Identifier
Created
Classification
Origin
09ASHGABAT64
2009-01-15 12:32:00
CONFIDENTIAL
Embassy Ashgabat
Cable title:  

FOREIGN BUSINESSMAN DISCUSSES HOW TO DO BUSINESS

Tags:  ECON PINR SOCI TX 
pdf how-to read a cable
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FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 2129
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUCNCIS/CIS COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHAK/AMEMBASSY ANKARA 4680
RUEHBJ/AMEMBASSY BEIJING 2481
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RUEHIT/AMCONSUL ISTANBUL 2928
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RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RUEKJCS/JOINT STAFF WASHDC
RUEKJCS/SECDEF WASHINGTON DC
RUEHVEN/USMISSION USOSCE 3220
C O N F I D E N T I A L ASHGABAT 000064 

SIPDIS

STATE FOR SCA/CEN, EEB

E.O. 12958: DECL: 01/13/2019
TAGS: ECON PINR SOCI TX
SUBJECT: FOREIGN BUSINESSMAN DISCUSSES HOW TO DO BUSINESS
IN TURKMENISTAN

Classified By: Charge Richard Miles, reasons 1.4 (B) and (D).

C O N F I D E N T I A L ASHGABAT 000064

SIPDIS

STATE FOR SCA/CEN, EEB

E.O. 12958: DECL: 01/13/2019
TAGS: ECON PINR SOCI TX
SUBJECT: FOREIGN BUSINESSMAN DISCUSSES HOW TO DO BUSINESS
IN TURKMENISTAN

Classified By: Charge Richard Miles, reasons 1.4 (B) and (D).


1. (C) Indian businessman, George Jacob, (strictly protect
throughout) told econoff at a meeting on January 8 that
success in business in Turkmenistan depends on three things:
building good relationships, having contacts with the right
people, and understanding the system. Jacob became an
entrepreneur in Turkmenistan after living and working in the
country as a consultant for five years. Jacob began working
in Ashgabat in 1996 for U.K. consulting firm IPM on road,
water supply and sanitation, information technology, and --
in coordination with auditor of Turkmenistan's petrochemicals
reserves Gaffney Cline on oil and gas -- projects. In 2001
Jacob started his own company and began to distribute
Japanese and Korean electronics such as Samsung, Panasonic,
Hitachi, and JVC in Turkmenistan. Now, he has two showrooms
in Ashgabat, a resale center in Dashoguz, and various service
centers -- as well as an office in Tashkent and buyers
working for him all over Central Asia and the Caucasus region.

BUSINESS ENVIRONMENT REQUIRES REGISTRATION IN A LOCAL'S NAME


2. (C) However, because of Turkmenistan's barriers to
business -- especially foreign businesses -- Jacob's
showrooms are registered in a local's name. He said that
this arrangement means these showrooms could be seized at any
time. Jacob said that, while locals licensed as
entrepreneurs or Individual Sole Traders (or as a group of
"Several Sole Traders" who operate as a sort of guild-like
organization) are charged less import duty and value added
tax than limited liability companies or public limited
companies -- this privilege is not extended to foreign
entrepreneurs. Jacob also said that entrepreneurs "have more
freedom," noting that entrepreneurs are not required to keep
cash in a bank. (NOTE: This is absolutely an important
privilege because taking money out of one's personal or
business bank account is not easy or automatic. Generally
one must prove through invoices or other means why one needs
to take a certain amount of money out of an account.
Therefore, according to Neil McKain of the European Bank for
Reconstruction and Development, some businesses keep dead
people on the payroll in order to have access to cash. END
NOTE.) Jacob now employs over 100 people -- including U.S.
program alumni -- and has expanded into billboard advertising
and trade show stands. He visits about once a month and
calls from his home base in Dubai once a week to keep in
touch with his team.

PRESIDENT'S ASSISTANTS EXPECT GIFTS (GREASE PALMS TO GREASE
THE SKIDS)


3. (C) Jacob did not admit to having given "gifts" to
officials, but said that he had heard from business
associates that the President's assistants expect gifts such
as clothing, watches, and shoes -- and only the best brands.
He had also heard an unsubstantiated rumor that
Berdimuhamedov's shirt buttons are custom-made with monograms
of "GB."


4. (C) COMMENT: Jacob indicated the great sensitivitiy
involved with discussing aome aspects of doing business in
Turkmenistan. The business barriers he describes -- in
particular, the corruption -- could make it difficult for
U.S. companies to enter this market. END COMMENT.
MILES