Turkish Finance Minister Şimşek voices hope for a region in chaos

Wednesday, April 27, 2011
GÖKHAN KURTARAN

ISTANBUL - Hürriyet Daily News

Turkish Finance Minister Mehmet Şimşek says Ankara supports 'open societies' in order to boost trade and investment in the Middle East and North Africa. AA photo.

Political turmoil in North Africa and the Middle East will “provide stability and prosperity in the long run” by creating open societies and stronger institutions, Turkish Finance Minister Mehmet Şimşek said Wednesday.

As the uprisings reach its borders, Turkey will support “open societies” in order to boost trade and investment in the region, Şimşek said at the 6th Turkish-Arab Economy Forum.

“Don’t be afraid of your own people,” the minister said, addressing nearly 500 businessmen from 22 Arab nations who attended the event. “What’s happening in the region now will lead to prosperity in the end.”

The change in the region will pave the way for “stronger institutions,” Şimşek said, emphasizing that the Middle East and North Africa will “eventually benefit economically” from the grassroots demand for democratization.
Turkey itself has “benefited from raising the level of fundamental rights” in the country, the finance minister added.

Suggesting that surging oil and gas prices provide “a great opportunity to invest more abroad” for Arab businessmen, Şimşek also expressed a positive outlook on energy costs. “[Arab] capital could flow into Turkey,” he said, noting that such inflows would lay the foundations for better economic integration.

Targets in bilateral trade

“Bilateral trade between Turkey and Arab nations stood at around $6.9 billion eight years ago. As of 2010, it has reached $33.5 billion,” he said.

Taking the floor after Şimşek, Rifat Hisarciklioğlu, the head of the Turkish Union of Chambers and Commodities Exchanges, or TOBB, said the level reached in bilateral trade was not sufficient. “The total import volume of Arab nations stands at around $600 billion,” he said. “Turkey’s annual imports are at around $180 billion, but Arab nations account for only $10 billion of this amount.”

The political instability engulfing the region has, however, taken a toll on Turkish exports. In February this year, exports to North Africa dropped by 19.6 percent compared to a year ago.

Hisarciklioğlu pointed out that Turkey has been working on a new industrial zone in Jenin, the largest town in the northwestern West Bank on Palestinian territory. “We are building up this industrial zone to promote peace through industry and investments,” he said. “Turkey currently is working on the infrastructure of the project.”
Mohammed al-Fatah Naciri, the ambassador of the Arab League, called for an end to the Israeli embargo against Palestinians. He also said economic cooperation between Arab nations and Turkey serves “the common interest of all.”

“Turkish constructors account for almost 40 percent of all projects in Arab countries,” said Hisarciklioğlu, adding that the total volume of such contracts has reached $76 billion. The number of Arab tourists to Turkey has surged thanks to the lifting of visa requirements with Syria, Lebanon and Jordan, he added.
“The number of Arab tourists visiting Turkey was at around 250,000 a decade ago. As of 2010, the number stands at 1.8 million,” Minister Şimşek said.

A few of the speakers praised Turkey’s economic success, holding it up as an example for the region. “Turkey’s experience is the best proof yet that correct economic policies can lead to resounding success on the international level,” said Rouf Abou Zaki, the chief executive of Al-Iktissad Wal-Aamal Group, which organized the event along with Turkey’s Foreign Economic Relations Board, or DEİK.

Noting that Turkish investors have penetrated deep into Iraq, the country’s Finance Minister Rafe al-Issawi said those who come first to Iraq “will have the greatest profit.”

Iraq needs investments mainly in electricity generation, said al-Issawi, adding that his ministry would give letters of guarantee for Turkish companies considering such investments. “We also need nearly 3 million new houses,” he said, inviting Turkish construction companies to Iraq.

Tatar facilities promising for Turkish car firms

Tuesday, April 26, 2011

GÖKHAN KURTARAN

ISTANBUL- Hürriyet Daily News

The Tatarstan government is calling on Turkish automotive companies to take part in a $8.5 billion project to boost truck production in the country. As the Trade Minister Ravil Zapirov speaks of incentives and major tax cuts for Turkish investors, the invitation also goes for further investments in Russia’s heart of car production. Several Tatar companies, meanwhile, are seeking Turkish suppliers and partners

 

Kamaz automotive company will go through a major renewal process to increase production capacity, says Ravil Zapirov, Industry and Trade Minister of the Republic of Tatarstan (2nd R).

Turkish carmakers will be welcomed to contribute to the $8.5 billion upgrade plan at Kamaz, Russia’s largest truck maker in Tatarstan, according to a top official.

The automotive company will go through a major renewal process to increase production capacity, Ravil Zapirov, industry and trade minister for the Republic of Tatarstan, told the Hürriyet Daily News & Economic Review during a Monday meeting with Turkish companies.

“The plan is expected to take a few years,” said Zapirov, adding that Turkish firms are also invited to have a share in the $8.5 billion project.

Turkish firms investing capital in Tatarstan would be supported through various incentives and considerable tax cuts reaching 20 percent, he added.

The minister, accompanied by a mission representing of 40 Tatar companies, started its Turkey visit in Istanbul on Monday and continued with a series of bilateral business meetings with the leading automotive supplier firms based in northwestern province of Bursa, Turkey’s automotive hub.
Autopribor, a leading Russian producer of components for cars, busses and trucks, is looking for a Turkish business partner that would be interested in supplying cold forging metals, and non-ferrous metals, a company executive told the Daily News.

Russia’s BZAK, one of the biggest suspension and steering systems components distributor, also eyes joint-ventures with Turkish firms willing to benefit from the competitive advantages of plants located in Russia, the source also said.

Leading Russian automotive firms Elaz, Insermax, Isko, Kamaz, Marussa Motors, Serp & Molot and Termokam are also in search of Turkish suppliers for car parts, he said.

Russian state banks may be involved

The Russian Bank for Development, or VEB, has already provided a $10.7 million loan for Kamaz, Minister Zapirov said. “Russian authorities are ready to support Turkish investors with all kinds of instruments,” he added upon a Daily News question. “Turkey and Tatarstan should cooperate closer in the automotive industry as both countries rank among the top performers in terms of production capacity.”

“As home to 13 techno parks Tatarstan offers great investment opportunities for the automotive industry,” according to him.

The specialized zone of Alabuga in Tatarstan is awaiting Turkish firms to invest freely with a decent infrastructure, he said.

Alabuga, considered as one of the most vibrant industrial zones in whole Russia, encompasses 20,000 square meters of land.

Turkey might be part of a new Asian currency, expert says

25.04.2011

GÖKHAN KURTARAN- ISTANBUL

As the economic rise of Asia generates a need for an alternative to the US dollar, a parallel broad-basket Asian Currency Unit, Turkey might also consider being part of the new Asian currency rather than Euro said the professional speaking to Hürriyet Daily News & Economic Review on Friday.

“Turkey will be in a position to make a tough decision between a new Asian currency and Euro in next five to ten years,” said Tim Jones, program director of Future Agenda, a program addressing the challenges of next decade, in an interview in Istanbul. 

According to Jones, today there are essentially two key currencies that can be considered as global reserve currencies: the US dollar and the Euro and key commodities such as oil, gold, steel and so on are priced. Jones said, “Many leaders in Asian countries suggesting a new basket of Asian national currencies which could be used in international trade as the oil and food prices decrease with the international trade on a new world currency.”

Not only do they want to avoid having to use the dollar as the de facto intermediary for many international trades, they also want to keep their money within their own control with less dependency on the strength of the US economy and the highly US-orientated global financial institutions, according to Jones.

Jones said that China and Japan as well as many others such as Thailand, Vietnam and Malaysia are keen to have an alternative option to the U.S dollar; the new global currency could not be Euro due to ongoing Eurozone crisis. Fueled by the booming developing economies, attempts of such basket of Asian currency would likely be in the agenda of Turkey to be discussed in next years. “What will be the role of Turkey in such Asian attempt,” asked Jones.

Having a finance center bring liability to Turkey

Reminding Turkey’s target of turning Istanbul into one of the top finance center of the world by the 2023, the hundredth anniversary of modern Turkish republic, Jones said, “in order to become a finance center, the world’s largest banks has to be attracted to move their headquarters to Turkey”. Jones added, “This would bring liability to Turkey.”

Jones noted that the global economic crisis affect on the global finance centers. He said, “the big banks in New York, London and Frankfurt had been bailed out by the countries hosted them.” Jones explained, “The question is that do you really want to put ourselves in such position.” According to him if the answer “yes,” Turkey has to decide what type of finance center Istanbul could be; “Dubai, Singapore, Hong Kong, London or New York “

According to Jones, if Turkey wants to turn Turkey into a finance center, the country has to bare in mind Turkey’s liability for all the banks to be headquartered in Istanbul in the future. “Is Turkey ready for such position” asked Jones adding that Turkey might not consider European Union membership “until the European economy recovers and solve its financial problems.” Reminding Germany, “Turkey would not like to be a lender country for bailouts in Eurozone.”

Turkish contractors in Turkmenistan facing payment crisis

Sunday, April 24, 2011

GÖKHAN KURTARAN

ISTANBUL- Hürriyet Daily News

 

Turkish construction companies in Turkmenistan are on the edge of big losses as the government rejects to pay an alleged $1 billion for completed or ongoing projects, businessmen say. The Turkmen government is either seizing equipment or offering new and attractive contracts to overcome upcoming legal problems, they say

Turkish construction companies in Turkmenistan are hardly financing their ongoing projects in the country as the government is not doing any payments, according to some businessmen. DHA photo

Turkish construction firms doing business in Turkmenistan are facing financial problems as the government is rejecting to pay the cost of completed projects worth $1 billion, according to contractors speaking to the Hürriyet Daily News & Economic Review on Sunday.

“More than 40 Turkish construction firms have been subjected to mistreatment,” said Tarık Bozbey, head of the Mediterranean Exporters Union and head of Bozbey Construction. “Turkish firms there are in a serious financial struggle.”


Bozbey said that because the Turkmen government was not making its obligatory payments the construction of some projects could not be completed. The government seized construction vehicles and equipment from some Turkish firms “illegally,” according to Bozbey. “This means billions of dollars in losses for the firms,” he said, adding that the Turkmen state had violated international laws by mistreating the Turkish firms.

“And yet Turkmenistan continues to invite Turkish firms for new infrastructure and construction projects worth nearly $4 billion,” Bozbey said, adding that the firms are hesitating over starting up new projects. “As we have already lost million of dollars, how can we consider new projects?”

Talking to the Daily News, Ozan İçkale, a board member of İçkale Construction, said Turkmenistan, which called on Turkish firms in early 2006, has changed its attitude toward international companies due to its decreasing income from energy resources.

According to İçkale, Turkmenistan President Gurbanguly Berdimuhamedov increased the price of natural gas from $60 to $160 in 2007. Relying on energy income from the state, the president signed contracts with Turkish construction firms to turn Ashgabat into a “new Dubai.”

Russia had been importing nearly 50 billion cubic meters of natural gas annually via Gazprom until an explosion at a Turkmen pipeline in April 2009. Various allegations by Moscow and Ashgabat paved the way for a serious decrease in gas exports and income for the Turkmen government, İçkale said. “They started to urge Turkish firms to rush and complete construction projects with no payment,” he said. When Turkish firms there started facing serious difficulties in financing their operations, “The Turkmen authorities seized our vehicles and equipment worth nearly $12 million,” said İçkale.

“Some Turkish businessmen are even imprisoned with no clear accusations,” claimed İçkale, without giving any names. According to İçkale, the government is forcing Turkish firms to leave the country before paying the total cost of the projects.

His company had contracts worth nearly $350 million, but collect only $205 million so far, İçkale said. These projects include a hotel in Turkmenbashi, irrigation canals in Abada city, a 72-house residence project, two schools, a theater and a convention center in Ashgabat. İçkale said the cost of seized vehicles and equipment owned by his company was nearly $100 million.

“Turkmenistan has been one of the most important markets for Turkish construction firms after Libya caused firms to loose millions of dollars,” said İçkale.

Legal action

Speaking on the condition of anonymity, a Turkish businessman who still has investments in Turkmenistan said nearly 25 Turkish firms would apply to the International Center for Settlement of Investments Disputes, or ICSID, in two weeks’ time.

The ICSID is an autonomous international institution established under the Convention on the Settlement of Investment Disputes between states and nationals of other states with over 140 member states.
“Such a move will put Turkmenistan in a tough position, as Turkmenistan has already violated international laws and mistreated many Turkish investors,” the businessman said.

 President takes initiative 

According to the businessman, Turkmenistan President Berdimuhamedov recently called Turkey’s President Abdullah Gül and asked for the Turkish firms to not file against the Turkmen state at the ICSID. Gül decided to organize a trip to Turkmenistan to discuss the matter and resolve the dispute together with Turkish Foreign Trade Minister Zafer Çağlayan, the source said.

The source also said an independent institution based in the United Kingdom has been working to determine the amount of the losses of Turkish firms in Turkmenistan. The result will be reported to the international court, he said.

The losses might reach more than $1 billion, according to the source.

Turkish firms, which have invested nearly $1.5 billion in Turkmenistan in more than 800 projects, had $20 billion worth of contracts in the country as of the end of last year, according to figures provided by the Foreign Economic Relations Board of Turkey, or DEİK.

Turkey might be like Norway, minister says

Thursday, April 21, 2011

ISTANBUL- Hürriyet Daily News

Europe will realize the need for Turkey to grow and increase its competitiveness or the nation might consider staying out of the European Union in the future, said the Turkish Economy Minister and Deputy Prime Minister Ali Babacan.

“Turkey will go on implementing EU criteria,” said Babacan as he spoke at the opening ceremony of Forum Istanbul meeting Thursday.

The country “is not in a position to learn much from the EU” regarding the economy, he said. Still, “Turkey should not move away from its EU targets as the country is still not at the same level of democracy, fundamental rights and freedom and legal framework with EU members,” said.

“Maybe one day the EU will realize its need for Turkey and invite us for EU membership due to decreasing economic power of the union,” he said. “Maybe we will not join the EU like Norway and join if there is need in the future.”

Many European countries are struggling in the economic crisis with lack of efficient leadership and ruled by coalition governments that have been unable to generate solutions to economic problems, he said.
Europe lost its two seats in International Monetary Fund, or IMF, to developing economies due to the crisis and uncertainty in the eurozone,” he said. “Turkey aims to gain seats now.”

If Turkey was an EU member, the IMF seat would not have been lost, he said.

Turkish opposition chief Kılıçdaroğlu reveals economy agenda

GÖKHAN KURTARAN

ISTANBUL - Hürriyet Daily News

 

Speaking to a group of reporters in Istanbul, Kemal Kılıçdaroğlu, the leader of the Republican People's Party, or CHP, underlines the importance of the welfare state and sustainable growth. The government's economic policies serve to enrich only a wealthy minority, he says, promising to create nearly 800,000 new jobs in a few years

Kemal Kılıçdaroğlu reveals the economic aspect of the election strategy of his Republican People’s Party, or CHP, ahead of the June 12 polls. DAILY NEWS photo, Emrah GÜREL

Main opposition chief Kemal Kılıçdaroğlu continued the emphasis he has placed on social and economic problems since being elected leader, revealing the economic aspect of the party’s election strategy Wednesday ahead of the June polls.

The Republican People’s Party, or CHP’s, new strategy focuses on the welfare state, sustainable growth and the fight against poverty.

“We will bury poverty in history. We will bring sustainability to the Turkish economy,” Kılıçdaroğlu told a group of journalists in Istanbul.

The CHP formulated its economic policy suggestions through negotiations with various nongovernmental organizations and experts, he said.

Among the members of the team are Müslüm Sarı, a former Central Bank official; Kenan Şimşek, a former official of the Banking Regulation and Supervision Agency, or BRSA; and Aykut Erdoğdu, a former Treasury undersecretary. All three are candidates in the June 12 elections.

Describing the country’s current economic model as one that is “dependent on the exports of imported intermediate goods,” Kılıçdaroğlu said the Justice and Development Party, or AKP, government has not pursued an efficient income distribution policy.

Reminded of government officials’ statements on fast economic growth, he said: “Yes, we are growing. But that’s only a small number of wealthy [people].”

Turkey’s gross domestic product, or GDP, grew by 8.9 percent in 2010 after severely contracting in 2009.

Aiming high

The CHP is aiming to boost GDP to $2.6 trillion while increasing average per-capita income to $31,500 by 2023, Kılıçdaroğlu said. His 2023 export target is $650 billion, compared to the AKP’s target of surpassing $500 billion.

The opposition leader said the CHP aims to create nearly 800,000 new jobs for the country’s young population through no-interest loans to small- and medium-sized enterprises. The party also has its eye on cutting the unemployment rate from the current level of above 11 percent to 6 percent “in the next few years,” he said.

The party will also implement gradual tax cuts for small companies, Kılıçdaroğlu told the Hürriyet Daily News & Economic Review. Diesel prices would be fixed to 1.5 Turkish Lira per liter for farmers, he said – a promise that could cost $5.2 billion annually.

Kılıçdaroğlu described his “family insurance” proposal as a key aspect of a social safety net that is implemented in developed countries. It stipulates between 600 and 1,250 liras of monthly state aid to poor families. “The project would cost approximately 8.5 billion liras,” he said.

According to official data, there are 12.7 million Turkish citizens who live below the poverty line.

“We have the sources for all our projects,” said Faik Öztrak, the CHP’s deputy president, responding to criticism from the ruling party. He said the AKP has not yet revealed the sources for its projects announced by Prime Minister Recep Tayyip Erdoğan on April 16.

Emphasizing the goals of a sustainable economy and raising economic competitiveness, Kılıçdaroğlu said a “Financial Stability Board” should be formed with the participation of the Turkish Central Bank, the BRSA, the Treasury Undersecretariat and the Finance Ministry.

Position on nuclear energy

Commenting on Turkey’s dependency on imported energy, Kılıçdaroğlu said the CHP “aims [to implement] top-quality nuclear power that utilizes high technology” in the long term. He claimed the planned Akkuyu nuclear-energy plant in the Mediterranean province of Mersin could have cost half the announced cost of more than $20 billion.

The CHP’s new economy strategy foresees raising employment levels though various incentives for new investments in Southeast Anatolia. “We will turn the region into a logistics hub for the Middle East,” Kılıçdaroğlu said, emphasizing planned investments in the petrochemical and textile sectors.
“We will give more incentives for textiles than those in Egypt,” he said.

Kılıçdaroğlu’s target for the region is 9.5 percent GDP growth, while his national growth target is 7 percent.
Responding to an article published Wednesday by The Independent newspaper in Britain, which mentioned the name of Kemal Derviş among possible candidates to lead the International Monetary Fund, Kılıçdaroğlu said he would be “pleased to see one of our friends in such a position.”

Derviş, a former World Bank chief, served as the economy minister in Turkey during the era of the late Bülent Ecevit between 2001 and 2002. Speaking on Derviş’s post-crisis program, Kılıçdaroğlu said it was a mistake to follow that program for so many years after the recovery from the 2000-2001 crisis.

Italian agency offers loans to Turkish firms to boost trade

Tuesday, April 19, 2011

GÖKHAN KURTARAN

ISTANBUL - Hürriyet Daily News

 

SACE, an Italian agency targeting to boost exports, has launched a credit program for Turkish investors to support mutual trade. The program is providing loans for infrastructure, oil and gas refinery and distribution projects mainly, Marco Ferioli, head of the agency says. Italian Central Bank, meanwhile, has opened an Istanbul branch

'For Turkish firms to benefit from the loans, they need to have an Italian trade partner or an Italian firm to invest with,' says Marco Ferioli of SACE.

An Italian export promotion agency aims to boost its exports to Turkey by allocating credits to domestic companies valuing $2.5 billion in total, said the Istanbul chief of the agency.
The credits are donated on condition that the Turkish borrowers partner with Italian firms, importing materials for Italy in general means, Marco Ferioli, head of SACE Turkey and Middle East, told the Hürriyet Daily News & Economic Review.
 
“Turkish companies could benefit from the credits for new investments with Italian firms,” he said speaking at the sidelines of Turkish-Italian Business Council meeting organized by Foreign Economic Relations Board of Turkey, or DEİK, in Istanbul.

Italian firms attach a great importance to Turkey, Ferioli said. “To benefit from the loans, the firms need to have an Italian trade partner or an Italian firm to invest with.”

Noting that today’s competitive market conditions require greater financial stability than ever, Ferioli said SACE’s credit insurance policies covered guarantees against poor or non-payment cases.
The main aim of the implementation was to promote Italian exports, he added.

“We are interested in investments in infrastructure, oil and gas refinery and distribution projects,” he said.
Meanwhile, Astaldi, an Italian construction firm, has recently won the right to construct a 421-kilometer motorway to connect northwestern industrial province of Gebze, with İzmir, the third biggest city in the country in the east, Ferioli said. The 7-year project, which was launched earlier in January, will cost nearly $9 billion, he said.

The SACE provided loans for the project, Ferioli told the Daily News. “We are interested in funding such infrastructure projects.”

Foster Wheeler, another Italian company signed contracts with Socer & Turcas Refinery for a new refinery in İzmir, he added.

The new facility to be built in the Aliağa zone, where Petkim, the joint venture’s chemicals facility is located, will have a total capacity of 214,000 barrels per stream day, according a report by Gasworld magazine. “We have also financially supported this investment,” Ferioli said, without mentioning an exact value of the investment.

Italian Central Bank in Turkey

Evaluating investment conditions in Turkey for the Daily News, Giorgio Merlonghi, the financial attache of the Italian Central Bank, said, “Turkey is a tremendously well-developed country with a strong banking system.”
The Italian Central Bank has recently opened a representation office in Istanbul, he said. “This shows how much important Turkey for Italian interest.”

Talking on the economic performance of Turkish Central Bank during the crisis, Ferioli said, “We were impressed with the Central Bank’s attitude and we are closely observing the monetary policies of the bank.”
“We are aiming to join forces for investments in third countries, especially in Northern Iraq,” said Zeynep Bodur Okyay, chairperson of Turkish-Italian Business Council. Okyay said the number of Italian firms in Turkey reached 870 as of the end of last year, up from 106 in 2006.

The bilateral trade volume between Italy and Turkey hit $16.7 billion by the end of last year. “We aim to reach $20 billion,” said Okyay.

Iranian firms break into world markets via Turkey

Monday, April 18, 2011

GÖKHAN KURTARAN

ISTANBUL - Hürriyet Daily News

 

Companies in Iran are finding their way to the world economy through Turkey, developing strong trade ties in recent years, according to a Turkish business representative.

“Turkey is replacing Dubai for Iranian firms,” Bilgin Aygün, the vice chairman of Turkish-Iranian Business Council at Foreign Economic Relations Board of Turkey, or DEİK, told the Hürriyet Daily News & Economic Review on Monday. “The best of Iranian firms penetrate world markets through Turkey,” he said, noting that cultural, historical and religious links go back hundreds of years as well as Iranian firms’ interest in Turkey.

“Many Iranian firms with warehouses in Dubai are now considering Turkey due to the geographical advantages it offers,” he said, adding that direct flights offered by Turkish Airlines to four Iranian cities have paved the way for business growth between the two countries.

According to figures from the Turkish Prime Ministry’s Undersecretariat of Treasury, the number of Iranian firms in Turkey reached to 1,470 by the end of last year. The figure for the years between 1954 and 2002 was only 319.

Starting from 2002, the year that Turkey’s ruling Justice and Development Party, or AKP, came into power, every year nearly a hundred new Iranian firms started to operate on Turkish soil. Iranian firms’ interest in Turkey even continued during the global recession and 139 new firms were registered in Turkey in 2008.
According to figures, 167 Iranian firms started to operate in the country in 2009 before a record-breaking sum of 284 last year.

The total capital of top 74 Iranian companies out of 167 that were registered in Turkey in 2009 was between $50,000 and $200,000. The capital of only seven Iranian companies that registered in the country was above $500,000. In 2010, the capital of 284 new Iranian companies in the country summed up $9.83 million.
“Bilateral trade volume has increased 50 percent as of the end of last year,” Aygün said.

It was “considerably” easier for Turkish businessmen to work with Iranian firms as almost one in every three speaks Azeri, a dialect similar to Turkish, said the vice chairman. “Turkey could penetrate eastern markets through Iran while Iran penetrates western markets through Turkey.”

Energy trade

Turkish dependency on energy imports has increased the strategic importance of Iran for the country, Aygün said. “Turkey and Iran could join forces and invest in third countries, especially in Tajikistan and Afghanistan that are strongly under the influence of Iran.”

He said an Iranian business delegation would visit Istanbul in September to meet with Turkish businessmen to negotiate the possibility of investment in third countries. “A Turkish business delegation from DEIK would visit Tehran for the same purpose in April 2012.”

Turkey’s oil imports reached 7.8 million tons in 2008 and slumped down to 3.2 million tons in 2009. According to Energy Market Regulatory Body, or EPDK, Turkey’s total import of oil from Iran reached 5.3 billion tons by the end of last year. Natural gas import of Turkey reached 5.2 million cubic meters by the end of last year from 4.1 million cubic meters in 2008 and 5.2 million in 2009.

More border gates 

Turkey and Iran opened a third border crossing at Kapıköy in eastern province of Van province last Saturday. Speaking at the opening ceremony, Turkish Foreign Minister Ahmet Davutoğlu said, “Our prime minister set a target of $30 billion in annual trade with Iran. That is why we are opening this border crossing.”

“This border is a symbol of peace and friendship and the resurrection of the Silk Road, which for centuries played an important role in making the economy of the region flourish,” said Foreign Minister Ali Akbar talking at the ceremony.

According to Turkish Prime Minister the economic relations between two countries would be boosted with a fourth border to be opened in Dilucu in northeast of Turkey and a fifth crossing border in Dillucu in northeastern Turkey without giving a date for opening.

“Iran’s foreign trade volume is approximately $150 billion,” Mehmet Koca, chief executive officer of Gübretaş, told the Daily News.

The Turkish fertilizer acquired Iran’s Razi Petrochemical in 2008 for $656 million euros. Noting that the business opportunities between the two countries had tremendous growth potential, Koca said, Turkish and Iranian trade volume floats around $10 billion as the total foreign trade volume of Iran has reached approximately $150 billion by last year.

Koca said Turkey has nearly a $3 billion share in Iran’s total imports of $60 billion last year. According to Koca, “The figures show that Iran meets nearly 95 percent of its import demand from countries other than Turkey.”

“In recent years, with the attempts of the Turkish government, Turkey has improved trade relations with Iran,” said Koca, noting that economic relations gained new momentum thanks to increasing political and economic influence of Turkey in its hinterland. Koca said the current trade volumes are still way below the potential, in order to accelerate the economic relations, “Iran’s approach to the world carries significant importance.”

“The new border crossings taking place between two countries, Iranian firms opening new firms in Turkey in order to penetrate worldwide economies through Turkey demonstrate that the economic relations between Iran and Turkey have developed to a great extent,” said Koca.

Turkey’s total trade volume with Iran reached $10.6 billion by the end of last year, according to Turkish Statistical Institute, or TurkStat. Turkey’s total export volume to Iran reached nearly $3 billion in last year rose from nearly $2 billion of 2009. Turkey’s import volumes also skyrocketed to $7.64 billion in 2010 compared with $3.4 billion in previous year.

German pharma giant criticizes Turkish policies

Friday, April 15, 2011

GÖKHAN KURTARAN

ISTANBUL - Hürriyet Daily News

'We want to continue investing in research and development in Turkey,' says Bert Tjeenk Willink of Boehringer Ingelheim, speaking in Istanbul on April 15, 2011.

Boehringer Ingelheim, one of the world’s top pharmaceutical companies, said the recent price cuts imposed in Turkey have caused considerable financial loss, implying that it may exit the Turkish market.

“We don’t want to leave the market. We want to continue investing in research and development in Turkey,” said board member Bert Tjeenk Willink, speaking on the sidelines of a press conference in Istanbul on Friday.

The cuts imposed by the government have caused nearly a 10 percent decline in profitability, said Willink. “Our products are marketed as the cheapest price in all of Europe,” he told the Hürriyet Daily News & Economic Review.

The company is more hesitant than ever to invest further due to the unpredictability in the market, he said.
Willink said if the government wants more pharmaceutical companies to invest more in Turkey, then an urgent solution needed to be found.

The government has cut the price of original drugs by as much as 30 percent in total in December 2009 and November 2010, in an effort to cut health care spending to 14.96 billion Turkish Liras ($9.4 billion) in 2011 from 15.2 billion last year.

“They expect us to implement studies and invest in research and development in medicine, while they also expect us take care of the budget deficit of social security institutions,” Willink said. “We cannot afford to do that.”

The top executive said Boehringer products are being exported to Germany from Turkey. “We are pleased to sell discounted products here, as long as they don’t show up in other markets.”

According to new regulations imposed in December, the price cut in original drugs without a generic counterpart was determined at 32.5 percent. The figure is 20.5 percent for original drugs with generic alternatives.

Russian exec on Turk nuke plans: 'Fukushima couldn't occur in Akkuyu'

Thursday, April 14, 2011

GÖKHAN KURTARAN

ISTANBUL - Hürriyet Daily News

'If our investigation reports show that seismic conditions are not suitable for a power plant in Akkuyu, we will take all the necessary precautions to eliminate the problems,' says Alexander Superfin, the general manager of Akkuyu Nuclear Power Plant Co.

The nuclear reactor planned for southeast Turkey will use the latest technology, the top Russian executive responsible for building the plant in Mersin’s Akkuyu district has said, dismissing concerns raised following Japan’s nuclear disaster.

“In Akkuyu, we will build a WWER-type plant using MPP2006 technology. This is a new generation of nuclear-power reactor that Russia has designed and developed,” Alexander Superfin, the general manager of the Akkuyu Nuclear Power Plant Co., said Wednesday, speaking on the sidelines of the 14th Eurasian Economic Forum in Istanbul.

Russia is also interested in additional nuclear plants that Turkey plans to build, Superfin told the Hürriyet Daily News & Economic Review.

Akkuyu Nuclear Power Plant Co. is a project company linked to Russia’s atomic energy giant Rosatom. Approved by Turkey on Dec. 13, the company is responsible for building the Akkuyu plant near Turkey’s Mediterranean coastline.

Many countries, including China and Germany, are reviewing conditions at their nuclear power plants as the crisis at Japan’s Fukushima Daiichi reactor continues in the wake of a massive earthquake and tsunami. On Thursday, an Indian government official said the country plans to install additional new technologies that ensure automatic shutdown of nuclear plants upon detection of seismic activity.

A faulty problem

Anti-nuclear groups in Turkey have said the Akkuyu plant will be built dangerously close to an active fault line. Responding to such concerns, Superfin said: “If our investigation reports show that seismic conditions are not suitable for a power plant, we will take all the necessary precautions. The results of the report will be made public.”

According to Superfin, previous site investigations after 1976 showed that Akkuyu is one of the best locations in Turkey for a nuclear power plant.

The Akkuyu plant would be similar to the third-generation one under construction in Novovoronezh, Russia, which Superfin said would be “a reference design and reference model for Akkuyu.” A similar design will also be used at another planned nuclear energy plant in Belene, Bulgaria.

“The Akkuyu plant will be equipped with numerous safety measures that were not available at the time when Fukushima was built four decades ago,” Superfin said. “Safety systems will protect the main reactor structure from all possible accidents. These will work even when there is no power at the plant.”

Superfin said the Akkuyu reactor would incorporate a so-called “core catcher” to insure against the possible release of highly radioactive substances into the environment. “What we saw in Fukushima simply will not be able to occur in Akkuyu,” he said.

Commenting on the recent suspension of talks with Japan on a planned second nuclear plant in the Black Sea province of Sinop, Superfin said Russia is also interested in those plans.

Turkish government officials have spoken about the possibility of planning a third nuclear facility, reportedly in the northwestern province of İğneada.

Prime Minister Recep Tayyip Erdoğan recently said the Akkuyu plant construction will start as early as April or May, a statement that surprised Superfin. “We cannot start construction until we receive the construction license,” he said. “The license will come after the completion of detailed site surveys and this will take at least a year.”

Russian engineers are scheduled to investigate the site at the end of the month, Superfin said.

Northwest may become 'new Detroit,' Turkish minister says

Thursday, April 14, 2011

GÖKHAN KURTARAN

ISTANBUL - Hürriyet Daily News 

 

A four-year strategy document for Turkey’s automotive sector, announced Thursday by Turkish Trade and Industry Minister Nihat Ergün, suggests a series of attempts to pump fresh blood into the sector.
Three northwestern provinces – Bursa, Adapazarı and Sakarya – “could become a new Detroit,” according to the minister.

“Turkey could increase its competitiveness with the new strategy plan designed with the participation of the leading distributors, manufacturers and associations of Turkish automotive industry,” said Ergün, speaking at the Istanbul meeting.

Political stability in the country over the last eight years has boosted the economy and the automobile sales climbed from 510,000 in last year compared with 90,000 in 2001.

Turkish auto sales hit a record last year, according to initial figures that indicate that nearly 750,000 vehicles were sold last year due to increasing demand.

Noting that production hubs of the automotive industry have been shifting toward to new regions, the northwestern provinces could be turned into a “new Detroit,” Ergün said. The total number of automobiles produced was nearly 500,000, Ergün said, “Turkey aims to increase the number to 1 million in next five years.” Ergün said Turkey is highly preferred by the leading global automotive companies due to the production cost and the quality.

Pointing out the risk that the domestic automotive sector faces, Ergün said, “Turkey’s foreign trade surplus, which was $5 billion, decreased to $3.5 billion and is finally down to $373 million.” Ergün said the Turkish automotive sector should not rely on increasing imports. Ergün said nearly one-third of automobiles sold in Turkey are produced in Turkey. “Automotive companies should increase their product range and export volumes.”

Ergün said leading companies in the sector would invest nearly $2 billion in new projects by the end of this year. Pointing out the importance of hybrid and electric cars for Turkey, “We have decreased the tax down to 3 percent in order to promote the use of green cars.”

A Turkish automobile brand 

The minister said Turkey could produce its own automotive brands. Noting that most of the well-known automotive brands import parts and equipment, he said, “Turkey could also start having it own brand with this way,” said Ergün. “I do not expect a 100 percent purely Turkish car,” adding that leaders of the sector should consider investing in a domestically produced Turkish car.

“Turkey has the capacity to manufacture its own car,” said the general manager of Skoda Turkey, Mahmut C. Kadribeyoğlu, talking to the Hürriyet Daily News & Economic Review. “At the same time it is not easy to have a global brand,” he added. “Unfortunately, Turkey does not have many global brands in general and it is even more complicated and harder to create a successful global brand,” said Kadribeyoğlu.


 Targets in the strategy document
1. Improving research and development infrastructure
2. Increasing production capacity and supporting innovation design and brands
3. Increasing the sales and existence in domestic and global markets
4. Improving legal and administrative processes in the sector
5. Improving physical conditions for Turkish automotive sector

Businessman invites Swedes for cheap labor, regional access

Thursday, April 14, 2011

GÖKHAN KURTARAN

ISTANBUL - Hürriyet Daily News

Turkish businessman İshak Alaton (L) and Erik Belfrage, senior vice chairman of Skandinaviska Enskilda Banken, shake hands during a Wednesday meeting.

Turkey offers Swedish investors vast opportunities for cheap employment and regional access, according to İshak Alaton, chairman of Turkish-Swedish Business Council at Foreign Economic Relations Board of Turkey, or DEİK.

It is beneficial for foreign firms to consider Turkey for future investment plans, said Alaton during his meeting with Swedish Trade Minister Dr. Ewa Björling and an accompanying delegation in Istanbul on Wednesday.

“While you would pay a minimum 2,000 euros for an employee’s monthly salary in Sweden, you could employ a quality employee for as little as 400 euros in Turkey,” she said.

Turkey could cooperate more with Swedish firms in biotechnology, information technology and energy, she added.

Turkish immigrants to Sweden have been a successful example of both social and economical integration, according to Alaton.

Besides, Swedish firms could plug into Iraqi and Iranian markets through Turkey, he said. Recalling the ongoing construction projects of his Alarko company in Kazakhstan, Alaton said Swedish firms may also benefit from the already established business links between Turkey and Central Asian countries.

The total number of nearly 130,000 people of Turkish descent living in Sweden might act as a bridge between the Swedish and Turkish companies, agreed Minister Björling.

“We aim to double the total volume of Sweden’s exports by 2015,” he said.

Swedish companies were particularly ready to cooperate in green energy in Turkey, he added.

“No country should be dependent on one type of energy for and not on supply from a single country either,” he said

The Turkish businessmen living in Sweden have invested nearly $100 million euros [in 2007] in a coronary stent production facility in Çatalca district in Istanbul, Alaton said. “Alvi Medica today is exporting nearly 90 percent of its production.”

Turkish banks performed efficiently during the global economic crisis, said Erik Belfrage, senior vice chairman of Skandinaviska Enskilda Banken, or SEB, told the Daily News.

The vice chairman said Turkey has gained a new role in its region, which gives hope about the economic stability of the country. Talking about Turkey’s European Union bid, Belfrage said, “We and Swedish firms fully support Turkey.

Turkey’s exports to Sweden still fall relatively short compared with the import figures, according to Alaton. Turkey’s exports to Sweden rose from $748.7 million to $967.3 million as of the end of 2010, according to Turkish Statistical Institute, TurkStat. Turkey’s imports from Sweden increased to $1.92 billion by the end of last year compared with $1.89 of 2009.

Libya to remain risky for Turkish businesses, professional says

Wednesday, April 13, 2011

GÖKHAN KURTARAN

ISTANBUL - Hürriyet Daily News

 

It is not likely for Turkish construction companies to restart business in Libya this year, a business representative tells the Hürriyet Daily News. Hardships in money transactions and insurance add to current security problems. Turkish businesses should focus on new markets to compensate for export losses in North Africa and the Middle East, says another

 

Libyan rebel fighters gather aboard a fishing boat which was stocked up with weapons, munitions and food supplies in the eastern Libyan port city of Benghazi in this Tuesday photo. 'Turkey has to be in risky waters,' says Tahsin Öztiryaki, vice chairman of Turkish Exporters’ Assembly or TİM. AFP photo

Turkish firms, particularly in the business of construction, with vast investments in Libya will need months to restart operations in the country, said a business representative.

“I do not think Turkish firms can restart operations again in Libya this year,” Hüseyin Ersin Takla, chairperson of Turkish-Libyan Business Council at Foreign Economic Relations Board of Turkey, DEİK, told Hürriyet Daily News & Economic Review.

Turkish businessmen have a total of $96 million savings in Libyan banks, he said.
The total volume of the guarantee letters for construction projects totaled nearly $1.5 billion at the end of last year.

Although employees and executives of Turkish firms have already left Libya due to protests and violence in the country, said Takla they are still facing serious problems with the operations, contracts, insurance, credit and payments for completed construction projects.

“Most of the contracts signed according to district laws vary from one to the other,” he said, adding that they might not be quite so binding.

Insurance policies of Turkish construction machinery are mostly at Libyan insurance companies, he said.
Due to the United Nations sanctions on Libya, money transactions are impossible, he said. “The only way the transactions could be done is through A&T, a joint-venture, 63.99 percent of which is owned by Arabs and 36.01 percent by Turks,” Takla said. “The remaining banks in Libya cannot make transactions.”

North African countries, mainly Libya, are crucial for the Turkish construction sector and building materials businesses, said Hüseyin Bilmaç, the chairperson of the Association of the Turkish Building Material Producers, or İMSAD, at the meeting.

“It is a market that we don’t want to lose. We consider this process as a short break,” said Bilmaç.

New focus: Africa 

Libya has nearly a 2 percent share in Turkey’s total volume of current exports, said Tahsin Öztiryaki, vice chairman of Turkish Exporters’ Assembly or TİM. “Certainly we are not going to sit and cry for our export losses in Libya but look for new alternatives,” he said.

Öztiryaki told the Daily News that other African countries might well compensate the export loss triggered by the political turmoil spreading across North Africa and Middle East.

“We will focus on new markets,” he said. “Recently with a delegation of Turkish businessmen we have visited Ghana, Ethiopia, Kenya and Gabon, and we were amazed with the trade and investment potential.”

Turkish construction companies inked deals for various projects worth of nearly $350 million during a group visit to Ecuador, he said.

Noting that India, Indonesia and Iraq have crucial importance for Turkish exporters, Öztiryaki said Turkey could compensate the loss in any of these other markets easily. “Northern Iraq is the top priority in trade relations and investment of Turkish firms,” he said.

Responding to a Daily News question on risks in Africa, he said, “Turkey has to be in risky waters.”

Turkish development aid volume jumps in one year

Tuesday, April 12, 2011

GÖKHAN KURTARAN

ISTANBUL - Hürriyet Daily News

 

Turkey’s international development aid has reached a total volume of $967 million, increasing by 23.8 percent since last year and surpassing many European countries, according to a recent report by the Organization for Economic Cooperation and Development, or OECD. Leading experts agree that Turkish international aid is correlated with its new escalating role in global politics and economics.

Turkey contributed $967 million in aid while the total aid from all donor countries totaled $129 billion in 2010, according to the report prepared by OECD’s Development Assistance Committee, or DAC. Turkey has exceeded the average growth of 6.5 percent of DAC member countries by 23.8 percent.

European Union members of the DAC provided a total of $70.2 billion, and Turkey outpaced Greece, Ireland, Portugal, Poland, Hungary and Luxembourg, according to DAC figures.

“Turkey’s contribution to international aid has a lot to do with its increasing role in global economics and politics,” said Veysel Ayhan, advisor at the Center for Middle Eastern Strategic Studies, or ORSAM.

“Most of the aid has been sent to conflict regions, such as Palestine, Lebanon and Yemen, and in turn, Turkey has boosted its soft power in these regions,” he told the Hürriyet Daily News & Economic Review.

According to Ayhan, Turkey’s contribution to international aid correlated with Turkey’s attempt to build its role and influence in conflict regions. Ayhan said, in relation to Turkey’s aid to Haiti after the earthquake of January last year, the country was spreading an important message to the world, “It showed the world that Turkey is keen to help a non-Muslim society in crisis time,” he said.

Turkey provided $1 million of financial aid to Haiti last year according to an official statement of Ministry of Foreign Affairs, including four military planes carrying a rescue team of 10 personnel and a total of 40 tons of humanitarian aid.

“Turkey has not used the instrument of aid efficiently for many years in international politics,” Ayhan told the Daily News, adding that he expects Turkey to increase the volume of international aid in the future. “Turkey changes the perceptions of the locals living in conflict areas through aid and opens the doors for Turkish firms to flock into the market.”

African interest

“If you are claiming that you are a real power you need to show this with your checkbook,” said Dr. Mensur Akgün, director of the Global Political Trends Center, or GPOT. “A couple of years ago, there was no Turkish interest in Africa,” he told the Daily Dews in a recent interview, adding that the country had become more active in the global and political economy in recent years.” he said.

In addition to official international aid by the Turkish government, many humanitarian foundations work collaboratively to collect donations for African states. “Turkey is building its reputation,” added Akgün.
“Turkey has turned into a real donor country,” said Cengiz Aktar, an Associate Professor at the European Union Relations Department of Bahçeşehir University in Istanbul. “Turkey was a receiver of international financial support for a long time, but this has changed rapidly in recent years.”

According to Aktar, the figures of DAC represent the official donations of the Turkish International Cooperation and Development Agency, or TIKA. “The increase rate of 23.8 in international aid is normal for Turkey as the country has been recently increasing the total volume of donation,” he said.

Crisis-hit EU members 

Crisis-hit Greece has decreased the total amount of its donations from $607 million to $500 million last year. Ireland also has also decreased the total amount of donation from nearly $1 billion to $895 million in 2010. Hungary donated in 2010 almost the same volume as its previous year with $378 million. Still, Portugal, the latest country to request a European Union bailout, increased the volume of its donations from $513 million to $648 million in 2010. Poland has increased its volume to $378 from $378 million last year.

Turkish pipeline operator laments debts due to gas price hike

Monday, April 11, 2011

GÖKHAN KURTARAN

ADANA - Hürriyet Daily News

 

Turkey's BOTAŞ International Limited, which operates the Turkish section of the BTC pipeline, has applied for international arbitration against the consortium that provides natural gas for the route due to operational costs. BİL chairman İbrahim Palaz tells the Daily News that the operational cost of the oil pipeline is higher than the profit defined by the agreement signed between the parties in 2002.

 

The operator of the Baku-Tbilisi-Ceyhan oil pipeline’s Turkish section is applying for international arbitration against its natural gas provider due to a dramatic rise in the price of gas, which the company needs to run its oil pumps.

“The agreement that was signed between the parties nearly nine years ago is causing a great loss of money,” BOTAŞ International Limited, or BIL, Chairman İbrahim Palaz told the Hürriyet Daily News & Economic Review on the sidelines of a press meeting in Adana on Sunday.

Palaz said BIL had posted nearly $31 million in losses and $91 million in debt at the end of last year and added that the operational cost of the oil pipeline was higher than the profit defined by the agreement signed in 2002.

Noting that Turkey has four major pump stations located in the eastern provinces of Ardahan, Erzurum, Erzincan and Erzincan, Palaz said, “These pumps operate with natural gas and the hike in natural gas prices has caused a great loss for the company.”

In the last five years, natural gas prices have risen 45 percent, he said, adding that the operational cost was “unsustainable this way.” In a period in the middle of March, the natural gas spot price jumped 13 percent.

The 1,768-kilometer-long crude oil pipeline starts in the Azeri-Çıraq-Güneşli oil field in Azerbaijan’s Caspian and connects Baku, Tbilisi and Ceyhan on Turkey’s southern coast. Since 2006, around 1.2 billion barrels of oil have been transferred through the pipelines.

The four oil pumps consume approximately $35 million worth of natural gas per year, Palaz said. “The prices were nearly $312 per thousand cubic meters in 2009 but this has now peaked up to $450.”

Because of the prices, the only way for BIL to avoid constant financial loss is for it to renegotiate the current agreement with provider Baku, Tbilisi and Ceyhan Consortium, or BTC Co. and “fix the natural gas prices,” Palaz said.

The operational income of the company will be nearly 27 cents per barrel of oil until 2021, but will be updated in 2021 and increased to 43 cents per barrel, according to the agreement.

“Natural gas prices are increasing day by day, leaving us no option but to take a loss. Since we cannot increase the actual income per barrel of oil before 2021, we will continue to lose money,” Palaz said.
“Fixing the prices of natural gas per thousand cubic meters at $110 or below might give a breath to the debt-stricken company,” he said.

If the situation is not rectified, the company could go default on its debt, which might mean that one of the most important export routes for Caspian oil could be threatened, he said.

In order to continue the operation, the company has outsourced financial support from Turkish lender Vakıfbank over the past five years at a cost of roughly $195 million.

Palaz also said the operational income of BIL was lower than Azerbaijan and Georgian operations, noting that while Azerbaijan and Georgia charged 78 cents per barrel of oil, Turkey charged 35 cents at the moment.
The BTC Consortium could make some changes in the agreement as a result of international arbitration in the next six months, said Palaz.

Palaz said he was assigned to his current position in the company with the encouragement and invitation of Turkish Energy Minister Taner Yıldız nearly 13 month ago. “Yıldız knows the current situation of the company and supports me fully in this challenge of changing the fate of the company.”

‘Company is losing money’

“The claims of loss brought forward by BIL do not mean Turkey has a financial loss, it is the company itself that loses the money,” Murat LeCompte, the director of communications and external affairs for Turkey at BP, which leads the 11-members consortium that controls BTC Co., told the Daily News on Monday.

LeCompte said Turkish authorities could apply a transit pass tax that would amount to 20 cents per barrel.
“There could be no loss in that sense,” he said, adding that the tax was similar to corporate taxation.
The BP official also said Turkey collected a “good amount of tax” out of the oil running through its 1,076-kilometer share of the BTC pipeline.

The Turkish Petroleum Corporation, or TPAO, has close to a 6.53 percent share in BTC Co., LeCompte said, adding that the Turkish corporation received 6.3 million barrels of oil per year in return for the share. “If you calculated this amount with current prices, this would make a serious profit.”

Regional turmoil costs Turkey $384 million in trade losses

Sunday, April 10, 2011

GÖKHAN KURTARAN

ISTANBUL - Hürriyet Daily News

 

Turmoil in the Middle East and North Africa, rising stars for Turkish exports, has caused a trade loss of approximately $384 million for the country, but hope for recovery remains. 'If you stayed at home and did not shop for a few weeks, you would most likely be able to purchase at least four times more than the usual amount,' says the head of an export association

 

Rebel fighters rest by a mosque hit by artillery fire in the restive eastern town of Ajdabiya, Libya, on Sunday. Turkey's exports to Libya have fallen by 43 percent in the first quarter of 2011 compared with the same period last year. AFP photo

Turkey’s trade with countries in the Middle East and North Africa – a region that offered Turkish business new markets during the recent economic crisis – has been deeply affected by political uprisings and unrest, figures have shown.

The country’s exports to Libya, Egypt, Yemen, Tunisia and Syria slumped nearly $384 million by the end of the first quarter of 2011 compared with the same period last year.
The biggest decrease has been in exports to Libya, which dropped 43 percent, followed by Egypt and Yemen with a 24 percent drop and Tunisia at 20 percent. The unrest in Syria over the last three weeks caused nearly a 5 percent decrease in Turkish exports in the first quarter of the year according to figures provided by the Turkish Exporters’ Assembly, or TİM.

“We never expected these events to take place and spread to all the countries one by one,” an executive of the Aegean Exporters Union said in a phone interview last week, speaking on condition of anonymity. “We will need to wait at least for one more month to see the temporary and permanent results of the unrest in the Middle East and North Africa.”

Most Turkish exporters were not prepared for such instabilities in the region, he said.

“The figures are basically the result of the ongoing tension in the region,” Rona Yırcalı, the board chairman of the Foreign Economic Relations Board, or DEİK, told the Hürriyet Daily News & Economic Review earlier this month. “I believe the export figures will change in the second and third quarter of this year in a positive way,” said Yırcalı, noting that Egypt and Tunisia had already started to show recovery signs.

 

“I believe that the decrease in export figures will not continue in the long run,” Tarık Bozbey, the head of the Mediterranean Exporters Union, told the Daily News. He said the needs of Libya, Egypt, Tunisia, Yemen and Syria would be high after the current unrest subsides, creating a demand for more exports.
“If you stayed at home and did not shop for a few weeks, you would most likely [be able] to purchase at least four times more than the usual amount,” he said.
Exports to Libya decreased from nearly $146.6 million in January to $23.5 million by the end of March due to the rising unrest in the North African country as Turkey’s total export volume slumped from $457.2 million in the first quarter last year to $272.8 million by the end of the first quarter this year.

Turkish exports to Egypt also plummeted, decreasing from nearly $618.8 million to $487.5 million. The total amount of exports to Tunisia sharply decreased to $145.1 in the first quarter of this year, down from $184.2 million in the same period last year.

Total Turkish export volume to Syria – the latest Middle Eastern country hit by an uprising – decreased nearly 5 percent in first quarter of 2011. The Syrian economy has not been greatly affected by the popular protests, which have spread to the country in the past two weeks, and the Central Bank has enough liquidity to cover imports or withdrawals without any problem, Syrian Central Bank Gov. Adib Mayeleh said Monday, according to Bloomberg.

Despite the encouraging messages from Syrian authorities, Turkish exports to Syria have also decreased from nearly $419.1 million to around $411.4 million since the same period last year.

Crisis-hit US property market may whet Turkish investors' appetite

Sunday, April 10, 2011

GÖKHAN KURTARAN

ISTANBUL - Hürriyet Daily News

 

Astrum, a US-based investment fund founded and managed by a Turkish-American, says the slowly -recovering US property market promises great opportunities for foreign investors, particularly Turkish businesspeople. The fund also recommends investing today to gain big money five years later. Still, the plan signals macro and micro risks

 

A sign for a realty company is displayed in front of a short sale home in Lake Worth, Florida. Investment fund Astrum says it might buy houses for Turkish investors in US.

The top executive at a U.S.-based investment fund has invited Turkish investors to take advantage of low-priced properties in the crisis-hit real estate market in the United States.

“This is the right time to invest in the U.S. real estate market,” Nevin Sanlı told the Hürriyet Daily News & Economic Review on the sidelines of a sector meeting in Istanbul on Friday.

Sanlı, who is of Turkish descent, also warned investors about a possible burst in the growing Turkish market.
His company, Astrum Investment Management, or AIM, will raise $50 million initially from Turkish investors and borrow over $70 million to invest in U.S real estate, as the values are at or around 50-year lows, Sanlı said.

“The fund will buy properties now, stabilize and improve them and sell when the economy recovers,” he said, noting that the fund promised a 17 percent annual profit over five years from office and medical buildings and apartments to be rented by the U.S.-based company.

Under Sanlı’s plan, the company will purchase at least a dozen buildings in the U.S. The investment will generate an estimated 60 percent net operating income in this five-year plan.

“A potential investor needs to put a minimum of $1 million and maximum of $5 million into the fund,” he said. Investors cannot directly withdraw before the five-year period ends.

“There might be gradual payback of the investment in two years’ time if the investor wants to leave the fund, with no interest plus a certain fine,” he said.

“With a total purchase power of $118.75 million, we aim for a 115.7 percent – after U.S. taxes – return to investors on capital,” he said.

“I personally am investing $1 million into AIM and also bear the operational expenses of the firm,” Sanlı told the Daily News.

Sanlı said at the meeting that in order to avoid the bureaucratic details for foreign investors, the company would function through an offshore firm to be located either in Belgium or Luxembourg.

Responding to the Daily News’ question on which country would be a competent authority in the case of a dispute between the investor and AIM, Sanlı said, “it could be arranged according to an agreement: Turkey, the U.S., Belgium or Luxembourg.”

Recovery chances

Larry Kosmont, chief investment officer and a shareholder of AIM, said the U.S. economy was expected to continue its modest recovery this year. “But it remains fragile due to high unemployment, a depressed housing market, consumer debt and mixed confidence levels.”

Noting that the U.S. economy had been going through the worst economic crisis triggered by the mortgage crisis, Kosmont said, “I believe that it’s the right time for investors to buy properties at low prices right now.”
Pointing out that 5 million jobs were lost in 2009 in addition to another 3.6 million in 2008, Kosmont said, “Over 10 million homes have been foreclosed since December 2007 and historically low home prices have started to attract buyers.”

The empty houses would sell faster when people get back jobs, he said. “Companies in the U.S. are still hesitating to add long-term jobs.”

Noting that the commercial real estate market appears to be heading in the “right direction,” Kosmont said, “Occupancy demand is on the way up and rents are still at bottom but a possible increase is also coming.”
New construction projects will be at a minimum for a couple of years, he said, predicting that a lack of new buildings would luckily support gradual rent increases over the next few years.

Addressing journalists, Kosmont said the fundamental signals support a buying strategy. “The possible exit strategy will be in five years when the prices of the real estate reach its peak point,” Kosmont said. “South Korean pension funds and other big investors are buying and looking for opportunities in the U.S real estate market.”

Turkish real estate bubble on the way?

Exaggerated prices for houses in Istanbul could lead to a real estate bubble, according to the director of a U.S.-based investment firm.

“Most of the houses are overpriced in Istanbul,” Nevin Sanlı, director of Astrum, told the Hürriyet Daily News & Economic Review.

“If the prices are as high as $2,000 per square meter for some apartments in Istanbul, I start having doubts about what could happen when the house is on sale again for the second buyer,” he said. “It is sure that the first seller of the house would make a great profit, but the house might stay in the hand of the owner as the buyer already purchased the property at the peak price.” 

Talking about the Turkish real estate market, Larry Kosmont, chief investment officer and shareholder of Astrum Investment, said, “The real estate sector is significant.”

“The Turkish real estate sector reminds me of the margins that we had six years ago,” he said, adding that it was in Turkish investors’ best interest to diversify risk by investing in different countries rather than focusing on a single location.

Taiwanese firms seek new markets via Turkey

Friday, April 8, 2011

GÖKHAN KURTARAN

ISTANBUL - Hürriyet Daily News

 

Numerous Taiwanese firms are planning to invest in Turkey to export products to access new markets such as Hungary, Belarus and Russia, a Taiwanese deputy minister told the Hürriyet Daily News & Economic Review after the opening ceremony of a fair Thursday in Istanbul.

“We are pleased to witness Taiwan’s involvement in over 20 investment projects in Turkey such as Asus, a major computer company, and Micro Star, a computer main boards, graphic cards and notebooks manufacturer,” said Sheng Lin, deputy minister of economic affairs, in an interview during a Taiwanese business mission’s visit to Istanbul.

The mission included representatives from 57 companies and was led by the deputy minister.
 “Other prominent Taiwanese companies that have been actively participating in Turkey’s economic activities include shipping giants Yang Ming Marine Transport and Wanhai Lines,” Sheng said.

There could be more firms that are looking for opportunities for investments, according to him. “Our firms may penetrate the Hungarian, Belarusian and Russian markets through Turkey. We are trying to understand the dynamics of the Turkish market.”

Noting that Taiwan is globally recognized for its technological products and services, Turkish market has significant importance for Taiwanese firms, Sheng said.

Machinery trade

“Many Turkish industrialists purchase their machines from Taiwan as most of the Taiwanese products are in good shape for reasonable prices,” said Erdal Gamsız, president of the Machine Tools Industrialists and Businessmen’s Association.

“Turkey imported nearly 3,000 machines from Taiwan,” he said. Gamsız said, “Turkey is seen as the rising star of the world by Taiwanese companies.”

Turkey is currently Taiwan’s 36th major trade partner according to the official figures of Taiwanese Ministry of Economy. Turkish export volume to Taiwan is relatively small compared with the import volume. Turkey’s exports have reached nearly $130 million by the end of 2009 and its imports were recorded as $1.34 billion in the same period of the year.

Last year, Turkey’s export volume to Taiwan reached $136.7 million while Taiwan’s exports reached $1.84 billion. In the first three months of this year, Turkey exported goods worth nearly $12.5 million as the import volume reached nearly $280.5 million.

In search for a global standard in Islamic banking

Wednesday, April 6, 2011

GÖKHAN KURTARAN

ISTANBUL - Hürriyet Daily News 

 

Islamic banking is growing rapidly in the aftermath of the global financial crisis, but it desperately needs a global set of standards that every country and institution accepts. Speaking to the Hürriyet Daily News in Istanbul, an expert says the Turkish Central Bank might ‘take the lead’ in this effort. ‘Risk has no religion,’ says Khalid Ferdaus Howladar of Moody’s, adding that he likes the Turkish term ‘participation bank’

 

Khalid Ferdaus Howladar of Moody's (third from L) is seen on stage with other officials including Turkish Central Bank Gov. Durmuş Yılmaz (third from R) in Istanbul during the 'Seminar on Managing Liquidity In The Islamic Financial Services Industry' held April 6, 2011. AA photo

Turkey may not be ready to take a prominent place in the world of Islamic finance due to the ongoing political tension on religion’s role in the society, but an expert says Islamic finance needs input from the nation on how to proceed.

Noting the often-contradictory interpretations of the principles of Islamic banking, Khalid Ferdaus Howladar, the vice president and senior credit officer of Moody’s in the Middle East, suggested that the Turkish Central Bank might “take the lead” in establishing a global standard that would help Islamic banking become more transparent.

Howladar was speaking to the Hürriyet Daily News & Economic Review in Istanbul on the sidelines of the “Seminar on Managing Liquidity in the Islamic Financial Services Industry” event held Wednesday.

Speaking at the event, Central Bank Gov. Durmuş Yılmaz said the establishment of a “carefully designed and constructed” Shariah inspection board could be a step in the right direction, without mentioning any possible role Turkey might play in this.

“As a new and developing banking model, Islamic banking has some deficits compared to conventional banks,” Yılmaz said. “In the latter, which has a well-developed interbank money market, lenders [can choose from] various instruments.” He noted that because these instruments rely on interest they cannot be a choice for Islamic banks.

“In the Islamic world, there are various problems about the terminology, products and contracts in Islamic banking,” Howladar told the Daily News. “The terms used in Islamic banking do not necessarily have the same meaning in different countries. The meaning often changes from one bank to another.”

He gave examples of the use of “musharakah,” a joint venture agreement between two or more partners, whereby each partner provides funds to be used in a venture, or “mudarabah,” a special kind of partnership whereby one partner gives money to another for investing it in a commercial enterprise. The meanings of these two accords are interpreted differently in different countries.

“There is no global standardization in Islamic banking yet,” Howladar said, emphasizing the key problem of Islamic banking.

Central banks to the center stage

However, he suggested a way out – one that gives Turkey a key role. The much-needed standardization could be attained through the cooperation of the central banks in countries such as Turkey, Qatar and Malaysia. “In that sense, Turkey might become a model for protection of consumer rights in Islamic banking and lead other central banks in bringing standardization,” Howladar said.

He said the conclusions of the Islamic Financial Services Board, or IFSB, an international standard-setting organization, are not binding. As opposed to a powerless organization, cooperation among central banks could create “some power to bring a standard into Islamic banking in the global sense,” he said.

The interest in Islamic banking has been on the rise, particularly after the global financial crisis. Last year, the global size of the industry stood at around $1 trillion. In 2015, the figure is expected to surge to $2.7 trillion. Interest rose in the aftermath of the crisis, as Islamic banking is strictly linked to underlying real assets, as opposed to “exotic” derivatives that played a great role in triggering the crisis.

“I like the way that Islamic banking is named participation banking in Turkey,” said Howladar, pointing out that the industry is not just for the use of Muslims, but has become an alternative for non-Muslims, too. Thus, the term “participation banking” might attract non-Muslims, he said. “Risk has no religion.”

Yuan trade spurs Chinese banks to rush to Turkey

Tuesday, April 5, 2011

GÖKHAN KURTARAN

ISTANBUL- Hürriyet Daily News

Pedestrians walk past a branch of the Industrial and Commercial Bank of China. Bloomberg photo

Several Chinese banks are preparing to enter the Turkish market by opening branches, a Chinese state official has said.

These potential investors include Industrial and Commercial Bank of China, or ICBC, Ning Zhang, secretary-general of the standing committee of Shenyang Municipal People’s Congress told the Hürriyet Daily News & Economic Review during a Tuesday meeting in Istanbul.

“The interest in Turkey has increased among Chinese finance institutions and I encourage them to open branches in Turkey,” Zhang said.

ICBC is looking for opportunities to open branches in Turkey, according to him. “Turkish and Chinese relations are bound to increase,” he said.

“Having financial institutions actively working in both countries would also increase the foreign direct investment [FDI] volumes.”

Turkey and China agreed to use their currencies, the Turkish Lira and the Chinese yuan, in bilateral trade relations said Turkish Prime Minister Recep Tayyip Erdoğan after having talks with Chinese Premier Wen Jiabao during his official visit to Ankara in November.

“In order to improve the trade and investment relations, we should have Chinese banks operating in Turkey,” Hüsnü Özyeğin, chairperson of the Foreign Economic Relations Board of Turkey, or DEİK, also told the Daily News. “During my visits to Europe, I see new ICBC branches recently opened in Amsterdam, Paris and Frankfurt. I want to see Chinese banks in Istanbul, which is defined as a global finance center according to the master plan of the State Planning Organization.”

Noting that trade ties have developed rapidly between Turkey and China in the last 10 years, Özyeğin said, “I believe the relations could be stronger if Chinese banks would come and open branches here.”

An industrial group that is not involved in trade and investment relations with China could not continue to grow, Özyeğin said at the meeting attended by a delegation of Chinese bureaucrats.

Noting his FİBA Holding’s $250 million shopping mall investment in Shenyang, Özyeğin said Shenyang is an inviting place to make new investments. The mall is set to open in November.

Özyeğin said the gross domestic product volume of China exceeded $5 trillion by the end of last year and left the Japanese economy behind. “The size of the Chinese economy will hit $12.5 trillion by 2020,” said Özyeğin. “This means that an economy the same size as Germany or Japan will be added to the Chinese economy.”

Sectors

Addressing journalists, Özyeğin said, “There are many chances for possible Chinese investors in Turkey,” adding that there should be more joint ventures formed by Turkish and Chinese firms for making investments in power plants, wind and solar power stations, logistics, ports and mines in Turkey. The number of Chinese firms in Turkey hit 400 by the end of January this year.

“Unfortunately only 34 of the Chinese companies have total capital more than $500,000 in Turkey today.”
Turkey has set up 61 enterprises in Shenyang, one of the most industrialized provinces in the Asian country, with actual use of capital of $27.2 million by the end of August last year, according to figures of the Department of Commerce of Shenyang province.

Turkish firms mainly operate in textiles, communication equipment, computers and other electrical equipment manufacturing.

On the other hand, 36 Chinese firms from Shenyang have invested nearly $25.7 million in machinery, electronics and textiles in Turkey.

Turkey’s export volume to China is still low compared with the booming imports of Chinese products in recent years. Turkey’s exports to China increased from nearly $1.6 billion to 2.25 billion last year while the total volume of imports skyrocketed from $12.67 billion to $17.18 billion by the end of 2010, according to the Turkish Statistics Institute, or TurkSTAT.

“In order to balance the import and export volumes, we should have more Chinese firms investing in Turkey,” said Özyeğin. “We could not compete with the Chinese economy only with nuts and dried fruits.”

Millennium Bank to be renamed

Millennium Bank will fully operate with a new name in the Turkish finance sector in the next three weeks according to Hüsnü Özyeğin, chairperson of the Foreign Economic Relations Board of Turkey, or DEİK, in remarks to journalist on Tuesday at a press meeting held in Istanbul.

Turkey's FİBA Group, owned by Özyeğin, signed an agreement with Banco Comercial Portugues to purchase 95 percent of Millennium Bank in Turkey for $88 million in February last year.

Responding to the criticisms that Turkish Central Bank’s recent measures might decrease the profits of Turkish banks, Özyeğin said, “The decisions and measures of the Central Bank in order to fight the increasing current account deficit are totally right.”

Özyeğin, the third-richest man in Turkey, has $3 billion in wealth, according to Forbes Magazine’s latest report. He also owns Amsterdam-based Credit Europe Bank NV, which operates in countries including Russia, German and Romania.