OBG talks to Zafer Ça ğlayan, Turkish Minister of Economy

Interview: Zafer Ça ğlayan

Where can trade be further expanded between Turkey and the GCC?

ZAFER CA ÇAĞLAYAN: Recently, Turkey and the GCC have been trading more and more. In 2005 Turkey exported $3bn to the GCC and imported $2.2bn. These numbers reached their apogee in 2008 when Turkish exports stood at $12.3bn and GCC imports hit $4.4bn. These amounts have dwindled, mostly due to effects of the global financial crisis. But now the construction sector is picking up in the GCC. Considering that Turkish contractors have undertaken and completed valuable projects in the region, the construction sector is currently of great importance to further expand trade.

How can trade barriers be lowered and economic integration be encouraged across the Middle East?

ÇAĞLAYAN: Compared with other regional blocs, the countries in the Middle East have been late-comers in establishing economic integration. However, efforts to establish a trade preferential system among the Organization of Islamic Cooperation (TPS/OIC) member states resulted in a framework agreement, which came into force in 2002. The agreement sets out the general rules and principles for the establishment of the TPS/OIC. Additionally, the protocol or preferential tariff scheme was adopted in 2005 and came into force in February 2010. However, the agreement will only become fully operational once 10 OIC members complete the signature and ratification of three legal instruments of the agreement and submit their tariff concessions lists. So far, only six OIC members have completed the process.

What can Saudi manufacturing companies learn from Turkey, particularly with regards to exports?

ÇAĞLAYAN: Industrialisation has been the heart of development since the earliest years of the Turkish Republic. Manufacturing has been the first steppingstone of this process. The sector is widely regarded as the locomotive of growth and development. Since the industry involves significant sub-sector variety, emerging trends in the manufacturing sector serve as a barometer for the future of the economy.

Manufacturing has an important share in Turkey’s GDP, accounting for 15.5% in 2010. This is why the sector is the key ingredient of economic growth in Turkey. As an outcome of liberal economic policies implemented in the 1980s, the adoption of export-oriented strategies and the evolution of production coupled with the intensification of technology use has increased the share of the manufacturing sector in Turkish exports.

Turkey’s manufacturing industry is also its largest export sector. In 2011 exports reached $126bn, 93% of which came from manufacturing. Key Turkish products include basic metals, motor vehicles and textiles.

The phrase, “Think global, act local,” summarises our manufacturing philosophy. Countries create opportunities within their own unique formation. The path they follow must be compatible with their resources, population, knowledge accumulation, capital structures, development and geopolitical position. In line with this, Turkey has developed its own model. Within that context, there is much to learn from the Turkish example.

Following recent global trends, value added, innovative and competitive products in line with global supply and demand have been key concepts for domestic production and trade patterns. To maintain competitive power, creating trademarks, product design, research and development and market diversification must all be encouraged. Quality of customer services, including after sale services is also important. Enhanced public-private partnerships, private sector-university partnerships and employment of qualified staff are also significant for a manufacturing industry exporter.

Last but not least, I recommend manufacturing exporters consider the demands of external markets, research markets through trade missions and meet short-term customer demands quickly. In addition, a marketing strategy that focuses on developing policies for high quality designs and technology, and embraces after-sale customer will benefit manufacturers.