Modern Turkey offers opportunities

Turkey's Trade Minister, Kursad Tuzman.
Turkey's Trade Minister, Kursad Tuzman.
Turkey, the world's 17th largest economy, is a country in a hurry, keen to be seen as a modern, progressive state that has blended Islamic traditions with modern western business ways. Agribusiness Editor Neal Wallace recently visited Turkey and found a country that did not meet stereotypes or preconceptions.

The business world has been forced to take notice of Turkey.

In an era of rampant international economic growth, the Mediterranean country led OECD countries with average growth of 7.4% from 2002 to 2006.

More than that, it is at the heart of a region of one billion people and a strategic bridge between Europe and Asia.

The Turkish Government is courting business opportunities around the world but, for New Zealand, tariffs averaging 47.6% on agricultural products effectively reduce export options to merchandise products and services.

Massive investment in infrastructure and modernising industry still make those attractive business propositions and there is plenty of room to move, with total trade between New Zealand and Turkey worth $160 million.

Imports have outstripped exports with New Zealand exporting $55 million worth of products, wool, hides and skins and dairy products last year but importing close to $100 million - mainly cars, grapes, nuts and dried fruit and chromium oxides.

Turkey's Trade Minister, Kursad Tuzman, told reporters in Istanbul that while the Government was looking at tariffs on agricultural products, there was little likelihood of those rates changing.

But membership of the European Union, being considered at present, would see those tariffs reduce.

New Zealand's ambassador to Turkey, Hamish Cooper, described Turkey as a "medium-term market".

New Zealand companies were successfully doing business, with a Christchurch firm recently assisting Turkish partners with pumping technology on a water pipeline to feed the political capital, Ankara.

Other opportunities existed in earthquake engineering and specialised manufacturing.

In March, the two countries signed a education agreement and this month started talks on taxation issues.

Mr Cooper based his optimism for improved business relations on a strong and positive political relationship that has seen regular visits by political leaders from both countries.

A Ministry of Foreign Affairs and Trade report said the greatest potential in the market was in service, high technology and specialised manufacturing.

There was also potential for marketing alliances between Turkish and New Zealand companies, or arrangements for the manufacturing of New Zealand-designed products in Turkey.

The Earthquake Engineering New Zealand Cluster has been active in Turkey and there was a growing market for information and communications technology.

Mr Cooper said Turkey also offered other benefits to New Zealand businesses.

Turkey was a member of the EU's Customs Union, which meant industrial goods and the industrial component of processed agricultural goods could be exported duty-free from Turkey to other members of the Customs Union while external tariffs on those goods were aligned to those imposed by the EU.

Turkey's potential was obvious.

A country of more than 70 million people, its gross domestic product (GDP) per capita has doubled to $US7000 since 2001 and was expected to reach $US10,000 by 2013 Turkey was a modern progressive economy that was basing its success on low-waged, skilled workers, the quality of its products and its strategic geographic position.

In the commercial capital, Istanbul, major infrastructure investment spending was obvious, with a new rail and bus system and new motorways.

Despite this investment, there was little sign of easing traffic congestion.

Turkey has social reasons for pursuing economic growth.

Nearly 60% of the population was aged under 25 and there was a fear that those disenfranchised through unemployment, a lack of education or chance of a future could be lured by religious fundamentalists.

The country was keen to show that Islam, democracy and commerce were compatible.

"Greater exports will lead to greater democracy," Mr Tuzman said.

Last week, Turkey's Tuskon business organisation arranged a conference in Istanbul involving 1500 Turkish businessmen and 500 business leaders from 21 Asian and Pacific countries to develop business opportunities.

Mr Tuzman said during the conference that as business with other countries grew, so would relationships, breaking down misconceptions about the Islamic faith and showing that Turkey was a modern progressive economy.

"It will help understand the real image of Turkey. Now you feel what kind of people live in this country and what is their aim. You understand the real and right image of Turkey," he told reporters.

But the country has some major issues to contend with.

There is political unrest, with media accusing the Chief Prosecutor and senior military officials of coercion in a bid to disband the ruling Justice and Development Party (AKP) which won 47% of the votes in the last election a year ago.

Mr Tuzman said modern Turkish history was littered with political coups and unrest, which the country had survived.

As a member of the Ministry of Foreign Affairs he worked for 11 ministers in 12 years.

Despite that history, foreign capital invested in the country has increased from $US1 billion some years ago to $US20 billion last year.

Turkey was still seeking membership of the European Union, having had its initial request turned down and now finding French resistance to its renewed application.

Public opinion polls show continued support for membership, but citizens spoken to appear less than keen, saying Turkey made major concessions and changes to meet EU standards in its failed application, so why should it try again?

They felt the EU and the West had more to gain economically and politically from Turkish membership than Turkey, given its geographic position and that it was an Islamic state.

But membership could hurt businesses which were generally family-owned, often traditionally run and which relied on low wages and low health and safety standards.

EU membership would bring with it the requirement for higher wages and employment conditions, which could compromise Turkey's international competitiveness in the face of competition from low wage economies, China and India.

Many businesses lack modern production systems and structures which would reduce competitiveness in the face of EU-imposed higher compliance.

There was little sign that companies had access to those skills and advice or had identified a need for such structures.

Another issue for Turkish companies was the lack of people speaking English, the international business language.

The Turkish Government has successfully broadened its business and export base, but in this era of globalisation, maintaining it could be the difficult part.

Neal Wallace visited Turkey with the assistance of Tuskon Asia Pacific Foreign Trade Bridge conference organisers and the Pearl of the Islands Foundation.


• Population: 73 million.

• Sixty percent aged under 25.

• World's 17th largest economy.

• GDP per capita: $US7000.

• Total exports in 2007: $US107 billion. Mainly machinery, transport, vehicles, clothing, iron and steel.

• Total imports in 2007: $US170 billion. Mainly fuel, machinery, transport and non-electrical machinery.

• 2007 New Zealand exports to Turkey were worth $NZ54 million, led by wool, raw skins, machine tools and butter.

• 2007 Turkey's exports to New Zealand were worth $NZ100 million, led by vehicles, grapes, nuts and dried fruit and chromium oxides.



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