TURKMENISTAN: U.S. ENTREPRENEUR'S CAR BUSINESS IN

C O N F I D E N T I A L SECTION 01 OF 02 ASHGABAT 000056

SIPDIS

STATE FOR SCA/CEN; EEB;
ENERGY FOR EKIMOFF/BURPOE/COHEN
COMMERCE FOR DSTARKS/EHOUSE

E.O. 12958: DECL: 01/14/2020
TAGS: ETRD ELTN ECON PGOV EINV BTIO TX
SUBJECT: TURKMENISTAN: U.S. ENTREPRENEUR'S CAR BUSINESS IN
ASHGABAT

Classified By: Charge Sylvia Reed Curran for reasons 1.4 (b) and (d).


1. (C) On January 13, econoff met with the owner of
International Automotive Resources to discuss his decision to
buy used cars in the United States. and ship them to
Ashgabat, while also setting up an automotive service center
in the capital. The owner, a U.S. citizen from Arizona,
purchased a garage and two offices in a run-down strip mall
near the Ashgabat airport. He is now busy remodeling the
buildings, giving them a more "Western" appearance.
According to the owner, the business is fairly simple;
potential Turkmen clients identify U.S.-made makes and models
and a figure they are willing to pay, while putting down a
cash deposit. He then has an associate in the U.S. buy the
requested vehicles at auction, often well below blue book
value. If no vehicle can be found, the deposit is returned
or applied to a different vehicle. The cars all have minor
defects that are repaired once they arrive in Turkmenistan.
He added that labor in Turkmenistan is very cheap, but most
mechanics are self-taught and often require a lot of
training. The owner expects his business to continue to
grow, and he has plans to open general repair garages and
offer auto diagnostics training to would-be mechanics, if he
can receive the proper authorization from the Turkmen
Ministry of Education.


2. (C) He explained that he was a licensed auto mechanic and
diagnostics technician in the U.S. He moved to St.
Petersburg, Russia about three years ago in order to import
and sell used cars from the U.S. to clients in St.
Petersburg. He noted that potential clients would approach
him with a U.S. made make and model, and he would buy those
makes and models on auction for far below the blue book
value. The cars would leave Miami or New York by ship to
Latvia, then continue to St. Petersburg by rail. All of the
cars had minimal damage that could be repaired at his small
service shop in Russia. While in Russia, he sold several
cars to a wealthy Turkmen client who suggested that shipping
U.S.-made cars to Turkmenistan would be profitable and would
have a lot less overhead than Russia. With his Turkmen
contact's help, he was able to obtain a tourist visa, a work
visa, and register his business with the Turkmen government
in a very short amount of time. Following his first trip to
Turkmenistan, he sold his business in St. Petersburg and
moved to Ashgabat.


3. (C) The owner of International Automotive Resources
explained that doing business in Turkmenistan was not that
difficult, but graft exists on many levels. He stressed that
he absolutely refuses to make under the table payments to
bureaucrats to obtain permits and government approval, adding
that his Turkmen office manager spends hours and sometimes
"days" in lines at customs and other government offices
meeting every legal requirement. He underscored that his
decision to be an honest business man in Turkmenistan has
brought him a lot of unexpected business. He recounted that
a Turkmen client recently ordered a car for a particular
price and paid the amount up front. When the car arrived in
Turkmenistan, it had additional damage incurred during
transportation to Turkmenistan. He contacted his Turkmen
client and immediately provided a refund for the additional
damages. The Turkmen contact was reportedly so impressed
that he told all of his friends to get their cars from the
"honest American."


4. (C) The owner added that Turkmen are very interested in
high-end cars from the U.S. including Buicks, GM models, and
U.S.-produced Toyotas. He noted that because of his
well-connected Turkmen contact, his shop recently ordered and
installed chrome accessories for President Berdimuhamedov's

ASHGABAT 00000056 002 OF 002


2007 and 2008 GM Yukon SUVs. The owner opined that since he
worked on the president's cars, business has also picked up,
noting the importance of staying on the good side of the
Turkmen President. He added that he ships cars from the U.S.
to Latvia and then on to Ashgabat by rail to the train
station in Gypchak, about 20 km from Ashgabat. He asserted
that this route is the most reliable and least expensive way
he has found to ship cars into the country. He added that
from start to finish, the process of getting a car from the
U.S. to Turkmenistan takes about 35 days.


5. (C) COMMENT: The experience of this U.S. entrepreneur is
rare and encouraging. Although, he has had assistance from a
seemingly well-connected Turkmen businessman, he attested
that he has been able to conduct legitimate business by
closely fulfilling every Turkmen legal requirement, even if
it takes longer than paying bribes to circumvent or speed up
the process. He stated that many of his associates in Russia
were shocked to learn of his plans to attempt business in
Turkmenistan, especially since he speaks no Turkmen and
little Russian. Nevertheless, he is confident that he made
the right business decision. In addition, this entrepreneur
intends to start training Turkmen mechanics on high-tech
automotive diagnostics equipment in order to help them
properly repair newer, non-Russian-made vehicles, something
that most Turkmen car owners would welcome. END COMMENT.
CURRAN