Strong Turkish-Saudi links present enormous economic opportunities
Strong Turkish-Saudi links present enormous economic opportunities
“These growing economic ties are strongly backed by identical approaches on the whole range of bilateral and regional issues,” said Yunus Demirer, Turkish ambassador, here.
Demirer, who gave an overview of Saudi-Turkish relations in an interview on the occasion of the Republic Day of Turkey, said that “the two-way trade between the Kingdom and Turkey has been in the region of SR30 billion annually.”
He also spoke about growing Saudi-relations in other sectors, his country’s commitments to help solve regional problems and the support extended to over two million Syrian refugees currently taking shelter in that country.
Referring to the progressively growing commercial relations, the ambassador said that trade between Turkey and Saudi Arabia has been growing consistently.
Around 80 percent of Turkey’s exports to the Kingdom are industrial products whereas agricultural products account for 10 percent in the exports.
On the other hand, the bulk of Turkey’s imports from Saudi Arabia come from crude oil and petrochemical products.
A close observation of that import shows that the share of crude oil in total imports declined from 79 percent to below 40 percent between 2000 and 2014, while the share of petrochemicals increased drastically (the value of imports of polypropylene rose to $1 billion ) in the same period.
On the other hand, the decrease in the last two years was mainly related with the decline in crude oil prices.
Speaking about the upswing in trade and investment, Ambassador Demirer said that there is a genuine opportunity to establish a long-term partnership between Turkish and Saudi business communities.
Saudi visitors feel at ease in Turkey, says the envoy, while adding further that Turkey is among the world’s top 12 producers of building materials such as cement, glass, steel and ceramic tiles.
“As neighbors and two of the world’s oldest civilizations, Turkey and Saudi Arabia have shared a long history of religious, cultural, scientific, and economic linkages,” said the envoy, adding that Turkish imports from Saudi Arabia have been traditionally dominated by mineral fuels.
Petrochemical products are the second largest category of Saudi exports to Turkey as said earlier. On the other hand, Turkish exports to Saudi Arabia are much more diversified.
Steel and iron products tend to dominate Turkish exports, followed by machinery and transport equipment, agricultural and textile products.
He said that “the depth and diversity of our relations, our joint commitment to stability and well-being of the region as well as our intertwined interests lead our two countries to foster the existing relationship to higher and new levels of cooperation.”
Referring to the investment climate in Turkey, a Turkish government report said that the structural reforms carried out by the government in the last decade have improved the investment climate, which in turn attracted substantial Foreign Direct Investment (FDI).
Legislation on investment was streamlined along global standards.
At present, Turkey has a foreign capital-friendly legislation and transparent regulatory system.
FDI legislation is based on the principle of equal treatment for domestic and foreign investors.
Turkey grants all rights, incentives, exemptions, and privileges available to national businesses to foreign investors.
Turkish law accepts binding international arbitration of investment disputes between foreign investors and the state.
Foreign investors are free to repatriate their capital and profits.
Turkey’s legal system protects and facilitates acquisition and disposal of property rights, including land, buildings and mortgages.
Also, generous tax privileges for free zones and technology development zones have provided a stimulus to the investment therein.
As a result, Turkey has become the commercial/investment hub of the region.
Foreign companies have been using free zones as well as Turkish partners to access the EU market as well as looking for business opportunities throughout the Balkans, Central Asia, the Caucasus and the Middle East.
To this end, the report noted that about 400 Saudi firms directly or indirectly operate in Turkey at present.
Saudi companies mainly invest in industrial sector in Turkey in collaboration with Turkish private and public sectors.
They can also increase their investments in agricultural, finance, tourism and communications sectors.
Turkey, on the other hand, has had a sizeable number of highly-qualified and technologically superior contractors, who are present in every nook and corner of the globe including the Gulf states today.
In the field of tourism, Turkey has been doing very well. A total of 39 million tourists visited Turkey in 2013 and, hence the tourism revenue reached $32 billion.
Turkish tourism sector’s target is to be among the top five countries in the world in terms of attracting the highest number of tourists and receiving the highest amount of tourism revenue by 2023.
It is important to note here that the tourism traffic between the Kingdom and Turkey has also been consistently growing.
“Indeed, tourism is a dynamic and resilient sector in Turkey,” said Ambassador Demirer.
As of today, Turkey ranks 6th in the most-visited global destinations list and tourism relations between Saudi Arabia and Turkey are developing quite well. Last year, Turkey attracted more than 250,000 Saudi tourists, which proves that Turkey has been one of the most favorite destinations for Saudi men, women and children.
In fact, the Saudi visitors feel at ease in Turkey, which is a majority Muslim country with halal food found everywhere.
“Our values, history, art, food and way of life easily reach our Saudi brothers,” said the envoy. On the other hand, more than 500,000 Turks visit Saudi Arabia each year, mainly for Haj and Umrah.
This is in addition to a large number of Turkish businessmen, who visit the Kingdom on a regular basis.
Asked about the total number of Syrian refugees hosted by Turkey today, Ambassador Demirer pointed out that Turkey currenlty hosts more than two million Syrian refugees as part of the historical humanitarian effort.
The humanitarian assistance of Turkey to those refugees has now exceeded $5 billion, he noted.
Such in influx of refugees is mainly because of the fact that Turkey has the longest land border with Syria among all its neighbors. Together with Iraq, the length of the border is 1,295 kilometers.
Speaking about Turkey’s global standing in world’s trade and economy, the diplomat said that “due to its globally integrated and solid economy, large and young population, Turkey is a source of new business and development in its region.”
Turkey has shown remarkable performance with its strong growth over the last decade. A sound macroeconomic strategy in combination with prudent fiscal policies and major structural reforms integrated Turkish economy into the global economy.
Besides, Turkey’s dynamic and growing economy creates many opportunities in trade and in other areas of cooperation in the region.
Demirer, while speaking about the economic situation, said that the economic growth has become sustainable through the macroeconomic improvements and fiscal discipline.
During 2002-2014 period, Turkey ranked among the top five countries with its 4.9 percent annual GDP growth rate.
Its 2.9 percent growth rate of 2014 enabled Turkey show better performance compared to 18 European countries.
This comparatively good performance has continued in the first half of 2015 and Turkish economy grew by 3.1 percent.
According to OECD, Turkey is expected to continue its comparatively good economic performance in the next couple of years.
As the GDP levels tripled to $800 billion in 2014, up from $231 billion in 2002, GDP per capita exceeded $10,390, up from $3,500 in the given period.
“Turkey became the 6th largest economy in Europe and the 17th largest economy in the world according to GDP figures in 2014,” said the envoy, adding that Turkey’s geopolitical location and its strong ties with Caucasia, Central Asia, Middle East and EU increase its importance especially as a bridge in economic relation between these regions. Besides being the gateway of energy resources, foreign trade, overseas construction activities and foreign direct investment (FDI) are among the most important sources of this significant economic performance shown by Turkey.
On global level, Turkey’s foreign trade in 2002-2014 has shown an outstanding performance and the share of volume of trade in GDP rose to over 50 percent from 39 percent in 2002.
Moreover, both sectoral and regional composition of exports and imports have changed in a way that has transformed Turkey from a peripheral, labor-intensive production center to a more technology and capital intensive goods exporting country.
Owing to its skilled man power, extensive technological knowledge and adaptation, cost effective service at international standards, high client satisfaction and coordination between public and private sector; Turkish construction sector; has always been one of the key and locomotive sectors of the Turkish economy. Construction accounts for over six percent of GDP and employs almost 1.4 million people.
When the direct and indirect impacts on other sectors are taken into account, the share of the construction sector in the Turkish economy reaches to 30 percent. Turkish contractors have become important players internationally, related to their domestic experience.
Starting from 1972 to 2015 (August), Turkish companies have taken 8,620 projects in 104 countries worth of $318.4 billion.
This increase is mainly related to the airport, metro, industrial production sites, refinery, energy infrastructure and highway projects which require more skills and necessitate more technology.
This also enables Turkey to be among the top 12 producers of building materials in the world, particularly in the supply of products such as cement, glass, steel and ceramic tiles.
These numbers highlight the power that the Turkish construction industry has on an international level. In 2015, 43 Turkish contracting companies were listed among the “Top 250 International Contractors” announced by a leading international industry magazine.
“Turkish contracting services in Saudi Arabia has undertaken over 100 projects up today,” said Ambassador Demirer.
All these Turkish companies, especially contracting ones, area also doing exceptionally well in other GCC states.
As the political, economic stability and the structural reforms contributed to the inflow of FDI to Turkey and on Turkish companies working overseas, these inflows increased the soundness of the Turkish economy in return.
As of today foreign direct investment stock in Turkey is about $128 billion.