Turkmen Business Law Fails to Tackle Root Problems
Turkmen Business Law Fails to Tackle Root Problems
NBCentralAsia commentators say new legislation on business will not be enough to boost Turkmenistan’s econonomy.
On August 15, the Turkmen parliament passed a law providing for greater government support for small and medium-sized enterprises, which supporters say will stimulate rapid growth and greater integration with the global economy.
Sources in parliament say the legislation brings in simplified procedures for registering a business, in place of the current bureaucratic process which requires numerous inspections and the submission of a large amount of documentation.
The law also sets out a range of tax breaks which businesses will enjoy; these are not described but will be detailed in supplementary regulations.
The customs are also eased, so that unlimited amounts of certain types of goods can be imported as hand baggage and luggage. Previously small-time traders were restricted to 60 kilograms per trip.
An observer based in the capital Ashgabat says local businesspeople have long been hoping for a relaxation of the rules to reverse what they see as a decline in private enterprise.
The private sector remains on a small scale and exists mainly in trade, the service sector, agriculture, transport, property rental and tuition, rather than industry.
The legislation that existed hitherto would seem at first sight to encourage small businesses, but in practice they encounter a range of obstacle.
A woman from the southwestern Mary region said financial barriers had prevented her from realising her dream of designing and manufacturing clothing.
"I would find it hard to pay taxes at the outset,” she said. “I would need some tax benefits.”
A businessman who has been raising poultry and selling the meat for more than a decade says his problem is that he cannot expand his operation as that would mean acquiring new premises and taking out loans, neither of which has been feasible to date.
Local officials whom he has asked for help have turned him down.
"If only they’d allow credit unions, then it would be easier to set up a business," he said.
Experts fear that while the new law will simplify life for small traders, they will not have much effect on the economy as a whole, which is in need of wider-ranging reforms.
"They are being naïve if they think giving a boost to one area of business, which relates mainly to buying and selling goods, is going to stimulate and improve the whole market," said Annadurdy Khajiyev, a Turkmen economic analyst based in Bulgaria.
Tinkering with customs duties and registration process is not going to turn the economy around, he said.
The economist added that what the ailing Turkmen economy, which is tightly controlled by the state, really needs is a coordinated programme of systemic change, incentives to set up large enterprises that employ hundreds of people, and benefits for export-oriented production.
"The laws that parliament is reviewing are superficial,” he said. “They are just an attempt to adapt [but retain] the current administrative system rather than adapt to the demands of the market.”
(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 has resumed, covering Uzbekistan and Turkmenistan.)
On August 15, the Turkmen parliament passed a law providing for greater government support for small and medium-sized enterprises, which supporters say will stimulate rapid growth and greater integration with the global economy.
Sources in parliament say the legislation brings in simplified procedures for registering a business, in place of the current bureaucratic process which requires numerous inspections and the submission of a large amount of documentation.
The law also sets out a range of tax breaks which businesses will enjoy; these are not described but will be detailed in supplementary regulations.
The customs are also eased, so that unlimited amounts of certain types of goods can be imported as hand baggage and luggage. Previously small-time traders were restricted to 60 kilograms per trip.
An observer based in the capital Ashgabat says local businesspeople have long been hoping for a relaxation of the rules to reverse what they see as a decline in private enterprise.
The private sector remains on a small scale and exists mainly in trade, the service sector, agriculture, transport, property rental and tuition, rather than industry.
The legislation that existed hitherto would seem at first sight to encourage small businesses, but in practice they encounter a range of obstacle.
A woman from the southwestern Mary region said financial barriers had prevented her from realising her dream of designing and manufacturing clothing.
"I would find it hard to pay taxes at the outset,” she said. “I would need some tax benefits.”
A businessman who has been raising poultry and selling the meat for more than a decade says his problem is that he cannot expand his operation as that would mean acquiring new premises and taking out loans, neither of which has been feasible to date.
Local officials whom he has asked for help have turned him down.
"If only they’d allow credit unions, then it would be easier to set up a business," he said.
Experts fear that while the new law will simplify life for small traders, they will not have much effect on the economy as a whole, which is in need of wider-ranging reforms.
"They are being naïve if they think giving a boost to one area of business, which relates mainly to buying and selling goods, is going to stimulate and improve the whole market," said Annadurdy Khajiyev, a Turkmen economic analyst based in Bulgaria.
Tinkering with customs duties and registration process is not going to turn the economy around, he said.
The economist added that what the ailing Turkmen economy, which is tightly controlled by the state, really needs is a coordinated programme of systemic change, incentives to set up large enterprises that employ hundreds of people, and benefits for export-oriented production.
"The laws that parliament is reviewing are superficial,” he said. “They are just an attempt to adapt [but retain] the current administrative system rather than adapt to the demands of the market.”
(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 has resumed, covering Uzbekistan and Turkmenistan.)
