Balkan countries seek ways to boost economic ties with Turkey


Balkan countries call for Turkish investors to expand business and economic ties in a wide range of niche sectors that have untapped potential.

By Menekse Tokyay for Southeast European Times in Istanbul -- 21/02/14


Erdal Trhulj, minister of energy, mining and industry for the Federation of Bosnia and Herzegovina, addressed the Eurasian Economic Summit in Istanbul. [Menekse Tokyay/SETimes]

Officials from several Balkan countries say they are eager to work with Turkey to find new areas of co-operation that will strengthen regional economic ties.

The latest in an on-going dialogue between Southeast Europe and Turkey came earlier this month as the Marmara Group Foundation played host to the 17th Eurasian Economic Summit in Istanbul, which brought together high-level officials from across the region.

Sadullah Sipahioglu, head of the Turkish-Southeastern European Business Councils, said infrastructure, power plants, housing, road construction, and tourism are among the key sectors for Turkish investors looking for markets in Southeast Europe.

"Especially in Albania and Croatia, we encourage Turkish investors to concentrate on niche areas, like tourism facilities and hospital constructions, where our businesspeople have a great potential and skills to bring an added value in the region," Sipahioglu told SETimes.

"Turkish investors are among the most preferred ones in the Balkans region, and they have already showed their good performance in various investment projects," he added.

In an exclusive interview with SETimes, Erdal Trhulj, minister of energy, mining, and industry from the Federation of Bosnia and Herzegovina, said Turkish companies already have a strong economic presence in BiH in a wide range of sectors.

"Producing cellulose and wrapping paper, Turkish-origin Hayat factory significantly increased its production each year, while another Turkish company, Sisecam, is active at Tuzla Lukavac, the industrial zone of BiH, for soda chemicals production," Trhulj said.

In the future, the countries will have the opportunity for co-operation in the energy sector, especially with investment opportunities in coal, lignite mines, wind and solar energy, Trhulj said.

"However, there is a great and untapped potential for Turkish investment in our country that may boost regional economic ties. The reason why this potential has not been exploited so far was because we don't have the necessary legal legislation to open up the energy market for the private sector, and especially foreign investors," he added.

Trhulj said that by the end of the year BiH would liberalise the electricity market for private competition in line with the requirements of South Eastern Europe Energy Community, which includes BiH.

According to the latest data of Turkey's Economy Ministry, Turkish companies are currently conducting 12 projects in BiH with a total value of $564 million, while Turkey's direct foreign investment in the country is concentrated on the banking, education and airline sectors.

Economic relations between Serbia and Turkey have been growing steadily since September 2010, when the two countries signed a free trade agreement.

Last year, the level of trade reached approximately $750 million, with a growth rate of 20 percent in comparison with 2012.

Filip Sanovic, economy advisor at Serbia's Consulate General in Istanbul, said trade is getting more balanced, and the trade deficit on the Serbian side is narrowing, but there is still space for further progress.

"The number of business forums and levels of businessman visits on both sides are promising the closer co-operation in the coming years. Still, there is a huge untapped potential for Turkish companies and their investments in Serbia," Sanovic told SETimes.

"Political stability, geographic location, lower production and utilities costs, and an experienced labour force are the key factors for Turkish businessman to take Serbia into consideration as an investment point," Sanovic added.

Serbia's free trade agreement with customs union of the Russian Federation, Belarus and Kazakhstan, as well as the Central European Free Trade Agreement, can open doors to those markets for Turkey, Sanovic said, adding that experienced Turkish businessman can also help Serbia to increase its presence.

Sanovic said the textile sector has become one of the highly productive areas of economic co-operation between the two countries.

"There are a few large projects of Turkish textile companies in Serbia in the final phase, and launching of production is expected to be in the spring. We are hoping that their good experience will lead the new wave of Turkish investments in Serbia, leading to increasing of co-operation and stability between two countries," Sanovic said.

Last May, Turkey, Serbia and BiH established a Trilateral Trade Committee, aiming to promote foreign investment and co-operation opportunities among the three countries.

Romania is also hoping to attract more Turkish investors to increase already significant economic relations between the two nations.

During the recent visit of Romanian President Traian Basescu to Turkey on February 5th, Turkish President Abdullah Gul said the countries have been experiencing the greatest volume of trade throughout the Balkans.

"We are resolute to augment our existing $6 billion trade volume to $10 billion in the short term," Gul said.

Currently, the investments of Turkish companies in Romania amount to $5 billion and cover a wide range of sectors. Basescu met with the representatives of the business world as part of his program in Turkey.

The two countries aim to deepen their business ties especially in transportation, tourism, culture and defence projects.

Montenegro also has free trade agreements with Turkey on tourism and customs, while double taxation is prevented, offering convenience to Turkish investors. In 2013, trade volume between Montenegro and Turkey was about $42 million, deemed a low level compared to the previous year.

Turkey and Montenegro signed a mutual administrative assistance agreement in September with the aim of preventing customs-related crimes and boosting further commercial and economic co-operation.

Ramo Bralic, Montenegrin ambassador to Turkey, said Turkey's leading companies have longstanding economic interests in his country and have benefitted from its low tax rates.

According to the World Bank's Southeast Europe Regular Economic report, presented in December, Montenegro's economy is expected to grow 2.5 percent in 2014.

"Montenegro was recognised as a favourable investment destination for the Turkish capital as a connection and bridge point for further economic co-operation with the EU and CEFTA countries including Russia, with which it has preferences agreements," Bralic told SETimes.

Among the Turkish businesses operating in Montenegro is Gintas Company, which built a business centre and hotel complex in Podgorica. Tosyali Company invested in Nikşiç Steelworks, and Turkey's leading port operator Global Ports Holding acquired a 62 percent share in the Port of Bar, Montenegro's largest commercial port -- the first time that a Turkish company acquired the majority stake of a foreign port.

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"There is also a considerable scope for investment in the energy sector, especially in hydro energy, wind power and thermal power," Bralic added.

In April 2011, the Turkish-Montenegrin Joint Economic Committee signed a protocol to increase trade, especially in the energy sector.

Bralic also said the two countries might boost their business and economic relations by tapping into the tourism potential of Montenegro's Adriatic coast and mountainous areas.

How should Turkey take steps to further improve economic relations with Southeast Europe? Share your thoughts in the comments section.

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