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DE RUEHAH #0763/01 1681313
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P 171313Z JUN 09
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 2987
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUCNCIS/CIS COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHAK/AMEMBASSY ANKARA 5323
RUEHBJ/AMEMBASSY BEIJING 3051
RUEHKO/AMEMBASSY TOKYO 2916
RUEHIT/AMCONSUL ISTANBUL 3567
RUCPDOC/DEPT OF COMMERCE WASHDC
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RHMCSUU/CDR USCENTCOM MACDILL AFB FL
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RUEKJCS/JOINT STAFF WASHDC
RUEKJCS/SECDEF WASHINGTON DC
RUEHVEN/USMISSION USOSCE 3628

UNCLAS SECTION 01 OF 04 ASHGABAT 000763 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, EEB 
 
E.O. 12958: N/A 
TAGS: ETRD PREL EIND EFIN TX
SUBJECT: TURKMENISTAN -- A NEGLECTED OPPORTUNITY FOR U.S. 
BUSINESSES 
 
REF: A. 07 ASHGABAT 1169 
     ¶B. 08 ASHGABAT 1388 
     ¶C. ASHGABAT 476 
     ¶D. ASHGABAT 197 
 
¶1.  (SBU) SUMMARY:  Although Turkmenistan's population is 
small, the country's wealth -- due primarily to its natural 
gas deposits -- makes it a potentially attractive market for 
U.S. businesses.  Obstacles include a restrictive visa 
regime, lack of rule of law, bureaucracy and corruption. 
Despite these obstacles, a range of U.S. companies in various 
sectors are successfully pursuing business in Turkmenistan. 
While the forms of engagement vary from direct investment to 
working through local distributors and European affiliates, 
they all share certain qualities and practices that are key 
to success for foreign businesses in Turkmenistan.  Quality 
products and services, cutting-edge technology, exceptional 
customer service, local investment and training and long-term 
perspective are among these traits.  Looking forward, both 
the U.S.-Turkmenistan Business Council and the U.S. 
Government's trade promotion entities could play significant 
roles in making U.S. business aware of the opportunities in 
the Turkmen market and facilitating interested companies' 
efforts to enter that market.  For those companies willing to 
make the necessary investment in time and resources, 
Turkmenistan could become a profitable market, as the 
experience of some U.S. companies already shows.  END SUMMARY. 
 
A MARKET WITH BOTH POTENTIAL AND OBSTACLES 
 
¶2.  (SBU) Turkmenistan is about the size of California and 
has an estimated population of only five million people. 
However, it also has access to great wealth as the world's 
fourth largest producer of natural gas.  Other key sectors 
include oil, refined oil products, and textiles.  Despite 
Turkmenistan's resource wealth, many potential investors and 
trade partners find the country's restrictive visa regime, 
taxation policy, lack of commercial arbitration mechanisms, 
and absence of an in-country foreign business council to be 
significant barriers to doing business.  Pervasive corruption 
and a glacially slow bureaucracy, based on a top-down, 
non-transparent decision-making structure, are also aspects 
of doing business in Turkmenistan that need to be taken into 
account in preparing a business strategy. 
 
U.S COMPANIES HAVE A TRACK RECORD OF SUCCESS 
 
¶3.  (SBU) U.S. companies approach the Turkmen market in 
various ways.  Several operate through regional or European 
subsidiaries.  Food and beverage manufacturers such as 
Coca-Cola Company and Mars/M&M operate through regional 
offices:  Coca-Cola through a Turkish affiliate and Mars/M&M 
through its offices located in Azerbaijan.  Pharmaceuticals 
manufacturer Eli Lilly and Company serves the Turkmen market 
out of its office in Almaty, Kazakhstan (Ref. A).  Heavy 
equipment manufacturer Caterpillar is represented by the 
local office of German firm Zeppelin, and farming equipment 
manufacturers John Deere and Case New Holland are represented 
by an Austrian distributor.  However, businesses such as 
aircraft manufacturer Boeing and oil field services companies 
such as Parker Drilling, Weatherford and Schlumberger have 
established direct relationships with the government and 
state-owned entities.  U.S. poultry is popular in 
Turkmenistan, and exporters such as Tyson Foods and Pilgrims 
Pride have direct relationships with Turkmenistan's Ministry 
of Trade and Foreign Economic Relations (Ref. B). 
 
SOME COMMON TRAITS OF U.S. BUSINESS SUCCESSES 
 
¶4.  (SBU) Despite the various challenges of the Turkmen 
market, some U.S. companies have found success in 
Turkmenistan.  While no one approach is applicable to all 
products and sectors, the winners share certain qualities and 
 
ASHGABAT 00000763  002 OF 004 
 
 
practices. 
 
-- QUALITY:  World-class name recognition for providing top 
quality products and services can go far to open doors for 
potential market entrants.  The Turkmen Government has shown 
that it is willing to pay top dollar to companies that can 
provide goods and services in its priority areas.  The 
companies mentioned above fall in this category.  Many of 
these companies formed relationships early in Turkmenistan's 
independence and built staying power over time. 
 
-- HIGH TECHNOLOGY:  Turkmen officials seek out high tech 
solutions to the country's problems, hoping to leapfrog from 
its Soviet legacy into the 21st century.  Wide-ranging areas 
such as education, healthcare, industrial production, a 
resort industry, and energy (including but not limited to the 
oil and gas sector) are government priorities for accelerated 
development.  The country is able to pay for practically any 
equipment or technology available and it has bought an 
impressive array of computers, printers, LED traffic lights, 
security cameras, communications and television equipment, 
upgrades to oil and gas equipment, forensic laboratory 
equipment, fingerprint programs, and security helicopters, to 
name a few. 
 
-- TRAINING:  The Turkmen Government wants to do business 
with companies that it perceives as long-term partners who 
will invest in the development of the country.  Turkmenistan 
requires that 70 percent of staff in local offices are 
Turkmen citizens and encourages foreign companies to train 
local staff.  This can mean providing training above and 
beyond what is usually given to a customer, beginning with 
short training programs in and around Turkmenistan and 
culminating in several long-term full scholarships for 
university students to study abroad. 
 
-- CUSTOMER SERVICE:  In many respects, Turkmenistan is a 
buyer's market, with European, Russian and Asian companies 
vying for a piece of the action.  Attentiveness to and 
providing customer service without delay can be critical, 
which may require establishing, at a minimum, an in-country 
representative office.  Although frustrating, waiting for 
hours to meet with a minister after the ministry urgently 
calls for the meeting is likewise part of the attentiveness 
that Turkmen officials expect.  Some companies deliver spare 
parts by chartered plane in order to minimize delay. 
 
-- FLEXIBLE BUSINESS TERMS:  Because of a bureaucratic 
decision-making process that is risk averse and hinges on 
getting a "green light" from the highest levels, decisions 
can take a long time.  As a result, companies can expect to 
wait significantly beyond what are considered "normal" 
deadlines in the West, resulting in juggling production 
deadlines, rescheduling orders from other companies, and 
last-minute requests for changes to product specifications. 
 
-- INVESTMENT IN LOCAL INFRASTRUCTURE:  When needed, U.S. 
companies and their affiliates have invested in local 
infrastructure to service their Turkmen customers.   Examples 
include oil and gas services and equipment providers and 
transportation logistics firms.  In the case of the official 
distributor of John Deere and Case New Holland equipment, it 
has developed a large infrastructure permanently located in 
Turkmenistan, consisting of over 200 people in country.  As 
such, the company's presence is both highly visible and 
readily available to its exclusive customer, the Ministry of 
Agriculture, at any time (Ref. C).  The Turkmen value easy 
access to vendor representatives, so having a local office 
gives a company a competitive edge. 
 
-- OFFER UNIQUE FINANCIAL AND LOGISTICAL ARRANGEMENTS:  While 
Turkish construction companies have been willing to break 
ground on projects before contracts have been signed (Ref. 
 
ASHGABAT 00000763  003 OF 004 
 
 
D), something U.S. firms, particularly public companies, 
would not be willing to do, one company has been willing to 
initiate an order's shipment before financing is secured. 
Upon cancellation of an order, the company also covers the 
cost of restocking product, worth 15 percent of the sale 
price.  In addition, this company ships parts to Turkmenistan 
via chartered plane, and allows customers to pay for parts 
and service in local or hard currency. 
 
-- CULTURAL KNOWLEDGE:  U.S. company representatives in 
charge of accounts in Turkmenistan are often foreign 
nationals with ties to the region.  The Turkmen have 
responded well to this approach because their engagement 
takes place within a shared business culture, with similar 
expectations and points of reference.  These executives also 
understand the importance of personal relationships in this 
business culture and the need for Turkmen to get to know 
those with whom they are dealing.  U.S. interlocutors might 
sense that initial meetings are unproductive because they 
almost never culminate in deliverables.  In fact, they serve 
the important purpose of laying the groundwork necessary for 
doing business. 
 
VISA REGIME MAKES INITIAL CONTACT DIFFICULT 
 
¶5.  (SBU) Some U.S. companies are exploring the Turkmen 
market.  Accounting firms, manufacturing companies and 
publishers have attended trade shows in Ashgabat to promote 
their companies and to research the local market.  Other 
companies rely on short "tourist" visits in order to engage 
in preliminary research.  Cold calling on government 
ministries can result in no response, but contact through a 
local partner or by participation in a trade show can open 
doors.  The government is approached by many foreign 
businesses, more than it can respond to, so having an 
approach that differentiates a company from the competition, 
combined with perseverance, is important to gain access. 
Turkmenistan's strict visa regime is a barrier that can 
potentially prevent a company from making introductory 
research and establishing contacts, another reason why many 
companies work with a partner who has experience in the 
Turkmen market. 
 
THE WAY FORWARD 
 
¶6.  (SBU) Turkmen Government officials at the highest levels 
have expressed a desire for more U.S. trade with and 
investment in Turkmenistan.  Foreign Minister Rashid Meredov 
recently emphasized Turkmenistan's need to increase its 
interaction with U.S. businesses, precipitated by President 
Berdimuhamedov's remarks that Turkmenistan needs closer 
relations with foreign business partners in all spheres. 
From rumors of the President's desire to see a McDonald's 
open in Ashgabat, to recent high-level meetings between 
Turkmen officials and U.S. business executives, the 
government has indicated that it wants a larger U.S. business 
presence. 
 
¶7.  (SBU) With its commercial potential in energy and other 
sectors, and given its unique environment, worldview, and 
expectations, an effective U.S. trade and investment 
promotion policy will leverage private sector interest and 
efforts with stepped-up USG resources.  In particular, the 
following measures: 
 
-- More resources to support commercial ties:  Increased 
Commercial Service engagement with Turkmenistan, either from 
Washington and/or regionally, through more visits, support 
for U.S. trade delegations and more trade promotion in the 
U.S. about opportunities in Turkmenistan. 
 
-- Increased local staffing:  Additional resources at Post 
would allow the hiring of a locally-engaged staff member who 
 
ASHGABAT 00000763  004 OF 004 
 
 
would concentrate on commercial affairs. 
 
-- Leveraging the U.S.-Turkmenistan Business Council (USTBC): 
 More prominent business promotion by the USTBC -- starting 
with a visit by its members to Turkmenistan -- could initiate 
a dialogue that could create a real agenda for improving the 
business environment.  Turkmen Government officials have 
called for the USTBC to step up its role.  Its members 
include many companies that already do business in 
Turkmenistan, providing a useful resource for companies 
looking for a way to enter the Turkmen market. 
 
¶8.  (SBU) Although Turkmenistan likely remains off the radar 
screen of most U.S. companies, Post has seen a steady and 
growing stream of companies expressing interest in the 
Turkmen market and seeking assistance and information about 
how to get started.  Unlike some countries where trade 
proposals need to be accompanied by a financing plan, 
Turkmenistan's resource wealth enables this relatively small 
market to seek out high quality, technologically advanced 
goods and services, and pay cash.  Still, while the country 
has opened up considerably in recent years and touts its 
desire to work with foreign partners, its legacy of isolation 
means that U.S. businesses need to be adaptive, creative and 
persistent when trying to tap into the Turkmen market.  For 
those companies willing to make the necessary investment in 
time and resources, Turkmenistan could become a profitable 
market, as the experience of some U.S. companies already 
shows. 
MILES