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Economic strategy of Turkmenistan: national model of sustainable development
Economy
Economic strategy of Turkmenistan: national model of sustainable development
Published 22.09.2021
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During 30 years of independent development, the economy of Turkmenistan, developing in a dynamic pace has fixed its positions among the countries, which are successfully integrated into world economic space. As the priority directions of the economic strategy of President Gurbanguly Berdimuhamedov who brings forth innovative initiatives further development of our independent Fatherland was defined by means of stimulation of business, introduction of advanced technologies, creations of joint ventures and joint-stock companies, development of insurance, stock exchange and securities market, implementation of radical restructurings in all branches. The main goal of the realized reforms on overcoming raw orientation of economy, development of market reforms, effective use of natural wealth, creating favourable conditions for life, health and safety of the person found the reflection in the fundamental motto "State for people!”.

Consecutive implementation of the strategic course towards industrial and innovative development for the past historical period in the true sense of the word provided economic independence of our state. It has given Turkmenistan in present conditions of economic recession worldwide, unexpected and sharp reduction of prices of energy resources, because of influence of distribution of the pandemic of coronavirus, an opportunity to keep competitiveness and to steadily develop many branches of economy. To support transformations of infrastructure and the course towards achievement of goals of sustainable development, implementation of tasks and purposes of "The national program of social and economic development of Turkmenistan for 2011-2030", "Program of the President of Turkmenistan for social and economic development of the country for 2019-2025" gave a powerful impulse for increase in production efficiency, and thoughtful use of investments, including support of the private sector of economy. Adoption of gradual realization of the "National Program to reduce the impact of current difficult circumstances in the world economy on the country's economy and sustainable development of the national economy for 2020-2021" and "Immediate Socio-economic Response Plan to Acute Infectious Disease Pandemic in Turkmenistan" at the state level became an effective step to combat the coronavirus pandemic, protection of health of citizens of Turkmenistan and support of some branches of economy.

Looking at the past way, for years of independent development Turkmenistan that should be noted especially, from the agrarian country turned into one of the industrially developed states. More precisely if at the initial stage in the country’s gross domestic product the share of agricultural production made more than 40 percent, industrial output - 17 percent, and over 80 percent treated the extracting branch, then now the share of industrial output in gross domestic product makes more than 27 percent, agricultural products - 11-12 percent. Along with it, infrastructure of agricultural production was radically reformed. Along with preservation of the role of cotton in the branch, grain industry has been restored and a basis for development of livestock production has been created to ensure food security in the country.

In our country, there emerged the diversified economy consisting of such major branches as electrical power, oil and gas industry, mechanical engineering, metallurgy, chemical industry, construction, electronic, light and food industry, pharmaceutics. Having branches of production and processing of natural gas in the structure, successfully operating gas industry remains for us the major branch. Therefore, priority projects are construction of the transnational pipeline of Turkmenistan-Afghanistan-Pakistan-India, power lines and fibre-optic communication line of Turkmenistan-Afghanistan-Pakistan. These regional projects have big prospects, and with their realization, the new strategic directions for power streams will open. Providing such large countries with fuel with dynamically developing economy as India and Pakistan, in the long term promotes access to the markets of the Pacific region and the Middle East.

In the branch of processing of natural gas, the main attention is paid to its deeper and broad processing. In oil-processing industry implementation of innovative production projects and transport infrastructure facilities continues. Commissioning of the installation for vacuum processing of fuel oil, alkylation of light olefins, isomerization and mixing of gasoline and polypropylene in Turkmenbashi complex of oil refineries gives the chance for release of new types of innovative competitive production. As one of the perspective vectors of development of branch creation of large branches for production of the polymer which is considered as the main component of production of various production necessary in the industry, construction, transport, agriculture and in life acts. One more of the perspective and fast-growing directions is the chemical industry, enterprises of which produce mineral fertilizers, technical iodine, sulphate and other chemical production. Natural wealth of the country give the chance for release of all types of mineral fertilizers.

The economy of Turkmenistan is stable and competitive. By results of 2020 the rate of economic growth made up 5, 9 percent. Following the results of the first half of the year 2021 this indicator grew to 6, 2 percent. In the country stability of financial system remains, measures for increase in financial involvement and broad attraction of investments into the sphere of financial services are undertaken. A great significance is attached to stimulation of the non-governmental sector of economy whose share grows from year to year. Following the results of 2020, besides the fuel and energy complex, the share of the private sector in gross domestic product made up 70 percent.

For years of independence, capital investments in large volumes were involved in diversification of national economy and improvement of all infrastructure in the country. The investment policy directed to expansion of production capabilities of economy provided emergence of the additional factor advancing to effective development of production resources, steady growth of the general demand and gross domestic product. Investments act as the main instrument of all-round development of economy. In this connection, the share of investments directed to economy in gross domestic product is equal to 25-30 percent. At the same time, 15 percent of all volume make up foreign capital investments. For last 30 years, volumes of the main investments into national economy grew by a hundred times that equally in more than 200 billion US dollars. More than 66-68 percent of investments go to the production sphere. It creates favourable conditions for considerable reforming of structure of economy, cardinal modernization of production branch, and increase in competitiveness of production of processing industry, the accelerated development of import-substituting and export-oriented branches, introduction in them innovative and information technologies. Along with it, special significance is attached to investments into the human capital as a form of quickly paid back and most reliable capital investment. In turn, investments into individual (in education, health care, science, etc.), strengthened innovative base of national economy.

It should be noted that Turkmenistan develops cooperation with various countries of the world and actively enters new foreign markets what is promoted by created modern transport and logistic infrastructure, transformation of our country into one of the transport and communication centres in the East-West and North-South directions. In 2020, Turkmenistan joined the World Trade Organization as an observer and started improvement of policy in the field of trade, its reconstruction in compliance with the international standards that promotes preservation of sustainable economic development of our Fatherland.

At this stage of development, during transition to the accelerated modernization, to industrial and innovative economy on the basis of introduction of digital technologies in all branches of the real sector of economy, the financial sphere, and life and in the new social and economic model relying on deepening of institutional transformations, statistics finds a special value. The need for the state statistics even more increases in gradual transition into the market relations. Statistical data are very important in management and planning of macroeconomic activity in Turkmenistan, drawing the budgetary projects, development of long-term social and economic programs of the country. According to the Law of Turkmenistan "On statistics", the State committee for statistics by drawing statistical data uses statistical methods, being guided at the same time by the standards which are widely used in the international practice. In this regard, a perspective task of national statistics is introduction of indicators and classifications corresponding to statistical experience and needs of market - focused economic management.

For the solution of the forthcoming tasks, transition to the system of national calculations was carried out now. This system is used at the characteristic of state of economy at the macro-level and the general form of development, for establishing interrelation between the major macroeconomic indicators and branches. As a result of implementation of large-scale transformations in all branches, for years of independence in Turkmenistan the structure of economy was changed. In recent years, the plan of increase in balance of the main macroeconomic indicators is considered. During the present period of development non-hydrocarbon branches, such as agricultural complex, transport and communications, trade, make a powerful contribution to accumulation of volume of gross domestic product. Thus, more than 27 percent of structure of GDP of Turkmenistan make up industrial, 11 percent - transport and communication spheres, 21 percent - trade and public catering.

The institutional reforms undertaken in days of independence led to high quality and quantitative transformations in structure of subjects of economy. Today over 90 percent of economic entities are presented by the enterprises of the private sector of national economy, increase in the share and role of which promote the target measures for support of private initiative, improvement of business environment, formation of reliable systems of protection and guaranteeing the rights for private property, the preferential taxation undertaken in the country.

As priority vector of activity of national statistics in the sphere of international cooperation assistance to preparation of the statistical reporting within implementation of projects in the field of Sustainable Development Goals acts. At interaction with the United Nations in Turkmenistan, large-scale work on formation of national database on indicators of system of sustainable development is carried out. Creation of the national platform of the statistical reporting under SDG indicators will give additional dynamics to process of development of the recommendations concerning information streams and their fragmentation.

The social sphere is one of the defining indicators of economic and social development of the state, which, first of all, is designed to provide wellbeing of citizens. The key part in protection of honour, freedoms and human rights enshrined in the Constitution of Turkmenistan is assigned to it. The principles of work and organization of this sphere vary depending on recognized values in the society. Thus, humanity inherent in the Turkmen people is really shown in the essence of the current social reforms and promotes consolidation of bases of statehood.

Economic progress and achievements for years of independence created reliable basis for happy life of Turkmen nationals. Annual stable dynamics of development of national economy increase in the volume of investment, aimed at accumulation of human potential, increase in other macroeconomic indicators allowed to strengthen social security and to improve welfare of the population, in particular, regularly to increase its income. In our country, the satisfaction of interests, requirements and wishes of citizens acts as a priority. The legal basis of activity in this direction is based on the statement that "in Turkmenistan the highest value of society and state is the individual» which is stated in article 4 of the Constitution of Turkmenistan. Historically it defined ways of the state system of Turkmen people, an essence of the humanistic principles of our ancestors. Therefore, the social policy pursued today clearly confirms continuity of the scheduled course.

So, in Turkmenistan it was decided to reorganize provision of pensions of population by means of introduction of conditional and accumulative method that became one of the key tasks of the Pension fund of the country. Therefore, the Law of Turkmenistan "On the state pension insurance", and on October 19, 2012 - the Code of Turkmenistan on social protection of population on March 31, 2012 was adopted. These acts defined legal, economic and organizational bases of creation and commissioning of system of state pension insurance, which acts as a major factor and financial basis for transition to conditional accumulative method. The positive reforms realized in this direction predict further improvement of life of population of our Fatherland and, at the same time, successful achievement of goals of sustainable development at the national level.

The financial and bank sphere possesses a special role in further strengthening of economic bases of independence. Proceeding from it, according to the initiative of our respected President on reforming of the financial and bank sphere, in 2011 "The state program of development of a banking system of Turkmenistan for 2011-2030" was approved. According to this document, the forthcoming tasks and also measures for improvement, according to requirements of time, function of the banking system in the large-scale economic reforms realized in the country, improvement of quality and increase in a range of banking services according to the international standards, maintenance of the stable rate of national manat were designated.

The innovative transformations which are carried out in this direction exert a positive impact on increase in coefficient of capitalization of banks, strengthening of base of financial resources, optimization of bank supervision, increase in the volume of bank operations, introduction of innovative bank production and technologies, improvement of quality of services rendered to the population in this area. Consecutive incorporation to this sphere of new technologies allows providing the population with payment and settlement, deposit and other services remotely. For further improvement of the bank sphere, development of national payment service provider, ensuring its efficiency, reliability and safety, now the payment service provider is modernized due to modern information technologies and computer programs. Day by day the scale of clearing settlements increases, new types of service systematically take root into credit institutions.

The high level of economic stability, providing legal guarantees and the state support helped growth of interest of foreign investors in Turkmenistan. Thanks to investments, which are directed to production and social segments of national economy an opportunity for implementation of large projects at the state and international levels appears, the national production base cardinally changes, new branch subjects, huge complexes of buildings of welfare appointment are under construction and put into operation. The foreign companies participated in financing of projects in such areas as the heavy industry, textile branch, agriculture, production of construction materials from local raw materials, tourism, transport and communications, civil aviation, modernization of infrastructure of railway and marine transport, construction of autobahns, operation of the national artificial satellite.

It is necessary to emphasize that the State bank for foreign economic relations of Turkmenistan carries out fruitful work on realization of national investment policy and attraction of the foreign capital to national economy.

This financial institution among which priorities attraction of the medium and long-term foreign credits for financing of strategically significant investment projects acts as the official representative of our state in the international financial market. In this context, the State bank for foreign economic relations of Turkmenistan closely cooperates with authoritative international financial institutions, development banks, and export credit agencies. Now the bank undertakes the appropriate measures aimed at implementation of "The program of development of foreign economic activity of Turkmenistan for 2020-2025" and development of international partnership. Together with foreign investors work on contracts, production-sharing agreements, contracts of rendering services, granting the international credits, creation of joint ventures - contractual forms that are the main mechanisms of attraction in the economy of Turkmenistan of foreign investments is carried out.

Development of joint and other legal forms with involvement of shareholders promotes integration of Turkmenistan into world economy, and finds huge value in creation of market infrastructure. Besides, they play a large role in attraction of direct foreign investments. At the same time, it should be noted that use of contractual forms became more active in the construction sphere. Within the licenses granted to the foreign companies and investors on the basis of production sharing agreements in Turkmenistan, on the Turkmen coast of the Caspian Sea and other onshore sections several projects were realized. The international financial institutions take an active part in granting the credits for the investment programs and large projects realized in our country and in their financing as well.

For implementation of policy of the leader of the nation in rendering the state support to small and medium business, the banking system provides representatives of the domestic private sector with different types of preferential crediting and sources of foreign financing. The positive experience accumulated in this area also stimulates development of small and medium business. Within the program of granting the credits for investment projects of businesspersons of the country for creation or expansion of productions long-term crediting at the expense of such direction as crediting of private producers intensively develops.

Today, as a result of entry of all countries of the world into the international market, the world competition escalates. From present vectors of development of the states of the planet, it is possible to judge that in the future those countries which provide an opportunity for its citizens to fully realize their professional skills and abilities and also transform new knowledge, practical practices into modern technologies and production will be in economic vanguard. Now in Turkmenistan huge significance is attached to professional education as to one of the key components of diversified economic growth that is connected with its justification as one of the significant factors promoting stimulation of economic development. Therefore, in the context of active integration of economy of our country into the international space, training of new generation of the experts possessing extensive knowledge of various directions of economy and perfectly understanding innovative technologies is carried out well coordinated and within realization of economic strategy.

In general, all large-scale reforms realized in branches of economy according to socially oriented economic policy confirm sure advance of independent neutral Turkmenistan on the way leading to new achievements and increase in welfare of people. Thus, successful performance of all measures designated in state programs will allow creating optimum market advantages in the near future, fully integrating into global economic space, considerably increasing foreign trade turnover. And widespread introduction of innovative technologies in all spheres of production will promote increase in competitiveness of domestic producers, expansion of domestic market of goods and services, in a word, strengthening of basis of financial and economic system.

Successful realization of the strategy realized under the wise leadership of our esteemed President according to the main principle "State - for people!", plays a crucial role in substantial increase of economic capacity of Turkmenistan, achievement of world recognition of our sovereign Fatherland as the country which is steadily developing in political and economic aspects. And, all achievements in harmonious development of national economy have become possible thanks to independence - a basis of our statehood.

Serdar Berdimuhamedov, 
Deputy-Chairman of the Cabinet, Doctor of Political Sciences.

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