At a Cabinet meeting on December 20, President Gurbanguly Berdimuhamedov announced plans to establish a new agency under the Ministry of Economy and Development that will oversee foreign investment and protect the national economy against possible risks deriving from such investment. Annamuhamet Gochyev, Deputy Chairman of the Cabinet of Ministers for Economy and Finance was tasked to prepare a proposal and submit it for Presidential approval at a Cabinet meeting on January 11, when the government will sum up the 2012 results. It is expected that the establishment of this agency with a wide range of authorities might create major bureaucratic hurdles for foreign companies seeking business and investment opportunities in Turkmenistan.  

Berdimuhamedov said that the experience of the past years calls for the establishment of an agency within the government structures. He noted that many countries currently have such agencies either independently or under government structures. Several representatives of foreign businesses in Ashgabat say the government is trying to filter out various foreign companies that fail to complete the projects on time or those with no credentials to do business in Turkmenistan.   

The agency will have broad powers including making recommendations or providing customized market research on the feasibility of investing in Turkmenistan for foreign companies. Any foreign company willing to come to Turkmenistan will have to go through a thorough background check by this agency prior to being granted a special permit.

Before granting the “work permit,” the agency will also be authorized to study all possible risks associated with possible investment of a foreign company in Turkmenistan. It was noted that these possible risks include internal and external ones, and risks connected with unexpected natural disasters in Turkmenistan. Berdimuhamedov also instructed the agency to consider possible political risks connected with the political situation of the country where the company headquarters are located. The foreign companies that win tenders in Turkmenistan will have to provide comprehensive company information to this agency before being announced the winner and starting the project. The agency will also have the authority to charge companies that violate business regulations in Turkmenistan.  

If necessary, the agency staff will be authorized to learn about the activities of any foreign company wishing to do business in Turkmenistan. If need be, the agency staff can visit a country where the head office of the company is based and get acquainted with the company’s work and study the possible risks.

Previously, the license to operate in Turkmenistan used to be granted by relevant authorized government agencies such as ministries. Now the newly established agency will have overarching powers to either approve or reject a foreign company’s request to do business in Turkmenistan. It is not clear whether the staff members of this new agency are going to be able to study and understand the business proposals from all sectors of the economy. Some representatives of foreign businesses in Turkmenistan fear that the establishment of such an “oversight agency” with broad powers will worsen the already dismal business climate in the country and might allow much of room for corruption. In its 2012 Corruption Perception Index, Transparency International ranked Turkmenistan 170 out of 174 while the 2012 Heritage Economic Freedom Index ranked Turkmenistan 168 out of 179.