One of the most important reforms of Turkmenistan's economic
plan is privatization. Article 9 of the 1992 constitution guarantees
citizens the right to own capital, land, and other material or
intellectual property, but no law has stipulated the source from
which land could be acquired. No fund of land available for private
purchase has been established. A law on land ownership allows
every citizen the right to own and bequeath to heirs plots smaller
than fifty hectares, so long as they are continuously cultivated,
and to obtain a long-term lease on up to 500 hectares. Such land
may not be bought or sold, however. In 1993 only about 100 peasant
farms were privately run, and they were leased rather than owned.
Nevertheless, after the government announced the 1993 law allowing
fifty-hectare plots, it soon received more than 5,000 applications.
In February 1993, a State Committee on Land Reform was established,
with a goal of privatizing 10 to 15 percent of all agricultural
land. Beginning in May 1993, the state began leasing land on the
condition that 35 percent of the state procurement for cotton
be surrendered, with no monetary compensation, as payment of rent.
Estimates of the irrigated land since leased or under private
ownership range from 3 to 12 percent. The state also intends to
privatize all unprofitable agricultural enterprises.
The privatization process is managed by the Department of State
Property and Privatization, which is part of the Ministry of Economy,
Finance, and Banking. Short-term plans call for continued state
control of the gas, oil, railway, communications, and energy industries
and agriculture--sectors that combine to account for 80 percent
of the economy. Laws on leasing, joint-stock companies, and entrepreneurship
were adopted in the early 1990s. A general privatization law passed
in 1992 describes the gradual denationalization of state property
through a variety of methods.
In 1992 only 2,600 small enterprises--mostly individual ventures
such as trading outlets and home-worker operations--were privately
owned. Through the end of 1993, only a few small trade and service
enterprises had moved to private ownership, mostly sold to foreign
buyers. Plans called for conversion of large manufacturing firms
into joint-stock enterprises by the end of 1994, and private ownership
of all trade and service-sector enterprises with fewer than 500
employees by the end of 1995. However, the state would maintain
a "controlling interest" in businesses that become joint stock
companies and would retain control over profitable larger concerns.
A second important component of Turkmenistan's economic development
plan is marketization. To promote this process, a decree was issued
in March 1993 for the formation of a joint-stock bank, the granting
of additional credits to the Agroindustrial Bank for the development
of entrepreneurship, and the establishment of seven free economic
zones. Agricultural entrepreneurs are to be granted special profits
tax and land payment exemptions. Within free economic zones, companies
with more than 30 percent foreign ownership are to receive special
exemptions from profit tax and rental payments.
Data as of March 1996