New Customs Policy May Bolster Investment

Recent changes to the Turkmen customs policy will create a better climate for foreign investment, by reducing duties and simplifying investment procedures, say many local NBCentralAsia observers.



Some, however, have expressed concern that such a sudden change to customs rules could destabilise the country’s economy.



On August 7, local media reports said that new customs duties had come into effect, which the authorities said were intended to help attract foreign investment, develop trade and economic relations with foreign countries and strengthen the national economy.



While details of the new customs procedures were not revealed, an NBCA source close to official circles, said that “significant” changes had been made.



For example, according to the source, the list of imported goods which are subject to taxation and duties has been reduced by almost half. It is now permissible to export unlimited amounts of tobacco, tobacco goods, vegetables, watermelons, melons and gourds without paying duties.



The amount of tax to be paid on exported and imported consumer goods has been cut in half, and will now be just five per cent and two per cent of an item’s cost respectively.



In addition to this, each Turkmen citizen is allowed to bring into the country one kilogramme of gold or of silver free of duty.



Customs procedures for air passengers have also been simplified, and baggage allowance has been increased three times to 60 kgs.



Local observers interviewed by NBCA welcome the new customs policy, saying it is an important step towards the liberalisation of the Turkmen economy.



An economy expert from a public organisation in Ashgabat said that the new customs rules were more favourable to businessmen, making it easier for small and medium-sized firms to develop.



A customs service employee at Ashgabat airport noted that customs legislature is coming into line with international standards, and said the change would yield positive results.



As an example, he pointed out that airport security and baggage controls would now be simplified.



“Now Turkmen customs inspectors will not be able to rummage through suitcases for hours,” said a customs officer. “The rules are more considered…and are easier to work with.”



NBCA observers in the country believe that the relaxation in the Turkmen customs policy will contribute to an increase in the flow of goods across the border and create favourable conditions for development of interstate trading.



“When trade and economy start developing, foreign investors will not be long in coming,” said a commentator from the northern Dashoguz region.



A local journalist agreed, saying he expected that trading would increase in the Dashoguz and Lebap regions on the border with Uzbekistan.



He added that he believed the Turkmen authorities would also liberalise trade relations with all Central Asian countries following the customs relaxation.



However, other commentators are concerned that such a sudden change to customs rules could destabilise the domestic market and harm the economy.



“One third of the country’s budget – if not more – is composed of taxes and duties, and if they start to bring in kilogrammes of gold without paying duties, the state will lose big money,” said one NBCA observer from Ashgabat.



Annadurdy Khajiev, a Bulgaria-based Turkmen economic analyst, said that authorities should carefully analyse the effects of implementing the new customs law on the domestic market.



For example, he said, the prices for melons in Russia are incomparable with our domestic prices. “If these are exported [to Russia] in unlimited amounts, what will be left in Turkmenistan?” he asked.



“If the domestic market suffers because of this law, they will have to amend it urgently.”



(NBCentralAsia is an IWPR-funded project to create a multilingual news analysis and comment service for Central Asia, drawing on the expertise of a broad range of political observers across the region. The project ran from August 2006 to September 2007, covering all five regional states. With new funding, the service is resuming, covering only Uzbekistan and Turkmenistan for the moment).