TURKMENISTAN: ENTREPRENEUR DOES NOT FORSEE A

C O N F I D E N T I A L SECTION 01 OF 02 ASHGABAT 001387 SIPDIS STATE FOR SCA/CEN, EEB E.O. 12958: DECL: 10/21/2018 TAGS: PREL ECON ETRD TX SUBJECT: TURKMENISTAN: ENTREPRENEUR DOES NOT FORSEE A THRIVING PRIVATE SECTOR Classified By: Charge d'Affaires a.i. Sylvia Reed Curran for reasons 1. 4 (B) and (D). ¶1. (C) SUMMARY: In a meeting with econoff, a local entrepreneur who currently represents various American firms explained how he got his start through purchasing used equipment in Dubai. He set up a Dubai company in order to get around Turkmenistan's restrictive laws and local banking problems. He appreciates working with U.S. companies, which willingly give distributorships to local companies, unlike European companies that typically work through distributors in Russia. This entrepreneur believes the Turkmen government will fully embrace the private sector only when the country runs out of hydrocarbon revenues. Concerned about protecting his business interests, he has no interest in drawing attention to himself by attending post's meetings for representatives of U.S. companies. Instead, he will keep his head down and continue making substantial profits. END SUMMARY. INTRODUCTION TO AGABIRLESHIK/MMI ¶2. (C) Since 1997, Murad Amansakhatov (please protect throughout) has distributed Kodak equipment and supplies, including developing chemicals and paper, and now owns several Kodak photo developing retail shops. Since 2001, his company has been a premier business partner of IBM in Turkmenistan. In addition, Amansakhatov represents American firms Pelco Security Systems and Freedom Steel, and through the Turkmen company Keris, works with Hewlett Packard. The local firm that Amansakhatov founded is called Agabirleshik. Amansakhatov created a company in Dubai -- MMI Business Services -- to get around restrictive Turkmen laws and banking problems. COMPANY HISTORY ¶3. (C) Amansakhatov explained at a meeting with econoff that he began his business by buying a used Kodak mini lab unit for developing photographs in Dubai in 1994, and today enthusiastically recalls how he made 100 percent profit charging the equivalent of $1 for each print -- up to 10,000 prints per day. He said this "was an excellent start to my (entrepreneur) business." In 2001, he met the owner of Ekturkmen, which was then IBM's local partner, and because of Amansakhatov's "strong financial position," they formed MMI and became IBM's premier business partner in Turkmenistan. OTHER ACTIVITIES INCLUDE GREY MARKET BUSINESSES ¶4. (C) After approaching Nokia several times for a distributorship -- and it did not come through -- Amansakhatov began importing Nokia handsets from Dubai and selling them in Turkmenistan, profitable because of the high prices in the Turkmen market. Amansakhatov previously imported computers and sold them through the Ministry of Trade and Foreign Economic Relations, but because the Ministry is no longer involved in technology, Amansakhatov sells hardware directly to customers, along with network services, servers, and service packages. CURRENT DEALS ¶5. (C) Amansakhatov has several current contracts with government entities: -- The Ashgabat police will purchase Pelco radar guns and Vocord radar gun systems software that will be used to record speeders at 33 locations around Ashgabat. -- The Central Bank and Dayhan Bank purchased enterprise resources project (ERP) software and an IBM hardware package. -- Balkan Province is using Freedom Steel to build a playground in Nebitdag. ASHGABAT 00001387 002 OF 002 OBSERVATIONS ON TURKMENISTAN'S PRIVATE SECTOR ¶6. (C) Amansakhatov observed that working with European companies is more difficult because they work through relationships with Russian distributors, while U.S. companies are willing to work directly with companies in Turkmenistan. This arrangement is significantly more convenient for Amansakhatov. Amansakhatov said that Turkmenistan is a risky market because government agencies -- and the people in them -- "change the rules all of the time." He also mentioned that it's difficult to conclude a contract because Turkmenistan's bureaucracy "places obstacles in the way of business." Amansakhatov thinks that doing business in Turkmenistan is more complicated than in Russia. Amansakhatov would not discuss anything else regarding the business environment inside the building, and outside said that the government does not support a private sector, adding that this will only change when Turkmenistan stops earning as much as it currently does from the sale of gas. The financial pressure that would come from the loss of this income would incite them to develop a private sector. ¶7. (C) COMMENT: Amansakhatov is an example of a born entrepreneur. As a product of the system, he also knows how to play the game. He is not flashy, and is not interested in attending post's events for representatives of U.S. companies and distributors of American products. His business's security is the priority, and therefore he will continue to keep his head down and continue making substantial profits. END COMMENT. CURRAN