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…

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!

Sincerely,

A Turkmenistani

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2 comments Show discussion Hide discussion
  • henrik the business consultant

    March 19, 2013 at 7:38 pm Reply

    Turkmenistan’s corrupt and ugly business practices are getting more and more exposed. First it seems very lucrative business oppurtunities but once you get into it, then you will be at the mercy of the corrupt and greedy civil servants whose demand of kickbacks increases once you have invested there. As a result a great number of international firms have gone bankrupt. Visa issuing authority of turkmenistan is nothing but a flourishing uncontrolled bribe generating business entity. Once invested, you wont even be allowed to visit the country to monitor the business acitivities, if allowed in there is risk of not getting an EXIT visa to leave the country without the law enforcement authorities getting their FAIR share of the kickbacks. In other words You will be robbed officially.

    Turkmenistan does not trust you, if you want to trade /purchase from turkmenistan you have to pay in advance; not even L/C is accepted but if you supply products, you will be paid (if at all you are paid) only after the delivery and after having you paid the kickbacks right from the clerk to the highest authorities. Hence you cannot even determine the volume of kickbacks in advance.

    Would you do dare to do business with Turkmenistan ? If you do, contact the EU commissioners , EU parliament delegation for Turkmenistan to get advice.

  • [...] my last letter was too harsh. Turkmenistan does need your money; all of our sectors are so poor — natural [...]

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