Turkmenistan has long relied on its natural gas reserves as the economic lifeline, accounting for over 90% of exports. However—low gas prices and output declines have spurred efforts to diversify non-energy sectors.
Developing agriculture through subsidies and investments. Cotton and wheat production have increased but more progress is needed for food security goals. Expanding the textile industry via new factories, albeit with mixed success due to outdated Soviet-era equipment and need for modernization.
Boosting mining output of gold, sulfur and other minerals. However, many deposits remain untapped due to lack of technical expertise and foreign investment. Promoting tourism around historical sites and natural wonders like the Darvaza Gas Crater. However— difficult visa rules, scarce amenities and lack of infrastructure remain deterrents.
Offering tax breaks for businesses in construction, transport and communications. Yet, the bureaucratic operating environment and state dominance of key sectors limit opportunities.
While diversification is positive, execution challenges and economic mismanagement have blunted impacts so far. Reforms to attract private investment are paramount to fully unleash diversification’s potential.
While progress has been made in sectors like agriculture and textiles, challenges remain in fully realizing diversification’s potential to lessen reliance on hydrocarbons. Access to financing is limited due to an underdeveloped banking system and foreign exchange controls constrain procurement of machinery and inputs. Skill and technology gaps also hinder the adoption of advanced practices.
The state control of strategic assets and preference for national champions curb competition and private sector dynamism. If these impediments are addressed through opening up to foreign expertise, investment and competition, diversification could gain stronger momentum.