Uzbek, Turkmen Economic Climates Hostile

Both Turkmenistan and Uzbekistan score poorly in the 2011 Index of Economic Freedom produced by the Heritage Foundation, a United States think-tank.

Uzbekistan comes in at 163 and Turkmenistan at 169 in a ranking of world economies and the ease of doing business that goes down to 179. The survey looked at economic environments according to ten categories, such as the ownership rights, corruption, investment and business start-up terms, taxation and the labour market.

Commentators in the two Central Asian states say there is little chance of rapid improvement in either.

One expert in Turkmenistan said massive change to social attitudes, the political system and the legislative framework would have to take place before economic conditions could be described as free.

At the moment, anyone doing business in Turkmenistan is vulnerable to corruption or predatory acquisition.

“If small-scale entrepreneurs start making more than the unspoken [monthly] limit of 5,000 US dollars, they come under scrutiny from the security agencies and their businesses will be closed down,” the expert said. “It’s impossible to get a [business] licence without paying a bribe. The procedure for registering a legal entity is very complex – you can go round the various offices and end up not being allowed to start up.”

Tight visa regulations and high customs duties also make foreign trade difficult in Turkmenistan.

Ronash Dustov, a Tashkent-based analyst, identified similar problems in Uzbekistan.

“Foreign trade is carefully carved up between closed business networks that are based either on kinship or powerful patronage,” he said. “Outsiders don’t get to go into business without their permission.”

High tax rates and intrusive regulation also make life difficult for businessmen in Uzbekistan.

“Entrepreneurs need to be masters of their own businesses, with no one interfering,” Dustov said. “Business must not depend on the whim of officials. Only when that happens will we be able to talk about economic freedom.”

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