Recently, Orient published an article briefly summarizing the findings of the 2025 World Investment Report of the United Nations Conference on Trade and Development (UNCTAD). They mentioned that Turkmenistan attracted $1.6 billion in foreign direct investment (FDI) in 2024, making it the second-largest FDI recipient in Central Asia. However, Orient did not provide any context to this number and how this number evolved overtime. Progres analyzed UNCTAD data from 1992 – 2023 to better understand the trends, scale, and significance of FDI in Turkmenistan.
Inward FDI Flow (Annual Inflows)
FDI inflow refers to the amount of foreign capital invested in a country within a given year such as through new businesses, infrastructure, or equity acquisition. In Turkmenistan from
- 1990s – early 2000s: FDI was low and volatile, mostly under $300M/year, reflecting investor caution post-independence.
- 2007 – 2009: Sharp increase, peaking at $4.55B in 2009, fueled by large energy and infrastructure projects.
- 2010 – 2023: Steady decline, stabilizing around $1–2B annually, with $1.38B in 2023 and $1.6B in 2024.
Figure 1. FDI Inward Flow to Central Asia in Current US Prices in Millions
Source: UN Trade and Development (UNCTAD).
In 2024 Turkmenistan attracted $1.6 billion, which is actually the third largest FDI after Uzbekistan’s $2.8 billion and Kazakhstan’s $2.5 billion. However, Kazakhstan also saw $3.7 billion in outward FDI, which refers to the amount of investment that country’s own companies or investors make abroad such as acquiring businesses, setting up subsidiaries, or building facilities in other countries. In Central Asia Kazakhstan is the primary country with outward FDI which can be a sign of economic maturity of Kazakhstan and global integration of its firms. Turkmenistan did not experience any outward FDI flow.
Inward FDI Stock (Cumulative Total)
FDI stock reflects the total accumulated foreign investment over time. In Turkmenistan FDI stock grew steadily from $0 in 1992 to over $42.9 billion by 2023, showing long-term investor presence despite recent declines in annual inflows. Turkmenistan attracted significant FDI during its energy expansion phase, but recent lower inflowssuggest challenges in sustaining investor confidence or diversifying beyond hydrocarbons. Despite a slowdown, foreign investors have largely remained, reflecting long-term interest in Turkmenistan’s strategic sectors (mainly hydrocarbons).
Figure 2. Inward FDI Stock to Central Asia in Current US Prices in Millions
Source: UN Trade and Development (UNCTAD).
This measures how much foreign investment each resident theoretically “receives”. Turkmenistan attracted from $0 in 1992 to $187 in 2023. The highest amount was $835 per person in 2009. This mirrors the general flow trend – high per capita impact during boom years (2009-2010), lower in recent periods due to shrinking inflows and growing population.
Figure 3. Inward FDI Flow as a Share of GDP for Central Asian Countries
Source: UN Trade and Development (UNCTAD).
FDI as a Share of GDP
This indicator shows the proportion of GDP made up by FDI in a given year, reflecting the macroeconomic importance of foreign investment. From 1993 – 2006 the share of FDI as a percentage of Turkmenistan’s GDP was generally low, fluctuating between 2%-5%. It peaked at 22.52% of GDP in 2009 indicating a massive significance in the economy. However, it steadily declined over time reaching 2% in 2023 showing reduced FDI weight in national output.
FDI as a Share of Gross Fixed Capital Formation
This measures FDI’s role in financing physical investments like roads, factories, and energy infrastructure. It started at 0% in 1992 and rose sharply to 45.67% in 1995, indicating that in the early post-independence years, FDI briefly played a dominant role in capital investment. In 2009 FDI funded nearly half (48.33%) of capital formation, likely linked to large foreign-funded energy and infrastructure projects. However, the share of FDI declined steadily over time reaching 4.15% in 2023. This indicates a sharp decline in foreign participation in long-term capital investment. Likely reasons are – tighter government control, worsening investment climate, lack of reforms, or increasing use of state budgets or domestic financing for capital projects.
Conclusion: What It Means for Turkmenistan
Overall, Turkmenistan’s FDI trajectory can be divided into three phases:
- Modest early inflows (1990s – 2006);
- Boom years (2007 – 2009), peaking at $4.55B;
- Gradual decline since 2010, with $1.6B in 2024.
Despite remaining a top recipient in the region, Turkmenistan’s FDI has fallen significantly in both volume and economic relevance. In 2009, FDI made up 48% of capital formation; in 2023, just 4.15%.
Moreover, FDI in Turkmenistan is primarily directed towards the hydrocarbon sector, including oil and gas production and distribution, and related industries like petrochemicals. According to the US State Department the Turkmen government only selectively seeks international partners, primarily in sectors it deems strategic, such as energy. Meanwhile, the country struggles to attract FDI due to opaque regulations, limited legal protections, and heavy state control. To restore and diversify foreign investment, Turkmenistan must improve transparency, investor protections, and sectoral openness – particularly outside hydrocarbons. Otherwise, FDI will continue to decline, reducing its role and impact in the country’s long-term development.
