Turkey’s economy and 2016 government action plan

The Turkish motor industry is in good shape... as UKTI prepares a market visit in February 2016

The strengths of Turkish business lie in areas such as civil engineering, manufacturing and construction. Italian engineering company Exergy’s has taken the lead and invested in a turbine production plant in Izmir to become the number-one supplier of geothermal power generation equipment in the country.

Exergy founder and CEO
 Claudio Spadacini said that Turkey would continue to be a primary market for his company. “Our focus is on the Turkish market but exporting to other countries from Turkey can be considered in the future,” he noted.

The Turkish motor industry in good shape. A January 2016 report on the Turkish Economy Outlook by the Ministry of Economy celebrated that automotive plants had rolled out 1,360,000 vehicles in 2015, according to the Automotive Manufacturers Association of Turkey. With 992,000 vehicles produced in Turkey going to export markets, the country broke records in both production (up by 16 per cent year on year) and exports (up by 12 per cent).  

The chairman of the Automotive Manufacturers Association of Turkey, Kudret Onen, forecast even higher figures for 2016. The association’s data ranked Turkey 1st in commercial vehicle production and 7th as automotive producer in Europe, and 16th in the world. Turkey is home to Ford, Fiat, Hyundai, Renault, Toyota, and Honda among other automotive companies.

In December, Turkey’s Prime Minister Ahmet Davutoğlu unveiled a 2016 action plan with new measures ranging from reducing costs in organized industrial zones to easing licensing procedures for investors. 
“Obtaining energy permits and licenses will be made easier, while company establishment procedures will be more streamlined,” he said. “A new patent law will be introduced in accordance with the reform package pertaining to science, technology and innovation.” Land costs in organized industrial zones will also be reduced. 
The plan also gave new powers to regional development agencies.

 

Commercial ties between Turkey and the UK

As UKTI south east prepares a market visit at the end of February,  there is a strong relationship between Britain and Turkey; bi-lateral trade, currently at around $12-13 billion, is growing. While some 65% are exports from Turkey to the UK, a promising shift came in 2014 when Ülker bought United Biscuits.

The British Chamber of Commerce in Turkey (BCCT) has more than 400 members, including big British investors in the country, such as Unilever, BP, Vodafone, Shell, and HSBC. Their presence on the Board shows that the Chamber has “serious experience and knowledge” available for UK companies, says Chris Gaunt, the chairman.

The Chamber works very closely with UKTI in Turkey, and has links with 14 of the biggest Turkish chambers, helping to create a wider network for British businesses to explore beyond Istanbul. It sometimes seems to me that Britain, once the great global traders, really has lost its trading mojo, but the upcoming UKTI mission to Turkey offers a chance to rediscover it.

 

Never mind the traffic ... the motor industry in Turkey is thriving

The sun shines on UK trade with Turkey

There is a big opportunity to sell the British brand or 'UK plc'.

As Istanbul basked in warm sunshine on a day in the first week in February, thoughts turned to a UK Trade & Investment trade mission heading for Turkey at the end of the month. This will be my third experience of such a mission. They are always interesting and bring home the opportunities and realities of exporting.

The simple facts are: any company can export; Turkey offers opportunities and a springboard to local markets in Iran and the South Caucasus; and would-be exporters can find on-the-ground help through the UKTI at the British Consulate and the BCCT (British Chamber of Commerce in Turkey).

What many UK companies don’t seem to realize is that the world greatly values British skills and experience in design, engineering, energy, health, marketing, branding and education.  There is a big opportunity to sell the British brand or 'UK plc'.

“Turkey has a strong manufacturing capability and capacity, producing products for other companies and other brands,” Christ Gaunt, Chairman of of the British Chamber of Commerce in Turkey (BCCT), told The Business Year magazine in a recent interview, “but it doesn’t have international brands itself. The country wants to change.”

It is often said that the country’s cities look like perpetual building sites with the constant construction of new roads, houses, hotels, offices, hospitals, and airports. But these are good signs of infrastructure improvements. UK companies are already involved in projects to build the third Bosphorus bridge and Istanbul’s third airport. A big programme is under way to improve health care and provide new facilities.

The energy sector is just one of those pinpointed by the British Chamber of Commerce in Turkey as needing “both investment and technological capabilities to develop self-sustainable energy production”. 

There are also big opportunities for UK firms in R&D to help a wide range of business, according to Chris Gaunt. In fact, R&D expenditure in Turkey went up by 18.8 per cent in 2014 to reach US$6.1 billion, according to the Turkish Statistical Institute. 
Spending surpassed 1 per cent of the country’s total GDP last year, with private-sector outlay accounting for almost half, at 49.8 per cent.

In education, state schools, colleges of higher education, and universities need support for providing English language teaching and for examinations. And business English training is required for Turkish executives and managers of companies looking to export – especially as Mr Putin has slammed the trade door to Russia in Turkey’s face after a Russian jet fighter was downed by the Turkish air force. While the political situation in Turkey and geopolitical instability in the surrounding region are causes for concern, business life goes on, even if companies are now more cautious and risk averse than they were a year ago.

Next week this blog will bring more news about the state of the Turkish economy and the strengthening commercial ties between Turkey and the UK.

 

Caption: Chris Gaunt, Chairman of BCCT, at the Istanbul Stock Exchange