: Merchandise exports to Turkmenistan
Graph: Merchandise imports from Turkmenistan
Graph: Merchandise imports from Turkmenistan

Note: Graph shows Hong Kong exports to/imports from Turkmenistan (by consignment)
Exchange Rate HK$/US$, average
7.76 (2012)
7.76 (2013)
7.75 (2014)
7.75 (2015)
7.76 (2016)
7.79 (2017)
Sources: Hong Kong Census and Statistics Department, Fitch Solutions
Date last reviewed: December 6, 2018


2017
Growth rate (%)
Number of Turkmen residents visiting Hong Kong32
-15.8

Source: Hong Kong Tourism Board


2017
Growth rate (%)
Number of European residents visiting Hong Kong1,929,824
-0.19

Source: Hong Kong Tourism Board
Date last reviewed: December 6, 2018

11.2 Commercial Presence in Hong Kong


2017
Growth rate (%)
Number of Turkmen companies in Hong KongN/A
N/A
- Regional headquarters
- Regional offices
- Local offices


11.3 Treaties and Agreements between Hong Kong and Turkmenistan

The double tax agreement (DTA) between China and Turkmenistan and its corresponding protocol came into force on May 30, 2010. The DTA will apply to taxes withheld at source from income derived on or after January 1, 2011, as well as other taxes collected in any taxable year starting January 1, 2011.

Source: China State Administration of Taxation (SAT)

11.4 Visa Requirements for Hong Kong Residents

  • All Hong Kong passport holders require a visa for Turkmenistan for up to 90 days stay. All foreigners require a visa to enter Turkmenistan and transit visas are the only visas issued without a letter of invitation. Permits are needed to visit the border regions of Turkmenistan. The nearest embassy to Hong Kong is in mainland China. The Embassy of Turkmenistan requires that the applicants submit their visa applications directly as they may require an in-person appointment.

  • The following areas are termed ‘class one’ border zones and entry without documentation is not possible: Eastern Turkmenistan Farab, Atamurat (Kerki) plus adjoining areas, Kugitang Nature Reserve, Tagtabazar and Serkhetabat. Northern Turkmenistan Entire Dashoguz region including Konye-Urgench, Dargan-Ata and Gazachak. Western Turkmenistan Bekdash, Turkmenbashi, Hazar, Dekhistan, Yangykala, Gyzyletrek, Garrygala, Nokhur and surrounding villages. Ashgabat, Mary, Merv, Turkmenabat and Balkanabat are not restricted, but anywhere outside these areas should be listed on a general visa, thus giving permission to go there.

Sources: State Migration Service of Turkmenistan, Fitch Solutions
Date last reviewed: December 6, 2018

Content provided by Picture: Fitch Solutions – BMI Research
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