VZCZCXRO4366
PP RUEHAG RUEHAST RUEHBI RUEHCI RUEHDF RUEHIK RUEHLH RUEHLN RUEHLZ
RUEHPW RUEHROV RUEHVK RUEHYG
DE RUEHAH #0869/01 1930514
ZNR UUUUU ZZH
P 110514Z JUL 08
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 1130
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE PRIORITY
RUCNCIS/CIS COLLECTIVE PRIORITY
RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
RUEHAK/AMEMBASSY ANKARA PRIORITY 4003
RUEHBJ/AMEMBASSY BEIJING PRIORITY 1820
RUEHKO/AMEMBASSY TOKYO PRIORITY 1687
RUEHIT/AMCONSUL ISTANBUL PRIORITY 2256
RUEKJCS/JOINT STAFF WASHDC PRIORITY
RHMFIUU/CDR USCENTCOM MACDILL AFB FL PRIORITY
RUEKJCS/SECDEF WASHDC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RHEFDIA/DIA WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 ASHGABAT 000869 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, EEB 
PLEASE PASS TO USTDA DAN STEIN 
COMMERCE FOR HUEPER 
ENERGY FOR EKIMOFF/THOMPSON 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON EPET TX
SUBJECT:  TURKMENISTAN PASSES NEW LAW ON LICENSING 
 
REF: a) ASHGABAT 0683 
     b) ASHGABAT 0697 
 
¶1.  (U) Sensitive but unclassified.  Not for public Internet. 
 
¶2.  (U) SUMMARY:  Less than two months after amending Turkmenistan's 
licensing law, President Berdimuhamedov on July 8 signed a newly 
redrafted licensing law.  The new version of the law reduces the 
list of licensed activities and clarifies supervision of licensing 
agencies.  The new law also for the first time exempts petroleum 
sector operations covered by the Petroleum Law, supporting earlier 
suggestions that Turkmenistan's Petroleum Law, which reportedly is 
being redrafted, will eventually cover licensing for certain types 
of petroleum operations.  In general, the new licensing law should 
be seen as a moderate step toward gradual implementation of a market 
economy.  END SUMMARY. 
 
¶3.  (U) On July 8, President Berdimuhamedov signed a new Law on 
Licensing of Certain Activities.  The law was originally adopted in 
1999 and subsequently amended five times, most recently on May 8 
(reftel A).  The new licensing law does not differ substantially 
from the previous version, but it does reduce the list of licensed 
activities from 66 to 44 and clarifies supervision of licensing 
agencies. 
 
LICENSED ACTIVITIES 
 
¶4.  (U) The new list of licensed activities shrank from 66 to 44 
items.  Among the most significant abolished items are those related 
to the purchase, storage, sale of grain and cereals, processing of 
grain and production of flour and grits/cereals, oil and gas 
processing, design, construction, repair and operation of main gas, 
oil and oil products pipelines, and operation of gas stations.  The 
list has become more general in description than before.  For 
example, rather than list individual licensed food production 
business sectors, the new law instead lists food stuffs production 
in general.  The July 8 Law now requires licensing for aviation, 
banking, pedigree cattle breeding and Astrakhan fur production, fire 
fighting and prevention, production and sale of food stuffs and 
feed, real estate appraisal, petroleum products trading, activities 
in special customs regimes and customs clearance related services, 
securities trading, and overseas job placement. 
 
¶5.  (U) The law specifically states that it does not apply to 
intellectual property rights, petroleum operations regulated by the 
Petroleum law, and law enforcement, defense, and security. 
 
REGULATION OF LICENSING 
 
¶6.  (U) The Cabinet of Ministers remains the key policy-making 
instrument in licensing.  The Cabinet appoints licensing agencies, 
as well as licensing supervision bodies.  The Cabinet also approves 
all licensing procedures.  Relevant agencies are authorized to issue 
licenses in specific sectors after mandatory due diligence. 
 
¶7.  (U) Although the previous law did not provide for the 
supervision of licensing agencies, the new version of the law 
dedicates an entire chapter to this issue.  Although the law does 
not clearly state which government body will serve as the licensing 
supervisory entity, its language suggests that there will be only 
one such entity.  The licensing supervisory entity is authorized to 
coordinate operations of licensing agencies, provide policy advice 
on licensing, including on the list of licensed activities and 
procedures, and maintain the registry of licenses.  The supervisory 
entity has the right to demand relevant data and documents from 
licensing agencies, conduct inspections, including those related to 
complaints of licensees, demand licensing agencies to cancel their 
decisions made in violation of the licensing legislation. 
 
PRIVATE VS. STATE ENTITIES 
 
 
ASHGABAT 00000869  002 OF 002 
 
 
¶8.  (SBU) The newly approved law still exempts state-owned entities 
from getting licenses.  However, the law now allows private entities 
to operate without licenses in free trade zones, including free 
tourism zones. 
 
¶9.  (U) Licenses for professional services, for example legal 
counsel, auditing, appraisal and others, under the provisions of the 
new law, do not expire.  Business activities are licensed for at 
least three years, as was previously the case.  The new law also 
streamlines license application and extension procedures for 
physical entities (including individual businessmen). 
 
¶10.  (SBU) COMMENT:  Although the text of the new licensing law has 
not been dramatically amended, it should be viewed as a moderate 
step toward a market economy.  The text incorporates a statement 
that licensing should not support monopolization or inhibit free 
enterprise or professional services activities.  Private businesses 
and individuals now have a forum-licensing supervisory body that can 
address their issues. 
 
¶11.  (SBU) COMMENT CONTINUED:  Petroleum sector-related activities, 
other than trading, are not covered.  In addition, there is a 
specific reference to the Petroleum Law as the applicable 
legislation for licensing of petroleum activities.  This  supports 
reftel B's suggestion that the government might be currently working 
on revised licensing arrangements for petroleum operations like 
geophysical, well drilling, well completion, well work-over 
operations, offshore construction, and abandonment.  END COMMENT. 
 
HOAGLAND