nCa Report
Ashgabat, 5 March 2012 (nCa) — Some tender notices recently published by the print media of Turkmenistan indicate the marked shift for purchases in local currency instead of dollar or Euro.
For instance:
- The state bank for foreign economic relations announced tenders for purchase of a tractor and trailer, and drilling equipment (for up to 500 meters depth) and pumps
- The state concern Turkmenhimiya (TurkmenChemicals) announced tenders for purchase of a complete production unit for liquid detergents and plastic containers
- The ministry of communications announced tenders for supply and installation of public telephones in Ashgabat
- The ministry of railway transport announced tenders for design, construction and equipping of an international bus terminal in Ashgabat
- The state concern TurkmenGeologiya announced tenders for purchase of 240 tons of thinner RV-CM
- The industrial enterprise MaryAzot announced tenders for purchase of electrical equipment and building products
- The state concern TurkmenNeft announced tenders for purchase of assorted equipment and parts (two separate lots)
- The state concern Turkmengaz extended the deadline for a previously announced tender for purchase of equipment and parts for Nayip and Bagaja fields
All of these tenders mentioned specifically that the bids should be in Manat, the local currency of Turkmenistan. More and more tender notices are coming up with this condition.
This trend is more than likely to expand to more purchases in future. It will have important implications in several areas, such as:
- The local companies that primarily work in local currency will have certain advantages against wholly owned foreign suppliers
- Manufacturers will be forced to find partners, whether local or foreign, who can take full advantage of local currency transactions
- Opportunities will arise for joint ventures where the local partner will take care of financial aspects
- Turkmen businessmen will be encouraged to open their rep offices abroad
- Companies with a diverse base of activities will be better poised to benefit from this trend, receiving payments for their goods and services in local currency and making payments for purchase of something else from Turkmenistan in local currency
- Book transaction – virtual barter – will feature in some deals, making way for opacity
- The entire financial and banking system in Turkmenistan will need to catch up with the international transactions network to make local currency deals attractive for prime manufacturers and suppliers
- Turkmenistan can ultimately use this lever to encourage currency swap deals with certain countries such as Turkey, China, Russia, Iran and several others; this will help reduce dependence on shaky dollar and uncertain Euro
- If the residual volume of local currency deals reaches the critical mass, Turkmenistan will be forced to allow for either free conversion of Manat or some other similar mechanism