Turkish Trade Minister Ömer Bolat has said Ankara attaches great importance to the bilateral economic relations with Saudi Arabia. In an interview with Asharq Al-Awsat, he also said that collaboration with the Kingdom, and the development of joint projects in the defense industry are of great importance for exploring cooperation opportunities in Africa.
Here’s the text of the interview:
1) What are the prospects for Saudi-Turkish economic, trade and investment cooperation? What are its fields? What are your expectations for the volume of bilateral trade in 2024?
We attach great importance to the bilateral economic relations with Saudi Arabia and we have already taken important steps in improving them with the guidance of political will exhibited by our leaders.
Our bilateral trade volume was recorded as 6,8 billion dollars in 2023. In the medium term, we can readily aim to reach a 10-billion-dollar trade volume. Our long-term target is reaching 30 billion dollars by diversifying the sectoral portfolio in our trade.
So far, Saudi firms have invested more than 2 billion dollars in Türkiye. We are open to cooperate with Saudi multinationals and the Public Investment Fund (PIF) to assess the feasibilities of Turkish companies that coincide with Saudi Arabia’s investment vision operating in various sectors.
2) What investment opportunities are available to the private sector in both countries? Is there a plan to maximize investment partnerships?
We closely follow developments within the scope of Saudi Vision 2030 aiming 3,3 trillion dollars of direct investment to diversify economic activity in the Kingdom. I believe that the growing motivation triggered by our “Century of Türkiye” vision and the Saudi Vision 2030 will create great synergy which would pave the way for significant economic benefits for our countries.
Turkish companies are willing to cooperate in line with Saudi 2030 investment vision including strategic sectors such as defence, renewable energy, machinery, building materials, automotive, aerospace, pharmaceuticals & biotech, medical devices and supplies.
Besides, we want our companies to take an active role in mega projects such as Neom, Diriyah Gate, Qiddiya, Red Sea Project within the scope of the Vision.
In the period of 2003-2023, the Turkish economy attracted more than a quarter trillion dollars of FDI. Türkiye stands out as having well equipped and young human capital, distinctive manufacturing capacity and quality as well as unprecedented geo-strategic location bridging Asia, Europe and Africa.
Further, since Türkiye has an ever-growing and strong economy thanks to being a superior and diversified industrial powerhouse, we operate a very dynamic investment incentive program.
It is worth mentioning that we strive for enhancing our investment climate constantly to encourage FDI and foreign investors. Our incentive scheme is tailored, project-based and comprehensive. Under every program, we evaluate each investment proposal one-by-one in line with the requirements of that specific investment project.
Investors can also tap into the potential of our free zones, and decent and completely objective legal structure guaranteed via mutual investment agreements. In this context, we expect more Saudi companies to benefit more from our country's incentive system and increase their investments in Türkiye within a wide range of industries.
Investment opportunities in Türkiye and Saudi Arabia vary across different sectors and industries. Both countries offer diverse investment opportunities across various sectors, depending on risk appetite, investment horizon, and expertise. In this regard, we believe there are many opportunities to exploit between our countries.
As it is well known, Saudi Arabia continues to accelerate the investment environment, which is being carried out under the socio-economic reform program known as “Vision 2030”. We follow this reform program very closely and strongly believe that there are many areas that we can cooperate and maximize our investment partnerships.
Accordingly, we believe that some sectors such as energy, transport and logistics, agriculture and food processing, tourism, industrial and manufacturing, financial services, healthcare and life sciences offer great potential and opportunities for Turkish investor companies. And also, we consider that joint investments between Turkish and Saudi companies will also enhance mutual cooperation opportunities. Therefore, we together with our private sector are ready to put our greatest effort to reveal the untapped potential between our countries and continue to work with Saudi Arabian partners.
3) To what extent do Saudi green initiatives provide to maximize cooperation in the green economy and climate?
Türkiye’s Customs Union with the EU which has been effective for nearly 30 years necessitates to closely monitor and align with the European Green Deal. Hence, Türkiye published its own Green Deal Action Plan, a comprehensive roadmap to a green, sustainable, and resource-efficient economy, in July 2021. In line with the Turkish Green Deal Action Plan, a series of initiatives aimed at promoting low-carbon production are in progress in Türkiye.
These include the establishment of a national ETS, the formulation of strategic roadmaps for low-carbon growth in relevant industries, alignment with newly developing EU sustainable product standards and the augmentation of R&D incentives. Furthermore, Türkiye is taking decisive steps to accomplish the transition to a circular economy and align with EU´s new technical legislation. As such, Türkiye is preparing its national Circular Economy Action Plan in priority sectors namely in textile, battery, construction products, plastics, packaging, food, electronics.
Establishment of new partnerships in wider area of policies, international cooperation and joint efforts will be defining factors for the successful implementation of climate change mitigation and adaptation policies to reach global climate objectives. In this regard, Türkiye is open to exchange of knowledge and experience sharing through international cooperation in innovation and R&D, as well as welcoming Saudi investments, in achieving global climate goals.
We attach great importance to collaborations both in the green transformation of industry and the transformation into clean energy, such as hydrogen blending into natural gas projects. In this context, we closely follow the projects initiated by Saudi Arabia within the scope of "Saudi Vision 2030", such as NEOM that envisages innovation and sustainability, and we are of the view that cooperation in such smart cities has a great potential in diversifying our economic collaboration. Further, we also attach utmost importance on collaboration in water use and wastewater management, within the scope of combating climate change.
4) To what extent is Türkiye prepared to cooperate with Saudi Arabia in the defense industries sector? Is there a common desire to launch projects in Africa?
Our country's defense and aerospace industry has achieved significant milestones with over 80,000 employees and an annual production value of $12 billion, exporting $5.5 billion to 180 different countries and regions. Our exports, which stood at $4.36 billion in 2022, increased by 27%, reaching $5.5 billion in 2023. Our defense and aerospace industry’s share in our country's exports is progressively rising, reaching 2.2% in 2023.
These remarkable accomplishments in our defense and aerospace industry indeed offer opportunities to enhance cooperation with friendly and allied nations. Collaboration with strategic friends in the region, such as Saudi Arabia, and the development of joint projects in the defense industry are of great importance for exploring cooperation opportunities in third countries and regions like Africa.
During the last two decades, Türkiye has achieved an unprecedented leap in defence industry solidified with innovative and high-tech product groups in a wide array of military equipment. We also know that Saudi Arabian Military Industries has an objective to become one of the top 25 defence companies in the world by 2030.
As being the countries having ambitious goals in defence industry, we endeavour to enhance our defence cooperation in various ends. In this respect, we have strong cooperation between our Ministry National Defense and Ministry of Defense of Kingdom of Saudi Arabia.
During our President H.E. Erdogan’s visit to Jeddah in July 2023, Mr. President and Saudi Crown Prince Mohammed bin Salman attended the signing ceremony between Turkish defense firm Baykar and the Saudi defense ministry regarding the procurement of AKINCI unmanned (combat) aerial vehicles as the biggest defence export contract in Türkiye’s history. This agreement is also important from the aspect of ensuring technology transfer and joint production which would advance the high-technology development capability of the two countries.
Besides, during the same visit, “Implementation Plan” was signed, and we believe that this road map will not only facilitate G2G relations in the field of defense but also have a potential to boost bilateral trade and mutual investments as a whole.
5) What is the government plan to strengthen the economic, trade and investment in Türkiye?
The Medium-Term Program (MTP) for the years 2024-2026 was published in the Official Gazette on September 6, 2023. As you may know, the MTP outlines a three-year perspective for public institutions in Türkiye.
The MTP aims to address the aftermath of disasters, reduce disaster risks, ensure macroeconomic and financial stability, target sustainable price stability with a focus on combating inflation, and prioritize investment, employment, production, and exports.
We are confident that our economy will successfully navigate any obstacles within the framework of the Plan outlined above. A crucial element in achieving disinflation is the ongoing enhancement of the current account balance, representing a significant structural transformation. Additionally, I would like to highlight our commitment to prioritizing investment and exports as essential components of our strategy to combat inflation.
During the Program period, our export targets are $267 billion in 2024, $283.6 billion in 2025, and reaching $302.2 billion by the end of the program period in 2026. Likewise, our import estimations are $372.8 billion in 2024, $388.9 billion in 2025, and reaching $414 billion by the end of the program period in 2026.
Therefore, during the program, we aim to gradually reduce the current account deficit, expected to be $34.7 billion in 2024, to $31.7 billion in 2025, and $30 billion in 2026. Thus, the share of the current account deficit in GDP will decrease from the 2024 level of 3.1% to 2.3% by the year 2026. In this path, as the Ministry of Trade, we are effectively utilizing our existing support mechanisms to achieve our export goals.
To achieve the targets set in the Program, as the Ministry of Trade, we are continuing our efforts with determination to implement the policies and measures outlined in the Program in effective coordination with our relevant stakeholders.
We aim to strengthen the production capacity in our country through technological transformation to achieve sustainable improvement in the current account balance. In this way, we target higher economic growth while reducing import dependency.
Furthermore, we are implementing efforts within the Green Transformation, such as clean energy, reducing energy costs, implementing waste-preventive policies, and enhancing efficiency and effectiveness in policies and practices through Digital Transformation.
We are working on enhancing the capacities of our customs and free zones, which are significant operational areas for foreign trade, to increase their effectiveness.
Especially with the renewal of customs administrations, border gates, and the improvement of processing capacities, we are facilitating the export processes of our country.
In order to achieve growth that supports investment, employment, production, and exports, we are implementing reforms in coordination with monetary, fiscal, and income policies by establishing a more favorable structure for improving the business and investment environment in Türkiye and ensuring sustainable growth. For example, technology-focused investments will be supported.
As the Ministry of Trade, we are aware of how crucial our producers and production are for our country's economy.
Therefore, our duty is to facilitate the work of everyone who contributes to production and the Turkish economy, support them and pave the way for them.
In addition to the Medium-Term Program (MTP), the Twelfth Development Plan (2024-2028) has been prepared with an inclusive approach involving public institutions, the private sector, representatives from NGOs, and academia. It was ratified by the Grand National Assembly of Türkiye and published in the Official Gazette dated November 1st.
In the new century of Türkiye, it has been emphasized that the Twelfth Development Plan, designed with a long-term perspective within the framework of the 2053 vision, will serve as a comprehensive roadmap. It aims to ensure the achievement of our development goals by taking into account the fundamental values and expectations of our nation. It is also highlighted that our main goal will continue to be raising our country above the level of contemporary civilizations.
The plan has been prepared with the vision of ‘an environmentally friendly, disaster-resistant, high value-added, distributing fair income, stable, strong, and prosperous Türkiye’ in the century of Türkiye.
In line with this vision, it is envisaged that a stable growth model will be implemented, focusing on green and digital transformation, with the industrial sector playing a leading role integrated with the agriculture and services sectors. It is foreseen that this model will strengthen Türkiye’s position in global trade, provide access to quality financing opportunities, and create maximum employment.
This plan is comprised of 5 main axes: ‘Stable growth and a strong economy’, ‘Competitive production through green and digital transformation’, ‘Skilled workforce, strong families, and a healthy society’, ‘Living quarters resistant to disasters, sustainable environment’, and ‘Democratic governance founded on principles of justice’.
In the plan, there is also an attempt to outline a long-term strategy for the year 2053. In this context, the aim is to achieve structural transformations that promote the global competitiveness and innovativeness of the Turkish economy as a high-income country on a global scale. The goal is for Türkiye to rank among the top 10 economies in the world by 2053 and among the top 5 economies according to purchasing power parity. On the other hand, it is expected that by 2053, Türkiye’s share in global merchandise trade will exceed 2%, and this percentage is anticipated to increase when including trade in services.
Within the framework of the 2053 vision, it is anticipated that Türkiye will maintain its position as the largest country in Europe in terms of agricultural national income, while also ranking 7th among countries worldwide.
During the planning period of 2024-2028, an average annual growth rate of 5 percent is expected. By the end of the plan period, the aim is for per capita income to reach $17,554, with per capita national income in terms of PPP exceeding $58,000. It is projected that an additional 5 million jobs will be created during the plan period, paving the way for a decrease in the unemployment rate to 7.5% by the end of the period. On the other hand, the Consumer Price Index (CPI) is targeted to be 4.7% in 2028. Furthermore, the Gini coefficient, which was 0.401 in 2022, is aimed to decrease to 0.380 during the plan period.
With the policies and measures to be implemented during the plan period, it is expected that exports will reach $375.4 billion and imports $481.4 billion, respectively. Additionally, with the targeted increase in tourism income, the current account deficit to GDP ratio is projected to be 0.2% at the end of the period.
At the end of the planning period, it is targeted that the need for borrowing by the public sector, as a percentage of GDP, will be 1.8%, the general government deficit will be 1.8%, and the central government budget deficit will be 2.0%.
In the plan, it is expected that Türkiye's share of world merchandise exports, which was 1% in 2022, will increase to 1.3% by the end of the period.
6) What are the most prominent challenges facing the trade, investment in the country? What are the ways to confront it?
As is well known, 2023 was a sluggish year for global production and trade. High inflation, rising commodity, energy and food prices, the climate crisis, the Russia-Ukraine War, the Israeli massacre in Palestine and disruption to shipping routes through the Red Sea has significantly mounted the risks on the global economy.
We think that such issues having global impacts can only be properly tackled with global cooperation. Türkiye has always actively engaged and on the forefront in finding the ways of settlement with the cooperation among all countries. We have started certain landmark initiatives such as Grain Corridor, encouraging global support for Palestine and zero waste policy as part of the endeavours for combating climate change and ensuring globally circular economy.
As the Ministry of Trade, we attach importance to continuing our work and planning in this direction to make the “Century of Türkiye” also the "Century of Trade Diplomacy" and to be present everywhere in the world with the policies we implement. We continue to take further steps to improve our trade relations with Saudi Arabia. In this context, we aim to bring our bilateral trade relations to better points by minimizing the bureaucratic obstacles, as well as solving problems encountered by our companies in both countries.
