Turkey is neither a close ally nor a rival; and that perhaps explains why it has occupied very little mind space among policymakers in both nations. Yet, both countries are very similar in a lot of ways – from secular moorings, liberal democratic heritage, their economic transformation and even their dependence on imported oil and quest for great power status. There are commonalities that can be built upon and made mutually beneficial. The first priority is to improve the dismal trade volumes of just about $7.5 billion per annum that the two nations have notched up so far. A desire to do this by putting Turkey on the radar screen of Indian businessmen is what brought Mehmet Simsek, finance minister of Turkey, to India.

Mehmet,48-years-old, is an economist and banker who turned to politics a couple of years ago, and has since steered his country’s economy through perilous times. Mehmet is however more than aware that the reforms journey is a continuous one and is in the process of implementing a program that he says will put Turkey into the high growth trajectory. He concedes readily that Turkey has focussed for too long on Central Asia,EU and Middle East and it now needs to rectify this and diversify its trade and investment corridors. In India, on a mission to put Turkey on the radar screen of Indian business, Mehmet shared his thoughts transparently on a range of issues, in an interview with Business Line. Excerpts:

What is the purpose of your visit?

I have come to put Turkey on the radar of Indian business. The foreign direct investment (FDI) between our two nations is not even worth mentioning.

The annual trade volume is at $7.5 billion , which is tiny when compared to the overall trade of well over $1.2 trillion done by both countries. The fact that the levels are low shows there is potentially a huge upside. It also suggests that something needs to be fixed.

That requires more effort from our side as policymakers and we need to get business community to engage. I know India is working towards a free trade agreement (FTA) with EU, and Turkey is a full member of the Customs Union Agreement with EU. So, in a way, technically speaking, if India signs a FTA with EU, that could apply to us, but since we are not a full EU member, we would need to sign a parallel agreement. These types of frameworks would certainly help facilitate trade and investment between the two nations.

Which sectors are you hoping to draw more investments and trade?

Turkey, unlike its neighbours, is a highly diversified economy. May be it is a blessing in disguise that we have no oil and gas. Last year, our oil and natural gas import bill was $56 billion.

Based on my interaction with the Indian business community, I think we can work together in infrastructure.

Turkish contractors are second only to China. According to a survey, Turkey has over 40 companies out of 256 global contract companies and over the last decade has completed over $301 billion worth of projects in 104 countries across 7,700 projects. India wants to be the manufacturing base for the world and you have the right ingredients – the demographics, the market size, right strategy and a focussed government. However, to do this, you need to address infrastructure.

Turkey has been growing fast and energy demand has been growing in double digits over the past decade. For the next 20 to 30 years. We need more energy investments, perhaps in renewables as well as other sources. In Information Technology, India is way ahead. So there is a compelling case for Turkish companies to invest in India and for Indian companies to invest in Turkey.

The country has a major manufacturing base for the automotive industry and a supportive eco system.

You mentioned your dependence on oil imports. How have softer oil prices affected you?

Along with India and China, Turkey will be one of the top beneficiaries. To give you an idea of how oil affects Turkey, every $10 decline in oil prices reduces our current account deficit by 0.5 per cent of GDP or about $4.5 billion. In addition, it reduces inflation by 40 bps.

We have a relatively good macro picture. Over the past few years, we have worked out a comprehensive structural reforms programme that covers 25 transformational areas.

There is strong political ownership for the programme and all our elections are over.

What has been the impact of the crisis in Greece on Turkey?

The direct impact is limited because they were never a major trading partner although we are neighbours.

But there is some indirect impact through European sentiment. We want European Union (EU) to address structural issues. At the peak, before the crisis, EU accounted for 57 per cent of our exports. That fell to a low of 28 per cent and has now recovered to 43 per cent.

We want a stable and prosperous neighbourhood. There are some issues now, but in the long run, they will work it out.

Related Topics
comment COMMENT NOW