Building bridges to a growing market: Institute of Export London branch assembles expert speakers for its October 3 event Opportunity Turkey, By James Brewer
Mega-projects, and many mini-schemes, are high on the agenda in Turkey, a country that has achieved some of the highest growth rates of recent times in Europe– and is predicted to keep up a strong pace despite the softening of some market factors.
The phenomenon underlines the importance of a half-day event organised for October 3 2013 by London branch of theInstitute of Export and International Trade. It is especially timely for British businesses seeking to enter the Turkish market or build on earlier gains.
UK interests can look to a wide variety of sectors ripe for further development in Turkey including tourism, energy, transport, marine, financial services, telecommunications, pharmaceuticals, agriculture and defence.
Senior members of the London branch of the Institute have outlined the main themes for the meeting, which will take place under the title Opportunity Turkey. These are: Turkey as a gateway to Europe, the Middle East and Eurasia; foreign direct investment; opportunities in Turkey, legal aspects; and tips and incentives for doing business in the country.
The Institute says: “The Turkish economy is predicted to be the second fastest growing economy in the world by 2018, and with a population of over 75m which is largely young and well educated, and the planned EU membership, the prospects for continued growth are impressive.”
Turkey “is one of the most dynamic and attractive markets for UK companies, ” but exporters should be aware that it is a complex and challenging market, says the Institute.
Businesses weighing up risks will want to quiz speakers at the London event about the impact of political clashes in Istanbul and other cities earlier this year, which came as a shock to outsiders. The unrest does not seem to be impacting major business areas, but there is talk of some commercial projects being put on ice.
People should be wary of misinterpreting developments. “Turkey is not Egypt, ” says one expert. “It is a young nation: 70% of people are under 30 years of age and what they do not want to be subject to is religious extremism.”
In terms of infrastructure, the government of Prime Minister Recep Tayyip Erdoğan is thinking big. Mr Erdoğan and President Abdullah Gül in May 2013 attended the groundbreaking ceremony for Istanbul’s third bridge over the Bosphorus. The project has been variously estimated to cost from $3bn to $6bn. Construction of the 1.3km suspension bridge, named after Yavuz Sultan Selim, one of the most prominent rulers in Ottoman history, has been opposed by environmentalists. It went out to tender last year and in an indication of opportunities for overseas companies, was awarded to a consortium of Turkey’s IC İçtaş and the Italian group Astaldi; Hyundai and SK are to build the lateral towers, aprons and suspension cables.
Even more ambitious is Kanal İstanbul, which would be a 44km sea-level waterway to link the Black Sea and the Sea of Marmara, with an outlet to the Aegean Sea. Kanal İstanbul would bisect the European side of Istanbul and form an island between Asia and Europe, by-passing the Bosphorus and easing its heavy shipping traffic – currently about 56, 000 vessels a year. This project is intended for the 100th anniversary in 2023 of the founding of the Turkish Republic. The $10bn – again, estimates vary and it could cost $30bn – new waterway would have a depth of 25 m. The northernmost point of the waterway, which would be lined by upmarket housing, would be close to another controversial project, a third airport for İstanbul Then there is the Izmit Bay Suspension Bridge, which when completed will be the world’s fourth longest suspension bridge, by length of central span. Located at the eastern end of the Sea of Marmara, near İzmit and 50km from Istanbul, it is to be part of a new highway linking Izmir and Istanbul.
Environmentalists objected to all these projects – as they did to the planned redevelopment of Gezi Park in Istanbul which led protests and a demand for a change of government, vigorously resisted by Mr Erdoğan.
This July, the central bank acted to shore up the currency, but trade itself seemed to remain buoyant. Imports were by value $23bn that month, up from $21bn in June, thanks mainly to a rise in energy and car imports. Main trading partners are Germany, UK, Italy, France, Russia, China and the US.
The Turkish banking system is seen as having behaved considerably more responsibily than many other large institutions in the mid-2000s, albeit under strenghened regulation after its own traumas in 2001. It includes one of the world’s biggest banks, Türkiye İş Bankası, known as İşbank, which has an extensive network and has played a leading role in introducing financial products and technology-based services. İşbank increased its net profit by 14.5% in first half 2013.
Turkey is a massive market and offers a great deal of business opportunity for those who are entrepreneurial, says David Buffin, founder and director of Buffin Leadership International, who has worked with many cultures and businesses. Mr Buffin, one of the speakers for the October 3 seminar, says that for him, working with Turkish interests has been a very positive experience.
Mr Buffin, who specialises in “leadership strategies and learning solutions focused on achieving powerful results, ”singles out Turkey as a particularly appealing proposition.
With Istanbul-based business partner Net Danışmanlık (Net Consulting), a management consultancy and training company, he is marketing and delivering strategies in Turkey. Net Danışmanlık is led by its founder and general manager Mrs Mükrime Alptekin, whose acumen he greatly admires. Mr Buffin says of working in Turkey: “You have to build that very strong bond of understanding – it is not always about money.”
Turkish people – like their counterparts in Greece – have an entrepreneurial disposition. “They want to do business, ” says Mr Buffin.
In getting on with Turkish people, you have to be outward going and bring something to the situation – energy, enthusiasm, and spark, Mr Buffin advises. It is not a question of straightforward interaction. You have to be a bit different and you have to be flexible. You have to deliver certainty, treat people with their rightful identity, make sure you contribute and help the other person ‘grow.’
“Profitable opportunities will come if you both share in the risk and the commitment.”
Many successful partnerships are in place in Turkey. Mr Buffin cites as an example the supermarket group Tesco – which in 2003 acquired the local business Kipa and opened its first Tesco Kipa store in 2005 in Bodrum. Since then, the venture has expanded to encompass more than 190 stores in 20 Turkish cities, achieving £745m revenue in 2012-13.
Another expanding venture is marine, energy systems and aviation engine company MTU. Since its foundation in 1990, MTU Turkey “has consistently expanded and transformed into a company with modern facilities and a specialised, experienced, and loyal labour force” according to its website.”
Mr Buffin has advised among others UK-based Balmoral Comtec and Balmoral Tanks, who have interests in several countries including Turkey. His company supports the learning and development of their people, and has worked with them in their promotional stand in Istanbul. He says that Balmoral, which makes and markets surface to seabed buoyancy, insulation and elastomer products, and assists in oil exploration in deep and harsh environments, has transformed its business and operation, producing massive increases in productivity, quality and reliability.
Mr Buffin praises senior people at the government service UK Trade & Investment (UKTI) for their record of helping people seeking to approach the Turkish market.
A view from Turkey’s leading business association, Tüsiad, on relations with the European Union and international bodies, will come at the London event from Dr Bahadır Kaleağası,
We asked Dr Kaleağası, Tüsiad representative to the EU, where Turkey stands, given that the economy has been booming but growth is slowing and the currency has weakened. Is this a deterrent to investment and trade with overseas businesses?
Dr Kaleağası said that Turkey certainly deserves, by far, a better result in attracting a higher share of the global foreign direct investment flow. It is the 16th largest economy, and a member of the G20, NATO, and OECD. “The country is in the process of membership to the EU and has met the requirements of the Customs Union. This means that Turkey with its trade and regulatory alignment is essentially part of the European single market.”
As far as standards of law, regulation and business practice are concerned, foreign investors in Turkey operate for the main in a European sphere, he said.. “Alongside its European characteristics and standards, Turkey enjoys as well Asian dynamism, entrepreneurship, flexibilities and the communication skills. This way of being a perfect Eurasian centre of economic gravity is Turkey’s international brand. With the recent upgrading by Moody’s, Turkey has probably become the most credible gateway of opportunity for FDI.”
Turkey has five challenges in confirming its rise as an ‘eldorado’ for FDI, he said:
1. Preserving the last decade’s very successful macro-economic discipline.
2. Enhancing democracy, rule of law, liberties, public procurement rules and the general investment environment in line with the requirements of the EU membership process.
3. Investing in human capital with a brand new, innovative educational reform which values free thinking, anti-dogmatic teaching, individual creativity and teamwork.
4. A revolutionary innovation policy targeting specific IT and manufacturing sectors.
5. Integrating Turkey into the framework of the upcoming Transatlantic Trade and Investment Partnership.
Dr Kaleağası said that Turkey has gone further than the Customs Union in integration with the EU. “As a country of accession and on the basis of the Turkish government’s official National Programme, Turkey is aligning its legislation with the EU and is essentially part of the European single market. In times of rapidly increasing velocity of the global economy, free trade agreements and European integration, Turkey’s challenge is to accelerate the current EU membership process while further amplifying economic ties with the rest of the world.”
He said that a disturbing disadvantage for Turkey in its relations with the EU is the limitation on free travel for Turkish business people, academics, and young people. The visa regime of the EU for Turkish citizens was discriminatory, turning out to be a non-tariff barrier, and harms Turkey’s international competitiveness, said the Tüsiad board member. Another problem is Turkey’s absence from the EU’s decision-making system.
What of other political questions such as spill-over impacts and dangers from the civil war in Syria, and domestic unrest. Should this deter UK and other companies from initiating and strengthening business relationships with Turkish enterprises?
Dr Kaleağası said that Turkey is a NATO country and had never been a land of international armed conflict since 1922. “So far we have not been hearing about any company having concerns because of the Middle East turmoil. A careful foreign policy would avoid any such perspective.”
What other opportunities are there for Turkey to strengthen its international trade relations?
“The Transatlantic Trade and Investment Partnership and EU-Japan economic agreement redefines a ‘New Western Axis’ in the world order to which Turkey ought to belong.” Turkish companies would always be globally more competitive in a Turkey well integrated into the EU, belonging to the transatlantic community while also developing its Eurasian characteristics of a dynamic and entrepreneurial economy open to Asia and Africa.
The Institute of Export meeting is scheduled to hear a welcome address from His Excellency Ünal Çeviköz, Ambassador of the Republic of Turkey. Other speakers will include:
Mutlu Manyas, founder of the Manyas law firm, who advises large local businesses in Turkey including KOC Group companies; and foreign investors including MAN, ThyssenKrupp and Wisco. Her practice focuses on major projects and corporate work with a particular emphasis on investments in Turkey.
Ahmet Iplickçi, senior adviser to the Turkish Prime Minister’s Office, He is vice-chairman and board member of the Turkish British Chamber of Commerce and Industry. Mr Iplickçi recently won the Most Successful Turk Award in recognition of his extensive experience as an entrepreneur and investor in start-ups and small and medium enterprises.
Emma Edhem, chairman of the Turkish British Chamber of Commerce and Industry and president of the Turkish British Legal Society, who will speak about bilateral trading and ascertaining the status of contracts in Britain and Turkey.
Dr Demet Yenilmez, vice-president sales for Genband, a provider of multimedia networking and software communications for enterprises in more than 80 countries. She has considerable telecommunication sales experience in international markets, including six years of doing business in Turkey, which she will outline as a case study.
Institute of Export London branch event Opportunity Turkey.
Date: Thursday October 3, at 15.30 for 16.00hrs.
Venue: Arab British Chamber of Commerce, 43 Upper Grosvenor Street, London, W1.