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2011Turkey and UAE- Trade Relationship Paritosh Kashyap
Turkey and UAE- Trade RelationshipTurkey and UAE are undergoing a very interesting phase in their bilateral relationship,with trade between them undergoing a rapid escalation in the last few years. Thoughstill in its crawling phase, the bilateral trade between the two nations has witnessed asignificant growth. According to a study conducted by researcher Ahmed Al-Ananbehof MoFT’s Department of Analysis and Trade Information, bilateral trade between thenations has increased from US $ 2.074 billion in 2006 to US $ 7.99 billion in 2008.Both Turkey and UAE offer a great case study to explore- one an oil rich Gulf state witha small population- considered richest among the world in terms of per capita income;other an emerging economy of great geo political significance- placed between thecrossroads of Europe and Asia with a predominantly western orientation.UAE is presently the 3rd largest export destination for Turkey with Turkey’s export toUAE increasing from US $ 2.892 billion in 2006 to US $ 7.473 billion in 2008. There hadalso been a gradual increase in UAE’s non oil export and re export to Turkey. In 2010Turkey accounted for 1.4% of UAE’s non oil trade with the world. Other than trade boththe nations are also exploring business opportunities with each other. Presently UAE’sinvestments in Turkey are worth US $ 5.01 billion and turkey’s investments in UAE areworth US $ 6.51 billion (moft.gov.ae, 2011).In the light of growing relationship between the two nations the given report isprepared to give a generalist overview- country profiles, nature of trade, attractivenessof both the destinations etc.Turkey and UAE: Country profilesThe following part will compare the two nations across various social and economicalparameters along with the graphical representation of data pertaining to the tradefigures of both the nations.Paritosh Kashyap Page 2
Turkey and UAE- Trade RelationshipParameters Turkey UAEReal GDP (PPP) US $ 952.6 billion US $ 246.8GDP Growth Rate 8.2 % 3.2 %GDP per Capita (PPP) US $ 13, 398 US $ 49,200Inflation (CPI) 8.5 % 2.2 %Current Account Balance -US $ 48.56 billion + US $ 36 billion US $ 195 billion (IncludingExports US $ 117.7 billion Oil)Imports US $ 166 billion US $ 159 billionTable 1: - compares Turkey and UAE across various social and economic parameters.Source of data: CIA fact books, Euro Monitor etc. Import in US $ billion 180 153.9 160 140 132.1 121.8 120 100 79.3 80 67.4 Import in US $ billion 60 40 21.4 27.2 20 6.7 11.6 0 85 90 95 00 05 06 08 09 10Fig 1: Value of Import for UAE in US $ billion, over the period of last 25 years. Source:National Bureau for Statistics, United Arab EmiratesParitosh Kashyap Page 3
Turkey and UAE- Trade Relationship 60 50.61 50 44.34 40.22 40 Export & Re Export in US $ billion 30 26.01 26.03 Export 22.6 Re Export 20 16.34 17.7 10 7.08 7.96 3.17 1.54 1.95 4.48 4.42 1.16 0.39 0.94 0 85 90 95 00 05 06 08 09 10Fig 2: Value of non oil Export and Re Export for UAE in US $ billion, over the period ofyears. Source: National Bureau for Statistics, United Arab Emirates 250 201 200 170.6 139.6 146.8 150 132.1 116.8 107.2 102.1 Export 100 85.5 Import 73.5 54.5 50 35.7 22.3 21.6 27.8 7.9 12.9 11.3 0 85 90 95 00 05 06 07 08 09Fig 3: Value of annual Export and Import for Turkey, in US $ billion, over the period ofyears. Source: Turkey Statistical Institute, US dept of stateUAE Turkey: Trade StatisticsParitosh Kashyap Page 4
Turkey and UAE- Trade RelationshipYear Turkey’s Export to UAE UAE’s non oil Export to (million Kg) Turkey (million Kg)2006 2520 242007 3300 412008 6280 412009 2270 342010 1980 30Table 2: Total weight of Export of Turkey to UAE and vice versa. Source of data:National Bureau of Statistics, UAEYear Turkey’s Export to UAE UAE’s Export to Turkey (US $ billions) (US $ billions)2006 1.89 0.052007 2.85 0.082008 7.47 0.252009 2.55 0.192010 2.48 0.16Table 3 : Data pertaining to total value of Export of Turkey to UAE and vice versa.Source: National Statistics Bureau, UAENature of Trade B/W Turkey and UAEMajor exports from Turkey to UAE include aluminum, precious stones, food stuffs andbeverages, plastics followed by animal products, chemicals, vegetable products etc. Thefollowing pie chart shows the percentage wise break up of major export items fromTurkey to UAE in 2010.Paritosh Kashyap Page 5
Turkey and UAE- Trade Relationship a 14% b 7% 39% c 1% 4% d 1% e 3% f 1% g 1% 29% h i jFig 4: percentage wise break up of Turkish export to UAE in 2010In the given figure(a stands for base metals and their articles; b stands for pearls stones and other preciousmetals; d stands for others; c stands for articles of woods; e stands for food stuffs; gstands for textile and textile articles; c stands vegetable products; f stands for plastic,rubber articles; h stands for chemicals and allied products)Total value of non oil exports from UAE to Turkey is US $ 160 million in 2010. Themajor export items are – Pearls and precious stones followed by plastics, rubber etc. Thefollowing pie chart gives a percentage wise break up the UAE’s export to Turkey.Paritosh Kashyap Page 6
Turkey and UAE- Trade Relationship 2% 2% 3% 16% A B 4% C D 73% E FFig 4: percentage wise break up of Turkish export to UAE in 2010(In the given figure A stands for pearls and precious stones; B stands for articles ofstones, Mica etc; C stands for plastics, rubbers etc; D stands for products of chemicals, Estands for food stuffs and beverages; F stands for others.)Future ProspectPresently the trade between Turkey and UAE is in its crawling phase, with GCC andUAE comprising a comparatively smaller share in Turkey’s overall trade in the MENAregion. But it has huge latent potential with both the nations taking strong measures toboost their relationship further. In Q1 2011, the total trade volume between them stoodover US $ 1.3 billion, 50 % increase compared to the same period last year. (KhaleejTimes, 2011).The following part of the report will evaluate the future prospect of trade betweenTurkey and UAE.Turkey’s attractivenessParitosh Kashyap Page 7
Turkey and UAE- Trade RelationshipTurkey is an attractive trade partner and investment destination for UAE. Turkishattractiveness is due to a wide range of Economical, Socio-Cultural, Legal andGeographical factors stated below (Middleeastelectricity.com , 2011) - With a GDP growth rate of 8.2% in 2010- it is presently among the fastest growing European nations. Strategically well placed between the cross roads of Central Asia and Europe- is well connected with 1.5 billion lucrative consumers in the region. 60 % of its population is aged less than 30, providing a huge and sustainable consumer base. Turkish annual trade standing at US $ 320 billion in 2010- constituted 1 % of the world trade. Turkey has strong presence in the MENA region making it easier for UAE to build further relationship. UAE and Turkey are Islamic societies with UAE once being part of the bigger Ottoman empire. Both share rich and glorious Islamic heritage and there is comparatively lesser cultural differences between them. UAE nationals do not require VISA before their arrival to Turkey.It can be applied upon arrival. Turkey is geo graphically close to UAE. Istanbul port is at a distance of 6700 KM from Dubai (Jebel Ali port ) where as the aerial distance is just 2995 KM. (The higher port distance is on account of ships travelling via Suez Canal to reach each other)UAE’s AttractivenessParitosh Kashyap Page 8
Turkey and UAE- Trade RelationshipUAE also offers attractive business opportunities for an emerging economy likeTurkey. Other than the common cultural and geographical factors that is being shared,UAE’s strength lies in the following- UAE is among the richest nations in the world. With a GDP per capita of US $ 40,000 in 2008, it was ranked as the 19th richest nation in the world. (World’s richest countries.com, 2009). With an annual disposable income of US $ 120 billion (2010) it offers a lucrative and elite consumer base. (Euromonitor International, 2011) UAE had been one of the fastest growing economies of the world in the last decade. Due to global economic slump followed by real estate crisis, GDP was hit hard in the last couple of years. But with oil prices’ increasing again- the economy is back on track. Dubai enjoys the status of a regional distribution center and is the 3rd largest re export center after Hong Kong and Singapore. Dubai has strong ambitions of transforming into a global trade hub. Jebel Ali port with an annual capacity of 11.6 million TEUs is undergoing expansion. Post expansion, the annual capacity is expected to leapfrog to around 55 million TEUs by 2030. UAE is strategically placed between the cross road of East and West and North and South. With the help of flagship carriers like Emirates Airlines and Etihad Airways,UAE is well connected to whole world. With ambitious plans such as Abu Dhabi 2030 and Dubai 2015- UAE is aggressively attempting to transform and diversify its economy. Once realized the plans are expected to provide ample business opportunities for its trade partners.Paritosh Kashyap Page 9
Turkey and UAE- Trade RelationshipNotwithstanding the attractive opportunities between Turkey and UAE as tradepartners, there are some hindrances as well. Lot of Turkish people are interested invisiting Turkey for trade; however they need to apply for visa before their arrival. (Thesame does not hold true for UAE nationals visiting Turkey). Similarly downside of UAEis that though it is one of the richest nations in the world, its small population of 4.7million does not represent a very big consumer base. Turkey has bigger market bases-Russia, EU nations, Poland- in its nearby vicinity. There are other areas of concern thathas to be taken care of in order to bolster the burgeoning trade between the two nations.Prospects of Turkish Export to UAETurkey has a well established textile industry. In 2009 the total textile export valued atUS $ 5.37 billion, comprised 5.3 % of the total Turkish export. According to a WTOreport- Turkish export constituted 3.3 % of the global textile trade where as 17.5% of theEuropean textile trade. Major markets for Turkish textiles are European Union, Russiaand other former USSR nations (ITKIB, 2009).Though not a major export destination, Turkish textile export to UAE had burgeonedin the past few years. In 2010 it was valued at US $ 110 million. The following pie chartshows the breakup of Turkish textile export to UAE in 2010. Hence textiles offers a greatarea for Turkey to explore further.Paritosh Kashyap Page 10
Turkey and UAE- Trade Relationship A 0% 2% B 0% 0% 2% 2% C 5% 5% D 16% E 34% F 1% G H 1% I 1% 31% J K L M Fig 5: %wise break up of Turkish textile export to UAE(In the given figure – A SILK B WOOL,FINE OR COARSE ANIMAL HAIR,HORSE HAIR YARN C COTTON D OTHER VEGETABLE TEXTILE FIBRES,PAPER YARN &FABRICS E MAN-MADE FILAMENTS F MAN-MADE STAPLE FIBRESParitosh Kashyap Page 11
Turkey and UAE- Trade Relationship G WADDING,FELT,NONWOVENS;TWINE, CABLES,CORDAGE ETC. H CARPETS AND OTHER TEXTILE FLOOR COVERINGS I SPECIAL WOVEN FABRICS & TUFTED TEXTILE FABRICS J TEXTILE ARTICLES AND FABRICS USED IN INDUSTRIES K KNITTED OR CROCHETED FABRICS L KNITTED OR CROCHETED ARTICLES OF APPAREL M ARTICLES OF APPAREL, NOT KNITTED OR CROCHETEDFrom the figure it can be comprehended that carpets and other floor covering, knittedor crocheted apparels and articles of apparels not knitted or crocheted constitute morethan 80 % of Turkish export to UAE.Paritosh Kashyap Page 12
Turkey and UAE- Trade RelationshipReferences: 1> Moft.gov.ae, 2011, moft releases study on UAE Turkey trade exchange, available at http://www.moft.gov.ae/en/det.aspx?detid=262&resourceid=30 2> Khaleej Times, Turkey targets 20 % rise in food trade with UAE, available at http://www.khaleejtimes.com/DisplayArticle.asp?xfile=data/business/2011/July/b usiness_July203.xml§ion=business&col= 3> Middleeastelectricity.com, 2011, Turkey-UAE investment reach $ 10 billion in 2010, available at http://www.middleeastelectricity.com/Global/Middle_East_Electricity/pdf/Turke yUAEinvestmentshit10bin20104Mar11GN.pdf 4> World’s richest countries.com, 2009, home page, available at http://www.worldsrichestcountries.com/ 5> ITKIB, 2009, Turkish Textile Industry, available at http://www.itkib.org.tr/english/about/sectors/textile/textile_info.pdf 6>Paritosh Kashyap Page 13