Turkmen export: Algorithm of the strategy of diversification

As it was informed at the session of the Cabinet of Ministers on April 19, the Ministry of Trade and Foreign Economic Affairs of Turkmenistan together with the UN Development Programme has developed the project of improvement of trade potential of our country. This project was drafted according to the Framework Programme of cooperation with the United Nations Organization for 2016 – 2020, which outlines the main activities related to the implementation of the 2030 Agenda for Sustainable Development. 

As is known, in February this year, President Gurbanguly Berdimuhamedov approved the Programme of social and economic development of the country in 2019 – 2025. The adoption of this strategic document gave start to the next stage of the implementation of multi-tiered reforms aimed at the improvement of competiveness of export potential of national economy including by the modernization and diversification of the branches of national economy, rapid industrialization of the country, strengthening of financial system, development of marketing relations and private business. Implementation of the Concept of digital economy, active introduction of innovative technologies, advanced scientific and technical developments would allow entering new levels. 

Significant investments are allocated for the implementation of this Programme. Significant part of them, 91.3 percent, would be allocated for production sphere, opening of new production facilities and work places. In general, it would provide dynamic growth of the gross domestic product (GDP) of Turkmenistan, industrial and agricultural production and service sphere. The volumes and variety of production made in the country would increase accordingly. The share of raw material in favour of the goods with high added value would reduce in the export structure. 

Naturally that objectives of comprehensive development of foreign economic relations of Turkmenistan, strengthening of its positions in international markets, attraction of foreign investments and know-hows to the country come to the fore at current stage. 

The UN 2030 Agenda gives an important role to the trade in the achievement of the Sustainable Development Goals. It either directly or indirectly supports economic grows of the states, improvement of the level of social wealth and occupation of citizens, spread of highly efficient and eco- friendly technologies, etc. 

Positive developments in the above-mentioned spheres are proven by the data of the State Statistics Committee, according to which the volumes of export of local goods have increased by 20.7 percent in January – February 2019 comparing with the same period of 2018. At the same time, the import of production has reduced almost by 27 percent. Turkmenistan trades with 83 countries of the world. China, Turkey, Italy, Afghanistan and UAE are the main partners among these countries. 

Big sums have been invested to the construction of modern industrial facilities specialized in processing of natural resources including to those related to petrochemical industry, chemical and energy spheres recently. 

For example, Garabogazkarbamid Plant has been put into operation in Balkan Velayat last year. The main part of the production is exported. Local port was reconstructed for this purpose in Garabogaz. This major investment project was made by the consortium of Mitsubishi Corporation (Japan) and Gap Inşaat (Turkey). Japanese Bank of International Cooperation took part in the financing of this project. 

Once industrial facility will reach designed production capacity, the volume of carbamide production in the country will be more than 2 million tons. It is worth reminding that few years ago, ammonia and carbamide production complex was built together with Japanese partners Kawasaki Plant Systems Ltd and Sojitz Corporation in Mary. 

Turkmenabat Plan of the State Concern Türkmenhimiýa is one of the main facilities of national chemical industry oriented to production of 225,000 tons of phosphate fertilizers and 500,000 tons of sulphuric acid per year. One more facility for production 300,000 tons of concentrated phosphate fertilizers will be built at the plant soon. 

New units for production of high-octane gasoline have been put into operation at Turkmenbashy Refinery Complex and Seydi Refinery. In addition, the production of bi-axially oriented polypropylene (BOPP) normal and three-layered film with 10, 20 and 30 microns width. 

Projects of diversification of oil and gas industry are other examples. Polymeric plant has been put into operation in Kiyanly settlement on Caspian Coast. Largest in the region petrochemical complex was built on request of the State Concern Türkmengaz by LG International Corporation and Hyundai Engineering Co. Ltd ( The Republic of Korea) with the participation of Japanese TOYO Engineering Corporation. 

At present, the construction of the plant for production of gasoline from natural gas is under completion in Ahal Velayat. Provided with latest equipment, the facility will process 1,782,000,000 cubic meters of natural gas and produce 600,000 tons of A92 gasoline meeting ecological requirements of Euro 5 standard. 

Growth rates of cement and other construction materials production from local raw materials indicate the main vectors of the intensification of national industry. Last year, the export structure of the country included the glass, which nowadays bring stable income in foreign currency. In particular, it was 1,335,000 US dollars for the past two month of 2019. 

Construction of new textile facilities with wide participation of the state and foreign investors allowed saturating local market with first-class production, which variety grows every year successfully competing with the goods from foreign manufacturers. However, the main achievement of Turkmen textile industry, which is based on modern complexes with full cycle of production, is the fact that it has managed to re-target the economy of the country and to turn Turkmenistan from the supplier of raw cotton into the exporter of ready-made production. 

Carpet making has rich national traditions, owing to which carpet production made of natural wool makes significant part of export of Turkmenistan production to the world market. Such partnership is successfully developed with German, Italian, Great Britain, Greek and French companies. 

Speaking of the future of the increment of share of agricultural section of the economy in export potential of the country, it is worth highlighting that today, Turkmenistan placed itself in the rank of the countries, which are self-sufficient in production of the main food products, having implemented the main points of its integrated programme of food security. 

Big livestock and poultry complex of full production cycle, starting from the cultivation of forage crops and feeding of young animals and birds until meat processing and production of meat and dairy goods, have been built and continue to be built in each velayat of the country. These are various cheese, cold cuts, milk, yoghurt, butter, cream, etc. 

Hothouse farms growing tomatoes, cucumbers, paprika, eggplants as well as mushrooms, parsley and other provide the residents of cities and towns with fresh vegetables all year around. Production of canned fruits and vegetables, natural juices, various pasta, bakery and confectionary has been established. 

The measures taken by the President for support of local producers, stimulation of growth of agricultural production allowed reducing the import of food production significantly and increasing the volumes of export. This fact is mentioned in the reviews of agricultural and food trade policy annually published by the UN Food and Agricultural Organization under the Regional Initiative of FAO in Europe and Central Asia “ Development of Agrifood Trade and Market”. 

Representatives of private sector make significant contribution to the implementation of the state programmes in import substitution and export orientation spheres of the country. The companies of the Union of Industrialists and Entrepreneurs have increased the volumes of industrial production by 13.1 percent, agricultural and food production by 5.8 percent in the first quarter of the year. 

Continuing the subject, it is worth mentioning that for the past two months of 2019, the cost of export supplies of cement has increased by 14.6 percent, textile materials by 31.2 percent, raw silk by 53.9 percent, carpets and carpet production by 6.6 percent, iodine by 13.8 percent, baked confectionary by 11.6 percent, fruit and vegetable production by 47.3 percent. Comparing with the same period of 2018, export of tomatoes and other vegetables has grown almost by 70 percent. 

Liquefied gas, gasoline, hydro-treated diesel fuel, jet fuel, technical and lighting kerosene, heavy vacuum gasoil, base technical oils, petroleum coke, road bitumen, polypropylene, technical sulphur, cotton yarn, terry fabrics, cotton lint, textile and sewing garments are among the goods, which are traditionally on high demand, sold at the State Commodity and Raw Material Exchange of Turkmenistan . 

437 export transactions to total amount of more than 490,680,000 US dollars and 91,550,000 Turkmen manats have been concluded at the State Commodity and Raw Material Exchange of Turkmenistan for January – March 2019. The buyers include businessmen from Great Britain, Russia, Germany, UAE, Turkey, Switzerland, Estonia, China, Kyrgyzstan, Kazakhstan, Afghanistan, Uzbekistan, Tajikistan, Ireland, Belarus, Armenia, Canada, Pakistan, Ukraine, Serbia, Romania, Malta and other countries. 

Export of bitumen via the State Commodity and Raw Material Exchange of Turkmenistan has increased 5 times, licorice extract – 4.4 times, base technical oils produced at Turkmenbashy Refinery Complex – 4 times comparing with the first quarter of 2018. Supplies of polypropylene made in Turkmenistan has increased to foreign countries. Export of heavy oil and straight-run gasoline has grown by 25 percent, cement by 32.1 percent, cotton yarn by 8.2 percent. 

Projects of development of transport and logistic infrastructure, air, railway, sea, road and multimodal transportation, which has been initiated by President Gurbanguly Berdimuhamedov and are currently under implementation, open wide perspective for activation of foreign economic activity. In this aspect, Turkmenbashy International Port, which was built on Caspian coast, construction of Kazakhstan – Turkmenistan – Iran transnational railway, Kerky – Ymamnazar (Turkmenistan) – Akina (Afghanistan) railroad, which is the first section of International Asian transport corridor, railway and motor bridge across Amudarya River, super modern airports in Ashgabat, Turkmenbashy, Turkmenabat and other cities are worth to be mentioned. 

Construction of Ashgabat – Turkmenabat and Turkmenistan – Kazakhstan highways will significantly improve throughput capacity of road system of the country, quality and time of logistic services and will expand international transport and logistic infrastructure and trade and economic relations with neighbouring states located along the Silk Road. 

Increment of export of various services including by use of the capabilities of national space satellite, development of international tourism, electronic trade, establishment of joit ventures and special economic zones are among planned activities. 

Therefore, perspective of further trade and economic partnership of Turkmenistan with the countries of the world have solid foundation for expansion of bilateral and multilateral relations and further integration of national economy to the world economic relations.