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Turkmenistan is set to revise its law on foreign investment, in a bid to encourage FDI and move the country closer to a market economy.

President Gurbanguly Berdymukhamedov has instructed the parliament to revise the law on foreign investment, in addition to laws on property and the budget system, telling the parliament that the existing legislation is "out of date". Turkmenistan needs to revise the laws to accelerate its transition to a fully fledged market economy, the president insists, according to a July 18 report by Trend.

Long isolated from the international economy, Turkmenistan has been making a gradual transition towards a market economy since Berdymukhamedov came to power in 2007. The government also hopes to develop sectors such as textiles and construction, to diversify the economy away from its heavy reliance on oil and gas.

Measures taken so far include unification of exchange rates, modifications to the tax regime and a partial privatisation of the housing sector. Ashagat has also announced plans to introduce international accounting standards. A July 18 statement on state news service Turkmen Dovlet Habarlary claims Berdymukhamedov has authorised the finance ministry to continue work with the UK's Foundation for International Financial Reporting Standards

In March, Turkmenistan launched a modest new privatisation drive. A handful of assets were sold, although none of them were valued at over $2m. More companies are due to go under the hammer between 2013 and 2016, although Ashagabt is expected to maintain control over the oil and gas sector, which remains the backbone of the economy.