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Investors eye crisis-spared Turkmenistan

Published on 19/03/2009

Ashgabat -- Foreign investors are looking at possibilities in the gas-rich Central Asian state of Turkmenistan, which has been spared the economic crisis but still presents obstacles for foreign businesses.

In deep isolation from tumbling international markets, Turkmenistan had an economic growth rate of 10 percent last year and has only recently opened up more to foreign investment after almost 20 years of dictatorial rule.

"It’s really time to put a foot in a door that’s opening," French Trade Secretary Anne-Marie Idrac said on Wednesday on the latest in a string of visits by foreign officials and companies to this largely desert country.

"Turkmenistan is virgin territory," she said.

A French official accompanying Idrac said: "There is little infrastructure so there are a lot of projects to do. But you have to be tough, this is definitely not a market for small and medium-sized enterprises."

Yves-Thibault de Silguy, chief executive of French construction and engineering group Vinci, said: "The Turkmen president called me six months ago saying he had an enormous need for construction and they have money.

"But we’re pioneers here, it’s not easy to get authorisation," he said.

Since coming to power in 2007, Turkmen President Gurbanguly Berdymukhamedov has tried to bring his country out of international isolation and has rolled back a personality cult imposed by his predecessor, Saparmurat Niyazov.

There have been changes, said a French diplomat who spoke on condition of anonymity, but "much remains to be done" including reforming investment legislation and the criminal code and improving press freedoms.

French oil and gas major Total is also interested in Turkmenistan, which is estimated to have the fourth biggest natural gas reserves in the world, but has held off so far because of restrictions on energy investments.

"Our discussions have not concluded yet since only the offshore is currently open to foreign companies. Onshore seems more interesting to us," said Arnaud Breuillac, vice president of Total for Europe and Central Asia.

Among the few foreign companies to have made major inroads in Turkmenistan is French construction giant Bouygues, which has built many of the grandiose palaces and public buildings that dot the Turkmen capital Ashgabat.

Held back by its heavy bureaucracy and remoteness, this country of five million people lodged between China, Iran and Kazakhstan does not seem to be ready for a breakthrough in foreign investment just yet.

"For a contract to be accepted, it has to be approved by five different administrative entities," said Matthieu Mitterand, a French trade official. "The country is opening up but that doesn’t mean it’s getting easier."

Isabelle Tourne/AFP/Expatica