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Turkmenistan: Worthy Place of Entrepreneurship in National Economy
Source: turkmenistan.gov.tm
Source Date: Friday, August 20, 2010
Focus: ICT for MDGs
Country: Turkmenistan
Created: Aug 23, 2010

A key priority of Turkmenistan’s economic policy is the effective development of the private sector that, in its turn, serves as a criterion of the quality of integration, economic and social progress and improvement of the standards of living of citizens. Encouragement of business initiatives is to profoundly promote sectoral shifts, the introduction of innovations, use of capital and division of labour.

The task to increase the share of the non-governmental sector in the GDP (excluding the fuel and energy sector) by 70 percent by 2020 is set in Turkmenistan In this regard state-private partnership stand as a strategic aspect of the activity aimed at developing and modernizing the socio-economic system of the country. State-private partnership exists in a wide spectrum of forms including a variety of contracts that the state provides to private companies for performing work and rendering public services, management, procurement of products to meet the needs of the state, technical assistance contracts and others.

The adoption of the Law of Turkmenistan “On the State Support for Small and Medium Businesses” gives an additional impetus to encourage small and medium businesses. The action programme for the state support of small and medium businesses is under development in accordance with this Law. The State Commission for the support of small and medium businesses was established at the governmental level. In our country entrepreneurial organisations can receive a loan at 5 percent interest per annum for a term of ten years to purchase fixed assets and a loan for a term of one year to purchase floating assets.

The government support for the private sector is based on the general principles of social and economic development when income of population rises as the share in the private sector in the GDP increases, and when businesses are responsible for many sectors of the social sphere.

The support to small and medium businesses in Turkmenistan is characterized by a relatively stable increase in the quantitative and qualitative indicators reflecting the entrepreneurial environment in the region. As of July 1, 2010, 12,100 entities operate in the private sector in Turkmenistan.

The strategy for encouraging small and medium businesses in Turkmenistan is based on the following principals: the priority to the development of small and medium businesses, integration, publicity, transparency of the government support for small and medium businesses, access to the state support for private sector entities, the guarantees of free entrepreneurship and the guarantees of protection of the property rights of small and medium businesses.

The government support for small and medium businesses is provided in the forms of legal, institutional, property, financial, information assistance and other at the national level, and at the level of velayats and Ashgabat.

The executive authorities and local government bodies collaborate to conduct the unified state policy for encouraging small and medium businesses.

A key aspect of the strategy for supporting and encouraging entrepreneurship in Turkmenistan is the creation of the enabling environment for small and medium businesses. The ways to create this environment have been identified. These include the provision of small and medium businesses with financial, material and technical resources, encouragement of investments allocated by small and medium businesses for implementing the national social and economic development programmes, creation of new jobs and increase of income of population. The practice of government purchases on a competitive basis of goods (works, services) produced by small and medium businesses and the measures aimed at developing the programmes for financing small and medium businesses, providing assistance to small and medium businesses in training, re-training and raising the level of professional skills of personnel, promoting foreign economic activity, interregional cooperation and enhancing their export potential are of particular importance.

Turkmenistan has developed the system to support small businesses: executive authorities particularly address the strategic tasks of encouraging small-scale forms of business activity, whereas local government bodies determine the major fields of this activity because entrepreneurial activity has the distinctly territorial specificity, concentrates within a particular area and is restricted to a particular territory.

The 2011-2030 National Social and Economic Development Programme stipulates that the measures of direct and indirect support which when combined will contribute to the free development of small and medium businesses will be elaborated and ensure enhanced public activity and accelerated growth in entrepreneurial activity. As a result, enterprises operating the private sector of the national economy will increase in number and create more new jobs, and an initial capital required for newly created enterprises will be accumulated and existing small and medium businesses will receive new incentives to expand that will enable to overcome negative tendencies of private enterprises towards tax evasion.

In the future, considerable attention will be given to promotion of various forms of ownership and privatization of existing state-run and public properties. In this regard, the measures aimed at elaborating the effective legal framework required for effective activity of business entities of various forms of ownership will be taken. The science-based approach will be taken to privatization and denationalization of enterprises of the light and food industry, the services and trade sectors that aim their activity at flooding the domestic and foreign commodity markets basis. An equity market will be created in these industries and the banking sector as well.

Free economic zones will be created and developed in Turkmenistan in compliance with the peculiarities of the national economy. An important role in this process will be assigned to the creation of free economic zones including industrial clusters and promoting free trade near Ashgabat, in Turkmenbashi on the Caspian seaside and in Garabogazgol.

To attract foreign investments and facilitate establishment and operation of joint ventures and foreign companies the measures to update statutory documents regulating and guaranteeing protection to foreign investments, free economic zones, transition to international accounting standards will be taken further.

The contractual and regulatory framework will be updated further in Turkmenistan so as to expand international cooperation in the investment sector. Foreign investments in the national economy will be attracted through concluding production sharing agreements, providing tax concessions, concluding contracts for cooperation and risk response services. The mechanisms for protection and insurance of foreign investments, collateral security and the framework of guarantees provided when settling disputes will be improved. The measures aimed at receiving credits from foreign banks to promote investment activity will be taken. These efforts will be taken in industries that apply advanced technologies and innovations, first of all.

These measures will ensure the growth of employment, maintain social stability in the country and facilitate application of scientific and technological advances in industry, effective use of financial and material resources that will lead to increased productivity of labour, and introduction of advanced technologies and innovations. Therefore, the private sector will be able to find a worthy place in the national economy, and entrepreneurial activity will reach a qualitatively new level.
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