Turkmenistan's 2017 Free Economic Zone Law: Legislated, Still Not Operating Eight Years Later

In October 2017, Turkmenistan enacted a Law on Free Economic Zones, promising businesses - foreign and domestic - the right to operate without profit ceilings, protection from nationalisation, and non-discrimination guarantees, modelled on free-zone frameworks used elsewhere in Central Asia such as Kyrgyzstan's tax-free IT zone and Tajikistan's IT Park Dushanbe.
Eight years on, the U.S. Department of State's 2025 Investment Climate Statement finds that 'no free economic zones are known to be in operation in Turkmenistan, despite legal provisions that allow for them.' The same report documents a two-tier tax system that disadvantages the foreign investors the law was meant to attract: most domestic entrepreneurs pay a flat 2% income tax, while foreign investors face 8-20% rates, and firms without pre-approved government contracts must pass through a cumbersome inter-agency approval commission.
A November 2025 OECD review, 'Building a Competitive Investment Landscape in Turkmenistan' - based on a private-sector survey, government interviews and Turkmenistan's own data - reached a parallel conclusion: the country still has no dedicated Investment Promotion Agency, and the report's central recommendation is that the government create one to streamline support for investors and coordinate outreach beyond the hydrocarbon sector that still dominates the economy.
World Bank-tracked FDI figures show volatility rather than steady diversification: inflows rose to roughly USD 1.38 billion in 2023 (a 47% increase on 2022) after falling 27% the year before - a pattern consistent with hydrocarbon-price-driven swings rather than a broadening investor base. This case is recorded not as a success story but as a documented gap: an instrument legislated to attract diversified investment that, on the independent evidence available, has not yet been implemented as designed.

Read the full analysis: https://eu-cai.org/building-a-competitive-investment-climate-in-turkmenistan/