Speech By H.E.Abdullah Gül, President of the Republic of Turkey on "The Role of Emerging Markets and Turkey in Global Economic Recovery"
09.11.2010
"Distinguished Guests,
Ladies and Gentlemen,
It is my great pleasure to be here, in the City, today, and I would like extend my sincere thanks to Bloomberg for giving me the opportunity to speak at the heart of London’s business community.
I am also glad to see here some of the prominent CEOs in the UK and distinguished members of the British business community.
Distinguished Guests,
Yesterday in my lecture at Chatham House, I also talked about the weaknesses of international economic governance exposed by the current global economic crisis. In fact, the dire effects of the crisis are still being felt in many parts of the world.
On the one hand, we see developed market economies running huge deficits in their public finances; on the other hand, there are rising economies with fast growth rates and large sovereign funds emanating from current account surpluses.
There are also a number of countries recharged by high oil and other commodity prices, in contrast to the least developed countries suffering from high oil, commodity and food prices.
All these are signalling to us that the international economic system is at a state of an “imperfect equilibrium”. Until this situation shifts into a new and normal balance, we might encounter symmetrical shocks at both global and regional levels.
In order to avoid the recurrence of similar shocks in the future, we must draw the proper lessons from this global crisis. We should remember that this crisis was caused by the irresponsible acts of some financial institutions in the most developed markets. Unfortunately, ordinary people have paid the highest price for the mistakes of a few.
The current economic crisis unveiled, once again, the weaknesses and deficiencies of the existing global and national financial and economic architectures which lack efficient governance and regulation over those reckless financial institutions.
I believe that the G-20 should continue to play a central role in putting together the right policies and measures to that effect.
In that endeavor, we should act with the principles of free and fair trade, and avoid currency wars and protectionist tendencies. Let us not forget that we are in the same boat, irrespective of our development levels, in the face of these turbulent waters.
Dear Friends,
The relationship between Turkey and the United Kingdom is based on strong bonds of alliance, friendship and mutual trust.
Strong links between our countries were first forged 500 years ago when the forerunners of the two countries developed mutual trading interests.
For over half a century our countries have stood side-by-side in pursuit of peace and prosperity.
Today, close economic and commercial ties between our countries represent an important aspect of our bilateral relations. Turkey is truly a growing economic power and its presence is already felt in Britain. 380 million pounds have been invested by Turkish companies; there are more than 3000 Turkish students attending UK universities; the Turkish community in Britain is approaching 400,000 people and the UK is the 3rd biggest export market for Turkey.
As a growing economy, Turkey represents unparalleled opportunities for British businesses. The total value of UK-Turkey trade currently stands at over 5.7 billion pounds annually. The UK is the 8th biggest import partner of Turkey. There are also strong signs of recovery in our trade. In the first half of 2010 the bilateral trade volume increased by 42 percent compared to the same period of last year.
As Prime Minister Cameron stated during his visit to Turkey, our target must be to double our trade volume over the next five years. I think this target is reachable.
BP, Vodafone, Tesco and HSBC are four large British investments already well-established in the Turkish market.
More than 2000 UK companies have invested 2.5 billion pounds in Turkey. Hundreds of UK citizens are buying property in Turkey.
Esteemed Members of the London Business Community,
Now, I would like to touch upon the recent developments in the Turkish economy and say a few words about the comprehensive economic programme that we have implemented during the last few years.
As we all know, the majority of the emerging markets suffered a significant slowdown in their economic activities due to the global crisis.
Being an open and free-market economy integrated with the global economic and financial system, Turkey was no exception. Our exports declined to 102 billion dollars in 2009, while they were 132 billion dollars in 2008.
Despite all those setbacks the Turkish economy has shown resilience and strength in face of the global downturn. There were no bank bailouts or financial defaults in Turkey. On the contrary, Turkish banks have managed to keep troubles at bay and continued to realize substantial profits.
Turkey was the only country to increase its credit rating twice during the global economic crisis. Now, the risk premium of Turkey is lower than that of Italy, Spain and Portugal. This is more proof that we have pursued the right economic policies in recent years.
Dear Friends,
Investors are always seeking an answer to the same question: “Why should I invest in this particular country?”:
Because, Turkey is rising in many ways: The Turkish economy is the 16th biggest in the world, the 6th in Europe and is rightfully labelled by many as the BRIC of Europe.
Eventually, we have grown by 11% in the first half of 2010, which makes us the fastest growing economy among the OECD countries.
On the global scale, we shared the third rank with China after Singapore and Taiwan. Now, we are expecting a total growth of more than 7% at the end of the year.
We hope to reach a GNP threshold of 1 trillion dollars towards the end of this year.
We aim to be among the top 10 economies in the world by the year 2023, when we commemorate the 100th anniversary of the Republic of Turkey.
The developed infrastructure can also help facilitate growth and encourage investment. Turkey is a hub for transportation, telecoms and energy.
Turkey has become an energy corridor and terminal of Europe. Currently it has the capacity to transport 121 million tons of oil to world markets per year. This is projected to increase to 221 million tons plus 43 billion cubic metres of natural gas with new natural gas and oil projects on the way.
The Turkish economy has become strategically important in its region during the last decade. An increasing focus on the private sector, with an ambitious privatization programme, which generated more than 40 billion Dollars, has transformed the economy.
In a nutshell, Turkey has moved from an inward-focused import substitution economic model towards an industrial export led growth driven by knowledge accumulation.
Dear Guests,
Turkey's central strategic location at the point where the East meets the West and the South meets the North and its ability to reach and serve its surroundings: Europe, Central Asia and the Middle East are key assets.
Turkey has historic, cultural and linguistic links with more than 1 billion people in its broader neighbourhood, where Turkey’s market penetration is strong particularly in automotive, durable and consumer goods as well as in the construction sector.
Turkey's foreign policy goal of effective diplomacy with its neighbours promotes unrivalled influence and regional cooperation.
As economic interdependence is a foundation of a stable and prosperous environment, Turkey is encouraging regional development and integration schemes around her.
EU accession of Turkey is another priority and we continue to work on accession with strong British backing.
The multidimensional expansion of geopolitical horizons has signalled a new phase for Turkey that offers promising opportunities to international investors.
The investment environment is mostly a legitimate concern for investors.
The very favourable investment climate in Turkey offers one of the most liberal legal systems for FDI among the OECD with the following main principles:
- well functioning free-market economy,
-equal treatment for foreign and domestic companies,
-no pre-establishment screening,
-unrestricted foreign ownership,
-free transfer of funds,
acquisition of real estate,
-and dispute settlement in local courts or international arbitration bodies.
From Istanbul, it only takes 4 hours by plane to reach more than 50 countries, which represent a quarter of the world's population and a quarter of the world's economy.
As a result of this investor-friendly environment, Turkey attracted foreign capital worth more than 75 billion dollars between 2003 and 2009.
Ten years ago, the number of foreign companies was only around 5.000. This number has steadily increased and reached around 23.500 in the year 2009.
We have registered an approximately 26% increase in the number of foreign companies during the last two years despite the global economic downturn.
In this context, I am very happy to say that, British companies have had an important share in the foreign direct investments coming into Turkey.
We would like to see new investors from the UK. Likewise we encourage our private sector to increase their presence and invest more in the UK.
Dr. Huseyin Aslan, Head of the Turkish Investment Support and Promotion Agency is with us today. I am pretty sure he would be delighted to answer your questions as regards to investing in Turkey.
Distinguished Guests,
Ladies and Gentlemen,
Before concluding my remarks, I would like to emphasize the importance of human interactions and tourism activities in the development of our economic relations.
Thanks to our geographical advantages and rich historical and cultural heritage, Turkey has become one of the top 10 tourist destinations in the world. Last year, Turkey ranked 7th in terms of visiting tourists and 8th in terms of tourism revenues in the world.
Among those top 10 tourism countries, Turkey was the only country that performed the 2009 tourism season with rising tourist numbers despite the global economic downturn. More than 27 million tourists visited Turkey last year. I am very happy to see that, British tourists ranked third after Germans and Russians with a share of 9% in the total tourists we received last year.
In concluding, given our common goals, mutual interests and shared ideals, we must cherish and nurture our relationship and seize every opportunity to take it forward. In order to achieve this, we must plan together and act together.
I would like to say, once again, that we are open to all your suggestions and ready to offer all the necessary support we can in your business initiatives.
Thank you."
