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