A letter to Western investors interested in Turkmenistan
Dear Western investor,
You might have a Turkish colleague who is trying to convince you to invest in Turkmenistan, but should you believe him?
The picture looks nice. Turkish firms ran 63 projects in 2011 worth ~3.27 billion USD, and in 2010, ~4.5 billion USD. Such numbers at the height of the Great Recession are really amazing. And your Turkish colleague is probably hungry for more: the total business volume of Turkish construction firms in Turkmenistan is over 30 billion USD since 1991, and there are, right now, 1,500 Turkish-run construction projects in Turkmenistan worth 32 billion USD.
But look closer.
Earlier this year, Turkish company Polimeks apparently received a 2.5 billion USD tender for to build a new international airport in Turkmenistan by 2016. This company is also building second phase of an “Olympic village” — without any Olympics. And this same company has been accused in Turkish media of trying to smuggle gold into Turkmenistan!
A much more respectable Turkish omnicorp, the Çalık Group, has also had strange relations with Turkmenistan. According to a leaked United States diplomatic cable, the Group suspects that Turkmenistan is actually under the control of Russia (still, they haven’t let this stop them from signing a contract to modernize Turkmenistan’s Soviet-era electrical system). Speaking of the Russians, their telecom MTS has had an epic relationship, getting kicked out for two years for no reason, then allowed to return last year only on the condition that they share 30% of their profits with the Turkmen state. In 2011, MTS even warned international investors that Turkmenistan is a risk to all of you.
Yes, Turkmenistan has a lot of growth potential, but no one really understands the inner workings of its government. In its 2012 Corruption Perception Index, Transparency International ranked Turkmenistan 170 out of 174 while the 2012 Heritage Economic Freedom Index ranked Turkmenistan 168 out of 179. The country’s key economies are state owned.
Also, from cultural perspective, it is an investment virgin; it has real lack of familiarity with international business norms. This especially making Western companies feaful to invest and so their major interest remains in the promising oil and gas fields.
So, believe me, resist the temptation to invest here!