In his new feature article a writer of “Chronicles of Turkmenistan” Ata Garlyev elaborates on the obstacles confronted by small and medium business in Turkmenistan and how the construction industry survives.
Today small and medium businesses in Turkmenistan, including vendor stalls in bazaars, privately-owned retail outlets, stores, markets, small companies, consumer services shops, cafes and snack bars, car repair shops and beauty parlors, are going through hard times. These businesses always rely on the purchasing power and financial solvency of their customers, including state-run enterprises.
The worsening standard of living has resulted in a decrease in the purchasing power. Moreover, extortions by firefighting, public health, tax authorities and other regulating agencies have remained the same. According to entrepreneurs, not only is their profit tiny but business owners need to “support” these parasites.
Since it is unprofitable to run a business many owners curtail their operations or refocus on the more profitable lines of business.For instance, two grocery stores located in the former shop “Veteran” on Khudayberdieva street were closed down.
A popular supermarket “Aybolek” in the residential district “Mir” shut down.The proprietor, who also owns the same-name furniture factory and a furniture store, decided that it was not profitable to keep the supermarket.
The retail chain “Akmarket” was sold over a year ago for the same reason.
The problem is that suppliers and distributors overprice goods and a vendor cannot get more goods for further sale if the entire batch is not fully paid.
This also applies to stores and pharmacies, which results in high prices, including for medications.The vendors are not sure what will happen with the dollar exchange rate even in the short-term perspective.
Therefore the precondition to pay for an entire batch of merchandise upfront is not feasible for retailers, as it is challenging to sell the goods today when the purchasing power has plummeted.
The shelf life for groceries and medications is quite short but the monthly rental and staff salaries need to be paid regardless of revenues.
Currently only two retail chains are “afloat” Kamil and Halk Market, as they are under the patronage of Dadayev (Aleksandr Dadayev is Chair of Turkmenistan’s Union of Industrialists and Entrepreneurs- comment by the editorial board) and a member of the President’s family.
The queue for sugar at Kamil Market
Unoccupied retail premises and business offices are available for rental in various districts of the city.There are shopping stalls, popularly referred to as “Houses” near the old market and Exhibition of Economic Achievements, where shuttle traders used to sell clothes and footwear.
Now 60% of these premises are vacant.Shuttle traders are unable to pay rental fees let alone generate a profit.Business centres located at the intersection of Moscow avenue and Mir street, on the corner of Mir and Yunus Emre streets as well as shopping centres Berkarar, Imperial, Khalifa, Joshgun, Oguzkent are only 30%-40% occupied.
However, despite this situation, shopping centres are being built in almost each new residential district of the capital.
Private houses at the market of Exhibition of Economic Achievements. Photo from the archives
There are almost no foreign companies left in the capital and one can count on one’s fingers those which remain.These are oil and gas companies with their own subcontractors, and construction businesses which are executing government contracts.
Today it is impossible to register a representation office or a subsidiary of a foreign company owing to the greed of officials which has been driven by bureaucracy.Moreover, entrepreneurs who are close to the authorities are reluctant to allow competitors to enter the market.
For this reason many investors are leaving the country although they could not only create new jobs but also pay taxes to the government coffers.
A few years ago the profitability of the recreational zone “Avaza” was under discussion.After billions of public funds had been literally buried in the sand and the majority had been embezzled, the President started looking into the profitability of the project.
Profitability is out of question owing to expensive construction works and a lack of customers all the year round due to climatic conditions.However, even if the recreational zone is vacant, it needs to be maintained.
This requires huge amounts of money which are not now available in the federal budget.Therefore, as instructed by Gurbanguly Berdymukahmmedov, Dadayev will be overseeing the privatization of “Avaza”.
The following construction businesses are still operating — Myradym, Tyaze djay, Cheper, Altyn nesil, Nusay Ellary, Khilli and some others which are supported by Dadayev or the President’s family. The rest have long gone bankrupt, were liquidated, or shut down their operations, and the owners of some were imprisoned for debt.
Then the question arises how do entrepreneurs work under such conditions? Those who can invent schemes to bypass certain regulations, instructions and other bureaucratic inventions, search for lobbying opportunities, pay bribes encouraging the corruption which is rampant in all spheres of the Turkmen life. What options do they face? They need to survive.