AFC on the Road – Turkmenistan

Dear Investors and Newsletter Readers,

We decided to visit Turkmenistan in May 2024 after the third AFC Uzbekistan Fund Tour. Turkmenistan borders Uzbekistan to the west and happens to be one of the least visited countries in the world with what’s purported as being one of the ten hardest visas in the world to obtain. So, we figured we’d give it a shot and plan a 4-day tour!

Upon receiving the invitation letter for our visa from the tour agency we used in Turkmenistan, we went to the Turkmen embassy in Tashkent. Warned of how chaotic the embassy is and how long it could take, along with a customary light interrogation, we were prepared to be patient. However, our interaction at the embassy was the polar opposite.

We provided our invitation letter and visa form along with our passports and the gentleman on the other side of the glass said to wait five minutes. Not being our first time dealing with a government agency in this part of the world, “5 minutes” often means 30 minutes or one hour. However, after approximately 5 minutes we were called and given our passports with our shiny green Turkmen visas pasted inside. The visa officer then asked how was the experience, to which we smiled, saying “you know how it was”. He responded with a blunt and semi-aggressive “tell me”, as he wore a smile. To which we responded it was one of the best and most straight-forward consular visits we’ve ever had. He relayed this to his team on the other side of the glass window, as everyone smiled. We said our goodbyes and we were all set for the journey to begin.

The day after our May 2024 AFC Uzbekistan Fund Tour, we took the evening Afrosiyob (fast train) which takes four hours from Tashkent to Bukhara, arriving around 23:00. We took in the sights of the ancient city around midnight. For anyone going to Uzbekistan, Bukhara is a must see, much more so than Samarkand, especially as the old city is lit up at night.

Bukhara by Night

The following morning at 06:30 we were picked up by a taxi for the two-hour drive to the Uzbek-Turkmen border where we exited the taxi and continued on foot. The border was easy to cross on the Uzbek side, taking five minutes as there was only us and a group of four Chinese tourists. We crossed no-man’s land in a minivan to the Turkmen side where we took a Covid-19 PCR test (just a money-making opportunity) which costs USD 33 each. Then we proceeded to the Turkmen immigration building via another, this time Soviet, minivan (nicknamed a “bukhanka” as it is shaped like a Soviet loaf of bread called bukhanka) where we met our Turkmen tour guide for the next 4 days (foreigners cannot freely travel in Turkmenistan, save for a 72-hour transit visa), completed our customs declaration forms (which were not in English), then they took our fingerprints and checked each luggage item thoroughly and finally proceeded onto another bukhanka to the border exit. There, after a final confirmation from a border guard that we had our visas stamped, we entered the parking lot, surrounded by the sprawling Karakum desert (which covers 80% of Turkmenistan).

We then took a twenty-minute drive to the nearby city of Türkmenabat, formerly Novy Chardzhou, the second largest city in the country, hosting a population of ~250,000, for a quick lunch before a back-breaking four-hour drive with our modern Japanese 4-wheel drive SUV to the ancient city of Merv on one of several roads to be that resembled the moon (and probably was a similar experience to what riding in the back of a dump truck full of rocks must feel like). On the drive, we passed a handful of wandering camels, some large petrochemical facilities (Turkmenistan hosts the world’s fourth largest natural gas reserves behind Russia, Iran, and Qatar), and hundreds of trucks with either Iranian, Turkish, or local number plates. We suspected that all the Iranian and Turkish trucks were in transit to Uzbekistan.

After about 2 hours into the journey, a brand new nicely paved 4 lane highway (resembling a German Autobahn) appeared parallel to our “tank track” road with a few trucks from time to time on it. After a short while, we innocently asked our tour guide why we can’t use it too and his answer was “it costs money”. To our surprise after a few minutes our driver drove off the “tank tracks” and followed another SUV which led us to the Autobahn. For about 30 minutes we were able to drive at about 120 km/h (instead of the maximum 50 km/h on the “tank tracks”) and realized that this road was actually still closed as from time-to-time construction works were taking place. Finally, we had to exit the Autobahn since a bridge was still under construction and a dirt track led us back to the normal road. However, before entering the normal road we had to pass by a guard (he was obviously a construction worker) and our driver handed him the equivalent of 50 USD cents for the “informal toll”.

Merv is an ancient Silk Road oasis city located next to the Amu Darya River with first human settlements dating to the 3^rd millennium BC. By the 12^th and 13^th centuries, it is estimated that Merv may have been the world’s largest city, with its population swelling to 500,000. Continuously conquered by invaders as the region continued changing hands, between 1788 and 1789, the city was razed by the shah, or king, of the Emirate of Bukhara (in modern Uzbekistan), and when Russians arrived in the region during the 1800’s, the city was abandoned, with the remaining population relocated to a nearby settlement.

What’s fascinating about being in a country that receives only a few thousand tourists per year is that, just as you could experience in Angkor Wat two decades ago, the area was completely void of tourists, making Merv ours to explore, save for a small group of Turkmens doing restoration work on one building. Even more fascinating is the fact that the entire place is still littered with millions of clay pottery pieces which must be hundreds of years old and can be easily picked up as a souvenir (which we of course did not).

Ancient Merv

The Merv Oasis

After spending a little more than hour in Merv, due to a tight schedule to catch our flight, we drove about one hour to the city of Mary, an entrepreneurial city, where we boarded a Boeing-737 for the one-hour flight to the capital city of Ashgabat. Security at the airport was the typical story of bureaucracy, hiring far too many people to check, recheck, and check yet again our passports for the sake of employing the population. What was funny is that amidst all this “security”, we were still able to bring bottles of water and soft drinks through security and onto the plane, something unheard of in the developed world.

The former President of Turkmenistan, Gurbanguly Berdimuhamedov, is famous for his obsession with Guinness World Records. So it is only natural that at Ashgabat International Airport we encountered our first such world record, that of the world’s largest bird-shaped (seagull) building (according to Guinness World Records) with a wingspan of 364 meters.

The passenger terminal is also host to the world’s largest carpet, at 705 square meters. Opened in 2016, the airport is as modern as anything you see in Istanbul or Hong Kong. As we departed the airport, we passed by the world’s biggest fountain complex and thereafter we stopped to take a photo; our first glimpse of the ostentatious capital. We then drove to the Sports Hotel which is part of a massive complex built for the “2017 Asian Indoor and Martial Arts Games”, where the stadium, clearly visible from our hotel rooms, showcased the world’s largest statue of a horse.

Ashgabat International Airport

The next morning, we went on a sightseeing tour of ministries in various shapes (Ministry of Education in the shape of a book, Ministry of Oil & Gas in the shape of an oil rig, etc.), the world’s largest structure in the shape of a star (the Ashgabat television tower), and the world’s largest indoor ferris wheel, the latter of which, we did not enter. Comically, every few minutes our guide reminded us to not take photos of public buildings like ministries, government buildings and even the city centre in some instances, merely because…

The World’s Largest Indoor Ferris Wheel

Busy Ashgabat at 15:00 on a Friday

Only a few days before travelling to Turkmenistan, our broker in Uzbekistan casually told us during a dinner that the country “seems to have had” a stock exchange but its website (https://www.agb.com.tm/en/) did not work for the last 2 years and emails he sent to them were never answered so he was not sure if the stock exchange was still operating. Of course we were very surprised after we found the exchange's website on Google and that it was operating again and updated (even in English) with new information and price quotations. The next day we wrote an official email to the CEO of the Ashgabat Stock Exchange but as of the day of publishing this travel report we never received a reply – what do you expect? Naturally, we asked our tour guide if we could visit the stock exchange and try to arrange a meeting, which of course we were denied since “you are travelling on a tourist visa and not with a business visa” we were told. After pushing to be taken there (actually the building was just one block away from our hotel) and at least see it from the outside, our guide grew increasingly frustrated, probably never having been asked such a request. We negotiated that we would stop in front of the building so we could at least take a photo. However, as we passed the building by car, he pointed it out, without stopping of course.

We then continued onward to the State Museum of Turkmenistan which showcases the gifts given to the former President (where much to our disappointment photos were (again) not allowed) as this museum was impressive for a variety of reasons. From gifts given to the President from Turkmen state-owned enterprises to gifts from foreign dignitaries, we saw books, tea sets, intricate wooden carvings, swords, and much more. The two-story museum took about 1.5 hours to get through, concluding with the rally car the president drove around in 2019, of course!

The Building Hosting the Ashgabat Stock Exchange in the Distance
(A “Forbidden” Photo since it is in a Ministry Building)

This was followed by lunch in a nice Turkish café, which from the street you would never know existed. Except for very few roof top advertisements (one of them from Nestle), outdoor advertising in Ashgabat is illegal. Therefore, you can be next to a restaurant or bar and haven’t the slightest clue until you enter.

After our lunch, we headed to the “Russian Bazaar" of Ashgabat which is reminiscent of anything you’ll see in Uzbekistan, full of vendors selling everything from school supplies and clothes to the ever-attractive food section. We interacted with a very nice vendor who kept feeding us figs, apricots, macadamia nuts, and more to where we felt compelled to buy some of his products, especially as we had a journey ahead of us the next day so it paid to be provisioned.

On the way back to our hotel, we drove to see the wedding palace which overlooks the city, and, like everything else in Ashgabat, is impressively over the top, with empty roads and everywhere just white buildings and no people!

Ashgabat Wedding Palace

That evening we were taken to a “fancy” rooftop hotel restaurant for dinner where we got a panorama view of Ashgabat’s white skyline of white buildings and white cars.

Ashgabat from Above

While the meal was nothing special, one of the most fascinating things about it and Turkmenistan is the country’s exchange rate.

The official exchange rate is 3.5 manats to 1 USD. However, the black-market rate is 19.5 manats to the USD. If you order something in your hotel and charge it to your room, say a coffee for 40 manats, you will be billed at the official rate leading it to cost USD 11.42. However, if you pay cash, that coffee’s price collapses all the way down to a more normal USD 2.05. While we forgot to take pictures of some of the menus from restaurants we ate at, we did get the menu from this dinner, with prices below.

The Dinner Menu and Prices (in Russian)

Further to this, what is typical in many countries is a difference in pricing for hotels between locals and foreigners. Our hotel, the Sports Hotel costs approximately USD 85 per person per night. However, for a local, a suite costs 170 manats, or USD 8.71 at the black market rate. And, no that is not a typo!

Before returning to the hotel, we visited the modern shopping mall opposite our hotel in order to stock up on food and alcohol in an upscale supermarket. The shopping mall was full of local shops – and no international brands with the exception of LC Waikiki.

In the supermarket most of the goods were from either local, Iranian or Turkish companies. There were only a few international brands, but the big U.S. brands and European brands were almost all missing – just a few infamous German brands (no Ricola or Lindt chocolate for Thomas). However, we were surprised to see that the Coca-Cola can was filled by a Coca-Cola bottler in Kabul, Afghanistan. Interestingly the AFC Asia Frontier Fund is invested in a Pakistani aluminum can producer which is the supplier for this Afghani bottler.

After our evening meal at the hotel restaurant, we walked back to the Sports Hotel and did some exploration through the martial arts park. It was nice that since the projects most certainly cost a significant amount of money to build that there was life in the form of kids and families playing tennis and football, so at least the park was being used.

Upon returning to the hotel, we went to the rooftop which happened to be a Chinese restaurant that looked very good (had we stayed another day it would have certainly been dinner) with music blasting, people on the dance floor, and families swigging vodka at the dinner table. The only thing more impressive than the food was the view, as our hotel had a veranda, and below is a picture of Ashgabat by night.

Ashgabat With the TV Tower in the Background

The next day we were told we would depart the hotel around lunch time as we were to have Turkmen plov in a little village on the way to the “Darvoza”. As we drove out of the ghost town that is Ashgabat, we crossed a bridge into a neighborhood with traditional homes that look similar to what you see in the rest of Central Asia, where it appeared the majority of Ashgabat’s population (about 1 million) actually lives. There was traffic, bus stops and buses were full, and some of the houses were very beautiful, while none of the construction was white marble!

As we drove further on the highway it became increasingly obvious, we were moving further afar from the stage the President set, for the infrastructure grew worse and worse until we were again driving on roads that resembled the moon (little did we know how much worse the road would get).

1.5 hours later we entered into a village house where the owner was cooking borsog, or fried dough. After sampling some of this greasy goodness we entered a yurt where we sat on the ground on a Turkmen carpet and were given a bowl of meat soup and plov.

Frankly, our Uzbek friends will be happy to know that we much preferred the Uzbek plov we have grown accustomed to, for this plov was swimming in a pool of oil that makes Uzbek plov look dietic! With little meat and a sprinkling of carrots, it left much to be desired, but the experience was fun.

Our Host Cooking Borsog, Followed by Plov

After lunch, the journey continued for another 2.5 hours. On our way we stopped at a petrol station to refill the car, and in the parking lot was a tapchan (traditional furniture for a tea house). We grabbed a local beer after looking through the fun, presumably Iranian knockoff brands of which Sponge Cake (Snickers) and Olego’s (Oreos) had the most interesting packaging. We snapped this photo enjoying our beer, while in the distance a sandstorm was about barreling our way.

Iranian Snickers

Enjoying a Beer in the Karakum Desert

So where were we heading? Well to the Darvoza gas crater, otherwise termed the “Gates of Hell”. This is a crater that was formed in 1971 when the Soviets were drilling for natural gas. The ground caved in and was releasing gas and methane. Rather than letting it emit into the air, causing potential fatalities, the Soviets lit the crater on fire expecting it to fizzle out in due course. 53 years later, it is still burning as bright as ever, and is especially spectacular at night, so we were heading there to spend the night in a yurt.

We visited two smaller craters before arriving to the Darvoza. The first crater was from a sulphur mining operation where we observed mere gas bubbles in the water filled crater. The second crater was alight, but only modestly. 30 minutes of driving later, it was clear that the Darvoza was the main spectacle, especially as we were almost the only tourists there.

Darvoza Crater at Sunset

Driving a few hundred meters up the hill after our photo session, we arrived at our yurt camp where we were to spend the night. At this point the sandstorm had picked up full force and when walking outside you were being hit in the face by what felt like a sandblaster, a situation where it’s hard to keep one’s eyes open. Inside the yurts there was also sand accumulating, as shining a light you could see the particles floating in the air. Sitting tight until a feast of roasted lamb, chicken and veggies was made, we ate dinner and thereafter took a pitch-black walk down to find the crater.

Our Home for the Night, Amid the Desert Sunset

With sand lashing our faces, it was very hard to see. On our way into the darkness, we saw an empty plastic bottle of “red tut”, a local Red Bull of sorts from a Turkmen soft drinks producer, bouncing back and forth in the wind, just as we saw the immeasurable glow of the crater. It really was a sight to be seen and the highlight of the trip.

Spotting the Crater in the Distance

Darvoza Crater at Night, With a Moonlight Background

Turkmen Red Tut

Taking a handful of photos and enjoying the heat coming up from the crater as the desert winds from the sandstorm blew cold, we walked around the crater counter clockwise, observing it from various angles and even seeing some of the old drill pipe sticking out of the side.

With sand obstructing our vision and no point of reference, heading back to our yurts we got lost. Feeling we had made a complete circle we began walking up a hill unsure if it was the correct one. After 10 or 15 minutes of meandering back and forth, looking for the light of our yurt camp, we eventually stumbled upon that bottle of Red Tut, still bouncing back and forth in the wind. A life saver, we knew we were moving in the right direction, shortly thereafter seeing the distant light from our driver’s yurt at camp. Wind howling, we got back safe and settled into bed (actually between a layer of dusty and sandy Turkmen carpets).

The next morning, we had a 6-hour drive to the Uzbek border which was the most back-breaking ride of our lives. Never before had we contemplated several times asking the driver to stop so our spines could mend, it was an excruciatingly painful journey; but it had to be done for our visas in the country expired the next day and we had to exit through a specific border point.

Similar to the previous day, on our way to the crater, there was hardly any traffic on the road except for the occasional truck. Almost all the trucks had Turkmen number plates (except a few from Kazakhstan), and looked quite new and well maintained, but interestingly most of the time still had a cover with German text on the trailer (most of them German logistic companies but one was of Egger Beer from Austria). Also, most of the trailers were German (Schmitz, Krone, Koegel) and the trucks themselves were either DAF (Holland), Ibeco (Italy), MAN (Germany), or Mercedes.

The 6-Hour Turkmen Highway Massage

Once we arrived at the border, immigration was a breeze, and unlike the Turkmens in the queue, our bags weren’t searched as we were waived on through thanks to a friendly border guard. We took one more bukhanka-type van and chatted with some friendly Turkmens on their way to Uzbekistan. As usual, the Uzbek side was easy and took only a few minutes before our taxi driver picked us up and drove us to the ancient silk road city of Khiva where we had a late lunch before driving to Urgench International Airport for the 90-minute flight back to Tashkent.

Khiva in All Its Natural Beauty, Full of Local and European Tourists

Turkmenistan was a fascinating adventure and we look forward to hopefully making it back for that meeting with the CEO of the Ashgabat Stock Exchange one day - inshallah!

AFC Quarterly Webinar on Wednesday, 24^th July 2024

We will host our regular quarterly webinar to update existing and potential investors on the performance and outlook for our funds. The webinar will be held on Wednesday, 24^th July 2024, at 9:00am NY, 2:00pm UK, 3:00pm Swiss, and 9:00pm HK/SG time and will be recorded for viewing at your convenience.

I hope you have enjoyed reading our AFC on the Road report. If you would like any further information about our AFC Uzbekistan Fund or other funds, please get in touch with us by email (see below).

With kind regards,

Asia Frontier Capital

This email address is being protected from spambots. You need JavaScript enabled to view it.