TURKMENISTAN: RESIDENTS AND ENTREPRENEURS IN MARY

C O N F I D E N T I A L SECTION 01 OF 02 ASHGABAT 000254 SIPDIS STATE FOR SCA/CEN, EEB E.O. 12958: DECL: 02/24/2019 TAGS: ECON EAGR EAID BTIO SOCI TX SUBJECT: TURKMENISTAN: RESIDENTS AND ENTREPRENEURS IN MARY FRUSTRATED WITH BUREAUCRACY REF: A. ASHGABAT 110 ¶B. 08 ASHGABAT 1492 Classified By: Charge Richard Miles, reasons 1.4 (B) and (D). ¶1. (C) SUMMARY: Food processors from around Mary province told Economic Officer that they need capital to increase their manufacturing capacities. Accepting Turkmen Government equipment would force them to hand over all food production to the Government, thus severely reducing their profits. They are frustrated with the amount of time required to process permit, patent, and license applications. Residents of a communal farm are also frustrated with the local government, which promised them infrastructure upgrades that have so far gone undelivered. USAID implementer, Counterpart International, has proven to be a helpful partner, and for this reason the village elder of the farm asked for U.S. Government support to build a kindergarten and school because, as he said, "I don,t want to wait for them (local government) anymore." State ministries and agencies see private businesses as competition to their own business interests and income. This mindset must be turned around if private industry is to grow in Turkmenistan to any real degree. END SUMMARY. ENTREPRENEURS SAY THAT THEY NEED CAPITAL ¶2. (C) A group of 12 entrepreneurs from Mary province, most of them food processors, said in a meeting that took place at the American Corner in Mary city on February 12 that their largest concern is the lack of capital available to purchase equipment that would allow them to expand their businesses. One person even said, &We can do everything else -- but we need capital for equipment.8 Acknowledging that equipment was available from the Government, they pointed out that the Government expects private food processors who receive equipment from Government sources to deliver all food production to the Government for sale at official outlets. (NOTE: As previous interlocutors have regularly mentioned, such policies result in a significant reduction in entrepreneurs, profits. END NOTE.) The entrepreneurs noted that past microfinancing pilot projects were very helpful in this regard. The entrepreneurs also objected to what they characterized as excessive bureaucracy involved in applying for licenses, registration, patents, and other documents needed to open a private company. ¶3. (C) The group was adamant in its frustration over the waste of time and potential, and several of the entrepreneurs asked for Post,s assistance in remedying this situation through official contacts. They also asked for training programs in navigating the bureaucracy and small business development in Mary province, noting donors tend to offer training only in Ashgabat. In addition, they said that the Union of Entrepreneurs and Industrialists should open regional offices. (COMMENT: This comment confirms that Union chairman Aleksandr Dadayev is respected, liked, and seen as capable of bringing entrepreneurship to Turkmenistan. (Ref A) END COMMENT.) A private tour guide and travel agent said that she has been working on getting the State Tourism and Sports Committee to allow private citizens to operate bed and breakfast guest houses in the provinces for three years, to no avail. She saw this as a job-creating endeavor that would also involve producing and selling handicrafts, a skill that many Turkmen living in the countryside already possess. Such activities would generate much needed income for people who are otherwise unable to find gainful employment. (NOTE: This guide said that local private hotel Yrzgal is allowed to register foreigners but others are not (Ref B) because the owner of Yrzgal is rich and has connections. END NOTE.) COMMUNAL FARM GIVES UP ON LOCAL GOVERNMENT, OFFERS OWN MUNICIPAL SERVICES ¶4. (C) In a community center opened with financial ASHGABAT 00000254 002 OF 002 assistance from USAID implementer Counterpart International, five residents of the Goekche communal farm located in Archalik village in Wekilbazar district -- just outside of Mary city -- expressed their gratitude for a USAID-supplied electrical transformer that provided electricity to the village, after waiting 11 years for the local Turkmen Government to supply one. They also said that the lack of support from the city of Mary and the head government official in their district led the residents to arrange for road construction and gas and electricity connections on their own. But this infrastructure is no longer sufficient to provide for the needs of the growing number of inhabitants, which has reached 23,416. The village elder said that he met with the lead official of Wekilbazar district three times, and who finally promised to supply five cement electric poles to the village. However, the district didn,t have vehicles that can deliver such heavy poles, and the village had to call upon USAID implementer Counterpart International for delivery assistance. The residents also said that the roads are in terrible condition and that the Government does not penalize residents whose construction projects encroach on the roads, making them narrower than when originally constructed. ¶5. (C) The village elder said that the local head government official promised to build a school for the village in 2010, but the elder doubted this promise would come true since promised plastic water pipes have not appeared. He asked for U.S. Government support to build a kindergarten and school in the village, as well as to renovate the community center, so that children would not have to travel to the city for their education. He also said that he wanted to strengthen Archalik,s capabilities so that it could take care of its own municipal services, such as sanitation, and that the inhabitants were willing to pay for infrastructure such as drinking water pipes. They requested that the district pay for construction of main roads, but they were willing to pay for side roads. Later in the day, the director of USAID project grantee Khemayat, Kurbandurdy Bugrayev, said that these communal farmers feel that their district is at the bottom of the province,s list of priorities. ¶6. (C) COMMENT: USAID project grantee head Bugrayev mentioned after the meeting with the entrepreneurs that ministries see private businesses as competition to their own businesses and income. This mindset must be turned around if private industry is to grow in Turkmenistan to any real degree. Based on the farmers' comments, the improvement of rural infrastructure remains low on the list of Government priorities, presenting a striking contrast with the investments made in Ashgabat and certain high profile projects. END COMMENT. MILES