The analysis of the non-governmental sector showed a steady increase in economic indicators.
An observer of Turkmenistan’s economy Valentin Trapeznikov assessed the potential of the country’s non-state sector in an incorruptible way within an interview for CentralAsia.news. He said that now it demonstrates significant economic growth. The economist willingly answered all the questions of the editorial correspondent.
Please tell us what are the main reasons for such a growth rate?
— One of the significant factors in the diversification of the economy of Turkmenistan is the change in its structure in terms of the forms of ownership of economic entities. The privatization processes actively carried out in Turkmenistan have a significant impact on this process, along with the creation of new private enterprises. In particular, the share of state-owned enterprises from 2013 to 2019 decreased from 22,4% to 19,2%, while the share of private enterprises, on the contrary, increased from 65,7% to 71,2%.
Speaking of the number of newly registered legal entities, it must be added that in the first half of 2020, their number increased by 631, which is 37,2% more than in the previous year. At the same time, private ownership accounted for 95,4% (in 2019 — about 91%), state — 2,5%, public associations — 1,1%, other forms of ownership — 1,0%. The total number of newly registered private enterprises increased by 43,7% compared to the previous year, while state-owned enterprises, on the contrary, decreased by 52,9%.
So does it mean that the benefits of the growth of private entities definitely exist?
— Certainly. It must be also added that there is a significant increase in employment within individual entrepreneurship, which also has a significant impact on the change in the structure of the number of economic entities in favor of the private sector of the economy, whose representatives are involved in almost all types of economic activity.
The share of the non-state sector in the structure of gross production (GDP) of Turkmenistan grows steadily. In particular, according to the results of three quarters of this year, within the total volume of GDP, it reached 66,9% against 65,7% in 2019. In agriculture, these indicators were 96,6% and 95,3%, in industry — 58,4% and 56,2%, transport and communications — 73,9% and 72,7%, trade — 93,4% and 93,3%, respectively. The share of the non-state sector in construction is over 75% of the gross output of the industry.
The economic indicators of the non-state sector of the economy in comparison with the state sector also demonstrate higher growth rates. So, in general, the GDP in the third quarter of 2020 grew by 4,2%, and by 6,1% in the non-state sector.
What is the leading industry in your opinion?
— If we consider the sectoral cross-section, then the indicators of the private sector are generally higher. In agriculture, growth in the country as a whole is 8,6%, and in the private sector — 10,1%. In the «transport and communications» sector, similar indicators were 4,9% and 6,6%, respectively. The advantages of the non-governmental sector are also characteristic of such industries as trade and the provision of services.
It is for sure that the indicators of the non-state sector in agricultural production are especially impressive. In this industry, the highest growth rates in relation to the previous year were noted in the production of potatoes — 13,5%, melons — 10,4%, vegetables — 8,4%, fruits and berries — 7,6%, meat — 6,2%, eggs — 8,6% and wool — 11,9%.
What can you tell us about the impact of external connections?
— A favorable climate has a very constructive effect in this direction. Joint and foreign companies actively work in almost all sectors in Turkmenistan, most of which also belong to the non-state sector. So, at the beginning of 2020, 635 joint and foreign enterprises, 986 of their branches and representative offices from more than 70 countries were registered in our country.
The scale of activity of foreign companies in our country is most clearly characterized by indicators in the oil and gas industry, where several projects are implemented by foreign investors under the terms of production sharing agreements. In particular, Dragon Oil (UAE), Petronas (Malaysia), Eni (Italy), CNPC (China), and several others are actively developing fields, annually increasing oil and gas production. In the first nine months of this year, they produced about 57% of oil and more than 29% of gas. Foreign investments in the extraction of hydrocarbon resources amount to tens of billions of dollars and continue to grow.
Which areas have the most dynamic business activity?
— Turkmenistan, as a platform for promising work, has a wide range of profitable areas. But still, the priority activities of joint and foreign enterprises include construction, manufacturing, wholesale and retail trade, vehicle repair, transportation, storage of goods, scientific and technical activities, agro-industrial complex, forestry, and fishing.
Thus, representatives of the non-governmental sector make their significant contribution to the implementation of national and sectoral programs of Turkmenistan, to the production of various types of products, ensuring the overall dynamic and sustainable development of the Turkmen economy.
