Friday,26 April, 2019
Current issue | Issue 1123, 22-28 November 2012-
Friday,26 April, 2019
Issue 1123, 22-28 November 2012-

Ahram Weekly

A Turkish boost

While Turkish Prime Minister Erdogan’s visit to Egypt this week could further bolster bilateral relations, Nesma Nowar finds out Egyptians need to do more to make the most of the budding relationship

Al-Ahram Weekly

Turkey is on everyone’s lips these days in Egypt. There is growing sentiment by both government officials and ordinary citizens for forging stronger links and fostering broader economic ties with the country.
Egypt-Turkey economic rapprochement has always been significant for both countries, but came more into the spotlight under President Mohamed Morsi’s administration. Given Turkey’s significant economic progress in recent years and Egypt’s faltering economy following the 25 January Revolution, the Turkish economic model has become more alluring.
This week, Turkish Prime Minister Recep Tayyip Erdogan was in Egypt to discuss the means of boosting relations between the two countries. Erdogan was accompanied by 12 ministers and a large number of businessmen. This was Erdogan’s second visit to Egypt following the revolution. His first visit was in September 2011.
During his two-day visit, Erdogan attended the Turkish-Egyptian Business Forum. The forum has resulted in the signing of 27 cooperation protocols in the fields of energy, industry, culture and education, said Adel Al-Lamei, head of the Egypt-Turkey Business Council.
Al-Lamei stated that Erdogan was accompanied by a significant group of businessmen representing the largest industrial companies in Turkey in addition to naval transportation and petrochemicals enterprises.
The Egyptian government presented some 1,000 Egyptian and Turkish businessmen during the forum, several development projects in East Port Said, Suez and Sinai.
The visit is expected to boost already thriving bilateral relations. “Turkey is the only country that is robustly supporting the Egyptian economy.” Al-Lamei told Al-Ahram Weekly.
This is clear in Turkey’s endeavours to shore up the Egyptian economy. In September, Turkey agreed to provide Egypt with a $2 billion financing package aimed at strengthening Egypt’s foreign currency reserves and supporting investment in infrastructure. Egypt has already received the first $500 million of the aid package, while it is expected to receive another $500 million during the coming weeks and the remaining $1 billion next January, Al-Lamei said.
He added that Erdogan announced during the visit that the Turkish Export Bank would operate in Egypt and it would work on supporting small and medium sized enterprises (SMEs).
Though trade between Egypt and Turkey is expected to reach $5 billion by the end of this year, both sides expressed their desire to increase that amount, stating that the current trade volume does not meet the ambitions of both countries.
Turkish investments in Egypt amount to $1.5 billion, represented in 300 companies employing some 55,000 Egyptians, according to Al-Lamei. He expects economic relations between Egypt and Turkey to double in the coming period. Turkish investments are also expected to increase.
Indeed, 2012 has seen the entry of several Turkish companies into the Egyptian market. A clustre of three Turkish companies has been established in 6 October City with total investment worth $150 million.
Hassan Ali Erdem, chief commercial councillor at the Turkish Embassy in Egypt, said that the first company is named Hayat, which produces baby diapers; the second is Gulsan, which produces non-woven technical textile used for producing baby diapers. Gulsan is supposed to supply Hayat and other producers with non-woven textiles. The third company is Elif, which produces plastic packing materials.
“These companies will help Egypt cut its imports, expand the local market, create new jobs and export Egyptian made products,” Erdem told the Weekly.
Another Turkish home furniture producer opened its showroom in Cairo, and Turkey’s largest white goods producer, named Beko, also opened an office in Cairo this year.
Moreover, Turkish Airlines started to operate flights from Istanbul to Sharm El-Sheikh and Hurghada for the first time.
This is in addition to several other Turkish companies that are studying the Egyptian market. Erdem stated that a Turkish company is currently conducting a feasibility study to produce automotive spare parts in Egypt, while another one is doing research on a possible cement factory in Ain Al-Sokhna. Erdem further stated that some Turkish businessmen are interested in investing in Upper Egypt, for the phosphate rocks.
“A Turkish company is now studying the possibility of turning phosphate rocks into phosphoric acid, a chemical used in the fertilising industry.”
Though Turkey is targeting several countries to invest in, including Egypt, the Russian Federation, Algeria, Iran, Malaysia and Indonesia, “Egypt holds a unique position for Turkish investors among these countries,” Erdem said.
He ascribes this to the proximity in location and culture between Egypt and Turkey. “There are too many common things between Egyptians and Turks.”
Erdem pointed out that Turkish investors are not concerned with Egypt’s unstable economic and political environment, saying that Turkey has experienced several economic crises since the 1980s and Turks have managed to deal with them.
He added that Turkish businessmen do not care about political crises very much. “Our companies study the market’s political risk and potential and when the potential seems to be optimistic, the political risk could be then left aside.”
The volume of trade between Egypt and Turkey has witnessed great strides in recent years, especially after the Free Trade Agreement (FTA) signed between Egypt and Turkey that came into force in 2007. However, Turkish Exports to Egypt have always been higher than Egyptian exports to Turkey. From January to October 2012, according to Erdem, Turkish exports to Egypt increased by 33 per cent compared to 2011 figures. Egypt’s exports to Turkey, meanwhile, have dropped during the same period.
Trade between Egypt and Turkey amounted to $4.2 billion in 2011, with $3.98 billion as Turkish exports to Egypt and $216.4 million as Egyptian exports to Turkey, according to the Egyptian Ministry of Industry and Trade.
“Egyptian businessmen are not export-minded people,” Erdem said. “They should go and study the Turkish market and explore export opportunities. Unfortunately they do not do that.”
He added that Egyptian companies and businessmen should make use of the FTA that allows full tariff exemption of Egyptian industrial commodity exports. “This is an opportunity that should help Egyptian exporters, but up till now, they are not making use of it,” Erdem said, adding that Egyptian exporters are focussing instead on exporting petroleum and petrochemical products.
“I always say that we are not competing with Egyptian companies but with European companies in the Egyptian market.”
For his part, Al-Lamei stated that negotiations with the Turkish side are on track to eliminate customs duties on Egyptian agricultural products entering the Turkish market. “This in turn would boost Egyptian exports to Turkey,” he told the Weekly.
The FTA signed between Egypt and Turkey includes, most notably, full tariff exemption of Egyptian industrial commodity exports and a gradual liberalisation of Egyptian industrial commodity imports from Turkey on a yearly basis up to 15 years. Regarding agricultural commodities, both countries will exchange lists of sensitive commodities based on their comparative advantages.

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