Category: Business

Turkey’s Internet Tiger Shows Signs of Stirring

Turkey has that most scarce, yet highly sought-after, attribute among European economies: growth. With this rising tide, is now the time for investors to be contemplating Turkey’s growing Internet economy?

Certainly the statistics look good. According to the European Union, Turkey’s real gross-domestic-product growth for 2010 was 9%, compared to just 2% for the 27 EU members. It is forecasting that growth for 2011 will be 7.5% against 1.9% for the EU.

Turkey has 35 million Internet users—out of a total population of around 77 million—70% of whom, according to research firm Comscore, are younger than 34. That makes the country the fifth-largest Internet audience in Europe. Those users are engaged, spending the third-longest time online in Europe, after the Netherlands and the U.K.

Turkey has also embraced social media: It is one of the top five audiences on Facebook and top 10 on Twitter. Furthermore, Turkey’s infrastructure is well developed. Credit-card penetration, at some 60%, is higher than the European average of 50%. Online retail is strong and growing fast.

And unlike in Russia, logistics and physical infrastructure are good. Thanks to heavy investment, communication links are good. The third-generation network, at least in major urban areas, is often faster than that found in many other European countries.

Toss into the pot a couple of major exits for Turkish start-ups (South Africa’s Naspers acquired a majority stake in Markafoni, an e-commerce site; eBay Inc. snapped up online marketplace GittiGidiyor and Amazon.com Inc. took a stake in flower retailer Çiçek Sepeti), and the arrival of the Russian search engine giant, Yandex, and the picture is starting to look pretty good. Is an online Anatolian Tiger starting to stir?

However, despite the recent panel at the Munich DLD conference hyping Turkey as a golden investment opportunity, the experience of attending the recent Startup Turkey conference in Antalya leads one to conclude that it’s a brave investor who jumps into the market right now.

Burak Buyukdemir, the conference organizer, says the Turkish Internet scene is still heavily dominated by copycat e-commerce sites. Of the 33 startups that made pitches at the conference, more than half were shopping sites of some sort, aimed at selling Turkish products to Turks living in Turkey.

Commentators often look down their noses at copycats, but they serve an important part in the development of the ecosystem. Entrepreneurs need to learn their craft. Taking a successful model and turning it into a Turkish equivalent is both safer—the model is proven—and faster.

Nor need they be unattractive to international investors, says Charles Irving of Pond Ventures. With about 80 million Turks world-wide, three million of whom live in Germany, it is possible to build a reasonably sized company that might make it onto the investors’ radar.

But, admits Ali Karabey, founder of Turkey’s newest venture-capital organization, 212 Ventures, problems still need to be overcome if the market is truly to take off. Investors only get their money back when a company is sold, and the exit route for Turkish companies isn’t that clear, he says. The public markets in Turkey aren’t really suitable for the size of Internet companies at the moment, so trade sales remain the most likely exit, and so far they have been to international companies, not local players.

Meanwhile, looming on the horizon is the threat to the emerging Internet scene from Rocket Internet, the startup factory founded by Germany’s Samwer Brothers. Its aggressive model of rolling out competitors is a worry for local players, says Hans-Jürgen Schmitz, the managing partner of Luxembourg-based Mangrove. He acknowledged that the prospect of a heavily funded Rocket site would certainly force him to look twice at opportunities in Turkey right now.

The other worry for Turkish investors, says local business angel Ömer Faruk Akarca, is the worrying valuations startups are trying to claim. There is a risk, he said, that Turkey could go straight from nascent scene to bubble without stopping in between. He called for some realism to be injected into the market. While investors weren’t being taken in by the numbers, he said, there was a risk that as Turkey’s profile raises ever higher, and more and more capital becomes available, that people will start to believe the valuations.

Despite all that, Turkey has certainly caught the eye of the investment community. That leading venture-capital company Accel Partners, an investor in Facebook, Groupon, Etsy and Spotify, decided to send two people to attend a conference of 300 Turkish startups shows how seriously the country is taken.

Nor should the threat from Rocket be exaggerated, cautioned Niels van der Linden, a Dutch adviser based in Istanbul: “Companies do not have a right to exist, and if Rocket can produce better companies, more quickly, then Turkish startups need to learn and adapt. Competition is good. At the moment the field is clear, but that will not last.”

With its impressive growth, its alignment with the European Union and its historic role as a bridge between east and west, Turkey is certainly a country of great opportunities. Fortune favors the brave, so for those willing to play a high-stakes game, get on the flight to Istanbul tomorrow. For everyone else, the tiger has just started to stir. Be there when it eventually wakes.

via Turkey’s Internet Tiger Shows Signs of Stirring – WSJ.com.

February 26, 2012
Libya wants Turkish companies to return

Turkish Prime Minister Recep Tayyip Erdogan (R) poses with Libya’s Prime Minister Abdel Rahim al-Kib after their a press conference in Istanbul on Feb. 25. (AFP)

By The Associated Press

ANKARA / TURKEY

Turkey’s prime minister called on Libya on Saturday to disband militia forces to restore security and assume full power in the country, even as his Libyan counterpart invited Turkish companies to return to Libya to finish construction projects worth billions of dollars.

Turkish contractors were involved in 214 building projects, including hospitals, shopping malls and five-star hotels worth more than $15 billion in Libya before last year’s uprising against Muammar Qaddafi. When Turkey swiftly evacuated its 25,000 workers during the chaos, Turkish leaders assured Libya that they would return.

It is still not clear how or when that could happen even though Qaddafi has been deposed and killed.

Hundreds of armed militias, who drove Qaddafi from power, are holding the real power in Libya, and the government that took his place is largely impotent, unable to rein in fighters, rebuild decimated institutions or stop widespread corruption.

The National Transitional Council, which officially rules the country, is struggling to incorporate the militias into the military and police, while trying to get the economy back on its feet and reshape government ministries, courts and other institutions hollowed out under Qaddafi.

“The success of the transition process in Libya is proportioned with the establishment of security. I believe the Libyan administration will never concede from this,” Turkish Prime Minister Recep Tayyip Erdogan said during a joint news conference with his Libyan counterpart, Abdel Rahim al-Keib. “In this framework, it is of primary importance that the security forces be restructured and militia forces disbanded.”

Turkey’s police chief recently visited Libya to hold talks on restructuring and training the country’s police force and Erdogan said “we are taking a series of steps both in supplying equipment and training.”

Turkey seeks to lead in the region, advocating democracy in the Middle East and North Africa. And it is increasingly seen as a regional model because of its democratic system, economic development and Muslim identity.

“We see Turkey as a model,” al-Keib said. “We hope that Turkish companies come back as soon as possible.”

Al-Keib asked for help from Turkey in rebuilding Libya, training its police force as well as equipping its hospitals. Hundreds of wounded Libyans have been treated in Turkey.

Turkey, NATO’s largest Muslim member, initially balked at the idea of military action in Libya but it gradually broke long-standing ties with Qaddafi and began supporting the alliance’s airstrikes against targets linked to his regime.

The seeds of Turkey’s friendly ties with Libya were laid during a U.S. arms embargo following Turkey’s invasion of Cyprus in 1974, when Libya provided Turkey with spare parts to operate U.S.-made jets. Since then, Turkish builders have become a mainstay of foreign business in Libya, despite an influx by Chinese, Russians and others later.

The bilateral trade was $2.4 billion in favor of Turkey before the uprising and the two countries have waived travel visas to boost that trade.

Erdogan said Turkish Airlines will increase its flights to Libya from 28 to 42 to improve trade and initiate tourism between the countries.

via Libya wants Turkish companies to return.

February 26, 2012
Turkey’s rolling out the red carpet for trade partners beyond Europe

ISTANBUL // Increased efforts by Turkey to attract Arab investors and improve relations with China are signs that Ankara is looking for new partners beyond Europe, analysts have said.

“Turkey cannot wait for Europe,” Idris Kardas, chief coordinator of the Platform for Global Challenges, a think tank at Istanbul’s Bilgi University, said this week.

Some countries in Europe, the traditional focus of Turkey’s foreign and economic policies, are battling a severe debt crisis. Therefore, Ankara is reaching out to other countries to develop its economy and regional clout, Mr Kardas said in an interview.

After hosting dozens of businessmen from the Gulf region representing sectors like energy, construction, agriculture and banking this month, Turkey this week rolled out the red carpet the red carpet for Xi Jingping, China’s vice-president, who is expected to move to the top post in about a year. Mr Xi chose Turkey as the last leg of a diplomatic tour seen as a dress rehearsal for Chinese leadership.

The visit came shortly after Ali Babacan, the Turkish deputy prime minister overseeing economic policy, confirmed that Turkey was looking for new partners outside Europe.

About 45 per cent of Turkish exports have been going to Europe, Mr Babacan told a CNN panel at the World Economic Forum in Davos in January. “But the good part of the picture is 55 per cent of our exports go elsewhere and those non-European markets are growing quite fast and that is playing a very good balancing role,” Mr Babacan said at the meeting.

Deniz Gokce, an economist who writes a column for the Turkish Aksam newspaper, said that trend was partly a result of Turkey’s experience of being rejected by the European Union, where major member states have reservations about Turkey’s membership bid.

“If Germany and France do not want us, then adios,” Mr Gokce told The National yesterday. Trying to find new economic partners elsewhere was an intelligent move by the Turkish government, he said: “Getting closer to places that have the capital.”

Mr Kardas said Turkey was not the only country looking for alternatives to Europe. “China has been severely affected by the crisis in Europe, so it also needs new partners.”

He said China also recognised Turkey’s growing regional role. “China regards Turkey as an important player in the Middle East,” he said.

Mr Xi told a Turkish-China business forum in Istanbul on Wednesday that Turkish and Chinese companies signed agreements worth nearly US$4.3 billion (Dh15.79bn) during his visit, according to Turkish and Chinese media reports. On Tuesday, the Chinese vice-president met with Abdullah Gul, the president, and Recep Tayyip Erdogan, the prime minister.

Mr Erdogan accepted an invitation to visit China in April, according to Zafer Caglayan, the Turkish trade minister.

“Turkey has become one of the world’s most interesting countries,” Mr Xi told the business forum. China and Turkey have agreed to increase their trade volume from about $20bn now to $100bn by 2020.

Both sides played down political differences during Mr Xi’s visit. Members of China’s Uighur community in exile protested against Mr Xi’s visit in Ankara, but the Turkish government did not address the issue in public.

Mr Erdogan, who accused China of “genocide” against the Uighurs three years ago, was quoted by the state-run Chinese newspaper China Daily as telling Mr Xi that Turkey “never allowed any activity on its territory that aims to undermine China’s independence, sovereignty and territorial integrity”.

Differences over Syria were also put aside. While Turkey is calling for the Syrian leader Bashar Al Assad to hand over power, China vetoed a resolution in the United Nations Security Council calling on Mr Assad to quit. But both sides refrained from commenting publicly on the issue during Mr Xi’s visit.

Turkey has been enjoying an impressive economic boom that has more than tripled the country’s gross domestic product between 2002 and 2010, when it reached about $736bn. In an effort to keep that momentum going, Turkey has started to advertise itself as an alternative to Europe to attract foreign investors.

Speaking at the first business forum of Turkey and the six countries of the Gulf Cooperation Council (GCC) in Istanbul this month, Mehmet Simsek, Turkey’s minister of finance, said his country was offering attractive investment conditions.

Turkey “has very good opportunities in many sectors – agriculture, tourism, energy, health,” Mr Simsek said. “At the Gulf, there are capabilities, funds, resources. It is a wonderful combination.”

During a visit to Dubai in January, Mr Gul invited Arab businessmen to his country and said Europe no longer had large potential. “Europe has grown as much as it can grow,” Mr Gul said, according to Turkish media. “There are no new buildings, roads, subways and airports left to be built. And Europe’s population is ageing.”

via Turkey’s rolling out the red carpet for trade partners beyond Europe – The National.

February 25, 2012
Turkey plans on buying 100 F-35

Turkey will proceed with its plan to acquire dozens of F-35 fighter jets worth $16 billion, says the Turkish Defense Minister. Many partner countries of the international F-35 consortium have reneged on their purchasing plans

A F-35 fighter jet is on display at the Singapore Airshow Feb 12. Turkey wants to purchase 100 of them, with a total worth of $16 billion, to revamp its air forces. AFP photo

Turkey is planning to purchase 100 multi-purpose F-35 jet fighters worth $16 billion, Turkish Defense Minister İsmet Yılmaz has said, according to daily Milliyet.

The first two of the military aircraft will be delivered by 2015, he said. The decision to order two F-35s was made last month.

The multi-purpose F-35 fighter jets are being produced by the U.S.-based arms producer Lockheed Martin. Turkey became a member of the international F-35 consortium in 1999. Other partners of the consortium include Britain, Italy, the Netherlands, Canada, Australia, Norway and Denmark.

The statement indicates that Turkey is insisting on proceeding with its plan to purchase 100 F-35s even as many other partner countries, including the United States, have backtracked on their purchase plans due to delays and incremental costs.

The Pentagon postponed the purchase of 139 F-35 fighter jets for five years, while Britain said the decision regarding the number of F-35s that the country would buy would be delayed until 2015. Italy last week said its F-35 orders would be scaled down by 30 percent.

The U.S. government plans to manufacture 2,443 F-35 fighter jets, according to a statement made to Turkey in 2012, Yılmaz said. “Purchase orders in the upcoming years regarding the [F-35 military aircraft] will be subsequently assessed depending upon the negotiations.”

Turkey has spent $315 million so far on three phases of the development of the F-35 fighter jets that the country is producing as part of the partnership, Yılmaz said.

Noting the incremental costs of the three phases, he said Turkey’s contract regarding its partnership in the consortium did not cover those costs. Aircraft supply costs would become clear after the aircraft order deal is signed, he said.

Negotiations on codes

Progress has also been made on negotiations with the United States over granting Turkey the permission to load war software, weapons and ammunition onto the aircraft independently, he said in a reply to a written question by İsmet Büyükataman, an opposition Nationalist Movement Party deputy.

Responding to claims that the U.S. would not sell the software and block the independent integration of weapons and ammunition, the minister said, “Negotiations regarding the independent loading of war software, weapons and ammunition to secure the independent deployment and maintenance of the F-35 in Turkey are continuing.”

Defense Industry Undersecretary Murad Bayar said last month Turkey and the U.S. were negotiating over flight codes for the two F-35 military planes.

via BUSINESS – Turkey plans on buying 100 F-35.

February 24, 2012
China Inks Contracts Worth $4.3 Billion With Turkey

(RTTNews) – Boosting bilateral trade, China on Wednesday signed a slew of contracts and deals worth $4.3 billion with Turkish firms on the sidelines of the visit of Chinese Vice-President Xi Jinping.

Bilateral trade between the two countries increased from some $1 billion in 2001 to nearly $19 billion in 2011 with China emerging Turkey’s third biggest trading partner, the Xinhua news agency reported quoting Chinese official statistics.

Since 2001, Chinese companies have signed with Turkish firms project-contracting deals worth over $10 billion, among which construction of the Ankara-Istanbul high-speed railway is the biggest joint project.

Addressing a China-Turkish business forum in Istanbul, Xi called for more efforts to boost trade and economic cooperation between the two countries.

He said efforts should be made in elevating bilateral economic cooperation, namely, to increase political trust, to explore more cooperation fields and deepen substantial cooperation, to join hands to reject trade protectionism and to enhance cultural exchange and people-to-people communication.

Xi said his current visit was aimed at deepening traditional friendship and consolidating strategic relations between the two countries.

Xi, who arrived in Turkey on Monday had talks with President Abdullah Gul, Prime Minister Recep Tayyip Erdogan and Parliament Speaker Cemil Cicek in Ankara.

by RTT Staff Writer

via China Inks Contracts Worth $4.3 Billion With Turkey.

February 24, 2012
China, Turkey Sidestep Syria Issue to Sign Business Pacts

By BRIAN SPEGELE And JOE PARKINSON

ISTANBUL—China and Turkey set aside differences on how to quell escalating violence in Syria on Tuesday, as Vice President Xi Jinping began the final leg of a diplomatic tour seen as a dress rehearsal for Chinese leadership by overseeing a series of bilateral business deals, including a central bank swap deal to boost trade in local currencies.

Agence France-Presse/Getty Images

Turkey’s President Abdullah Gul, left, and China’s Vice President Xi Jinping during a welcoming ceremony in Ankara

Mr. Xi, widely presumed to be China’s next top leader, signed the three-year currency-swap pact between Turkey’s central bank and the People’s Bank of China alongside Turkey’s President Abdullah Gul in Ankara on Tuesday.

The two leaders, who signed five other business agreements, didn’t make any public statements before the Chinese vice president headed to Istanbul to meet Prime Minister Recep Tayyip Erdogan, but Turkish officials were expected to relay their growing concerns over the gathering violence in neighboring Syria.

Ankara has repeatedly said the world can’t remain silent in the face of an 11-month revolt against President Bashar al-Assad, which appears to be degenerating into civil war. China, along with Russia, has vetoed two United Nations Security Council resolutions backing Arab League plans seeking an end to the conflict and condemning a crackdown on protests that killed 5,400 in 2011 alone, according to the U.N.

Ankara reacted furiously when Beijing, along with Moscow, vetoed the second resolution earlier this month, proposing a summit on Syria to help coordinate policy outside the Security Council.

As activists reported that Syrian government troops continued to shell restive districts in the opposition stronghold of Homs, killing at least 16 people, official communication from Mr. Xi’s diplomatic visit made no mention of Syria, or the stalling diplomatic attempts to halt the violence.

China’s state-run Xinhua news agency reported that Mr. Xi and the Turkish President discussed “regional and international affairs of common concerns,” though neither side initially offered details.

Turkey’s state-run Anadolu Agency reported that China was interested in investing in Turkish economic projects and that Prime Minister Erdogan had accepted Mr. Xi’s offer to visit Beijing.

The conspicuous silence on developments across the border in Syria disappointed Turkish analysts, who had hoped the meeting of two rising powers with expanding interests in the Middle East, could offer some clue on whether Beijing would soften its objection to intervention to quell the violence amid growing fears that the revolt against the Assad regime is degenerating into civil war.

China in recent weeks has given little indication it would support Western intervention, despite heightened criticism in Turkey, Europe and the U.S. that it was serving as an obstructionist to restoring peace there. Rather, senior Chinese leaders and state-run media have delivered unusually direct defenses of China’s position. China has a strict foreign policy of noninterference in other countries’ internal affairs, which in recent years it has used to block international intervention on humanitarian grounds alone. Additionally, China fears unrest toward authoritarian regimes in the Arab world could spread to Beijing if aided by the West, analysts say.

“Our position hasn’t changed,” said Foreign Ministry spokesman Hong Lei at a news briefing Tuesday. He said China was willing to work with the international community to resolve the crisis in Syria, but said China didn’t welcome external arms or interference in the conflict.

Mr. Hong confirmed China had received an invitation to a “Friends of Syria” meeting backed by Western powers and the Arab League set for Friday in Tunis, but didn’t say whether China would participate. Russia confirmed on Tuesday that it wouldn’t participate in the meeting because the Syrian government wouldn’t be represented, stoking fears that the group would struggle to gain legitimacy.

Mr. Xi, who will become China’s Communist Party chief in a once-a-decade leadership transition that begins late this year, will have to forge a consensus on sensitive foreign-policy issues among powerful political forces in China, including state-owned enterprises and the military.

Many questions remain about his approach to policy, though he is viewed by U.S. officials and other political analysts as a business-friendly politician, perhaps less driven by communist ideology than his predecessors.

Nonetheless, analysts said Mr. Xi wouldn’t be able stray significantly from the prevailing party line on Syria and other Middle East issues, lest he risk upstaging China’s current leadership, including President Hu Jintao.

Chinese leaders, including Premier Wen Jiabao, have said China isn’t defending the Assad regime. They argue the U.N. Security Council resolution calling for Mr. Assad’s resignation ran afoul with the U.N. charter. In addition to vetoing the Security Council’s resolution, China last week was one among just 12 U.N. member states to oppose a nonbinding resolution condemning the Syrian government.

Earlier on Turkey on Tuesday Mr. Xi was confronted with one sensitive domestic issue, as a group of protesters gathered outside his Ankara hotel to demonstrate against Beijing’s crackdown against Turkic-speaking Uighurs in China’s northwestern Xinjiang province, according to Turkey’s state-run Anadolu Agency. Violence between Muslim Uighurs and Han Chinese, China’s dominant ethnic group, left nearly 200 dead in western China in 2009 in the worst riots in the country’s far west in more than a decade.

Turkey’s Parliament Speaker Cemil Cicek earlier said that Ankara respects China’s “sovereignty and territorial unity” in an apparent reference to the issue.

via China, Turkey Sidestep Syria Issue to Sign Business Pacts – WSJ.com.

February 22, 2012