Tourist Resort Still Too Risky for Investors
Tourist Resort Still Too Risky for Investors
Turkmenistan’s proposed new tourist resort on the Caspian coast may have to be paid for by the treasury given that few foreign companies will risk investing in a country that doesn’t provide them with legal safeguards, say NBCentralAsia analysts.
On July 23, Turkmen president Gurbanguly Berdymuhammedov signed a resolution offering benefits to local and foreign companies that want to invest in the Avaza tourist zone, located in the port city of Turkmenbashi on the Caspian coast.
The government has set aside one billion US dollars to develop the 16 kilometre-long tourist resort and the initial plan is to build some 60 hotels, four modern health and leisure centres for children, large sport centres and plush tower blocks.
As part of the benefits package, all construction materials and goods delivered to the Avaza site will be exempt from customs duties. The authorities have also pledged to lease land to investors for up to 40 years, to give companies free registration and to allow businessman to take their profits abroad once the resort has opened.
Seven large Turkish companies and the Russian firm Itera have already expressed an interest. All of these companies have a long history of working in Turkmenistan’s construction industry.
NBCentralAsia analysts doubt that many other investors will want to risk pouring money into Turkmenistan as long as its laws are shaky and are stacked in the government’s favour.
A restrictive law on business and trade passed in 1992 is still in place, allowing the government to interfere in the work of foreign companies operating in Turkmenistan and even to expel them altogether. This is hardly conducive to attracting investors.
“Until Turkmenistan starts playing by the international rules of the game, where economic issues are solved in international courts of arbitration, no self-respecting company is going to agree to work under such conditions,” said an economic expert who wished to remain anonymous.
An NBCentralAsia observer from the western Balkan region pointed out that the best guarantee investors can hope for is support from Turkmen officials.
“If a foreign company enjoys direct access to the president or deputy prime minister, or of some senior official has an interest in ensuring that the company is successful, that is the strongest guarantee that the investment will reap profits,” said the observer.
One source in Ashgabat believes that most of the firms that get involved in Avaza will be contractors drawing on Turkmen government funds. The extent to which companies bring in private capital will depend on how open the business conditions are.
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
On July 23, Turkmen president Gurbanguly Berdymuhammedov signed a resolution offering benefits to local and foreign companies that want to invest in the Avaza tourist zone, located in the port city of Turkmenbashi on the Caspian coast.
The government has set aside one billion US dollars to develop the 16 kilometre-long tourist resort and the initial plan is to build some 60 hotels, four modern health and leisure centres for children, large sport centres and plush tower blocks.
As part of the benefits package, all construction materials and goods delivered to the Avaza site will be exempt from customs duties. The authorities have also pledged to lease land to investors for up to 40 years, to give companies free registration and to allow businessman to take their profits abroad once the resort has opened.
Seven large Turkish companies and the Russian firm Itera have already expressed an interest. All of these companies have a long history of working in Turkmenistan’s construction industry.
NBCentralAsia analysts doubt that many other investors will want to risk pouring money into Turkmenistan as long as its laws are shaky and are stacked in the government’s favour.
A restrictive law on business and trade passed in 1992 is still in place, allowing the government to interfere in the work of foreign companies operating in Turkmenistan and even to expel them altogether. This is hardly conducive to attracting investors.
“Until Turkmenistan starts playing by the international rules of the game, where economic issues are solved in international courts of arbitration, no self-respecting company is going to agree to work under such conditions,” said an economic expert who wished to remain anonymous.
An NBCentralAsia observer from the western Balkan region pointed out that the best guarantee investors can hope for is support from Turkmen officials.
“If a foreign company enjoys direct access to the president or deputy prime minister, or of some senior official has an interest in ensuring that the company is successful, that is the strongest guarantee that the investment will reap profits,” said the observer.
One source in Ashgabat believes that most of the firms that get involved in Avaza will be contractors drawing on Turkmen government funds. The extent to which companies bring in private capital will depend on how open the business conditions are.
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
