30 Mayıs 2011 Pazartesi

Business as usual between Turkey, Israel

ISTANBUL - Hürriyet Daily News

The diplomatic tension between Turkey and Israel since a deadly attack last year on a Gaza-bound aid ship has not hampered mutual trade, which continues to rise on the sale of military and other goods.

While Turkey purchases high-tech defense-industry equipment from Israel, the military goods going the other way mostly include boots and uniforms. “Turkey dresses the Israeli army, mainly exporting army boots,” said an executive from Turkey’s Yakupoğlu, who spoke to the Hürriyet Daily News on Monday on condition of anonymity.

The company manufactures materials in Ankara and exports them to Israel. Despite the political problems between the two countries, there has been no interruption in the firm’s business thus far, the executive said.
The export of military boots constitutes just a tiny portion of the long-standing trade relations between the two parties, and both Turkish and Israeli businessmen are enjoying a golden age of trade as official figures indicate that commercial bonds are stronger than ever.

Trade between Israel and Turkey increased by 25 percent between 2009 and 2010, and by 40 percent in the first quarter of 2011 compared with the same period last year. Bilateral trade by the end of last year peaked at $3.442 billion, up from $2.580 billion in 2009.

“Turkey and Israel’s business relations are getting stronger despite the political conflicts,” Uriel Lynn, the president of the Tel Aviv & Central Israeli Chamber of Commerce, told the Hürriyet Daily News on Monday.
“Turks and Israelis are not in a fight – the trade boom in both countries proves that,” said Lynn, adding that the “bilateral trade and investments have not been affected by the political situation at all.”

Political relations between the two countries have been strained since Israeli soldiers staged a raid May 31, 2010, on the Mavi Marmara, the lead ship of an international flotilla trying to breach Israel’s blockade of the Gaza Strip. The raid led to the death of eight Turks and one American of Turkish descent. A second attempt to break the Israeli blockade of the Palestinian territory is set sail in late June, with the Mavi Marmara and 14 other ships carrying humanitarian aid departing for Gaza from various European ports.

‘Free market wins’

“The main sectors in the recent increase of the bilateral trade volume [between Turkey and Israel] are mainly chemicals and metals,” Lynn said, noting there are several reasons for this increase and “none of them is connected with the political situation.”

He said both countries are enjoying the rise based on free trade agreements and economic growth. “The bonds between the Turkish and Israeli business sectors are still strong,” Lynn said. “All the reasons prove that in spite of political disagreement, the free market wins.”

Turkey made exports worth $2.083 billion while importing $1.359 billion worth of goods from Israel last year, according to Turkish Statistical Institute, or TurkStat, figures. In the first three months of 2011, Turkey exported products worth $579.3 million to Israel and imported goods worth $397.3 million.

Iron, steel, automotive products, oil and oil products, electrical machinery, chemicals, building materials, ready-wear products and metal goods are the main products exported from Turkey to Israel. In addition, there has been a rise in exports from Turkey of plastics, textiles, semi-precious stones and transportation equipment, according to the Israeli Chamber of Commerce.

Biggest trade partner

Turkey is currently Israel’s biggest trade partner in the region and its second-biggest in the world, following the United States, according to Ahmet Reyiz Yılmaz, the head of Yılmazlar Group, which has been undertaking large construction projects in Israel for many years.

He said Turkey could replace the United States in trade with Israel if the volume keeps climbing at its current pace.

“The inhumane attitude and the state terror conducted by Israel may cause the discarding of all trade figures, no matter how high they might be,” Zafer Çağlayan, Turkey’s state minister responsible for foreign trade, told the press in Ankara last year in the wake of the Mavi Marmara raid.

Some obstacles rooted in the political unrest between the two countries do still concern some Turkish businesses in Israel.

“The Israeli Foreign Ministry has rejected extending the visas of more than 1,000 Turkish laborers,” said Ahmet Reyiz Yılmaz, head of Yılmazlar Group, the only Turkish construction company running projects worth nearly $2 billion. Yılmaz is also the head of Turkey’s Nationalists and Conservative Party.

“We have been actively running construction projects in Israel for 17 years,” he said, noting that the Israeli authority’s rejection of the visa extensions causes delays and interruptions in his business. “The Turkish government also remains indifferent to our situation,” Yılmaz, said, adding that he is expecting resolution from the decision-makers of both countries.

Turkey may become an oil, gas medidator, says former Armenian PM

Sarkisian suggested Turkey and India partner with each other on the vast Arctic resources.

Sarkisian suggested Turkey and India partner with each other on the vast Arctic resources.
Turkey could play a significant role in mediating between energy dependent Europe and oil- and gas-rich Russia and Iran, said Aram Sarkisian, a former Armenian prime minister and energy professional today.

“Without Russia and Iran, Caspian oil and gas could not be transferred to Europe,” Sarkisian told the Hürriyet Daily News over the weekend.

“The pipeline projects to bring the vast resources of the Caspian region to Europe through Turkey are still in question,” said Sarkisian, who is currently the president of Euroasia House, a London-based institution involved in research and policy development on Russian oil and gas. “Conditions have changed rapidly in the Caspian region including Turkey after the Baku-Tbilisi-Ceyhan crude oil pipeline was stretched from Azerbaijan to Turkey,” he said, noting that delays in the implementation of alternative pipelines to Europe might end up with irrecoverable losses.

He was speaking on the sidelines of “Global Energy Outlook” conference organized by the Istanbul International Energy and Climate Center at Sabancı University.

Urge for Nabucco

“Turkey is the only country that could bring Iran and Russia together again to open negotiations for energy security in the region,” he said. "Russia has always been seen as a mistrusted neighbor, due to historical constraints. Armenia's confidence in Russia may be established by Turkey as it became one of the Russia’s strongest energy partners."

According to him, as the energy demand rises in Europe, the long-term discussions over the details of the route of the Nabucco plan, the gas bridge project from Asia to Europe, should come to an end.

The pipeline to connect the world’s richest gas regions – the Caspian region, Middle East and Egypt – to the European consumer markets, might “change its route to China due to rising demand in Chinese market,” he said. “I think the European Union has no energy policy,” he said. “The vast sources of Caspian oil and gas might go to the Chinese market eventually if Europe keeps on waiting, delaying the projects.”

Emphasizing Turkey’s close ties with Russia, the former Armenian prime minister said the trust harmed by the disagreement resulted in supply disruptions in many European nations, with complete cutoffs of their gas supplies transported through Ukraine from Russia in 2009 “could be restored by Turkey.” In order to have sustainable energy security in the region, “we all have to trust in each other in the region,” Sarkisian told the Daily News.

Arctic resources 

Moreover, Sarkisian suggested Turkey and India partner with each other on the vast Arctic resources. “Turkey and India, as emerging economies, should have a say on the Arctic oil and gas resources,” said Sarkisian.

Total Arctic resources are estimated to be nearly 90 billion barrels of oil, 1.67 trillion cubic feet of natural gas, and 44 billion barrels of natural gas liquids, according to the U.S. Geological Survey.

Emphasizing the importance of the vast oil and gas resources in Iran, Sarkisian said, “Being a European country both economically and culturally, Turkey can mediate between Iran and the European Union to make use of the vast resources there.” Without the approval of Iran, Caspian resources could never be fully developed, according to Sarkisian. “Everyone waits for the change in the Iran, but the change will come once the EU starts opening its doors to relations with Iran.”

Istanbul’s house sales down by 37 percent

Despite the relatively positive outlook of the Turkish economy, Istanbul real estate sales dropped 37.5 percent by the first quarter of the year.

The Istanbul property market was going through a “super-saturation of the market,” according to a top professional, speaking to the Hürriyet Daily News on Friday.

“Many housing projects including luxury accommodation accumulated quickly in the Istanbul property market, while the demand has not increased,” said Serdar Bacaksız, the board member of Limak Holding, in a phone interview. “Looking from an investor’s point of view, the property projects developed in Anatolian cities may be attractive with more affordable prices, compared to Istanbul,” Bacaksız told the Daily News.

“While looking around the city, I come across new giant projects almost everyday,” said Bacaksız, adding that the prices per square meter are hitting “astronomical levels,” which might be difficult for the average income consumers. “The market might be saturated already,” he said, referring to Istanbul’s property market.

Real estate sales in the Turkish market increased by 6.07 percent in the first quarter of the year compared to the same period last year, according to the Turkish Statistical Institute, or TurkStat. On the other hand, the Istanbul property market experienced an “unexpected decline” in the number of houses sold, representing a 37.5 percent decrease in the first quarter of this year compared to last year. The figures showed that 91,071 houses were sold in the first quarter of 2011.

Housing bubble

Opposing the claims of a “housing bubble” in the Istanbul property market, İsmail Kazanç, vice general manager of Torunlar, said the figures “far from reflect today’s conditions and facts.”

“The figures basically reflect the past two years of the crisis rather than the demand and pre-sales agreements we have today,” Kazanç said.

The biggest rise in house sales was recorded in the eastern provinces of Ağrı, Kars, Iğdır and Ardahan, with over 90 percent in the fist quarter compared to the same period a year earlier, according to TurkStat.

IFC ready to fund Turkish firms to invest in energy projects

The International Finance Corporation, or IFC, a member of the World Bank, said it might support Turkish companies struggling to pay the amounts promised for the country’s energy privatizations.

“We are open to support Turkish firms bidding for energy projects,” said Lars Thunell, executive vice president and chief executive of the IFC, during a Thursday interview in Istanbul.

Recalling that the IFC raised the amount of funds allocated for Turkey from $500 million to $1.3 billion for this year, Thunell said, “We plan to invest nearly $3 billion including syndication credits in Turkey during the next four years.”

Some Turkish companies experienced difficulties in paying the privatization amounts of electricity grids this year. Park Holding, the top bidder for Akdeniz Elektrik, the electricity distribution grid in Turkey’s Mediterranean region, announced earlier this week that it could not afford the $1.1 billion it promised.
The top bidders for Istanbul’s Anadolu and Rumeli grids, Toroslar, Dicle, Gediz and Trakya grids have also demanded extra time to make their payments. The due date for the payments was May 31.

MMEKA Makine, a joint venture between businessmen Mehmet Kazancı and Mehmet Emin Karamehmet, failed on May 9 to pay $1.21 billion for the privatization of the Başkent Doğalgaz, the natural gas grid in the capital city of Ankara.

“In general, our door is open to provide funding for such companies,” Thunell said, speaking to the Hürriyet Daily News. Recalling that the IFC has been interested in Turkey’s energy distribution companies, he said, “If we have an offer, we would consider such investments.”

Transforming the Istanbul office into a “regional headquarters” last year, the IFC in Turkey covers 30 countries across the Europe, Middle East and North Africa, or EMEA region.

The corporation invested nearly 35 percent of last year’s global fund in this region and the IFC invested a record $18 billion last year, said Thunell, adding that the EMEA region directed from Istanbul received nearly $4.5 billion by 2010.

‘Southern Corridor’

Responding to a question on the European Commission’s search for investors to form a possible “Southern Corridor” to bring natural gas from Iraq and the Caspian region to Europe, Thunell said: “We are interested in such projects. We are ready to help Turkish companies.”

“The business plans of firms needs to be evaluated for such a decision,” he said. “Our capability is also important as the size of these projects is huge, so one cannot just rely on a single source.”

“We are also bringing other investors to Turkey since the country has performed significantly well during the last couple of years, especially during the global economic crisis,” he said. Turkish companies are “flexible players.”

“It has been interesting to see Turkish companies evolving into regional powers, investing in Eastern Europe and Russia and then penetrating into the Middle East.” The trend is now the vice versa due to the regional turmoil in Middle East as “the companies are back to focusing on the Eastern European market,” he said.
The European Commission will seek investors for pipelines that could form a so-called Southern Corridor, according to Energy Commissioner Guenther Oettinger, reported Handelsblatt, a German newspaper, Wednesday.

Arab spring to boost regional economy 

“The Arab Spring will bring real opportunities to the region economically,” said Thunell, adding that the process may be tough for this year and 2012. The size of economies with less political interference could boost the trade and investments in the turmoil-hit region.
“The World Bank allocated $6 billion recently to restructure the economy in Egypt and Libya,” said Thunell, adding that it is too early to reveal a similar fund for Syria.

25 Mayıs 2011 Çarşamba

Dubai firm trusts in Turkish real estate market

The Turkish real estate market has been the shining star in its region, Ümit Türüdü Şen of Emaar says.

The Turkish real estate market has been the shining star in its region, Ümit Türüdü Şen of Emaar says.
Emaar, United Arab Emirates’ biggest property developer by market value, has invested $700 million in a luxurious project on the European side of Istanbul. The company is now planning to build some 2,100 residences on the Asian side of the city this year, said Ümit Türüdü Şen, vice general manager of the Turkey branch of the company, during a press meeting Tuesday.

“The Turkish real estate market has been the shining star in its region,” Şen told the Hürriyet Daily News on the sidelines of the meeting.

Comparing the local property market with Dubai, the homeland of the investor, Şen said, “The Turkish property market has been driven by domestic demand, which stabilizes constant growth and attracts foreign investors as well.”

Turkey’s real estate market recorded 25 percent growth in the third quarter and 17.5 percent in the last quarter of 2010, according to official figures. Şen said many analysts predict a steady increase in property prices and rent due to the increasing demand. According to the manager, investments in the real estate sector would increase by 10 percent by the end of this year.

Taking about Emaar’s investment in the Büyükçekmece district of Istanbul, Şen said, “Toscana Valley project on 1.7 million square meters of land cost around $700 million up to now.”

She said nearly 40,000 square meters of shops would be built as part of the giant project in addition to hotels and a hospital. “These additional investments are not part of the amount,” noted Şen.

Inspired by the Italian architectural style, Tuscan Valley Project includes 540 luxury units including villas, apartments and townhouses ranging from 149 to 940 square meters and set in 12 different types. The prices range between $528,000 to $2.3 million, said Şen.

“Foreigners are interested in Turkey’s property market,” said Şen, noting that they are primarily encouraged by the booming demand in recent years in Istanbul. “The young and dynamic population of the country desires owning a stylish house,” added Şen. According to Şen, nearly 35 percent of Toscana Valley project has already been sold to foreigners, which shows that Eastern and Western countries are motivated to own a house in Istanbul. “While Middle Eastern ones become interested in the Turkish market after watching Turkish TV series, Europeans primarily concentrate on investment opportunities in the sector,” said Şen.

The property sales to foreign nationals stood at nearly $3 billion, according to a recent report of Association of Real Estate Investment Companies, or GYODER. The amount dropped to $800 million at the end of 2009 due to the global economic crisis’ affect on Turkish property sector. The amount rose back to $2.5 billion by the end of last year, close pre-crisis levels.

Emaar also plans to build a giant a multi-purpose development project including 1,200 luxury residences, a shopping mall and a five-star hotel in Çamlıca district on the Asian side of Istanbul. The mall would the largest mall of the Asian side, according to Şen. The project to be built on 74,000 squares of land would expect to start by the third quarter of this year, she said. The company has invested a total of $400 million to purchase the expensive plot of land.

23 Mayıs 2011 Pazartesi

Global headhunters seek Turkish executives

Monday, May 23, 2011

Representatives from several international headhunter companies say employing Turkish employees is becoming a trend for corporations. Being raised in an emerging market, practical attitudes and ability to adapt to new conditions are the basic advantages of Turkish professionals
Qualified Turkish employees could fill the talent gap in many international companies seeking growth in other emerging markets, said several representatives of Executive Search Worldwide, or INAC, the global headhunter companies' body.
“Turkey is already the global center of talented, well educated, experienced executives, who respect the cultural values and background of others and can adapt to varying business environments,” said Ali Midillili, founder of MSearch Turkey, a research and consultancy firm, at the “Bridging the Talent Gap,” conference held in Istanbul on Monday.

Some 26 global executive search companies from 35 countries attended the event.
“We have not yet received inquiry for Turkish executives,” said Yvonne Borg, representative of Pro Astri, a Swedish firm. As the interest in emerging markets increase, Turkish experience would be more crucial in international companies, she told the Hürriyet Daily News.

Noting that Turkish economy’s was resilient during the global economic crisis, “Swedish firms aiming to grow in new markets will start seeking for Turkish executives with noteworthy experience,” she said.

“The times that the international companies were managing the business abroad with expatriates are over today,” said Giles Huart, regional consultant of Target, an Austria-based executive search firm.

Underlining the increasing need for local executives in growing markets, Huart told the Daily News that Turkish executives were capable of improving new perspectives on matters. “They are practical in finding innovative solutions to problems that might seem impossible to solve for others,” he said. According to Huart, more international companies will need to employ Turkish executives as Turkey has “big role and presence” in the Middle East, North Africa and Central Asia.

Many Dutch firms in the Turkish market highly prefer the local knowledge of the Turkish executives, said Onno Kervers, consul general for the Netherlands in Istanbul. “A remigration is also taking place as many Turks who were born or lived in the Netherlands return to Turkey to work in Dutch companies,” Kervers said. “Global headhunters are ready to take advantage of the qualified Turkish executives.”

“Turks and Germans create unbeatable duos in business,” Norbert Klein, chief executive of Bosch Siemens, told the Daily News. “We are highly encouraging Turkish employees to climb up to higher positions in our company.”

According to him, comparatively it was easier to locate Turkish executives in Germany only a few years ago but today the trend has changed and these executives work in Istanbul. “Meanwhile, it is even more difficult to convince German executives to work in Turkey,” said Klein, concluding that the best way to employ Turkish executives is to be based in Turkey.

20 Mayıs 2011 Cuma

Turkish exports changing course, heading to sub-Saharan Africa


Business opportunities in the heart of Africa are attracting Turkish exporters who have been hit by the turmoil in countries on the northern end of the continent. ‘Many Turkish investors are now exporting to countries that they couldn’t even locate on a map a few years ago,’ says a professional. Turkish exports to the region have increased more than 2.5-fold in the first quarter of the year
Workers harvest coffee beans on a large plantation in western Uganda in this file photo. Turkish firms have recently won contracts for projects valued up to $31 billion in the country, a Turkish minister says. Bloomberg photo

Workers harvest coffee beans on a large plantation in western Uganda in this file photo. Turkish firms have recently won contracts for projects valued up to $31 billion in the country, a Turkish minister says. Bloomberg photo

The social unrest in North Africa, a traditional market for Turkish businesses, has resulted in a new destination for the country’s exports to the continent as local firms increasingly turn to sub-Saharan Africa, professionals said.

Turkish export to sub-Saharan African countries skyrocketed to nearly $1.25 billion by the end of first quarter of this year from $478.5 million in the same period of last year, according to official figures.

“We have been sleeping for so long and now we are aware of the opportunities that lay in the heart of Africa,” said Tamer Taşkın, the chairperson of Turkish-African Business Councils at Foreign Economic Relations Board of Turkey, or DEİK.

Noting that Africa’s total export volumes has peaked up to nearly $500 billion annually, Taşkın told the Hürriyet Daily News during a recent phone interview that Turkey’s exports to the continent still remained considerably at nearly $10 billion.

“Turkey could increase exports to Sub-Saharan countries in search of decent products for affordable prices,” he said.“The Turkish government’s foreign policy in Africa has also bridged the investors from Turkey to Sub-Sahara,” he also said, adding that Turkish products were appreciated there as top quality European products.

Turkish Airlines supported the Turkish businesses there by increasing the number of its direct flights to the continent to 25, according to him.“We aim to increase our export product range and volume to Ghana,” said Pelin Güneşoğlu, head of the Turkish-Ghanaian Business Council formed only two months ago. Noting that some Turkish firms penetrated into the country only few years ago, Güneşoğlu said there are more firms planning investments in infrastructure, hospitals, schools and energy in the country.

According to her, Turkish firms have recently begun to eye the opportunities to start up refineries in the country, which recently discovered nearly 800 million barrels of light crude oil reserves. The country is expected to increase its public spending into substantial health, education and infrastructure projects.
Aiming for the lion’s share in the pie in the long run on the continent, Taşkın said DEİK has formed seven new business councils: Nigeria, Tanzania, Uganda, Angola, Ghana and Moritanya that sums up to 15 African business councils all together.

Confederation of Businessmen and Industrialists of Turkey, or TUSKON, another foreign trade organization in the country, actively organizes events both in Turkey and sub-Saharan countries to enhance economic ties.
“Turkish business delegations trips to Congo, Cameron and Tanzania started to bare fruit this year,” the chairperson of TUSKON, Rızanur Meral, told the Daily News. “Turkish exporters are doing business with countries that they couldn’t even find on an African map a few years ago.”

Turkish exporters’ concerns on security and health were washed away with investment and trade opportunities, Meral said. Having the third biggest oil resources in Africa, following Libya and Nigeria, Angola ranks as the 6th biggest export market on the continent for Turkey with nearly $109 million. Angola’s economy is highly dependent on the oil sector, which accounts for 40 percent of the gross domestic product and 80 percent the government’s revenues. In recent years, Turkish firms started to eye the country’s infrastructure projects.

Turkish investors have also started eyeing investment opportunities in Mauritania, which has approximately 860 million tons of iron ore reserves. The country’s vast agricultural lands are also attracting Turkish manufacturers of agricultural equipments and tractors.

“Our goal is to support the economic development in Uganda,” Turkish State Minister Bülent Arınç said at December meeting in Kampala, in the capital city of Uganda. Noting that Turkey might sign a free trade agreement with Uganda, the minister also noted that Turkish firms had recently won contracts for projects valued up to $31 billion there.

17 Mayıs 2011 Salı

Global investors eye chances in Turkish firms

Global investors’ interest in the country may boom due to a possible increase in the country’s investment rate after the general elections on June 12, according to Nurdan Toğuş, the chief economist at Ata Invest.
Some major actors are eying investment opportunities in Turkish companies, which promise strong growth, Toğuş said at the Investment Conference organized by her company Monday.

The conference hosted some 30 large foreign investors, which had bilateral talks with Turkish companies.
“We expect Turkey’s rate to be increased to the investment level,” she told the Hürriyet Daily News on the sidelines of the conference. “Foreign investors here would like to know plans of Turkish companies for the next year.”

“These 30 companies from 20 countries manage more than $1 trillion in total,” said Korhan Kurdoğlu vice chairman of Ata Invest indicating that Turkey is already on the way to become a regional finance center.

Representatives of leading companies such as Şişecam, TAV Airports, Ülker Group, Aygaz, Turcas, Tüpraş, Garanti Bank, Turkcell, Koç Holding, Banvit, Akçansa, Yapı Kredi Bank, Pınar Group, Tekfen Holding, Türk Telekom, Ford Otosan and TAT held meetings with 30 foreign investors during the bilateral meetings.

TAV Airports held one-to-one business meetings with possible investors including EMM Dobrinka Cidrof, Australian property development giant Goodman Group, Columbia Wanger and Kuwait Investment Authority, Daily News learned. Turkey’s largest mobile phone operator had meetings with representatives of EMM Dobrinka Cidrof and United Kingdom’s largest global emerging markets investment trust Templeton.

The largest conglomerate of Turkey, Koç Holding had meetings with potential investors such as British emerging market investment company Ashmore and New York-based company known as the leading fund managers of Egyptian securities, Concorde International.

Turkey’s state owned bank also held meetings with Templeton and U.S based Investment Company Firebird and Kuwait Investment Authority and Japanese Dai-Ichi Life Insurance Company. Akçansa, owned by Sabancı Cement Group, attracted global investors such as Columbia Wanger, Ashmore and Goodman.

“Nearly 40 new Turkish firms will be traded on Istanbul bourse this year,” said Hüseyin Erkan, chairman of Istanbul Stock Exchange noting that 20 applications to the bourse are still pending. “We are trying to increase the awareness the advantages that capital market could provide for Turkish firms,” said Erkan addressing the investors.

15 Mayıs 2011 Pazar

Germany’s exports spread hopes for Turkish businesses

The strong growth in the first quarter of 2011 posted on Friday in European Union engine economies may serve the interests of Turkey’s long-term trade targets, according to Turkish business representatives and economists.

European economies posted solid first-quarter growth rates on Friday, with several showing strong demand at home, except Italy where growth barely scraped into the black.
Germany, with the biggest European economy, led the way, expanding by a quarterly 1.5 percent to a level last seen before the economic crisis in 2008, provisional data showed.
Germany remains the biggest export market of Turkey.
France added 1.0 percent, the strongest rate since the second quarter of 2006, and Spain turned in a gain of 0.3 percent as it picked up speed from the end of 2010.

“We are pleased to see the growth rates at the end of first quarter in Germany and France better than expected,” Rona Yırcalı, the board chairman of Foreign Economic Relations Board, or DEİK, told the Hürriyet Daily News on Friday.

Despite the anxiety about the bailout operations to economically struggling economies, especially German and French economies show signs of a recovery, according to Yırcalı. Noting that both Germany and France are major trade partners for Turkey, “We will exceed this year’s total export target of $135 billion,” she said.
“Being the locomotive countries of Europe, Germany and France stimulate positive expectations for the long-awaited European recovery,” said Rıza Nur Meral, president of Confederation of Businessmen and Industrialists of Turkey, or TUSKON. “The recent growth in the first quarter will show its positive effect on Turkey’s export figures as well,” said Meral.

“Especially Germany’s growth is a positive sign for the Turkish economy,” said Nurhan Toğuç, the chief economist of Ata Invest said in a phone interview Friday, noting that increasing value of euro would serve the benefit of Turkish exporters.

She also noted that Turkey’s growth model might have more of a chance of sustainability than the German one. “I question whether Germany can continue its growth model based on exports,” said Toğuç.
“Germany still struggles to sustain its export volume to European markets and is likely to face serious obstacles with the U.S. market due to the euro’s considerable gain in value against dollar.”

The bottom

Recalling Turkey’s export target of $500 billion by the year 2023, the 100th anniversary of the modern republic, Toğuç said the country could achieve a similar growth model with Germany, a kind based on increasing exports. “Turkey has experienced the maximum levels of current account deficit so far,” she said, adding that the current account deficit trend might change route to the positive.

“Turkey’s growth model is based on domestic consumption as Germany’s growth is mainly relying on foreign demand,” Finansbank chief economist İnan Demir saşd. “Turkey has to adapt the German model of growth in order to increase its competitiveness in the long run,” he said.
* Gökhan Kurtaran from Istanbul contributed to this report

CHP forecast includes a $100 bln trade gap by 2023

The trade balance targets set by Turkey’s main opposition Republican People’s Party, or CHP, for the year 2023, the 100th anniversary of the modern republic, reflect a $100 billion gap, according to remarks by a top party official.

“The import target of CHP by 2023 is $750 billion,” said Umut Oran, responding to a Hürriyet Daily News question during a meeting with small group of journalists in Istanbul.
The party previously revealed its export target as $650 billion by the same year. Oran said unlike the ruling party, Justice and Development, or AKP, his party takes expected import volume of the country into consideration while forming economic goals for 2023.

“Turkey’s reliance on import items should lessen as soon as possible as the current trade deficit has already reached to an alarming level under the rule of AKP,” he said, blaming the government for relying on “hot money inflows” and forming its “green capital,” a term used often to describe the capital owned by Islamists.

Talking about the Canal Istanbul to be built by Turkey in Istanbul to connect the Black Sea to the Marmara Sea brought forward by Turkish Prime Minister Recep Tayyip Erdoğan, Oran said, “We should focus on projects in the Anatolian part of the country, rather than investing billions of dollars in Istanbul, which already attracts thousands of newcomers every day.” Noting that Istanbul’s population has already reached almost 15 million, he said, “If the migration continue in this way, the city population is likely to reach beyond 20 million in few years time.”

According to Oran, Turkey should focus on agricultural projects in cities of Anatolia. “Rural development for Turkey is crucially important,” said Oran adding that a land reform by distributing agricultural land to villagers who do not own land. “With this can try to sustain a reverse migration from Istanbul back to Anatolia.”

Noting that the CHP’s “family insurance” plan stipulates 600-1,250 Turkish Liras in financial aid to poor families, Oran replied back to criticisms saying, “The system will not discourage the poor families from joining the work force at all.” Oran said the family member who benefit from family insurance project of CHP would be the first ones to be employed in the case of job creation by the government or the private sector. “The total cost of the insurance project will be nearly 8 billion liras and Turkey has sufficient financial sources to provide such social aid.”

11 Mayıs 2011 Çarşamba

Turkish Central Bank should include yuan in its reserves, economist says


'Especially for Asian economies, adopting the yuan would be the best choice in international trading,' says Ben Chan (L), a senior vice president at HSBC.

'Especially for Asian economies, adopting the yuan would be the best choice in international trading,' says Ben Chan (L), a senior vice president at HSBC.
The Turkish Central Bank should seriously consider reserving China’s yuan, according to Junwei Sun, HSBC’s global research economist.

The Chinese currency is already on its way to becoming the third most important global currency following the United States dollar and the euro, Junwei Sun told the Hürriyet Daily News on the sidelines of a Wednesday meeting organized by the lender’s local branch.

“As some Asian central banks, such as Hong Kong and Thailand, started to reserve the yuan, Turkey should also seriously consider reserving the Chinese currency,” she said. “I believe Turkey will consider this more as the bilateral trade and investment increases in next few years.”

The economist said the Turkish Central Bank might aim to prepare for the Chinese currency’s internalization over the long haul amid China’s growing influence in the global market.

Agreeing with Junwei, Turkey would most likely move in line with other central banks, said Virma Sökmen, HSBC’s vice general manager of corporate banking in Turkey.

Turkish and Chinese business relations are strengthening she said, adding that Turkey’s total export volume reached $2.2 billion by the end of last year. “Since 2000, the export volume to China increased by 2,248 percent,” she said.

Ben Chan, senior vice president of business planning and strategy at HSBC, said, “Especially for Asian economies adopting the yuan would be the best choice in international trading.” He estimated nearly half of the Chinese international trade volumes up to nearly $2 trillion would be done in yuan by 2015.

“China, as the largest exporting country of the world and a global manufacturing center, will increase the use of the yuan in international trade, making the yuan the third the most important global currency,” he said.
According to official figures, Turkey’s imports to China reached $17 billion last year.

“Turkey imports many intermediate products from China and exports to European markets,” Sökmen said, recalling that trading in yuan might put Turkey in an advantageous position due to currency rates. “We completed the first yuan transactions very recently from Turkey to China with no problem,” said Virman, who called on Turkish traders and investors to use “the new global currency of the world.”

Turkey and China agreed to use local currencies, the Turkish Lira and the yuan, in bilateral trade relations after a November meeting between Turkish Prime Minister Recep Tayyip Erdoğan and Chinese Premier Wen Jiabao in Ankara.

Turkish steel firm eyes new investments in south

Local steel company Atakaş, which has sold its stake in the giant MMK Atakaş plant to Russia’s Magnitogorsk, is planning new investments in the southern province of Hatay. Speaking to the Hürriyet Daily News during a press briefing, Atakaş executive Cem Üstün says regional unrest is of no concern for Atakaş, as it has no serious competition in steel production
The MMK Atakaş plant in the southern province of Hatay aims to export 20 percent of its annual production.

The MMK Atakaş plant in the southern province of Hatay aims to export 20 percent of its annual production.
Turkish steel producer Atakaş plans a new investment with a total capacity of nearly 1 million tons of steel production per year in the southern province of Hatay on the İskenderun Gulf. The new facility will replace Atakaş’s existing production center in the same region.

“Atakaş is currently talking about acquiring land to make a new investment in steel,” said Çetin Mutluay, the public relations chief of the company, talking to the Hürriyet Daily News on the sidelines of a press conference held at the MMK Atakaş plant in Hatay. The company considers the southern province as “the rising steel industry hub of the region,” Mutluay said.

Last year, Turkey ranked as the 10th biggest steel producer in the world. In the first quarter of 2011, the nation produced 7.9 million tons of raw steel, corresponding to an annual increase of 31 percent, according to data from the Iron and Steel Producers' Association.

Atakaş and Russia’s Magnitogorsk, owned by billionaire Victor Rashnikov, made the biggest investment in iron and steel from a private sector company in Turkish history this year, putting $2.1 billion into the MMK Atakaş plant. Magnitogorsk, which initially owned half of the facility, announced that it had purchased the remaining shares from Atakaş for $485 million, a day after a March 9 ceremony.

Waiting for regulatory approval

Talking about the sale, Cem Üstün, Atakaş’s sales manager, said the deal had not yet been approved by Turkish regulators and approval was expected to be granted in November. Afterward, Magnitogorsk will assume control of 2.5 million tons of flat steel production capacity per annum and a seaport, which will also provide service to third parties. The port itself is capable of handling 12 million metric tons of iron and steel per year.

However, the two companies may still invest together, according to Üstün, who pointed out that 25,000 square meters of land owned by MMK Atakaş might be used for further investments. The plant is in the trial process and Üstün expects steel sales to start by next month.

According to the sales manager, ongoing political unrest in North Africa and the Middle East will not affect the company. “Iraq, Israel, Jordan and Syria are among the primary steel markets for MMK Atakaş,” he said. “Except Iran, there is no rival to our company in this region.” The company predicts it will sell one-fifth of its output to the Middle East.

“Turkey’s current need of flat steel is around 10 million tons,” Üstün said. “This figure will rise to 14 million tons by the year 2015.”

MMK Atakaş plans to increase production at its plant to also reach a full-rolled steel capacity of 2.5 million tons next year. Between 60 and 80 percent of the plant’s output will be sold to Turkish car and home appliances makers, Üstün predicted, as investments in these key sectors surge.


10 Mayıs 2011 Salı

Vietnam seeks Turkish aid in building refineries


State-owned Vietnam Oil & Gas Corporation, known as Petrovietnam, is seeking companies to construct new refineries - a process that may help Turkish builders who have suffered considerable losses due to the turmoil in Libya.

Vietnam is the fourth-largest oil producer in Southeast Asia, a top executive of Petrovietnam told the Hürriyet Daily News in Istanbul on Friday.

“With its vast oil and gas resources, Vietnam aims to increase the number of refineries,” said Dam Thi Huyen, the deputy general director of Petrovietnam. She was speaking on the sidelines of the Turkey-Vietnam Trade and Investment Forum, organized by the Confederation of Businessmen and Industrialists of Turkey, or TUSKON. “We invite Turkish construction firms to Vietnam.”

Petrovietnam’s crude oil output nears 15 million metric tons per day, but Vietnam aims to increase this capacity through more investments in oil fields. Currently the country has two oil refineries - Dung Quatin in the eastern province of Quang Ngai and Nghi Son, to the south of Hanoi.

“The Vietnamese are looking for foreign investment to build new refineries,” said Rızanur Meral, the TUSKON chairman, speaking after the business meeting that was chaired by Nguyen Thi Doan, Vietnam’s vice president.

Too big a task?

However, Meral pointed toward the difficulty of such huge investments, reminding that a refinery investment in Vietnam might cost $6 billion. “Such [a big amount] does not seem possible at first glance,” he said, adding that Turkey’s southern province of Ceyhan might be the priority for Turkish firms, since Turkey’s own refinery needs are considerably high.

Still, attracting such offers is important for Turkey, Meral said. Vietnamese firms are also interested in importing Turkish construction materials. Leading Vietnamese construction firms, including Dai Dong Tam, Vietland and Thai Hoang, all participated in bilateral meetings with Turkish companies on Friday.

“We are ready to support Turkish firms which consider to invest in our country,” said Vietnam’s vice president, reminding that her country attracted $20 billion in foreign direct investment last year alone. Vietnam is a gateway to key markets such as Malaysia, Cambodia, Brunei and Myanmar, she added.

Vietnam’s imports to Turkey have reached $636 million by the end of last year while Turkey’s exports to the Southeast Asian nation stood at $108 million.

6 Mayıs 2011 Cuma

Questions linger after landmark Central Bank briefing


Turkish Central Bank Gov. Erdem Başçı is pursuing a highly unorthodox policy of leaving interest rates low in an effort to curb short-term capital inflows. DAILY NEWS photo, Selahattin SÖNMEZ

Turkish Central Bank Gov. Erdem Başçı is pursuing a highly unorthodox policy of leaving interest rates low in an effort to curb short-term capital inflows. DAILY NEWS photo, Selahattin SÖNMEZ
Weeks after the Federal Reserve organized a press briefing for the first time in the U.S. central bank’s history, top officials of the Turkish Central Bank met with chief economists of lenders in an effort to explain their aims. However, the closed meeting, held in Istanbul on Wednesday, left some questions unanswered for bank economists.

Gov. Erdem Başçı is pursuing a highly unorthodox policy of leaving interest rates low in an effort to curb short-term capital inflows, even as other emerging-market central banks raise rates to curb inflation. Meanwhile, he is also raising reserve requirements for banks as the Central Bank tries to curb potentially destabilizing credit expansion and limit the current account deficit, which stood at $54.8 billion in the 12 months through February.

Speaking to the Hürriyet Daily News after the event on Wednesday, Başçı said he aimed to “clarify issues” and that the meeting was “not related to the Central Bank’s future policies.”
Bank economists briefed by Başçı and his deputies said they expect the policy mix of low interest rates and higher reserve requirements to continue.

Nurhan Toguç, the chief economist of Ata Invest, said she could not get a clear answer on the possible effects of the Federal Reserve decision to halt buying U.S. Treasuries as of June. “Further actions from the Turkish Central Bank are still not clear, particularly when we consider the Fed’s [upcoming] move,” she said, noting possible downward pressure on the Turkish Lira.

“I have doubts about the possibility of controlling credit expansion through reserve requirements,” Toğuç said, adding that Central Bank official were rather reserved about hinting at any additional instruments that might be used to this end.

Mopping up liquidity

Hikes in required reserve ratios since September have led to a withdrawal of around 40 billion liras of liquidity from the banking system, according to the Central Bank presentation to economists. The Central Bank gives no interest on the reserves it keeps, a source of complaint for many banks. İnan Demir, the chief economist of Finansbank, said lenders have lost up to 10 percent of their earnings that could be generated through an interest rate.

“Meanwhile, banks have to pay an interest rate of around 6 percent to the Central Bank,” as they benefit from the one-week repo window, Demir said.

The Finansbank economist expects a new hike in reserve requirements in the second half of the year, while adding that this instrument “might not be enough to control credit expansion.”

Starting from May 13, Turkish banks will be required to park 12 percent of short-term lira deposits at the Central Bank, without any interest. Previously, the rate was 11 percent.

Speaking after the meeting, Haluk Bürümcekçi, chief economist of EFG Securities, said the primary aim of the Central Bank is to cut consumer credit expansion to the level of the average expansion rate of the 2006-2010 period, which was 26 percent.

“It seems that consumer loan growth has decreased to the level of the average of last five years in May,” Bürümcekçi said. According to the economist, this is an indication that the Central Bank is “on the right track so far.”

In another development, the Central Bank will from now on meet investors only once in every three months to brief them on its policies. Tuğrul Gürgür, the Bank spokesman, told the Daily News that Gov. Başçı and his deputies will meet investors "after the release of each inflation report." The next meeting will be held after July 28 and the third one will be after Sept. 26.

“The communication method of the bank has changed as Başçı will meet all investors at the same time, rather than one-on-one meetings," Gürgür said, adding that this will increase transparency.

4 Mayıs 2011 Çarşamba

State lender warns on further increase in Turkey’s required reserves

Tuesday, May 3, 2011
The rate for reserves might increase in the next few months, Süleyman Kalkan told the Hürriyet Daily News & Economic Review on the sidelines of a meeting with journalists in Istanbul.

The rate for reserves might increase in the next few months, Süleyman Kalkan told the Hürriyet Daily News & Economic Review on the sidelines of a meeting with journalists in Istanbul.
Turkey’s Central Bank may decide for a further increase of the required reserve rates for lenders in a bid to fight the skyrocketing current account deficit and cool down the economy, according to the top executive of the state-owned Vakıfbank.

The rate for reserves might increase in the next few months, Süleyman Kalkan told the Hürriyet Daily News & Economic Review on the sidelines of a meeting with journalists in Istanbul.

Turkey’s trade deficit surged 91 percent to $9.8 billion in March, compared with $5.1 billion a year earlier, according to Bloomberg. The nation’s current account deficit more than doubled in February from a year earlier. The deficit rose to $6.1 billion from $2.7 billion in the same month of 2010, according to figures by the Central Bank.

The Turkish Central Bank increased bank reserve requirements three times in the past year to 16 percent from 10 percent in 2010, in a struggle against the rapid credit growth and current account deficit.

“Regulators should be more concentrated on some credit types playing a role in the increase of the current account deficit, not all of them,” Kalkan told the Daily News.

Noting that Vakıfbank bank granted a considerable amount of credits in energy and tourism investments, “New investments in these sectors might slow down the rise of the current account deficit,” said Kalkan.

The bank keeps supporting movements of the Central Bank in order to cool down the economy and control the rise of current account deficit through reserve rate requirements, Kalkan said. “Vakıfbank has nearly 5 billion Turkish Liras reserved in the Central Bank with no interest in return.”

Turkish Central Bank’s Monetary Policy Committee hiked reserve requirements for short-term foreign currency deposits last month. Starting from May 13, banks will be required to park 12 percent of such deposits at the Central Bank, without earning interest. Previously, the rate was 11 percent.

Can Akın Çağlar, head of Ziraat Bank, the biggest state lender, also commented on the cool-down policy of the bank last week. Ziraat may lose 4 billion liras in profits as its net earnings may fall by 20 percent at the end of the year if the current reserve ratio continues to remain at the same level, Çağlar said during a meeting in Istanbul.


A recent decision to move its headquarters to Istanbul is a part of Vakıfbank’s, the state-owned lender, broader vision to expand and increase its “global visibility,” said Kalkan.
“It was a must for us,” he said.

The bank’s move is also a part of the government’s bid to turn Istanbul into a regional finance center, restructuring a banking district on the Asian side of the city.

“We have encouraged nearly 350 employees to move to Istanbul with the headquarter operations to Istanbul,” said Kalkan adding that the employees would be supported financially to adapt to the new environment.

Nearly 1,500 liras extra per month will be paid to each employee during their first two years in Istanbul.”
“In order to compete with the other banks, we felt the necessity to be in Istanbul,” said Kalkan. “Istanbul has its own dynamism in finance world whereas Ankara has already lost its importance in that sense to Istanbul.”
The bank has opened 100 new braches all across the company, 80 new branches set to be opened in Istanbul by the end of this year, said Kalkan.

1 Mayıs 2011 Pazar

Samsun-Ceyhan might be shelved due to Channel Istanbul, says minister


Samsun-Ceyhan pipeline project, planned to provide an alternative route for Russia's and Kazakhstan's oil and to ease the traffic burden in the Bosporus and the Dardanelles “might be shelved” to due new Channel Istanbul projects said a Turkish minister speaking to Hürriyet Daily News & Economic Review on the condition of anonymity.

Talking about the crude oil pipeline in Turkey from the Black Sea to the Mediterranean oil terminal in Ceyhan, the minister said, “The project could not be run without the supply of the Russia and Russian officials.” Noting that Russian officials opposed supplying oil for the pipeline, the minister said, “Possibility of implementing the project has already been weakened,” emphasized the minister.

The aim of this project was to provide an alternative route for Russia's and Kazakhstan's oil and to ease the traffic burden in the Bosporus and the Dardanelles. The Samsun–Ceyhan pipeline was planned as a Bosporus bypass. Turkish Prime Minister Recep Tayyip Erdoğan earlier this weak said that the Istanbul channel which would be an alternative to Bosporus would lessen the number of shipping vessels pass through Bosporus. Ships carry 139 million tons of oil, 4 million tons of liquefied petroleum gas and 3 million tons of chemicals through the Bosporus annually according to official figures.