Eager For Self-Reliance, Turkmenistan Plans To Launch A Digital Economy

Turkmenistan has pledged to launch its own digital ecosystem and create jobs in new sectors, as the energy-rich country in the Caspian basin is looking to shift away from a reliance on oil and gas.

President Gurbanguly Berdimuhamedow is convinced that the use of innovative technologies is an essential factor for sustainable economic growth that could provide the basis for long-term prosperity. He has approved an economic development strategy for the next seven years, which he plans to have implemented in three phases and conclude sometime in 2025.

According to state media, the strategy features seven segments that reflect the current state of the national information and communication technology system, mechanisms for the implementation of the strategy, as well as the expected outcomes. At the same time, details have not been made public yet. Officials in Ashgabat believe the strategy will step up business and investment activity as well as boost the introduction of advanced government practices.

Earlier this year, Berdimuhamedow called on the government to begin preparatory work to introduce the document and create a schedule for the digital switchover.

“The program should help the national economy switch to innovative sample, introduce advanced manufacturing technologies, as well as switch to e-document management and digital identities systems,” Berdimuhamedow said in February according to reports by Turkmenistan Today.

A post-Soviet country with about 5.8 million people, Turkmenistan has a GDP (at purchasing power parity) of over $103 billion, which makes it Central Asia’s third-largest economy, behind Kazakhstan and Uzbekistan, according to U.S. government statistics. Although the country produces crops for export, the country’s wealth is primarily derived from hydrocarbons, as its exports – the bulk of which is natural gas going to China – make up 25 percent of Turkmenistan’s gross domestic product.

Meanwhile, a long-term digital restructuring of Turkmenistan comes amid issues the country has been facing since 2015, when the world saw a steep drop in gas prices.

Russia’s state-owned Gazprom, which used to do business with Turkmenistan in accordance with a deal signed in 2009, has left the country after officials in Ashgabat refused to revise the terms of the contract and sell its resources to Russia at a renegotiated rate. Following Russia, Turkmenistan lost another energy trading partner in the Caspian region, namely Iran. Turkmenistan cut off supplies to Iran on January 1, 2017, without prior notice, saying it stopped supplies due to pricing issues.

Currently, China is the only major importer of gas from Turkmenistan, making the Caspian country highly vulnerable to a single customer. The construction of a gas pipeline that links Turkmenistan and China through Uzbekistan and Kazakhstan was sponsored by Beijing, which binds the two countries together in what some analysts refer to as China’s ‘debt trap’. The terms of the agreement include the amount of money China has invested in the project, which is to be taken into account when deciding on a price point for the gas.

At the same time, officials in Ashgabat are exploring alternatives to take its gas to new markets, including through the Turkmenistan-Afghanistan-Pakistan-India (TAPI) transnational gas pipeline. The pipeline is expected to open in 2020, transporting 33 billion cubic meters of natural gas per year.