Category: Business

Turkey’s Premier Spells Out Trouble for Most Popular Food: Bread

By Emre Peker

ISTANBUL–Turkey’s most popular food is in trouble.

On Thursday, Prime Minister Recep Tayyip Erdogan turned his attention for a brief moment to bread: the backbone of every meal in Turkey, where bakers put out 37 billion loaves a year.

The premier said wasting bread is tantamount to greed, which lies at the root of economic crises and wars. Turkey, he said, can’t afford to squander 2 billion loaves of bread annually while the country needs to encourage savings and millions worldwide suffer from hunger.

That catapulted the puffy white loaves of dough, which are not nutritious but filling and rich in flavor, into the center of political debate. It also brought Mr. Erdogan, who is ever-present in the lives of Turkey’s 75 million people but not known for culinary curiosity, into the kitchen.

“From now on, we must enter a new period in the business of bread. Let’s remove the so-called white bread from our tables, let’s produce pure, genuine wheat bread, and in addition, let’s bring to the table bread with a high ratio of bran in it,” Mr. Erdogan said in Ankara.

The prime minister’s comments came after a flurry of media reports that private-equity firms including Dubai-based Abraaj Capital and Colony Capital from the U.S. are seeking a 50% stake in Simit Sarayi, Turkey’s top baker of yet another dietary staple: the simit, a local bagel donned with sesame seeds. While the company’s chairman said Simit Sarayi wouldn’t consider offers below $500 million, the valuation seems half-baked at best, people familiar with the talks said.

To be sure, Mr. Erdogan’s comments let simit off the hook as he sought to fine-tune Turkey’s habits and preferences. And this isn’t the prime minister’s first foray into health matters.

An avid opponent of cigarettes, Mr. Erdogan has pushed a smoking ban in Turkey in 2008. The prime minister often solicits smokers to quit, collecting their cigarette packs with a date and signature to mark a pledge to stop smoking.

In a more controversial health-care move, the government pushed through limitations to Caesarian section births after Mr. Erdogan said in May that he is opposed to the procedure. The premier is also against abortions, which he says is a ploy to stunt Turkey’s economic growth, but the government hasn’t yet pushed legislation on that issue.

Indeed, the health-conscious prime minister’s argument wasn’t strictly related to the public diet. Mr. Erdogan also said Turkey can pay minimum wage salaries to more than 100,000 people or build 500 schools with the money it squanders on wasted bread.

Thus, the premier joined other officials to encourage a higher savings ratio and build domestic resources for financing Turkey’s economic growth. Currently, the country relies heavily on international funding as it seeks to expand the $800 billion economy by 5% annually to join the world’s top-10 economies in the next decade.

“We need to be a nation that gets richer as it saves, and saves as it gets richer,” Mr. Erdogan said. “From time to time, we see those who wipe their lips with leftover bread, we cannot be like them.”

via Turkey’s Premier Spells Out Trouble for Most Popular Food: Bread – Emerging Europe Real Time – WSJ.

January 18, 2013
Carwyn Jones ‘pursuing leads’ on trade visit to Turkey

Wales needs a strong presence in emerging economies, First Minister Carwyn Jones said as he began a day of meetings in Turkey.

Carwyn Jones has meetings in Istanbul

Mr Jones said he was pursuing potential deals that could benefit the Welsh economy.

It is the first in a series of overseas trips he has lined up in the first six months of 2013.

He warned if the Welsh government “sit back” it will lose opportunities for foreign trade to competitors.

Speaking from Istanbul, Mr Jones told BBC Radio Wales’ Good Morning Wales programme that he had meetings with representatives from banking, manufacturing, academia and government.

We can’t afford to sit back because other people will be out here”

Carwyn Jones First Minister

“It’s quite clear when you come to Turkey that you see an economy that’s growing, a very dynamic population as well,” he said.

“They are going to be a power-house in years to come. It’s important then that we have got strong business and commercial links with them.”

Although he could not disclose “commercially confidential” details, he said the Welsh government was pursuing two “very promising” leads.

He arrived on Wednesday and leaves on Friday morning as part of a “hectic schedule”.

“You spend all your time in meetings – that’s the way it should be – and in pursuing business contacts,” he said.

“So it’s always a pretty hectic schedule. We can’t afford to sit back because other people will be out here.”

Later this month Mr Jones will be in Dublin to address the inaugural conference of the British-Irish Chamber of Commerce.

Next month the Welsh government will take a trade mission to San Francisco and the first minister will be in New York in March and in June he will visit Japan.

‘Sell Wales’

As first minister he has already made official visits to China, the US and India.

“You have to go out and sell Wales. No-one else is going to do it,” he said.

While he acknowledged that exports to China and the EU had deteriorated recently, exports to the US and India were improving.

The most trade recent figures published by HM Revenue and Customs show the value of Welsh exports in the third quarter of 2012 was £3.1bn – down from £3.3bn at the same time in 2011.

After meeting bosses from the steel giant Tata in India last April, Mr Jones hailed a pledge by the company to invest £800m in Wales over five years.

However, in November Tata said it would be shedding almost 600 jobs at plants in south Wales.

Mr Jones said: “What you have to do is go to countries and make sure Wales is on their agenda. There’s no point going somewhere then disappearing for years – people will forget about you.

“One of the messages we have learned is that if you want people to take an interest in Wales you have to make sure that you have a strong presence in those countries that are going to be important in years to come.

“They are countries like India, like China, like the USA and of course now like Turkey.”

In total, the Welsh government is planning 16 overseas trade missions this year, although it has not been confirmed that a cabinet minister will attend all of them.

The Conservatives called on the first minister to make sure the trips deliver for Wales.

Welsh Tory assembly leader Andrew RT Davies said: “The first minister must demonstrate that his globe-trotting serves a purpose and amounts to more than hunting winter sun.”

via BBC News – Carwyn Jones ‘pursuing leads’ on trade visit to Turkey.

January 18, 2013
Turkey e-commerce firms set for shakeout

* Online shopping booms in Turkey

* Sector has advantages over developed, emerging markets

* Foreign investors seeking opportunities

* But period of big, easy investments may be ending

* Small firms will struggle to gain scale to survive

Evren Ballim

ISTANBUL, Jan 16 (Reuters) – Swiss venture capitalist Klaus Hommels, an early-stage investor in Skype and Facebook, hadn’t thought much about Turkey or its e-commerce potential when he met Sina Afra in a Burger King at a Berlin airport in 2008.

But Hommels sensed an opportunity as he listened to Afra, a Turkish former eBay executive, talk about his plans for an online shopping club in his fast-growing native country.

Two months later, with financial support from the Swiss financier, Markafoni.com was born – a pioneer private shopping club in a country which now spends half a billion dollars a year buying clothing and accessories online.

“We had 10 minutes and we went to Burger King…That’s how it started. There’s a big risk in over-analysing stuff,” Hommels told Reuters on the sidelines of a conference on start-ups in Istanbul last year.

“Turkey is a very young and viral nation,” he said.

The e-commerce sector in this country of 75 million has boomed over the past five years, catching the eye of leading international investors and e-commerce giants such as South Africa’s Naspers, eBay and Amazon.

eBay initially invested in its Turkish clone GittiGidiyor in 2007, going on to buy almost the whole firm four years later, while Naspers bought 68 percent of Markafoni in 2011.

Amazon invested in online flower delivery site Ciceksepeti in the same year, while tech-focused hedge fund Tiger Global bought into private shopping club Trendyol.

According to a report on e-commerce in Turkey by consultants Deloitte, 17 merger and acquisition deals were closed last year. Nevzat Aydin, chief executive of online food delivery site Yemeksepeti, estimated foreigners had invested some $500 million in the sector over the past two years.

But most of the big deals have probably been done for now, and industry experts expect a period of consolidation as smaller e-businesses struggle to ensure their survival by scaling up and attracting heavyweight partners.

“There is a period of two years ahead of us which will be different to the past two to three years,” said Aydin, whose firm attracted a $44 million investment from U.S. private equity firm General Atlantic last year.

“Smaller firms will need to narrow their distance to the top ten. Firms with a valuation of $1-10 million need to grow – the number of small-scale firms is too high.”

SHOPAHOLICS

At current growth rates Turkey’s population is set to overtake Germany’s, the largest in the European Union, by 2025. Per capita income has nearly tripled over the past decade, though the crisis in Europe slowed growth last year.

Shopping malls sporting luxury brands from around the world have sprung up in cities across the country to meet the demands of a rapidly growing middle class, but as Internet penetration rises, online shopping is proving just as addictive.

The country has over 35 million Internet users, and ranks seventh in the world for Facebook users, according to Socialbakers, a social media analytics platform.

Industry executives estimate at least 8-9 million people are shopping online with a turnover of some $7.2 billion last year.

Internet card payments for various purposes rose about 30 percent to 30 billion lira ($17 billion) in 2012 and are expected to more than double by 2015, according to Interbank Card Center, which collates data about card usage in Turkey.

According to calculations based on the data, Turks spent $450 million on clothing and accessories, $395 million on grocery and food shopping, and $2.1 billion on electronics bought online last year.

The shopping clubs draw in customers by offering them discounts on branded and luxury goods and sending them daily emails of the latest offers once they register.

“Women have discovered online shopping in the past two to three years,” said Burak Buyukdemir, founder of Etohum, an initiative that supports Internet entrepreneurs in Turkey.

“That was one of the most important reasons behind the boom in e-commerce. Private shopping clubs like Trendyol and Markafoni, their target audience is women.”

FIERCE COMPETITION

Online revenue in 17 major European markets, excluding Turkey, will increase from 96.7 billion euros ($129 billion) in 2011 to 172 billion euros by 2016, with an annual growth rate of 12 percent, according to Forrester Research.

Turkey could see even sharper growth than more developed economies in debt-choked Europe. Meanwhile, its robust logistics and banking payment infrastructure make it more attractive for investment than many emerging markets peers.

But almost every e-commerce business in Turkey with annual turnover of over $30 million already has a heavyweight investor behind it, and there are not many potential targets left for newcomers, industry executives say.

There are hundreds or thousands of small-scale e-commerce firms, but many are too small to absorb big investments easily and lack distinctive business models.

“Foreign funds are trying to find potentially promising targets,” said Serkan Borancili, co-founder of GittiGidiyor, who sold his stake to eBay in 2011 when his company was valued at $218 million.

“Some funds are willing to invest $200 million. Such large funds are coming to Turkey, but there’s no target.”

Turning a profit is increasingly difficult in a highly competitive market. Borancili estimated that all except the largest e-commerce firms in Turkey were in the red, and said margins had fallen sharply as firms tried to scale up.

That means foreign investors interested in entering Turkey may be best advised to remain on the sidelines for now.

“Private shopping models are going to consolidate,” said Yemeksepeti co-founder Aydin. “We are going to see acquisitions, mergers…and collapses.”

January 17, 2013
Syria has accused Turkey of ‘economic terrorism’

Syria’s permanent UN representative Bashar Jaafari.

Photo: AFP

Syria has accused Turkey of ‘economic terrorism.’ Ankara has used the “suffering of the Syrian people for piracy” and stolen from Aleppo almost 1.5 thousand units of pharmaceutical and industrial equipment, said Syria’s permanent UN representative Bashar Jaafari.

According to him, “these criminal acts directed against factors of development and welfare of the Syrian people ought to be duly condemned.”

The diplomat expressed confidence that the UN Security Council should urge Turkey to “return the stolen property” and pay compensation.

Voice of Russia, RIA

via Syria has accused Turkey of ‘economic terrorism’: Voice of Russia.

January 17, 2013
How Istanbul, Izmir, Gaziantep and business are integrating Turkey into the EU

How Istanbul, Izmir, Gaziantep and business are integrating Turkey into the EU

January 15, 2013

A crowd of dynamic entrepreneurial types gathers in an Istanbul hotel. Outside, in the crowded streets, deals are being made, goods bought and sold, and a metropolitan economy larger than many entire EU member states is growing strongly.

Inside, the business people are learning how the EU works, focusing on practical details such as double taxation, fund-raising and visa liberalisation.

I’m at the “Young Businessmen on the EU Path” project opening ceremony in Istanbul, alongside distinguished colleagues from the Turkish side including Turkish Europe Minister Egemen Bağış.

The aim of the event is to help business people understand how the EU works. The Turkish private sector is large and powerful and keen to work with customers and other businesses within the European Union. Ensuring that they are as well-equipped as possible with the skills needed to thrive there is a win-win for everyone.

The event reminds me of the recent piece in the Guardian by Egeman Bağış. In it he argued that Turkey’s integration with the EU was constantly proceeding, driven by day-to-day contacts between people, businesses and cities – such as recent cultural, business and sustainability projects between Istanbul and Cologne, Barcelona and Copenhagen.

I’m a big fan of this argument: indeed, not only the dynamic mega-city of Istanbul but also people and businesses in smaller cities in which the UK-funded project will be holding meetings later this year such as Izmir and Gaziantep, are driving the integration process.

If that brings about new commercial opportunities between Turkey, the UK and other member states and creates wealth all round, so much the better.

Tags: business, European Union

Leigh Turner

via How Istanbul, Izmir, Gaziantep and business are integrating Turkey into the EU – Leigh Turner.

January 17, 2013
Turkey to Ratings Firms: Who’s The Boss Now?

By Emre Peker

ISTANBUL–Turkey lamented the purported unfairness of ratings agencies that trapped the country in junk status for many years while the government limited its criticism to verbal outbursts as it courted foreign investors. Not anymore.

Recently armed with its first investment-grade rating in almost two decades and seeing record levels of investor demand for Turkish stocks and bonds, Prime Minister Recep Tayyip Erdogan’s government did what Ankara wanted all along: dump Standard & Poor’s as a sovereign ratings provider to show the world who’s the boss.

“We are converting our issuer credit ratings on Turkey to ‘unsolicited’ as we no longer have a rating agreement with this sovereign,” S&P said Monday in a statement. The firm said it will continue to rate Turkey “because we believe there is significant market interest in this unsolicited rating.”

If governments could pick favorites and play ratings firms against each other, Turkey would be the example du jour.

Since May, Ankara has been raging against S&P, which at two steps below investment grade has the lowest rating on Turkey among the three major agencies. At the time, the New York-based firm cut its outlook on Turkey’s BB rating to stable from positive, citing headwinds in efforts to rebalance the country’s economy.

That drew a sharp rebuke from Turkey’s strong-willed prime minister and other officials including soft-spoken and internationally respected Finance Minister Mehmet Simsek. The main critique was that S&P’s decision was politically motivated and had nothing to do with Ankara’s ability to repay debt.

“The cost of this will be a statement from us that says ‘I do not recognize you as a credit institution,’” Mr. Erdogan burst out after S&P’s move last year. And while the premier’s proposal to establish a Turkish credit-rating firm has yet to flourish, the government did do away with S&P.

In the lead up to Ankara’s decision against renewing its agreement with S&P, Turkey kept attracting investors as expansive central bank policies worldwide pumped cheap money into the global economy. The steady cash inflow helped Ankara overcome speculation that it was in yet another boom-and-bust cycle.

In 2012, Turkey managed a soft landing of its $800 billion economy as officials curbed credit-fueled domestic demand and boosted exports. That helped prop up the lira, slow inflation to 6.2% from 11.1%, cut down the current-account deficit by more than $20 billion to 6.5% of gross domestic product, and expand the economy by 3% on the back of record exports.

As it crystallized that Turkey would avoid an economic hard-landing, and despite its ongoing dependence on external funding for economic growth, the government snatched the lowest investment-grade status of BBB- from Fitch Ratings in November.

Buoyed by resilient economic growth that’s forecast to rise to 4% this year–higher than emerging market peers including Poland and South Africa, according to the World Bank–Turkey now has what it always coveted: economic weight to throw around.

Ankara’s first act came last week, when the Treasury flexed its muscle to replace S&P with Fitch as one of the two major agencies that will rate its debt in 2013. Moody’s Investors Service kept its role as the second firm amid widespread speculation that it will raise Turkey’s rating by one notch to investment grade sometime this year.

“Fitch has a full investment grade rating now for Turkey so I guess is flavor of the month,” said Tim Ash, head of emerging market research at Standard Bank Plc in London. “The government is also probably sending a non-too-disguised message that it sets little store or value in the S&P rating at BB–it has long argued that the current junk bond rating is unjustified and unfair, and we would agree.”

Recep Tayyip Erdogan,

Standard & Poor’s,

Turkey

via Turkey to Ratings Firms: Who’s The Boss Now? – Emerging Europe Real Time – WSJ.

January 16, 2013