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Central Asia news

Turkmen economy is made open to foreigners

15.10.2007 11:58 msk

Nezavisimaya Gazeta

Business Turkmenistan

The decree "On foreign investments in Turkmenistan" President Gurbankuly Berdymuhammedov signed permits sale of real estate to foreigners. Berdymuhammedov intends to carry out monetary reforms as well.

The decree published on October 12 enables foreign investors to establish enterprises in Turkmenistan they will own completely or partially, buy real and movable estate including tenements, apartments, transportation, "and other objects permitted by the acting legislation". Before the decree, foreigners were permitted to invest in the Turkmen economy only in tandems with state businesses.

"The budget is short of money," Shohrat Kadyrov, an expert with the Norwegian Institute of Foreign Policy, assumed. "Ashkhabad is launching a new economic policy. It has to revive the national economy, but Saparmurat Niyazov left it no money to do it with." The Turkmenbashi's boasts of an impressive and steady economic growth notwithstanding, not a single new city was built in the republic and the rural population to city dwellers ratio never changed. Moreover, electricity generation went down from 14.5 billion kilowatt hour in the Soviet period to under 10 billion in the years of sovereignty. That is presumably why Berdymuhammedov wants assets sold.

Since Turkmenistan has always been open for Western investors, this proclaimed privatization will certainly interest Russia. Major Russian companies may find energy-production objects quite attractive. (The Mary Hydroelectric Power Plant, one that produces electricity for Ashkhabad and some for Afghanistan, is one of them.) LUKOIL in its turn is interested in Turkmen oil fields. It has already offered to buy the Turkmen-Malaysian Dragon Oil. The so called new travel zone Avaza is another attractive region containing sodium chloride, bromine, sulfate deposits.

Denomination of the manat (monetary unit) may continue the economic reforms that will remove both zeroes and the Turkmenbashi's portraits from banknotes in 2009. New manat designs (1, 5, 10, 20, 50, 100, and 500 manat banknotes) were recently shown to general public in Vatan news program. The 500 manat banknote is the only one to retain the portrait of President Niyazov.

"On the one hand, Berdymuhammedov is trying to improve his image and do away with the Turkmenbashi's legacy," Kadyrov said. "On the other hand, he knows that the economic reforms are a must to enable him to evaluate the national economy and do away with the double exchange rate. As things stand, it is 5,000 manats to a dollar by the official exchange rate and 23,500 manats to a dollar in the black market..."

Eager as they may be to enhance economic partnership with foreign countries, the authorities of Turkmenistan may find the proclaimed transition to market relations quite difficult. Analysts warn that all-permeating corruption may and probably will turn out to be a factor encumbering the process. WB survey of state management quality published in July 27 placed Turkmenistan among the least-rated countries.

Victoria Panfilova, Nezavisimaya Gazeta, October 15, 2007, p. 6, © Translated by Ferghana.Ru