Turkmen Industrialisation Plan Requires Sweeping Reforms

Turkmenistan’s president Gurbanguly Berdymuhammedov has begun his election campaign by pledging to turn his largely agrarian country into an industrialised state. Speaking ahead of a presidential election slated for February 12, Berdymuhammedov promised that new factories would be built across the country, alongside “industrial giants” fitted with state-of-the-art equipment.

Turning to the agricultural sector in his January 9 speech, he vowed to transform livestock farming by introducing “advanced, computer-aided technologies” and to use high-yield seeds and hothouses to take harvest sizes to a new levels.

Turkmenistan is rich in natural gas but much of its landscape is desert, with limited or no access to irrigation. A major part of available arable land is used to grow cotton, a major contributor to gross domestic product alongside gas.

The country depends on imports of consumer goods and over half Turmenistan’s food originates abroad. It imports grain, flour, meat, vegetable oil, fish, rice and powdered milk from Kazakstan, Russia, Ukraine and the United Arab Emirates.

As well as cotton, Turkmen farmers grow wheat, but not in sufficient quantities to satisfy demand. Experts say cereal farming is undermined by water shortages, but also by archaic equipment, and the fact that farmers do not own their land and have to work under state orders. Farmers are told what to grow, and at harvest time wheat purchase prices are set artificially low.

On the face of it, Berdymuhammedov’s promises of industrialisation may appear progressive, but the public needs a clearer understanding of how this industrial revolution might be carried out.

It’s generally known that industrialisation is accompanied by a shift from extensive to intensive development, enabling greater productivity. The Turkmen authorities need to spell out a precise plan as to how industrial production will increase in the current economic crisis, as producers face intense competition for markets. Where will Turkmenistan export these products to?

Implementing Berdymuhammedov’s proposal would entail opening up the country’s economy, in other words creating a market economy. That presupposes liberal economic policies allowing the free movement of goods and capital. If that does not happen, customs duties and tariffs will make Turkmen goods uncompetitive.

Major investments will be needed to allow processing of cotton and natural gas inside Turkmenistan. Will Berdymuhammedov, who is solely responsible for decisions on large tenders and contracts alone, be able to block unproductive projects and ensure that budgeting is transparent? Such questions remain unanswered.

There are some positive foundations for the industrialisation plan, in the shape of the funds earned from oil and gas exports, as well as foreign investment.

The first priority would be a package of laws regulating foreign investment, property ownership and the national budget, fit for a modern economic system. These laws should not be rushed, or exist only on paper; they must be effective, well thought-out and relevant.

The next step would be to bolster free enterprise, end the privileged treatment given to the “inner circle” of favoured businessmen, curb corruption, and train up more professionals.

There is also an acute need for judicial reform, especially in the area of commercial arbitration. Turkmenistan must sign up to and honour international conventions on courts of arbitration.

Finally, access to information must be allowed, so that producers can advertise and market their goods abroad.

In my opinion, such measures would make a practical contribution to innovative industrial development in Turkmenistan.

It would also make sense to learn from the experience of South Korea, which evolved from an economic backwater into one of the world’s most developed countries in the course of the 20th century.

Annadurdy Khadjiev is a Turkmen economist based in Bulgaria.

This article was produced as part of IWPR's News Briefing Central Asia output, funded by the National Endowment for Democracy.

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