TURKEY TURNED INTO THE INVESTMENT HUB FOR BALKANS,CAUCASUS AND CENTRAL ASIA - ALI JOSHGUN

 

Caspian Energy (CE): Mr. Minister, how would you evaluate the results of your visit to Azerbaijan and the current level of the Azerbaijan-Turkish relations?

 

Ali Joshgun, Minister of Industry and Trade, Turkey: Speaking about the relations with Azerbaijan we always note one nation - two states. Turkey was among first countries that recognized the sovereignty of Azerbaijan. President of Azerbaijan Ilham Aliyev cares much about the development of the Azerbaijan-Turkish relations. Many our businessmen work in the Azerbaijan market and are building up their business there. Within the last years the number of Turkish companies in the Azerbaijan market exceeded 1,200, whereas total capitalization made 700 million USD. The investing of Turkish companies in Azerbaijan exceeded 1.5 billion USD. If in 2005 the trade turnover between Azerbaijan and Turkey totaled 700 million USD, in 2006 it reached 1 billion USD.

The two countries have carried out the grandiose Baku-Tbilisi-Ceyhan oil pipeline project (BTC), whereas the implementation of the Baku-Tbilisi-Erzurum gas pipeline (BTE) got support of all world powers. In future Kazakhstan and Turkmenistan may join the project to export energy carriers through the territory of Azerbaijan. The countries of the region have to view this potential.

I think joint projects will serve to our nations and, on the whole, I positively view the results of the visit. During the meeting with President of Azerbaijan Ilham Aliyev we displayed the political will to implement joint industrial projects. I consider my visit to Baku to be very fruitful. I come back to Turkey with great hopes. God willing within the next few years our entrepreneurs will ensure great power of our states and competitiveness of our economies due to mutual investing, enhanced trade turnover and mutually beneficial cooperation.

 

CE: How would you evaluate the current level of the Turkish industry, its growth rates? What is its share in GDP and growth dynamics?

 

Ali Joshgun: Within the last years the Turkey's economy was experiencing a considerable growth. The reforms carried out in the country turned Turkey into an investment hub for the countries of Balkans, Caucasus and Central Asia. The automobile industry received the largest amount of investments. As a result, in 2005 foreign investments in the Turkish economy made 8.9 billion USD and are exceeding 20 billion USD now. Privatization projects are widely developing because of the trust to the Turkish market. Approximately 30 billion USD was invested in such projects within the last 4 years.

This process enabled to enhance the share of the refining industry within the country's economy from 50-60% to 83%. This is the highest, theoretically probable indicator, which allowed Turkey developing its own production, export and investment business.

For the last 4 years the growth rates of the Turkish economy have stood at 7.9%. Last year this indicator reached 9.8%. The incredible role in this direction belongs to the industrial sector of economy because industry both creates new job places and develops the service sector. Thus, additional 2,800,000 people got jobs. At the same time we suggest that over 1,000,000 people are unregistered employees.

In other words, the industry in Turkey is like a locomotive followed by the service sector. The industry is very important for Turkey and after all it is export-oriented. 4 years ago our export amounted to 32 billion USD, whereas this year it exceeded 85 billion USD. 92% of export accounts for industry. Geographically our export is oriented at America, Europe, and Japan. This proves once again that now our economy is worthy enough to compete with world economic powers. We purchased many up-to-date technologies. Jointly with 22 universities and scientific organizations we have created technical development regions to produce our own technologies. These regions are tax-free. At the same time we offer overall assistance to these regions. Factories and companies together with specialists from these universities have entered the stage where they are able to produce and export technologies. The state rendered overall support to this project. Small and medium enterprises (KOBI) are the core of the Turkish industry. We do our best to support these projects, create technological centres for them, extend interest-free credits, in particular credits on export, reconstruction and upgrading, service sector and introduction of high technologies. As these are small enterprises they apply old methods. We computerize them. During the session of OECD States our assistance to the industrial sector was brought as an example for other countries.    

 

CE: How is the process of the Turkey's entry to the European Union progressing? What influence will this factor exert on the development of industry in Turkey?

 

Ali Joshgun: The entry to the European Union (EU) is very important for Turkey. As you know, EU has certain conditions and criteria where high priority is assigned to democracy, human rights, superiority of law and freedom of opinion. Turkey has improved its legislation in this regard and harmonized it with European standards.

This process was followed by various discussions. By 2005 35 divisions, where 21 divisions fell to the Ministry of Industry and Trade, had been reviewed to meet European criteria. At the same time the discussions in the fields of culture and education have been completed as well. Discussions in other directions are successfully being carried out now. The only existing misunderstanding concerns the Cyprus issue. At the moment we continue discussions over 35 laws. This process is going to last two years more. We will discuss 8 laws in the end of this process.

The second important criterion, the so-called "a master-criterion", to some extent concerns economic matters. We started working in this direction in 1996 when Turkey and EU States reached the agreement about the Customs Union. This was a time-consuming work as we zeroed customs dues for goods sale to Europe. Today 53% of export, which exceeded 85 billion in 2006, accounts for European States. In other words, we are able to compete in the European market.

Moreover, the Standardization Institute of Turkey has harmonized 13,700 standards with European norms.

We are also working in another direction. The Patent Institute of Turkey has entered the first five countries-members of the European Patent Office. We have travelled a laborious path in order for our patent to be recognized worldwide since the patents were granted to one laboratory. In 2006 international structures recognized this certification body of Turkey. At the moment our certificates are recognized all over the world.

At the same time, free competition is of high priority for EU. There is a special body in Turkey, which controls competition so as to avoid establishment of various trusts and cartels and creation of unhealthy competition. Its operation was approved by OECD States.

Speaking about correspondence of the Turkish industry to European standards I would like to say we harmonized 162 directives with European norms and currently have no unsolved issues in this direction. I dare say now we are very close to "master-criteria" of EU. For instance, the ratio between the foreign debt and GDP of Turkey went down from 92% to 50%, whereas 60% is viewed as a limit. These criteria include budget deficit.

At present inflation in Turkey makes 8-9% a year, whereas the discount rate amounts to 11%. We work out special programmes so as to make the inflation rate comprise 4%, whereas the discount rate - 5%. I believe we will reach this level in approximately 5 years. Now Turkey has no other problems in its economy.

 

CE: What benefits will the countries of the region have after implementation of the Baku-Tbilisi-Kars railway transport corridor project?

 

Ali Joshgun: As I stated above Turkey and Azerbaijan have carried out grandiose BTC and BTE projects. The next step to be taken is the long-distance railway connecting Europe with Asia. Simultaneously, we are constructing a tunnel under the Bosporus to connect Turkey and Europe. As a result, well-being of the region, in particular Azerbaijan, Georgia and Turkey, will improve much. The long-distance railway will reduce costs on freight traffic from Asia to Europe, enable to expand market opportunities, decrease the delivery schedules and ensure a new, higher level of the trade turnover between our states.

On the other hand, energy carriers will stimulate development of industry, service sector and economy of Azerbaijan on the whole. Turkey is willing to share its experience and support Azerbaijan in this regard. We do not think of our benefits. We would like to set up joint companies so as to make them work, gain benefits and export production to third countries. For instance, Turkey invests much in Russia. Respectively, we want new Azerbaijan-Turkish JVs to be able to offer services in the markets where Turkish joint companies are already represented, in particular in the markets of Russia, Georgia, Iran and others.

 

Thank you for the interview