More than 160 business contacts initiated
S$4.5 million worth of sales expected over next 12 months and a confirmed order of S$50,000
Singapore, Monday, 13 June 2009 - The Singapore Business Federation (SBF) and International Enterprise (IE) Singapore jointly organized a high-level six-day business mission to Turkey in mid June to explore business opportunities in the country's Infrastructure Services, Marine & Offshore, Infocomm, Technology, Consumer Electronics and Retail sectors.
The mission, from 8 to 13 June 2009, was in conjunction with President Nathan's state visit to Turkey. He was accompanied by Ms. Lim Hwee Hua, Minister in the Prime Minister Officer and Second Minister for Finance and Transport, Mr. S Iswaran, Senior Minister of State for Ministry of Trade, and Mr. Balaji Sadasivan, Senior Minister of State for Ministry of Foreign Affairs.
The 18-strong business delegation, led by SBF CEO Mr. Teng Theng Dar, was SBF's second mission to Turkey since November 2004 when Senior Minister Goh Chok Tong visited the country. The delegates were from diverse sectors including architecture, marine services, trading, accounting, sports equipment, port management, ICT, engineering and airlines. The cohort also comprised several large corporations such as Singapore Technologies Engineering Ltd, PSA, Singapore Airlines, IDA International and SMES keen to tap the Turkish market.
A key highlight of the business mission was the MOU signing between Turkey's Foreign Economic Relations Board and SBF to set up the Singapore - Turkey Business Council (STBC). The STBC aims to promote bilateral trade, and contribute to industrial and technological collaboration between Singapore and Turkey.
The signing took take place during the "Singapore-Turkey Business Collaborations" seminar in Istanbul graced by Senior Minister of State for Trade & Industry Mr. S Iswaran. The seminar provided Singapore companies an opportunity to learn about Turkey?s business and economic conditions, and also served as a platform for Turkish and Singapore company representatives to discuss potential areas of collaboration.
In Ankara, the delegation was presented with an overview on the business opportunities in Turkey by the following organizations:
1. The Union of Chambers and Commodity Exchanges of Turkey (TOBB) on Economic Updates of Turkey and Key Sectors
2. Economic Policy Research Foundation of Turkey on the Overview and updates on the Turkish economy
3. Prime Ministry Privatization Administration on the Privatization Opportunities in Turkey
4. Ministry of Culture and Tourism on Updates on the Turkish Tourism Sector and Investment Opportunities
5. Turkish Contractors' Association on the Overview of the Turkish Construction Sector
6. Export Promotion Center of Turkey (IGEME) on Overview of the Turkish Manufacturing Sector
7. KPMG on Doing Business in Turkey - Tax and Legal Issues
SBF also arranged for delegation members to meet with relevant Turkish government authorities, facilitated business-matching and networking sessions with Turkish companies and banks respectively. The delegation also visited two manufacturing facilities in the Organised Industrial Park arranged by Ankara Chamber of Industry. In Istanbul, the delegation was briefed by the Associations of Bank of Turkey and Garanti Bank on Project Financing and the Economy and attended a Business Roundtable meeting at the Confederation of Businessmen and Industrialists of Turkiye (Tuskon).
Based on general feedback gathered by SBF, the delegation garnered more than 160 business contacts and achieved a firm order of S$50,000. The amount of sales under negotiation S$2.25 million, while sales expected over the next 12 months was closed to S$4.5 million.
In 2008, Turkey was Singapore's 42nd largest trading partner, with bilateral trade valued at S$1.89 billion, a sharp rise of 81% from 2007. This was largely due to the increase in imports of refined petroleum products and steel from Turkey. Singapore's top exports to Turkey are refined petroleum products, telecommunications equipment and apparels & textiles. Foreign direct investments from Turkey into Singapore amounted to S$4 million as of end 20071. Singapore companies with presence in Turkey include ST Electronics, PSA, Singapore Airlines, Charles & Keith and Food Empire.
ANNEX
| Event |
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Business Mission to Turkey |
| Date / Time |
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08 June - 15 June 2009 |
| Document |
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Country Brief - For Internal Circulation only |
Country Background
1. Turkey is at the northeast end of the Mediterranean Sea in southeast Europe and southwest Asia. To the north is the Black Sea and to the west is the Aegean Sea. Its neighbours are Greece and Bulgaria to the west, Russia, Ukraine, and Romania to the north and northwest (through the Black Sea), Georgia, Armenia, Azerbaijan, and Iran to the east, and Syria and Iraq to the south.
2. Turkey lies between Asia and Europe, serving as a bridge geographically, culturally and economically. Its location on two continents plays a central part in Turkish history and gives the country a major advantage in serving the markets of Europe, the Middle East and North Africa.
3. There are more than 4400 minerals deposits in the country. Her major minerals produced are boron (72% of world boron's reserves) borates chromites, mahnesite, marble (40% of world's reserves), basalt, perlite, pumice, barite, bentonite and feldspar. Turkey also possesses primary energy resources such as hard coal, lignite, asphaltite, petroleum, natural gas, hydroelectric energy and geothermal energy.
4. Additionally, Turkey is a major crossroads for pipelines carrying oil and natural gas to the Mediterranean region and Western Europe from Russia, the Middle East and Asia.
Political Overview
5. Singapore and Turkey maintained warm relations politically with frequent exchanges and visits by key appointment holders. This can be seen when Singapore's senior Minister Mr Goh Chok Tong made an official visit to Turkey in 16-19 November 2004, when he was accompanied by a high profile delegation of Singaporean businessmen.
6. Key political leaders in Turkey:
7. The Ambassador Extraordinary and Plenipotentiary of Turkey to Singapore is His Excellency Ahmet Bulent Meric. The non-resident Ambassador of Singapore to Turkey is His Excellency S Chandra Das.
8. The political landscape was changed dramatically by the Justice and Development Party (AKP)'s landslide victory in the election in 2002, and repeated its success with a stronger majority in the election in 2007.
9. The two main priorities of the government have been to meet the political conditions for starting accession negotiations with the EU and to maintain economic stability. In 2004, when EU endorsement was given for the start of accession negotiations. The EU and Turkey overcame objections from several EU member states to reach a last minute agreement to formally open accession negotiations on 3 October 2005, as agreed at the end-2004 European Council.
10. However, Turkey's EU membership negotiations will be expected to be met with difficulties. The main obstacle in the short term to negotiation progress is Cyprus. Further progress is also needed in human rights, freedom of speech and protection of minorities. Opposition within the EU to Turkish accession has already contributed to a decline in public support in Turkey for membership.
11. The government's management of the economy has been good. It has broadly adhered to the IMF-backed reform programme. As a result, the Turkish economy is now more robust and resilient to shocks. However, as shown by the sharp falls in the lira and the Istanbul stock exchange in May 2006, it is still vulnerable to volatility and sharp changes in investor sentiment.
12. Relations with Greece are traditionally poor, although it warmed up spectacularly when Greece supported Turkey's EU membership application. There are existing tensions between Turkey and Syria with the latter?s claims on Turkey's southern Hatay province; Turkey's military alliance and co-operation with Israel; and disputes over Euphrates water resources, as Syria believes its water supply could be threatened by Turkey's expansive irrigation and dam projects in the south-east of the country.
13. Turkey maintained a working relationship with Iraq under Saddam Hussein's regime. The parliament rejected a motion allowing the United States to deploy its Iraq-bound troops on Turkish soil. Even in the reconstruction phase, Turkey exhibited care so as not to be seen as an aggressor, taking time to decide whether or not to send troops to Iraq in response to a U.S. request for military assistance. Turkey is focused on forging good relations with the emerging Iraqi regime.
14. Relations with Iran are good, notably with regards to business ties. In the past, discussions regarding the possible establishment of a Turkish bank in Iran, and hopes to boost energy ties. Turkish and Iranian officials are pondering cuts in oil price, closer co-operation on the production of halal food, and a regional trade zone with Iran to facilitate operations with Iranian business owners. The EU and the United States are expecting Turkey to use its position in order to encourage Iran to co-operate with the West over its nuclear programme; Turkey supports Iran's use of nuclear power for peaceful means, but has cautioned it to halt development in the face of international opposition.
15. Turkey has a close strategic relationship with Israel. Co-operation is primarily at a military and political level. Both countries are close allies of the United States. Ties with the United States are set to improve under the Obama administration. Yet the issue of Armenia remains a threat to better ties; Turkish officials are keen to avoid the siding of U.S. politicians with Armenian lobby groups on the issue. Turkey and the United States have different outlooks on key issues, but also have an overriding need to co-operate. Therefore, the doors to improved relations will be kept open.
Economic Overview
16. The private sector has long played the major role in economic activity and in recent decades considerable privatisation has taken place in heavy industry, telecommunications and other fields. However, the state still controls key mining and energy companies, utilities and about 30% of the banking system.
17. Reducing inflation, which has been perennially high since the "oil crises" of the 1970s, has been a consistent priority of economic policy. Recent IMFbacked efforts to reduce inflation have centred on tight fiscal policy and an independent monetary policy conducted by the Central Bank of Turkey.
18. Low fiscal deficits, robust economic growth and debt amortisation as a result of privatisation caused the gross government debt/GDP ratio to fall from about 75% of GDP (new series) in 2001 to just over 40% in 2006.
19. The Turkish economy has been prone to severe economic and financial crises. In 2001 the crawling exchange peg collapsed, the lira plummeted, inflation soared and GDP contracted by 5.7%. In 2002-07 GDP growth was solid, averaging 6.8% a year.
20. In most years Turkey has run current-account deficits. The deficit has risen in recent years, from 0.3% of GDP in 2002 to about 6% in 2006-07, driven by strong domestic demand growth, high commodity prices and real appreciation of the lira.
21. Based on the global insights' analysis and forecast, the Real GDP (% change) is expected to be around -5.1% in 2009, with the nominal GDP decreasing form USD 726.1 billion in 2008 to USD 558.3 in 2009. Manufacturing and services sector, touted as the twin engines for Turkish economy, have been hit badly. The global financial crisis has undermined GDP growth prospects significantly. Nevertheless, the breadth and depth of the global financial and economic meltdown have overwhelmed any potential positive impact on Turkey's economic future.
22. Consumer and business confidence are decimated, an evaporation of external demand has sent industrial production plunging, capital investment has screeched to a halt, consumption activity has plunged, and the government has been forced to curtail spending. While the immediate negative impact of falling export growth will be offset by a similar drop in import growth, the ramifications of less manufacturing demand will take a heavy toll on economic growth throughout 2009 and even beyond. In our April forecast revision, GDP is expected to contract by around 5% in 2009 as a whole, with the economy essentially flat in 2010.
23. Severe losses were noted across the production spectrum. The loss of export demand, coupled with waning household consumption, was enough to trigger a 10.8% y/y drop in manufacturing production in the fourth quarter of 2008. Manufacturing production had already stalled in the third quarter (up only 0.5% y/y), resulting in a full-year expansion of a poor 0.8%. The manufacturing sector is the largest economic activity grouping within Turkish overall GDP. While significantly smaller as a share of GDP, construction activity suffered an even worse 2008 than manufacturing. For the year as a whole, construction activity was down 7.6%, inclusive of a 13.4% y/y plunge in activity in the fourth quarter alone. A housing bust and a paucity of available financing have undermined all construction in the country. Several other key production sectors also saw sharp losses at the end of 2008. Wholesale and retail trade, for instance, plummeted 15.4% y/y in the fourth quarter, dragging down the country's full-year trade by 0.9%. A loss of production led to a decline in transport demand, reflected in the 7.1% y/y downturn in transport, storage, and communication value added.
24. The global economic crisis has begun sending Turkish unemployment soaring, as the country's exporters are laying off thousands of workers. A deceleration in job creation that was noted beginning in the second half of 2008 is only going to intensify during 2009, as economic growth turns to contraction. Finance Minister Kemal Unakitan estimated that the brunt of the downturn will be borne by the small and medium-sized companies of Turkey. Those establishments that employ between one and nine employees account for 61.9% of total jobs. These jobs will be the first to be negatively affected.
25. In the longer term, the greatest challenge for the Turkish labor market will be creating enough jobs to deal with an expectedly sharp rise in labor participation. Although the official unemployment rate in Turkey is similar to the rates noted throughout the rest of Europe, its labor-force participation rate is significantly lower. According to a World Bank study, job creation going forward will be limited by the current large employment in the agricultural sector and unusually stringent labor regulations. The first of these problems is relatively unavoidable. In its economic development, Turkey will shed agricultural jobs and add industrial and service jobs. On the latter point, the World Bank urged sweeping reforms to address high severance packages, limitations on temporary work, and high social security costs. In addition to these changes, the country must also combat its pervasive shadow economy, against which potential legitimate employers must compete. Until the shadow economy can be reduced-through tax revisions and bolstering of property and business rights-job creation will be difficult to sustain.
Economic Structure
26. Agricultural resources in the country are relatively rich in a series of diverse cereal, cash, and fruit crops. More specifically, the country's agricultural production is greatest in tobacco, cotton, grain, olives, sugar beets, and citrus fruits. The country is also the leading exporter of hazelnuts.
27. Substantial mineral reserves exist in copper, zinc, lead, and gold. The country is a leading global exporter of chrome. Some oil deposits exist within the country, but are not enough to meet domestic demand. Natural gas deposits only supply around 2% of domestic consumption. The country is developing itself to become a key transit point for Russian and Central Asian raw energy products. More resources are being poured into further development of energy refining. The country has substantial reserves of coal, estimated at around 1 billion tonnes. Tourism potential in the country is considerable. Its diversity includes beach resorts to spectacular countryside, numerous antiquities, and cosmopolitan cities.
28. The makeup of Turkey's commodities trade is also evolving. Chinese imports received a boost at the beginning of 2005 with the cessation of textile and apparel restrictions. The ending of these international restrictions have undermined Turkey's ability to export its own apparel and textiles to the rest of Europe and the world, with it now facing greater international competition. Prior to the current economic crisis, the country had been rapidly increasing as an automotive exporter. Energy imports and exports are growing rapidly, as Turkey is positioning itself to be a key trading point between the crude energy providers of Russia and Central Asia and the Middle East and the markets of Europe.
Turkey Trade & Investment Profile
29. Turkey's trading patterns are undergoing significant changes. The removal of Saddam Hussein and trade embargos against Iraq has led to a rapid resumption of trade with that country. The Iraqi market is fast becoming a key destination for Turkish exports. Otherwise, the countries of the European Union (EU) and the United States are the country's primary trading partners. On the import side, cheap Chinese imports are securing an increasing share of total imports into the country. Additionally, new energy pipelines from Russia and Central Asia are causing trade with those countries to grow rapidly.
30. Energy imports and exports are growing rapidly, as Turkey is positioning itself to be a key trading point between the crude energy providers of Russia and Central Asia and the Middle East and the markets of Europe.
31. The main trading categories are: refined petroleum products, electric plant & parts, electrical power machinery, goods motor vehicles and medicaments.
32. Turkey's major trading partners for 2005 is listed in the table below:
Bilateral Trade
33. In 2008, total trade between Singapore and Turkey rose by almost 81% amounting to about SGD$1.89 billion, and in the process making Turkey our 42nd largest trading partner. The increase in trade is driven primarily by a significant increase of 155.5% of imports, valued at SGD$1.40 billion. On the other hand, exports decreased marginally to the tune of S$494 million with a significant drop in the export of telecommunications equipment, Polystyrene and Tin. In both import and export trade, petroleum products are the number one traded item between Turkey and Singapore. Overall, the total trade balance is in favour of Turkey where the imports from Turkey outweighs our export by more than SGD$900 million.
34. Turkey was Singapore's 42nd largest trade partner in 2008 (34th largest for import market and 48th largest export market in 2008).
35. Singapore's Trade with Turkey:
36. Top 10 Exports in 2008:
Value in S$ Thousand
37. Top 10 Imports in 2008:
Value in S$ Thousand
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