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Country Commercial Guides for FY 2000: TurkmenistanReport prepared by U.S. Embassy Ashgabat, Released July 1999 Note* |
CHAPTER IV: MARKETING U.S. PRODUCTS AND SERVICES
Doing business in Turkmenistan requires patience, persistence and personal contacts with officials at a high level in the Government. The GOTX wishes to encourage foreign investment and business, but the current legal and regulatory regimes do not conform to international business standards. The commercial code is not yet adopted; most local officials are unfamiliar with western business practices and internationally accepted norms; and business is often a matter of personal influence and politics.
Many marketing methods employed in the West do not work well here. Successful companies in Turkmenistan have established personal contact with GOTX officials either through representative offices or repeated visits. Smaller or lesser-known companies must establish their bona fides before being accepted. Large-scale contracts are signed at the presidential level and often require the travel to Ashgabat of the company's president or CEO to close the deal. Follow-up visits are also critical. Communication through fax and telephone are helpful but are no substitute for personal contact. There are locally-based distributors representing U.S. companies, but most are foreign companies themselves (usually Turkish) that have established offices in Ashgabat since Turkmenistan's independence. A list of potential distributors is available from the Commercial Section at the Embassy. Turkmenistan is not familiar with the concept of franchising, therefore, it is not yet practiced here. Almost all companies investing in Turkmenistan form joint ventures. Since there is limited privatization, joint ventures generally include government partners. There is no standard form for a joint venture agreement (except in the oil and gas sector); each agreement is negotiated individually, approved by the Cabinet of Ministers, and finalized by presidential decree.
Distribution and Sales Channels
Turkmenistan inherited a Soviet-style distribution system with a centralized distribution network, state orders, and state controlled prices. Gradually, the GOTX has liberalized prices for consumer goods, poor quality locally produced flour is sold at fixed, rationed, subsidized prices through state stores. In August 1994, the State Commodity and Raw Materials Exchange (SCRME) was established to regulate foreign and domestic trading and partially insulate the internal market from foreign competition during the country's gradual transition to a free market.
For this purpose, the presidential decree establishing the SCRME required that foreign trade transactions made on the basis of clearing agreements, trade credits, barter contracts, joint venture capital import/export, charitable activity, and other transactions be reviewed and registered by the SCRME. The process of registration takes, on average, one week, although in some cases the period is longer. After the approval of a contract, a fee for contract registration of 0.2% of the value of import or export transaction must be paid by both the seller and the buyer (50% of the sum goes to the general government budget and 50% stays at the SCRME). The following are exempt from payments of contract registration fees:
- enterprises and organizations importing grain, children's food, food products to be sold at regulated state prices, and medical equipment and medicine; and - goods imported on the basis of contracts funded by the state budget.
Barter contracts require the approval of the Cabinet of Ministers. According to Article 47 of the Law on Hydrocarbon Resources, all materials and equipment used in petroleum operations are exempt from registration with the SCRME and exempt from customs duties.
Registration of trade contracts is not automatic. If the SCRME finds that the articles of a contract are contradictory, or documentation is not complete, or prices set up in the contract can negatively affect a consumer market, then the contract will not be registered. Prices stated in the contract are subject to scrutiny by the SCRME and are compared with world market prices. If a contract requires an advance payment by a Turkmen partner, then the SCRME will require a guarantee issued by a solid foreign bank. Otherwise, registration of the contract can be rejected.
Besides registering contracts, the SCRME conducts auctions and trade transactions for both consumer goods and raw materials. The SCRME also has the authority to auction securities although a true securities market does not yet exist in Turkmenistan.
The SCRME itself does not function as a trader or an intermediary at auctions. It plays no role in the distribution of consumer goods that are produced locally for domestic consumption. These goods are distributed through a state wholesale network or direct transactions.
The Trade and Foreign Economic Relations Ministry determines and the SCRME announces restrictions on export from Turkmenistan. Usually, restrictions apply to goods that are in short supply in Turkmenistan. Turkmen Customs maintains a list of goods that cannot be imported into Turkmenistan, including handmade wool rugs of the Koshma type, yurtas, handmade carpets, and astrakhan wool.
Information on Typical Product Pricing Structures
The Turkmen market is small, and economic and natural factors affect the pricing of goods. First, transportation costs can double, even triple the price of goods imported. Also, the small population size (5.0 million people, according to Government statistics) and limited income (the average salary in the state sector is $16 to $40 per month) also limits marketing possibilities. Finally, excise taxes levied on some imported products and goods and a value added tax of 20% affect prices. Due to an average monthly inflation rate of 3% and a fluctuating black market foreign exchange rate (in July 1999 it ranged between 13,000 manats to 16,000 manats per U.S. dollar), prices are steadily rising.
Use of Agents and Distributors, Finding a Partner
A U.S. firm looking for a local partner will encounter three options:
Turkmen state enterprises;
small Turkmen private firms, largely involved in trading, and Turkish firms that have established trade, construction, and production businesses in Turkmenistan. So far, Turkish firms have been instrumental in promoting American and European companies' businesses in the Turkmen market, distributing goods and services, providing construction services for trade contracts involving turn-key sale of equipment, running representative offices, and other forms of business activities.
In addition, Iranian, Japanese and some European distributors have established wholesale and retail enterprises in Turkmenistan (especially in Ashgabat), introducing to the local market a wider range of goods not previously available to consumers. However, given the limited number of these distributors, prices are relatively high. Very few U.S. consumer goods are currently available on the local market, and many that do appear are trans-shipped from Dubai.
The low buying power of the population and the import substitution policy in agriculture pursued by the government serve to limit the number of foreign distributors in Turkmenistan. To promote U.S. exports to Turkmenistan, U.S. companies should be prepared to take a "hands on" approach to locating potential distributors and training them in effective sales techniques.
The Commercial Section of the U.S. Embassy in Ashgabat provides a number of useful programs to help develop contacts. They include: - Gold Key Service, which arranges meetings for a U.S. company representative's visit to Turkmenistan; - BISNIS "Search for Partners" which provides contact information on Turkmen companies looking for a U.S. partner; and - BISNIS "Trade Opportunities", which helps establish contacts with Turkmen companies seeking to buy U.S. products.
In all transactions, U.S. companies must carefully investigate potential local partners and exercise due diligence when doing business with local firms.
Franchising So far, no franchises have been sold in Turkmenistan. However, since many Turkmen small- and medium-size enterprises do not have sufficient capital to establish solid businesses, the franchising concept in such areas as fast food, dry cleaning/laundry services, and hotels and motels might become accepted.
Direct Marketing
There are very few foreign companies that practice direct marketing in Turkmenistan. Though it is a consumer-tailored approach to market, door-to-door, mailing, and other techniques of direct marketing have not become a popular practice among the population. One reason is extremely low purchasing power of consumers. Inadditiopn, direct marketing is not part of the local tradition.
Joint Ventures and Licensing
The GOTX encourages the formation of joint ventures with Turkmen state and private companies when a long-term foreign investment project or commercial transaction is negotiated. There have been about 278 joint ventures registered in Turkmenistan, most of which (more than 170) are located in Ashgabat. Usually, joint ventures are organized into a limited liability partnership, complete or mixed company, or joint stock company.
There are licensing requirements for a number of activities in Turkmenistan:
- oil and gas exploration and production are licensed by the Competent Body on Hydrocarbon Resources Development;
- gambling, slot machines, and tourist businesses are licensed by the State Tourist Corporation, "Turkmensiyakhat"
- tourism services are licensed by Turkmensiyakhat;
- culture and art businesses are licensed by the Ministry of Culture;
- cinema and video-cassette distribution is licensed by the State Movie and Video Company;
- publishing and sales of publishing products are licensed by the State Company "Metbugat" with Cabinet of Ministers and the Interior Ministry approval;
- wholesale and retail trade is licensed by the Ministry of Trade and Foreign Economic Relations;
- production and processing of meat and dairy products, animal fat and butter, beer and beverages and confectionery products are licensed by the State Association of Food Production;
- seed production is licensed by the Ministry of Agriculture;
- sheep, goat, camel wool, astrakhan wool and leather production and processing are licensed by the State Turkmenmallary Association of Cattlebreeding Joint Stock Partnerships;
- sale of medical and pharmaceutical products and services is licensed by the Ministry of Health Care and Medical Industry;
- fish farming is licensed by the Administration of Fish Preservation of the State Fish Committee;
- importation of alcohol is licensed by the Ministry of Trade and Foreign Economic Relations;
- banking activity is licensed by the Central Bank of Turkmenistan; - legal advising activity is licensed by the Ministry of Justice;
- insurance, reinsurance, broker activity, and operations with bonds are licensed by the Ministry of Economics and Finance;
- educational activities are licensed by the Ministry of Education;
- cargo and passenger transportation services are licensed by the Ministry of Transport;
- auditing activities are licensed by the Ministry of Economics and Finance;
- sea transportation services for cargo and passenger deliveries at the Caspian sea are licensed by the State Sea Steamship company.
Licensing requirements vary from one sector to another. However, there are a number of common documents must be submitted: foundation documents, certificate of registration, standard application, and license fee. Additional documents are required to demonstrate that the applicant has appropriate qualification to perform the proposed activity. The time to obtain a license should not exceed 30 days, according to decrees.
The term of the license is usually three years. Most licenses may be obtained from either central or regional authorities. For certain licenses, a permit from the Sanitary and Epidemiological Inspectorate, Fire Inspectorate, and/or State Standard Inspectorate is required. Foreign investors are required to submit the same documents as domestic investors in order to obtain licenses.
Selling Factors and Techniques
The Turkmen population has some national peculiarities related to food products, women's dresses, home appliances, and other factors related to climatic conditions and cultural traditions. For instance, preserved or semi-ready food products are not very popular in Turkmenistan because the majority of the population have small farms and produce fresh natural products. Second-hand clothing is also not popular and will have a long shelf life in Turkmenistan.
Quality products do matter in Turkmenistan but most consumers cannot afford to pay high prices. There is significant competition to U.S. goods from Turkish and European products that enjoy a geographic advantage.
Steps to Establishing an Office
A new amendment to the Law concerning Profit Tax outlines the definition of a representative office of a foreign company doing business in Turkmenistan whose activities will be subject to profit tax payment. The definition of a representative office includes "
(1) a branch office, department, administrative office, bureau, agency, factory, production shop;
(2) mines, oil and gas wells and/or other stationary and movable facilities used for natural resource development and extraction; and
(3) a construction site, or mounting and assembling shop that operates for more than six months."
The amendment states that the following activities of foreign companies in Turkmenistan will not be considered "a representative office subject to profit tax payment" including:
(1) demonstration and storage of goods belonging to a foreign company;
(2) storage of goods and items that belong to a foreign entity with the purpose of goods processing by another entity for their further exporting them from Turkmenistan;
(3) purchase of goods and products; and
(4) collection of information for a foreign entity and other kinds of assistance necessary for signing a contract.
To open a representative office in Ashgabat, a foreign company should first obtain registration from the State Agency for Foreign Investment.
A foreign company opening a representative office must register with the Registration Department of the State Agency for Foreign Investment (SAFI). The following documents are required for registration of a foreign company representative office:
1. An application with the description of the goal of the company's activity in Turkmenistan, background information about the firm, and a short survey of its latest activity. 2. Written confirmation about the availability of a legal address (lease or other document). 3. Statement about the representative office approved by a company's CEO (2 copies in Russian and Turkmen languages). 4. Power of attorney. 5. Background information about the head of the representative office in Turkmenistan with a photograph (3x4 size). 6. A copy of the charter of the foreign firm, certified by a consulate of Turkmenistan abroad or the Foreign Ministry of Turkmenistan. 7. Official registration document of the foreign investor from the investor's residence (an original). This document must be notarized. 8. A document from a bank in the country where the foreign investor resides (an original) giving the financial status of the foreign investor.
All documents must be originals that are stamped and sealed, translated into Russian and Turkmen, and submitted in the language of the country where the foreign investor resides. (No faxes are accepted .) Copies of translations must be certified by the agency that makes the translation. When submitting the documents to the Registration Department, copies of all the documents must be certified. The foreign investor pays $3,000 for registration of its representative office in Turkmenistan.
All the above mentioned documents are required for registration of a foreign company branch office with the Registration Department. The only exception is submission of a business plan for enterprises involved in production, processing and/or construction activities.
For more information, contact:
Registration Department State Agency for Foreign Investment 53 Azadi Street, Ashgabat, Turkmenistan 744000 Tel:(993)(12) 39-62-07, Fax:(993)(12) 35-04-11,12
Foreign investors interested in investing in Turkmenistan by establishing a joint venture (which to this point is the method used by most foreign companies), must also register their particular investment projects with SAFI. To evaluate a foreign investment project, SAFI requires the following information:
- General information about the project; - A marketing analysis; - Raw materials supply analysis; - Location of the facility and the environmental effect; - Technology to be used; - Management plan; - Labor resources to be used; - Project implementation schedule; and - Financial analysis and investment appraisal.
For more information, contact:
Investment Project Appraisal and Registration Department State Agency for Foreign Investment 53, Azadi Street, Ashgabat, Turkmenistan 744000 Tel/Fax:(993)(12) 35-04-12, 35-02-31, 35-04-15 To register a joint venture, a foreign company must provide the following documents:
1. An application with the description of the goal of the company's activity in Turkmenistan, background information about the firm and a short survey of its latest activity.
2. Written confirmation about the availability of a legal address (lease or other document).
3. A charter of the newly created enterprise approved by the Board of Directors (two copies in Russian and Turkmen).
4. Two copies of an establishment agreement approved by protocol of the Board of Directors.
5. Business plan approved by the Board of Directors for those enterprises that will be involved in production, processing and/or construction activities.
6. Power of attorney.
7. Short background information about the head of the enterprise (two photographs must be attached).
8. A copy of the charter of the foreign firm notarized by a consulate of Turkmenistan abroad or the Ministry of Foreign Affairs of Turkmenistan.
9. Official registration document of the foreign investor from the investor's residence (an original). This document must be notarized by a consulate of Turkmenistan abroad or the Ministry of Foreign Affairs of Turkmenistan.
10. Original banking documents certifying the solvency of the firm.
All the documents are submitted in the language of the country of the foreign investor's residence. They must be originals, stamped and sealed (no faxes are accepted), translated into Turkmen and Russian and certified by an agency that is recognized as producing accurate translations (for example, the Turkmenistan Chamber of Commerce). The charge is usually $5 per page to translate and certify the translation is accurate.
SAFI charges registration fees that vary depending on the type of activity. A company that produces raw materials, consumer goods, equipment and so on must pay $2,000. A company that is not engaged in production but in services and other activities must pay $3,000. To extend the term of registration, the fee is $1,500 (the original registration is valid for two years and then must be renewed).
SAFI may reject a company's registration on the grounds of non-feasibility of the investment project to be implemented in Turkmenistan.
A company may rent space in:
- business centers or hotels, or
- a building that belongs to a ministry, state organization or state/private enterprise.
Current rules prohibit renting space in private apartments, state-owned apartments and houses, and unfinished construction sites.
After a company has chosen office space, it must submit an application to the local Khakimlik (mayor's office) for approval for the legal address of the representative office. The application must be accompanied by the following documents:
- short description of the company's activity and the goals for opening a representative office in Turkmenistan;
- a lease (rental lease or letter of guarantee);
- proof of power of attorney for the head of the representative office; and
- short background information about the head of the office (a photograph must be attached).
A fee for registration is charged by the Khakimlik. For more information on opening presence in Ashgabat, contact:
Department of Foreign Economic Relations
Khakimlik of Ashgabat
22 Neutral Turkmenistan Street
Ashgabat, Turkmenistan 744000
Tel:(993)(12) 39-04-24, Fax:(993)(12) 35-67-00Foreign entities that have registered their representative offices in Ashgabat and do business in Turkmenistan must quarterly transfer 0.5% of their balance profit into the State Fund for development of the city of Ashgabat.
Advertising and Trade Promotion
Commercial advertising in Turkmenistan is controlled by the Government. Mass media offers very few options for advertising: two or three newspapers and TV and radio broadcasting. The mayors (khakims) of the cities and towns issue permission for billboards, neon signs and other outdoor advertisements. A new law concerning health protection is currently being developed by the Ministry of Healthcare and Medical Industry.
One of the articles of this law will address the issues regarding the banning use of alcohol and tobacco advertisements. The draft law will be submitted to the Turkmen Parliament later this year for approval. However, local authorities are restricting the placement of alcohol and tobacco advertisements outdoors in response to growing public opinion against advertising these products. Bars and casinos are also not allowed to advertise. Foreign firms do not need permission from the Government to advertise except for companies involved in educational or medical activities; they require permission from the Ministry of Education or the Ministry of Healthcare and Medical Industry.
Radio and Television Advertising. The National Television and Radio Company (NTRC) provides advertising services for both resident and non-resident companies doing business in Turkmenistan and accepts completed commercials as well as offering its own production facilities. There are two Turkmen channels, TMT and TMT-1, and one Russian channel, ORT, where commercials are placed.
The NTRC charges foreign companies airing TV commercials on TMT and TMT-1 channels 1,350,000 manat per minute. The price includes a 20% value added tax and a 5% advertisement tax (the overall tax is 25%). To air commercials on the ORT channel, NTRC charges foreign companies 1,480,000 manat per minute including a 25% tax. All charges are made only in the national currency. Discounts are provided depending on a length of a commercial. (The July 1999 official foreign exchange rate is 5,200 manat per one U.S. dollar.)
The charge for making TV commercials by the NTRC varies depending on the complexity of the production process and is different for resident and non-resident foreign companies. The prices may also be negotiated and discounts are provided.
The charge for airing radio advertisements is 260,000 manat per minute for foreign companies. A 25% tax is included in the price. Producing a radio advertisement it costs 4,000 manat per word plus a 25% tax for foreign companies.
Advertisements can be placed from 9 a.m. till 6 p.m. (with a lunch break from 1 p.m. till 2 p.m.) Monday through Friday. To place an advertisement, contact:
TMT Reklama Enterprise
3 Molla Nepes Street
Ashgabat, Turkmenistan 744000
Tel: (993)(12) 35-15-15 or 39-46-94, or 39-86-62
Tel/Fax: (993)(12) 39-47-22` Print Advertising. The two newspapers with the highest circulation in the country are "Neutral Turkmenistan" in Russian and "Turkmenistan" in Turkmen. Each distributes around 40,000 copies a day. The advertising office "Turkmenpressservice" places advertisements in both newspapers. The newspapers sell advertising space payable in manat
. U.S. companies resident in Turkmenistan may place advertisements in these newspapers at the following prices: 2,500,000 manat including 20% value added tax for one-half of a page, 1,300,000 manat for one-fourth of a page, 700,000 manat for one-eighth of a page, and 400,000 manat for one-sixteenth of a page.Advertisements can be placed during working hours from 10 a.m. till 5 p.m., Monday through Friday, and on Saturday from 11 a.m. till 2 p.m. To place an advertisement, contact:
Mr. Konstantin Zavistovski, Advertisement Manager (speaks Russian) Turkmenpressservice Office
2nd Floor, Room 234
20 Atabayev Street
Ashgabat, Turkmenistan 744000
Tel/Fax: (993)(12) 35-40-10
Tel: (993)(12) 46-84-55The Akasya Ltd. firm, a private company, also provides a range of advertising services in Turkmenistan. It publishes ads in its own "Biznes Reklama" newspaper in the Turkmen language, arranges TV advertising and produces billboards. The firm may be contacted at the following address:
Mr. Warol Bekdash, Director (speaks Turkish and English)
Akasya Ltd.
54-A Makhtumkuli Street
Ashgabat, Turkmenistan 744000
Tel/Fax:(993)(12)47-18-64The Vestnik advertising newspaper offers advertising services in Turkmen and Russian languages at 1,800 - 2,400 manat per square centimeter plus a 25% tax and can be reached at:
Mrs. Regana Balaban, Chief Editor
Vestnik Newspaper
First Floor, Room 39
20 Atabaev Street
Ashgabat, Turkmenistan 744000
Tel/Fax: 46-84-70, 46-84-43Pricing Products
Since 1991, the GOTX has been in the process of liberalizing prices for food products and services. Prices for almost all food products have been freed with the exception of flour available at subsidized prices and sold only to low-income families, families with children under sixteen, students and pensioners. Locally produced coarse-ground salt is available for free.
The GOTX continues to subsidize prices for utility services provided to the Turkmen population including gas, electricity, heating and water. Prices for the utility services provided to commercial entities are higher than for the population. Public transportation and telecommunications services are also heavily subsidized. To provide access to certain products and services by Turkmen citizens and entities and to protect them from foreign competition, the GOTX has been maintaining dual prices for these products and services reflecting a difference in prices set up for local residents and foreigners. Such products and services include air, rail, and inter-city bus transportation, telecommunications, admission fees to museums and exhibitions, gasoline station services, and building materials and fertilizers produced locally. Foreigners are charged in dollars while local residents pay state-subsidized prices.
Prices for goods sold by state enterprises are initially set by sectoral ministries and later approved by the SCRME through contract registration. About 80% of production in Turkmenistan comes from state enterprises.
According to the Law of Turkmenistan on Enterprises, an enterprise shall sell its products, services and production wastes at prices established independently or on a contract basis, or, if stipulated by Turkmen legislation, in accordance with state prices. State regulation of prices is permitted for those products and services that dominate the market. The list of such products and services is determined by the Government. At the same time, the Law of Turkmenistan concerning investment activities sets forth principles of pricing. It provides that the value of products and/or services produced during investment activity is defined on the basis of contract prices and/or prices negotiated through trade and/or auctions. The value of construction services that are financed by the Turkmenistan's state budget is defined on the basis of estimated and indexation.
Sales Service and Customer Support
Upon independence after the breakup of the a former Soviet Union, Turkmenistan inherited a system of very poor sales services provided along with poor quality goods and products at relatively low prices. The first foreign trading companies that entered the Turkmen market in 1991 were pioneers who introduced the practice of competing via quality sales services and prices. Foreign trading companies, primarily Turkish, have been teaching local labor the ways of western standard sales services.
There are no widespread customer support practices used in Turkmenistan. Foreign trading companies and their local distributors provide such customer support services as one-year product guarantees, goods deliveries, and custom-tailored orders for goods and services. Selling to the Government
Turkmenistan's economy remains largely government owned and controlled. In some sectors, such as oil and gas, electrical energy, and telecommunications, the Government plans to play a controlling role for the foreseeable future. As the privatization process advances, private companies will make up more of the market, but in the short term, most procurement will be done by the GOTX.
So far, most U.S. business activity in Turkmenistan has centered on development of the energy sector and on the sale of U.S. goods to the Government. According to the State Institute of Statistics and Forecasting, in 1998, the export of Turkmen goods to the U.S. was valued at USD 873,600 and the import of U.S. goods into Turkmenistan at USD 73 million. The U.S. exports such goods as food, agricultural equipment, iron products, vehicles, electronic equipment and spare parts, aircraft, helicopters and spare parts, medicine and medical equipment, chemical products, building materials, furniture and other goods to Turkmenistan. So far, direct U.S. investment in the country has been limited. However, it is expected that U.S investment in the oil and gas sector will increase in the near future.
In April 1996, the State Agency for Foreign Investment (SAFI) was established to perform multiple functions related to foreign investment projects as well as large trade credit transactions. SAFI determines the priority given to projects involving foreign traders and investors, evaluates business proposals, reports to the President about the basic aspects of projects under consideration to obtain his approval, arranges international tenders, registers foreign traders and investors, and monitors the implementation of projects. In addition, four State Funds for Development (petroleum and mineral resources; agriculture; transportation and telecommunications; health care and medical industry; and education) have been created to allocate foreign exchange earned by these industries to priority investment projects. To ensure sufficient funding for a particular investment project, SAFI and the Funds cooperate in regulating financial commitments made by Turkmen partners involved in foreign investment projects. A Presidential decree ordered that all trade and investment projects that need foreign credits must receive SAFI's approval before applying for financial support.
Import and export transactions carried out within investment projects and trade credit contracts must be registered with SAFI, the appropriate Fund and the SCRME.
Protecting Your Product from IPR Infringement
On March 1, 1999 the GOTX adopted a Civil Code that regulates IPR ownership in the areas of science, literature, and arts, as well as audio and video record production and distribution. A patent law and a law on legal protection of algorithms, software, databases, and topology of integrated microcircuits have been in effect since 1993 and 1994, respectively. The Patent Agency under the Cabinet of Ministers oversees patent law enforcement only for industrial innovations. No separate state agency supervises IPR issues. Should a case arise, all inquires must be made to the Cabinet of Ministers.
To date, IPR infringement in Turkmenistan has not caused significant losses to U.S. holders of intellectual property rights.
Need for a Local Attorney
There is a lack of skilled legal consulting and auditing services in Turkmenistan. Lack of knowledge of western legal systems, absence of any experience in working with U.S. law firms, limited experience with international law, an undeveloped legal system, and other factors such as the absence of skilled English-speaking lawyers, contribute to this lack.
The State Economic Court of Turkmenistan deals with economic disputes occurring between Turkmen enterprises. Cases with foreign company participation are also in the competence of the Court. However, it is recommended that a U.S. company stipulate international arbitration in any contract when considering doing business in Turkmenistan.
Performing Due Diligence and Checking Bona Fides of Banks, Agents, and Customers
The Government has always been very cautious in establishing business relations with new and little-known foreign companies. Normally, it prefers to deal with well-known names and brands. With only limited experience in locating business partners and suppliers, the government has often relied on an intermediary, usually a small Turkish or American firm, to help find quality products and services overseas.
To gain the trust and confidence of Turkmen Government, small and medium-sized foreign firms must first prove their intentions to do serious long-term business in Turkmenistan. That can mean opening a representative office in Ashgabat, signing a long-term investment contract, or negotiating a state concession for foreign investment.
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[end of document] Note* International Copyright, United States Government, 1998 (or other year of first publication). All rights under foreign copyright laws are reserved. All portions of this publication are protected against any type or form of reproduction, communications to the public and the preparation of adaptations, arrangement and alterations outside the United States. U. S. copyright is not asserted under the U.S. Copyright Law, Title17, United States Code.
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