TURKMENISTAN IS RAPIDLY EMERGING AS CENTRAL ASIA'S PREMIER INVESTMENT HOTSPOT, THANKS TO ITS SWEEPING REFORMS THAT ENHANCE BUSINESS OPERATIONS AND COMPETITIVE EDGE.

THE BANK WAS ESTABLISHED TO DEVELOP AND STRENGTHEN FOREIGN ECONOMIC RELATIONS AND TO PROTECT ITS CURRENCY. COULD YOU ELABORATE ON ITS PRIMARY ROLE AND OBJECTIVES?

The State Bank for Foreign Economic Affairs of Turkmenistan was established on January 27, 1992, by a Decree of the President of Turkmenistan. Its primary role is to act as a pillar bank for the Government of Turkmenistan in implementing the country's development programs. These programs aim at fundamentally reforming the national economy, ensuring the economic prosperity of Turkmenistan, and improving the well-being of its population.

As a pivotal institution, the State Bank for Foreign Economic Affairs functions as the Government of Turkmenistan's agent in international financial markets for attracting investments into the country's economy. In this direction, the Bank actively engages in attracting external medium and long-term loans for financing projects included in the President's and Government's socioeconomic development programs. Supporting the foreign economic policy carried out by the President and the Government of Turkmenistan, the Bank also aims to expand its cooperation geography and further develop collaborations with multilateral and national financial institutions, foreign commercial banks, export-credit, and insurance agencies.

Aimed at supporting international trade, the Bank focuses on fully meeting its clients' needs with reliable and efficient banking services and products. To this end, we offer products and services such as cross-border payments and transfers, trade financing, letters of credit and guarantees, and consultations on international trade settlements. Notably, Turkmenistan became a member of the International Islamic Trade Finance Corporation in 2022 with the Bank's active participation, signing a three-year trade finance agreement worth $150 million.

In terms of supporting investments in the country, the Bank aims at diversifying investments geographically, by sector, and by investment type. Hence, our Bank is not only focused on attracting foreign loans but also on encouraging and facilitating direct foreign investments in Turkmenistan's economy. In pursuing this new direction, the Bank is open to creating joint investment companies and funds in the country, in partnership with foreign financial organizations. An example of such collaboration is the establishment of the "Turkmen Investment Company" in partnership with the Abu Dhabi Development Fund in 2021, with a target capital of $100 million, aimed at further attracting direct foreign investments into various sectors of Turkmenistan's economy.

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WHAT STRATEGIES IS THE BANK IMPLEMENTING TO ATTRACT FOREIGN INVESTMENT INTO THE COUNTRY AND TO STIMULATE ECONOMIC GROWTH AND DIVERSIFICATION?

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To attract foreign investments, the Bank implements a strategy aimed at establishing and expanding partnerships with foreign financial organizations and companies. This strategy focuses on attracting direct foreign investments and investments in the form of medium and long-term loans to support the country's socioeconomic development programs. Focusing on specific sectors and projects that stimulate economic growth and diversification, the Bank emphasizes financing industrial and energy projects, transport and telecommunications infrastructure projects, agro-industrial complex development, private sector growth, and socially oriented projects in healthcare and water resource management.

For instance, over the last 15 years, with the Bank's participation, more than $13 billion has been invested in various development projects. These include significant projects such as the construction of a natural gas to gasoline plant in Ahal Province, a urea plant in Garabogaz, a gas chemical complex for polyethylene and polypropylene production in Kiyanly, and the provision of agricultural and water management equipment.

The Bank continues to support projects related to natural gas extraction and transportation, telecommunications, and the development of transport-logistics infrastructure. To support and develop the private sector, the Bank has financed small and medium enterprise projects worth over $220 million in the last five years through foreign loans. In implementing its strategy, the Bank also considers global challenges, such as climate change.

The strategy includes supporting the Government of Turkmenistan's efforts to combat climate change, develop hydrogen and green energy, and achieve carbon neutrality. Specifically, the Bank has begun financing projects based on the application of renewable energy sources.

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IN LIGHT OF RECENT GLOBAL ECONOMIC FLUCTUATIONS, INCLUDING CHANGES IN INTERNATIONAL OIL PRICES AND TRADE POLICIES, HOW HAS THE BANK ADJUSTED ITS STRATEGIES TO PROTECT AND ENHANCE THE COUNTRY'S ECONOMIC INTERESTS ABROAD?

The bank has developed and adopted a Medium-Term Business and Digital Strategy up to 2025. The main directions of this Strategy include: supporting the government in implementing development investment programs; facilitating the development of the private sector and public-private partnerships; and introducing innovative and digital banking products and services. As part of its Strategy, the Bank plans to continue active participation in investment projects aimed at industrialization, the development of transport and telecommunications infrastructure, agriculture, and others. The Bank will also continue to support and develop private entrepreneurship, investment, and innovation activities, which should become one of the main driving forces for increasing productivity, comprehensive economic growth, and creating additional jobs in the country.

While the main directions of the Bank's Strategy remain unchanged, the Bank is making certain tactical and operational adjustments to better protect and enhance the country's economic interests and to mitigate the impact of global economic fluctuations. Specifically, the Bank is adjusting its Strategy to include: strengthening the Bank's coordinating role within the country in interaction with international financial and non-financial organizations; expanding its correspondent network and establishing partnerships with commercial financial organizations located in countries of significant economic interest to Turkmenistan; enhancing control over compliance with sanction regimes to prevent the Bank's involvement in schemes that circumvent existing sanctions; increasing transparency, stability, and reliability of the Bank, and accordingly, obtaining a credit rating for the Bank from leading rating agencies; and placing a greater emphasis on projects that have a positive impact on the environment.

Turkmenistan is widely recognized for its economic stability and reliability. How does the State Bank for Foreign Economic Affairs contribute to maintaining and enhancing this reputation, particularly towards its ambition to be part of the global financial markets?

Annually, Turkmenistan's economy grows at a high rate, demonstrating its stability and resilience against various negative global factors and processes. Such positive growth is achieved through the implementation of comprehensive and systematic measures laid out in the medium and long-term programs by the President and Government of Turkmenistan for the socio-economic development of the country.

The successful development of Turkmenistan is aided by an active foreign economic policy aimed at strengthening the country's economic power and enabling the realization of large, strategically significant projects. In this regard, great importance is given to diversifying multifaceted interactions with countries worldwide. The country's transition to an industrial-innovative development path entails the expansion of foreign economic relations that stimulate the growth of industrial sectors and the economy's modernization as a whole. In the context of developing such foreign economic relations, it is crucial to demonstrate reliability and creditworthiness on the international stage. It is important to note that the Government of Turkmenistan pursues a balanced and responsible policy regarding attracting and subsequently servicing external borrowings. The State Bank for Foreign Economic Affairs, acting as the Government of Turkmenistan's Agent, manages and services a significant portion of the external debt in a timely manner.

I would like to highlight that even during the challenging period of the global COVID-19 pandemic, when many developing countries sought deferrals and restructuring of debts from their creditors, we continued to fulfill all our commitments without a single day's delay. As of today, the total obligations to foreign creditors do not exceed 5% of Turkmenistan's GDP, and there is no overdue debt on foreign loans drawn. These facts further attest to the high reliability and creditworthiness of Turkmenistan's economy.

As the Government's agent, the State Bank for Foreign Economic Affairs of Turkmenistan, by the Government's mandate, has been actively cooperating with FitchRatings since 2020 to assign and review Turkmenistan's sovereign rating, acting as an interdepartmental coordinator within the country. Additionally, the Bank is considering obtaining a rating from FitchRatings for itself, which would further affirm the Bank's position in the global financial markets.

Furthermore, the Bank has conducted several negotiations with Moody’s regarding the possibility of obtaining a sovereign rating from this agency and has provided its recommendations to the Government of Turkmenistan.

As is well known, the Government of Turkmenistan is actively working towards joining the World Trade Organization by 2030, and the State Bank for Foreign Economic Affairs of Turkmenistan is actively participating in this process. This direction also contributes to enhancing Turkmenistan's international reputation as a reliable and responsible partner, attracting foreign investment into the country.

GIVEN TURKMENISTAN'S STRATEGIC INITIATIVES AND ROBUST ECONOMIC POLICIES, THE COUNTRY IS BECOMING INCREASINGLY ATTRACTIVE TO FOREIGN INVESTORS. FROM YOUR PERSPECTIVE, WHAT ARE THE KEY FACTORS MAKING TURKMENISTAN A COMPELLING DESTINATION FOR INVESTMENT?

The foundational factors that make Turkmenistan attractive to foreign investors include its peaceful foreign policy, internal stability, and security. Especially today, it is hard to imagine the investment appeal of any country without these key elements. These fundamental factors, combined with the presence of rich natural resources, a dynamically developing modern transport and logistics infrastructure, and a policy of "open doors" in foreign economic relations, create favorable prospects for profitable foreign capital investment in Turkmenistan.

Speaking of other key factors, I would like to mention that the country has established a favorable investment climate for the development of the private sector and an increase in investments in Turkmenistan's economy in the form of direct foreign investments. In particular, a relevant legal framework has been developed and continues to be refined, including guarantees for the protection of foreign investments. In September 2017, the Law on Free Economic Zones was adopted, offering significant benefits, including in taxation and land lease.

For small and medium-sized businesses in the country, a simplified taxation system is in place. Turkmenistan has signed double taxation avoidance agreements with many countries, contributing to our country's investment appeal. In 2020, amendments were made to the Law on Hydrocarbon Resources. Now, not only exploration and production projects but also projects aimed at processing hydrocarbon raw materials fall under this Law, making the oil and gas sector of Turkmenistan's economy even more attractive for investment.

The adopted Digitalization Concept has spurred the development of electronic government services based on the "single window" principle, which also improves the business conditions for both local and foreign investors. The country has adopted the Law of Turkmenistan on Public-Private Partnership, which serves as a legal basis for developing various forms of public-private partnership. Such partnership plays a crucial role in mobilizing financial resources and complements the measures taken by the state to achieve sustainable development goals. The adoption of this Law also positively impacts further improving the investment climate in Turkmenistan.

Today, the Government of Turkmenistan is making significant efforts to join the World Trade Organization. I am confident that Turkmenistan's full membership in this international organization will further enhance its attractiveness to foreign investors. And, of course, the traditional hospitality and diligence of the Turkmen people are also integral factors that make Turkmenistan attractive to foreign investors.

The Bank fully strives to support the Government's efforts aimed at further improving the investment climate in Turkmenistan. Representatives of the Bank regularly participate in and speak at various investment business forums, revealing to potential foreign investors the attractiveness and investment opportunities of Turkmenistan. The Bank provides informational and consulting support to foreign investors and offers them a wide range of banking services and products in Turkmenistan.