The European Bank for Reconstruction and Development (EBRD) is continuing to support private small and medium-sized enterprises (SMEs) in Turkmenistan by enabling one such company to expand into a new sector.
Ak Gap, a manufacturer of plastic PET pre-forms which are used for the production of plastic beverage bottles, has been successfully growing with the help of EBRD financing and advice. The company counts the international soft drink company Coca-Cola and a number of leading local bottlers among its clients.
After establishing itself as a leader in the local market, the company’s management spotted a business opportunity in another area: windows and doors where the frames are made of PVC profiles.
At the moment, some Turkmen companies produce PVC windows and doors but there are no domestic manufacturers of either PVC as raw material or PVC profiles, so they are imported. According to market research, producing profiles in the country - even from imported polymers - would add value to both producer and consumers.
Following these findings, Ak Gap created a new subsidiary company, Turkmen Penjire, and approached the EBRD for financing to invest in a new production line.
The Bank will provide US$ 3.5 million loan to support Turkmen Penjire in launching the new production facility. Production is estimated to start in 2017, with an annual output of 3,000 tonnes of profiles. The project will help to replace a sizeable share of the profiles currently imported from Turkey, Iran and China. At the same time, local customers, namely construction companies and micro enterprises assembling frames for households will get a greater flexibility from the closer proximity to the new producer.
Engin Goksu, EBRD Head of Turkmenistan, said: “This project will strengthen the manufacturing sector in Turkmenistan. This resource-rich country has the ambition to produce its own polymers one day so it is crucial to support innovative domestic companies like Ak Gap who will be able to process those materials.”
Mark Webber, EBRD Head of Manufacturing and Services for the region, adds: “This project presents our long-standing client with a new opportunity to process basic polymers into a rather sophisticated material able to withstand Turkmenistan’s hot and sunny weather. We trust in the client’s skills and capabilities to deliver a successful project as it has already demonstrated through a series of expansions of their existing PET pre-form business.”
The European Union’s Investment Facility for Central Asia (IFCA) has provided technical cooperation grants for the project.
To date, the EBRD has invested about €250 million in Turkmenistan, mainly supporting privately-owned small and medium-sized manufacturers.