31 Temmuz 2011 Pazar

Local contractors ambitious in mechatronics businesses

Friday, July 29, 2011

Gökhan Kurtaran
Turkish construction firms are turning their eyes toward high-tech mechanical and electronic installations in prestigious projects in Russia, the Caucasus and Gulf countries, according to a top executive of AE Arma-Electropanç.

Some $6 billion of the Turkish construction business abroad consists of mechatronics, a sub-sector of the construction business, AE Arma-Electropanç Chairman Kemal Kızılhan told the Hürriyet Daily News on the sidelines of a Friday meeting, forecasting that the amount would reach nearly $9 billion by the end of this year.
Last year, Turkish construction companies took on over 500 projects worth $20.3 billion in 48 countries according to the Turkish Contractors’ Association, or TCA. These companies hope to operate projects worth $30 billion abroad by the end of the year, bringing fresh funds to the Turkish economy, he said.

Despite losing billions of dollars due to Libyan turmoil and payment difficulties in Turkmenistan, Turkish construction companies are continuing to expand in many countries, said Kızılhan. AE Arma-Electropanç provides electrical, mechanical and electronic installation and design works for facilities, such as large housing complexes, business centers, hotels and hospitals in Russia, Turkey, Dubai, Abu Dhabi, Cyprus, Qatar and Azerbaijan.

New skyscraper in Moscow 

Kızılhan also said his company, which has been active in the Russian construction market for the last 23 years, was preparing to sign a deal with a Russian firm for the electric and electronic installation of a new building called “Pilot 16” in Moscow, which will surpass the height of Mercury City Tower, the tallest building in Europe. AE Arma- Electropanç was a subcontractor on the Mercury City Tower, which is nearing completion.

The new building will be nearly 432 meters tall and will cost close to $800 million. “Our contract for the electric and electronic installation work is worth $101 million,” he said.

28 Temmuz 2011 Perşembe

Turkey's bank union backs Central Bank’s latest actions

 Wednesday, July 27, 2011 


Fragility would be limited in a positive economy like Turkey, according to
Hüsayin Aydın, the country’s top banker. AA photo

Fragility would be limited in a positive economy like Turkey, according to Hüsayin Aydın, the country’s top banker. AA photo

The Turkish Central Bank’s latest efforts to cool down credit growth are in line with the current situation and will have a positive effect, the head of the Turkish Banking Association, or TBB, said Wednesday.

“The Turkish Lira is a stable currency, and we believe this stability will continue,” said Hüseyin Aydın, who is also the general director of Turkey’s state-run Ziraat Bankası.

 In an effort to halt the sharp depreciation of the Turkish currency, the Central Bank on Monday brought a halt to current exchange auctions in which the bank was purchasing as much as $30 million from the markets per day. The bank also cut the reserve rate requirements for banks in foreign currency deposits from 11 to 10 percent for one year, while the cuts for up to three-year deposits and over three-year deposits were by 1.5 and 2 percentage points, respectively.

“The Central Bank’s decision in the current phase may be different and extraordinary compared to the past, but we believe that they are in line with the present situation,” Aydın said, adding that the bank had interpreted the changes in the markets and economy accurately.

“The impact of exchange rates and the slowdown in loans will surely have a positive effect on the current account deficit,” Aydın said. The positive progress in macroeconomic indicators such as the budget deficit and debt stock eliminates the vulnerability of the current account deficit, he added.

The bank association did not foresee any inflation risk in the country, Aydın told the Hürriyet Daily News. “Turkey’s macroeconomic figures have a positive course, and we think that fragility will be limited in such a positive economy.”

Be careful with household debt

Aydın, however, warned about growing household debt.
 “Individuals have to be more careful in the management of household debt in the long run,” Aydın said, noting the blurry picture of global economic indicators due to risks and ambiguity caused by the United States and Europe. “We all have to be more cautious” until the global economic signs are clearer for the markets, he said.
“The current account deficit has been a long-term structural problem in the country,” Aydın said. “Authorities have been taking the necessary measures on the matter. There is no overheating risk as the credit growth slowdown will cool the economy down in the long run,” Aydın told the Daily News on the sidelines of the meeting.

According to him, the smooth slowdown in credit growth will eventually cause a dampening of domestic demand and the economy as result. The total number of credits granted by Turkish banks has increased by 17 percent, reaching 623,553 this year as of July 1. Consumer credits increased by 19 percent while corporate credits rose by 16 percent in the first half of the year.

 “Turkish banks will be much more selective in credits and loans,” Aydın said.

Cypriots left jobless due to Greek turmoil

Gökhan Kurtaran
The worsening economic outlook in Greek Cyprus has reduced the hopes for Turkish Cypriot workers who used to cross the border daily
This file photo shows people waiting at the Lokmacı (Ledra) border crossing between Turkish and Greek Cyprus. AA photo

This file photo shows people waiting at the Lokmacı (Ledra) border crossing between Turkish and Greek Cyprus. AA photo
The debt crisis that has been ravaging Greece is also having an impact on the economy of Greek Cyprus, which many Turkish Cypriots have typically relied on for jobs. These days, though, the number of Turkish Cypriots crossing the border daily for work has reportedly plummeted due to the worsening economic outlook in the southern part of the island.

“The number of Turkish workers passing through the Lokmacı [Ledra] gate in Nicosia has decreased sharply from 8,000 per day to 2,000,” Cafer Gürcafer, the president of the territory’s Civil Engineering Contractors Association of Cyprus, told the Hürriyet Daily News over the phone.

Due to the crisis in Greece, many firms in Greek Cyprus have had to fire Turkish Cypriot workers, who had sought higher wages. Greek Cypriot businesses have started to hire Polish and Sri Lankan immigrants.
“Most Turks crossing the border were employed in construction, which has been heavily hit by the Greek crisis,” he said, adding that the real-estate market on both sides of the divided island was suffering.

Greek Cyprus is posting healthier economic figures than Greece, such as a budget deficit of 5.3 percent of gross domestic product and government debt that stands at 60.8 percent of GDP. The figures are 32.4 and 96.2 percent for Greece, respectively. However, its banking sector remains largely dependent on Greek banks, which have heavy exposure to government debt.

According to Gürcafer, another reason for the decline in border crossings is the rising nationalism in the south. “Turkish Cypriots have been working there for many years,” he said. “But recently, Greek Cypriot nationalists have started to complain about them. As the crisis started to bite, Turks became the first ones to be fired.”
“In order to stimulate investments, a solution [to the Cyprus problem] has to be found,” Gürcafer said. He also claimed Turkey is planning to bring the Housing Development Administration to Turkish Cyprus for mega projects. “Such an attempt would destroy the construction sector of Turkish Cyprus,” he said.

25 Temmuz 2011 Pazartesi

Chinese firm buys local cargo carrier

Gökhan Kurtaran
The Chinese HNA group aims to establish a European route network through its acquisition of 49 percent of the shares in Turkey’s ACT, an executive says
Hainan Airlines is China’s largest privately owned air transport company, owned by HNA Group that bought Turkish ACT.

Hainan Airlines is China’s largest privately owned air transport company, owned by HNA Group that bought Turkish ACT.
The HNA Group, the owner of China’s giant Hainan Airlines, has broken into the Turkish market by acquiring 49 percent of Turkey’s ACT Airlines and is now eyeing other sectors such as aviation, real estate, hotels and seaports.
 HNA, China’s largest privately owned air transport company, acquired 49 percent of ACT’s shares for $25 million and plans to invest more in Turkey, a top ACT executive told the Hürriyet Daily News on Thursday.

 “In the long run, the company is planning to rank among the top carriers in Europe,” ACT cargo partner, Yavuz Çizmeci, told the Daily News.

 “The investment is significantly important for HNA’s Europe strategy,” Çizmeci said. The alliance between the HNA Group and Turkish companies is very important in terms of allowing HNA to expand its international routes in the Middle East, establish a European route network and grow its overseas businesses, he added.
Istanbul-based ACT Airlines performs unscheduled air cargo services. In addition to ACT’s current fleet of four A 300-B4 cargo aircraft, HNA plans to grow quickly by purchasing three Boeing 747-400 aircraft before year’s end to become the biggest air-cargo company in the country.

The HNA Group plans to expand the fleet to 10 within the next two years, Çizmeci said.
Noting that the Chinese giant has invested nearly $25 million in ACT shares, he said the business bonds that had become stronger than ever between China and Turkey in recent years had played a major role in HNA’s investment decision in the country.

Trade volume between China and Turkey has grown

Trade volume between the two countries has grown from $2 billion in 2002 to approximately $17 billion by the end of 2010.

“The volume will hit $50 billion in the next eight years,” Çizmeci said. “A global air carrier active in the region would naturally benefit from this growth at a great extent.”

The group is also looking at more investment in Turkey in various sectors, ranging from real estate to ports, Çizmeci said. HNA started talks with one of Turkey’s leading construction companies, Renaissance, to construct seven luxurious hotels in Zeyport, one of the major Istanbul harbors Renaissance recently acquired, he said.

Renaissance also has major projects in Iran, Turkmenistan and Russia.

The HNA Group owns 17 overseas companies that had an annual income of around $3.2 billion in 2010.
The group provides aviation, logistics, finance and tourism services with a staff of 90,000 while the company’s total investments approach $30 billion, according to official data. Hainan Airlines, which the group acquired in 2003, is the largest privately owned air transport company in China.

HNA also acquired an aircraft maintenance facility last year at Istanbul’s Sabiha Gökçen Airport in cooperation with Bravia Investment of New York. ACT’s Çizmeci was the chief executive there and will continue at his post.
ACT has been delivering services to DHL and Lufthansa and has also been active in Gulf countries.

21 Temmuz 2011 Perşembe

‘Nuclear plant can meet Cypriot energy demand’

Hürriyet Daily News
The construction of a nuclear plant in Northern Cyprus could help meet the island’s electricity demand, authorities say. Turkey is also working on an energy masterplan for Cyprus’ both sides, Turkish minister says
The claim has been certified by the Turkish Cypriot authority as well as the chamber.

The claim has been certified by the Turkish Cypriot authority as well as the chamber.
Turkey’s bid to supply electricity for the whole of Cyprus has been based on two plans, building a nuclear plant on the island or laying underwater cables from Turkey, according to Turkey’s Chamber of Mechanical Engineers.

The claim has been certified by the Turkish Cypriot authority as well as the chamber.

Turkey has already set all the options on the table for meeting the energy needs of the island, Haluk Direskeneli, a board member of the Chamber of Mechanical Engineers and head of its Energy Committee, said in a phone interview Tuesday.

“Russia’s barge-mounted nuclear power plant might be built in northern Cyprus,” he said, adding that such a facility would generate electricity “not only for the Turkish part [of the divided island], but also the Greek part.”

A nuclear plant on the island was also discussed in the Greek Cypriot parliament a few years ago, Direskeneli said.

“Both options were mentioned in a recent master plan,” an official from the Turkish Cypriot Economy and Energy Ministry told the Hürriyet Daily News, speaking on condition of anonymity.

“Turkey’s government is currently working on an energy master plan for the island,” said Direskeneli, noting that Greek Cyprus was seriously struggling to provide electricity after a deadly blast at a military base last week knocked out the country’s main power plant.

The idea of a nuclear power plant in northern Cyprus was brought up at a seminar in the British Council’s Ankara office Jan. 16, 2007, with nearly 30 people in attendance, mainly from academic circles and interested “public and private enterprises,” Direskeneli said.

Still, the political uncertainties and conflicts on the island would pose a strong challenge in building a nuclear plant there.

“There are almost no fossil-fuel resources; no oil, no gas, no coal on the island,” Direskeneli said, noting that all fossil fuel to generate energy should be purchased abroad and transported by ferries to the island.
Another option to transfer energy to the island is laying underwater cables stretching from the southern Turkish province of Mersin to northern Cyprus, he added.

Turkey plans to build its first nuclear power station at Akkuyu, in Mersin, under a deal signed last year with the Russian State Nuclear Energy Corporation, or Rosatom. The Turkish government plans to start construction of three nuclear power plants within five years.

Despite the serious concerns expressed by Greece and Greek Cyprus about the power plant to be built in Akkuyu, “it would be in their best interest now,” according to Direskeneli, as the plant could generate electricity for Greek Cyprus as well. “Current electricity supply difficulty might push Greek officials to reconsider joint projects with Turkish Cyprus,” he added.

Greek and Greek Cypriot officials have reacted negatively to Turkey’s nuclear plans. “We believe there should be a collective approach by the European Union in order to exert adequate pressure on Turkey to reconsider its plans,” Greek Cypriot leader Dimitris Christofias said at an EU summit in March.

After meeting his Turkish Cypriot counterpart Sunat Akın in Ankara on Monday, Turkish Energy Minister Taner Yıldız said his ministry had prepared a wide-scale master plan for the island that would meet the energy needs of all of Cyprus by 2023.

7 Temmuz 2011 Perşembe

New economy team seeks more control of Central Bank, regulators

Gökhan Kurtaran
Turkish cabinets’ Economy Coordination Board will focus on the nation’s current account gap and seek more control on the Central Bank, accoring to experts
Deputy PM Ali Babacan will head a team of four other ministers in the new Turkish cabinet.

Deputy PM Ali Babacan will head a team of four other ministers in the new Turkish cabinet.
A new Cabinet has entrusted Turkey’s finances and economy to an experienced team that will likely look to address the country’s growing current account deficit and exert more control over the Central Bank, according to commentators.
The new team led by Ali Babacan will focus on the country’s current account deficit, a risky gap that ballooned to more than $60 billion, or about 8 percent of gross domestic product in the 12 months through March, said economists. The government forecast had been $42 billion for the year.

The masters of Turkey’s economy will also seek more control on institutions such as the Central Bank, the Banking Regulation and Supervision Agency, or BRSA, and other regulatory bodies, several experts told the Hürriyet Daily News.

Excluding Environment and Urban Planning Minister Erdoğan Bayraktar, the head of a newly launched chair in the Cabinet, all ministers related to the economy are from the former Cabinet.

Still, a change of roles was a surprise for many.

Former State Minister Zafer Çağlayan, who was responsible for foreign trade, will be the new economy minister.

Çağlayan often criticized the Central Bank’s policies to cool down the economy at his former post, as he was a defender of a weaker Turkish Lira to boost exports.

“We remember the criticisms of Çağlayan,” İnan Demir, chief economist at Finansbank, told the Daily News on Wednesday.

Despite the “lack of compatibility” between Çağlayan and the Central Bank, “it’s compulsory for both institutions to work collaboratively,” said Demir.

The new economy minister will need to soften his rhetoric on the Central Bank sooner or later, he said. “The new responsibilities on his shoulders should push him to do so.”

İnan also noted that Babacan would continue his control over the seat as he would serve as the head of the Turkish Economy Coordination Board, another new body within the government.

Finance Minister Mehmet Şimşek and Development Minister Cevdet Yılmaz, Science, Technology and Industry Minister Nihat Ergün are the three other ministers on the board.

“The new government will aim to have more control over the Central Bank,” said Demir.

Despite not being included in the new board, Bayraktar, former chairman of the Housing Development Administration, or TOKİ, is another member of the new economy and finance team.

Banu Kıvcı Tokalı, chief economist at Destek Securities, told the Daily News that the appointment showed the importance the government attached to the construction sector.

“As the construction sector remains the driving force of consumption and employment in the country, it will be among the priority of the new government,” Tokalı said.

The government will continue a sustainable growth policy, trying to avoid overheating. In order to decrease the growth rate and stabilize it around 5 or 6 percent, the government increased the control over the housing sector, she said.

Evaluating the new economy team, Tokalı said, “There is not much surprise,” adding that Çağlayan will “eventually follow the footsteps of Babacan who is favored by financial actors in the country.”

“When it comes to good results, the Central Bank gets awards and applause,” Çağlayan said during a meeting in the northwestern province of Bursa in September 2010. “What about the bill of pressure on Turkish exporters and the current account deficit caused by the exchange rates?”

At the same meeting, he described the Central Bank as “a car on the opposite line,” calling the bank to increase the control over the floating exchange regime in order to support the Turkey’s exporters’ competitiveness.

Responding questions by journalists during a press meeting to announce the new cabinet, Recep Tayyip Erdoğan said Wednesday there was no need to be concerned about the nation’s current account deficit.
Still, the gap “floats around the alarming level,” Veyis Fertekligil, the chief economist of T-Bank told the Daily News in a phone interview.

Fertekligil said Babacan was likely to remain in charge of the economic performance of the country as Çağlayan would focus on “curbing the current account deficit” through various measures such as new incentives for Turkish exporters. “The economy needs a wider reform,” he said, adding that Turkey’s midterm fiscal program was expected to be renewed by the third quarter of this year. “It has to focus more on the alarming current account deficit.”

3 Temmuz 2011 Pazar

Indirect moves to control exchange rate

Despite an official floating exchange rate regime, the Turkish Central Bank is making new moves in the exchange rate arena, according to economists. Worries over ‘hot money’ inflows have trumped inflationary fears, some say
Having cut daily purchases of U.S. dollars by $10 million to $30 million, the Turkish Central Bank could do more, according to economists speaking to the Hürriyet Daily News.

“The Central Bank might halt foreign exchange auctions altogether,” said Banu Kıvcı Tokalı, chief economist at Destek Securities, speaking on Friday. “The bank feels responsibility over the control of currency rates, despite the floating exchange rate regime in Turkey.”

The Turkish Lira has hit its weakest level against the dollar in 26 months last week, partly because of doubts about the Central Bank’s low interest rate policies despite concerns over inflation, accelerating growth and a widening current account deficit. As a first response to concerns, the bank cut its daily foreign exchange buying auctions to $30 billion on Wednesday.

The U.S. dollar closed last week at 1.607 lira, having gained 6.4 percent against the Turkish currency since early April.

Destek Securities’ Tokalı said despite the positive outlook of the economy, the volatility of the current account deficit continues to be the primary challenge ahead of the new Turkish government. The Central Bank aims to keep the Turkish Lira depreciated against the U.S. dollar and the euro “on purpose,” as this would increase the competitiveness of Turkish exporters, she said. According to Tokalı, the lira appreciated in value by nearly 18 percent this year compared with 2003. Despite the bright side of the coin, “Somehow we need to support Turkey’s exports as appreciation of the lira backfires in that sense,” said Tokalı.

The trouble with hot money

Even though some analysts expect an interest rate hike from the current level of 6.25 percent, Tokalı said such an increase is not possible, considering the global economic outlook. “Hot money inflows still pose a serious threat for Turkey,” she said, noting that an interest rate hike would attract hot money into Turkey. According to her, a tighter monetary policy that includes interest rate hikes might even cause “a serious boom” in the current account deficit, which stands at an annual $60.5 billion as of March. The figure corresponds to nearly 8 percent of Turkey’s gross domestic product.

Despite the appreciation of the U.S. dollar, the trend might not continue in the long run, according to Nurhan Toğuç, chief economist at Ata Invest.

Recent economic data from the U.S. point toward a worse-than-predicted situation, Toğuç said. According to the economist, the Central Bank limiting dollar buying is based on the assumption that the greenback might float stronger for some more time. “These measures are closely related with hot money inflows,” she said.
Predicting that nearly $5 billion flowed into Turkey from Persian Gulf countries due to political turmoil, Toğuç said there could be more to come. “Considering the debt worries in the eurozone and clouds over the U.S. economy, the Turkish Lira is still an attractive currency,” she said, adding that the Central Bank could limit buying further.
“The exchange rate needs to stabilize at some point,” said Kerem Alkin, the editor in chief of Bloomberg HT channel. “The risk of inflation pushes the bank to control the exchange rate,” he added.
Annual inflation in Turkey stands at 7.2 percent as of May. According to Alkin, the Central Bank is concerned about the rise in the exchange rate which might trigger further inflation. “Even though the Bank claims that it is staying away from a direct intervention in the exchange rate, indirect practices are in the agenda,” Alkin said.

1 Temmuz 2011 Cuma

Arab funds channel to Turkey, says top professional

Friday, July 1, 2011

Gökhan Kurtaran
Funds from Arab countries such as Kuwait, Qator and United Arab Emirates have stepped back from turmoil-hit Middle East and North African as they ready to invest in Turkey’s growing property market, according to the chairman of Jones Lang LaSalle Turkey

Kuwait Investment Authority, or KIA, Qatar Investment Authority, or QIA, and Abu Dabi Investment Authority, or ADIA, have planned to make major investments in office blocks, residences, hotels and shopping malls in Turkey,” Avi Alkaş told the Hürriyet Daily News on the sidelines of a press meeting in Istanbul.

ADIA has more than $600 billion in assets located all over the world, while KIA is estimated to have in excess of $200 billion and QIA $60 billion.

“Economic instability in Europe and turmoil in the Middle East and North Africa encourage investors to make major investments in Turkey,” Alkaş said. Turkey recorded 8.9 percent growth, one of the highest figures among OECD and G-20 countries, last year.

Both investors and occupier demand have been positively affected by Turkey’s strong economic growth out of the crisis, together with the political stability of the country as a result of the general elections held June 12, Alkaş said.
Arab investment in Turkey totaled $10.6 billion at the end of last year, according to Ibrahim S. Dabdoub, chief executive of the National Bank of Kuwait, who recently spoke to the Daily News on the sidelines of the sixth Turkish-Arab Economic Forum in Istanbul.

Recalling how Turkey’s retail market remains “promising” for investors, Alkaþ said the Istanbul Shopping Fest held March 18 to April 26 this year was widely supported by retailers and investors and increased debit card and credit card spending by 26 percent compared with the same period in 2010. “The figure shows how dynamic the retail market is in the country.”

More international brands are eyeing investment in the retail sector in the country, he said. “The Demsa Group plans to expand in the secondary cities with Guess stores and Michael Kors, Marc by Marc Jacobs, Hermes and Chanel are expected to open up their first stores in Istinye Park in the second half of this year.”

Turkey’s organized retail gross leasable area, or GLA, reached 6.96 million square meters with a growth of 441,000 square meters in the first five months of 2011 according Jones Lang LaSalle. Major shopping centers opened in Istanbul during this period are Marmara Forum with 137,000 square meters and Sapphire Shopping Center with 27,000 square meters and Demirören Shopping Center with 19,500 square meters leasable space.

The unit monthly prime rent, which has remained stable at 75 euros per square meter from the third quarter 2009 and until the end of 2010, has seen a 5 euro increase reaching 80 euro. “The increase trend will continue” and reaching 85 euros by the end of 2012, Alkaþ said.

Occupier demand in the office market has continued to pick up and rental growth is expected to start though the second half of the year, according to Alkaþ. Some 66,000 square meters take up volume was recorded during the first five months of this year, more than three times compared to the same period last year, according to official figures.

“Northern Iraq is more connected to Ankara than Bagdad economically,” said Alkaþ, recalling that many Turkish companies aim to grow in the newly developing region. “Northern Iraq, which was seen as the most dangerous of all, is now the safest region in Middle East and will continue to attract Turkish investors,” he said. “Turkish company assets in the region reached a total volume of $621 million by the end of last year according to the Kurdish Globe, an English-language newspaper in Arbil