The FINANCIAL — Given the economic crisis all over the world, the global investment environment is becoming more competitive. In light of that, the Turkish Ambassador advises the Georgian Government to be even more active. In his words, for instance, besides the well-known business centres in Turkey, the country has what they call the ‘Anatolian Tigers’ which represent a new generation of big Turkish companies. “Georgia should reach out and link up with these growing Turkish business communities. It will be a win-win process for both of us.” he promised.
“Given the economic crisis all over the world it is becoming a more competitive environment. Every government, developed or not, is competing with others to attract the floating foreign direct investments. Turkey, on its part, is actively trying to reach out to potential partners and inform them about the many lucrative opportunities existing in Turkey. Georgia too has a tempting case to make. During the past ten years Georgia has made great strides in liberalizing its economy and bringing out its potential which was not visible before. So now, on this strong basis, they need to reach out even more aggressively and attract foreign investors. For instance in Turkey, besides the well-known business centres like Istanbul and Izmir, we have what we call the “Anatolian Tigers” that include cities like Adana, Denizli, Gaziantep, Kayseri and Konya, which host a new generation of large Turkish companies. So, Georgians should go into these cities, and link up with these growing Turkish business communities. It will be a win-win process for both of us,” Zeki Levent Gümrükçü, Ambassador of Turkey to Georgia, told The FINANCIAL.
Representatives of the Turkish business community in Georgia met with vice-PM Giorgi Kvirikashvili and other Georgian officials in March of the current year. The meeting was initiated by the Georgian-Turkish Business Association, GURTIAD.
“It has been 15-20 years that Turkish businessmen have been actively present in Georgia. They see Georgia as their second home. Of course, time to time they face some difficulties. And this is only natural in a dynamic and growing economy like Georgia’s. What is important is to have regular and working channels of communication with the relevant officials and stakeholders, particularly with the Ministries of Finance and Economy. This is why we greatly appreciated Vice Prime Minister Kvirikashvili and his colleagues meeting with Turkish businessmen and having a frank and productive exchange on 22 March. Two or three weeks after this this particular meeting, the First Deputy Minister of Finance had yet another meeting with the Turkish business community, this time focusing mainly on tax issues. I believe this is a very useful process, which clears certain misperceptions, creates a much better understanding on issues of common interest”.
According to Gümrükçü, the main issues raised by the Turkish business community are the criteria of tax inspections, the recent amendments in visa policy and frequent changes of legislation relevant to business environment. “Given that many laws will soon be approximated due to the Association Agreement signed with the EU, it is of great importance that the views of the business community are also incorporated in a timely fashion and necessary consultations are held to this end. Otherwise, such changes might create adjustment difficulties particularly for the foreign investors. As to the tax inspections, Turkish businessmen ask whether they are too intrusive or whether they could be a bit more flexible. But this is exactly the kind of issues that need to be discussed and I see a strong political will on the part of the Georgian Government to do so” said Gümrükçü
Q. With more than USD 67 million Turkey was the 7th largest investor country in Georgia in 2014. How do you think the activities of Turkish investors might turn out this year, considering the regional crisis?
A. It is hard to make predictions in terms of amount. But I believe there is still a considerable interest in Georgia on the part of the Turkish businessmen. In this regard, aside from the Georgian domestic market itself, the agreement of the AA and DCFTA with the EU, as well as FTA with former Soviet republics makes Georgia very attractive for Turkish investors to produce here in Georgia and benefit from these free trade facilities. On my part, I am also doing my best to encourage them to come here and explore these opportunities. Taking this opportunity let me also comment on Turkey’s ranking among the foreign investors. In terms of the amount of capital invested, we might indeed be the 7th this year, but I believe in terms of the number of economic sectors invested, Turkey is by far the number one, since we have Turkish companies operating in almost all sectors, ranging from energy to construction, health to agriculture and banking.
Q. Which business sectors are the most attractive for Turkish investors in Georgia?
A. To start with, Georgia has big agricultural potential which makes it one of the most attractive areas for investors. Currently, a big portion of Georgian agricultural land remains uncultivated and the Turkish investors are looking forward to the new legislation which will set the rules for their engagement. In this regard, the sale of agricultural land to foreigners has always been a sensitive issue for every country. In Turkey too, we have certain limitations. So, the Georgian Government is right to be careful in this process. However, sooner rather than later you need to come up with a clear framework where potential investors can effectively explore the opportunities. In the field of energy too, Turkish investors are highly interested in developing the hydropower capacity in Georgia and then exporting the electricity they produce to Turkey and Europe. We already have some highly-respected Turkish companies operating in Georgia and I believe this will continue to grow, especially given the recently signed Inter-Governmental Agreement on Energy Cooperation. Tourism is another promising field in Georgia. But in order to realize its potential Georgia not only needs to invest in its infrastructure and promotion, but also has to work on its visa and other regulations to facilitate the entry of foreigners into the country. Over the last 15-20 years Turkey has turned into a major tourism destination with nearly 40 million tourists and we are ready to share our experience with Georgia. The fourth area of interest might be infrastructural development. Georgia has quite ambitious projects when it comes to development of infrastructure, be it roads, bridges, tunnels, water systems etc. Turkish construction companies are not only among the best in the world, but the proximity of the two countries lowers their cost of logistics too, making them excellent partners for Georgia. Finally in the health sector, there are already some hospitals in Georgia built by Turkish enterprises, but I believe there is still much more we can do, including new arrangements to have Georgian patients to be treated in Turkey.
Q. How has the regional crisis impacted on Turkish economy?
A. It is impossible not to be affected. For, one of the reasons why Turkey has recently made great strides in its economic development and become the 16th largest economy in the world, is because we were able to develop our trade and economic relations with our neighbouring countries. For instance, in 2002 the share of neighbouring countries within Turkey’s total trade volume was 8%, whereas in 2012 it reached 32%. So, any negative economic development in these countries inevitably has an impact on Turkey’s economy too. In this regard, the conflicts in Syria, Iraq and Ukraine are particularly important, while the economic sanctions against Russia and its repercussions throughout the region, including in Georgia, are also of great significance. That said, Turkey today has a much more diverse geography of trade partners going beyond its immediate region and covering almost the entire world, which in turn softens to a certain extent the impact of the developments in our particular region. Besides, we are also proud of the large spectrum of goods that we produce in Turkey and export to the world. So, in our case, depreciation of the Turkish Lira in fact reduced the cost of our export goods and has somewhat worked to our benefit. An additional positive aspect of the recent regional/international developments was the drop in energy prices. As a country which imports almost 80% of its energy consumption, this has greatly reduced our current accounts deficit and provided a boost to domestic production. So, despite a fall in trade with our regional partners, except for Georgia, Turkey has been capable of alleviating the immediate impact of the regional crisis on its economy due to its diverse trading network and wide production and export basis.
Q. The Turkish Republic managed to perform a miracle in terms of economic development in quite a short period of time. What were the core principles that helped you to succeed, and what can Georgia learn from you?
A. Indeed, only 15 years ago the GDP per capita of Turkey was around 4,000 USD, whereas it is now close to 13,000 USD. Today we are also 16th largest economy of the world and thus a member of the G-20. Moreover, Turkey today is among the largest donors of humanitarian and development assistance. There is no doubt that all this represent a huge leap forward. I think the main reason for this extraordinary development is the structural reforms we had undertaken since 2002, many of which were in line with our EU membership process. In particular, the reforms in the banking sector have been quite instrumental in enabling us to endure the shocking impact of the economic crises of the last decade. Secondly, the political stability we have been enjoying for the last ten years has also been quite helpful to stay on course with these reforms and take the necessary decisions which might have been more difficult in a volatile political atmosphere with frequent government and/or Minister changes. Of course with structural and visionary reforms in place and a politically stable environment, we managed to attract a great deal of foreign investments which first and foremost seek these two elements to be confident to land their capital. Finally, we have been able to increase our production basis through various incentives to local businesses and also due to the investment we made to research, development and innovation. Thanks to these efforts Turkish business environment is now much more productive and diverse both in quality and quantity. I should also mention that our business incentives were not only geared to increase domestic production but also to encourage our entrepreneurs to expand the scope of their trade and investments. Now, Turkish investors are everywhere in the world ranging from Africa to East Asia. In Africa alone, we have increased our trade and investments by ten times within the last decade. To support our entrepreneurs more effectively, we have also increased the number of our diplomatic missions abroad (in Africa from 12 to 39 in the last 4 years) and strengthened our export and investment promotion agencies.
As to lessons for Georgia, I think all of what we did and achieved in Turkey is relevant for Georgia too. In this regard, the structural reforms are particularly important. But with the EU Association Agreement in place, I believe you also have a sound framework to move ahead. There is no doubt that some of these reforms will be initially painful, but you have to keep a longer perspective and do the right thing with political leadership and determination. I am sure that this will also help you draw more foreign direct investment to the country. In parallel, you also have to increase your agricultural and industrial production with a particular focus on export markets. These being somewhat oriented to the long haul, investing and promoting your tourism potential might be what you need in the short term. In that respect, Turkey is an important target country to draw in more tourists. Although we have millions of Turks coming to Georgia every year, you need to do more to attract Turkish tourists from different parts of the country.
Q. In April of the current year Turkey agreed to deal with Ukraine over a joint defence project. Are there any risks that this agreement will resonate badly in Moscow?
A. I don’t think so. Russia knows very well where Turkey stands regarding the Ukrainian crisis. In fact, the reason why we were able to develop our relations with Russia is because they know that we have certain principles that we never forgo under any circumstances. We tell them very clearly, as we do with all our counterparts, what we see right and wrong. In that particular case, Ukraine is one of our strategic partners. So, from the very outset we have been telling our Russian friends that what they are doing in Ukraine is not right, neither for them, nor for Ukraine or the region at large. Therefore, we have never recognized the annexation of Crimea, which is a blatant violation of international law and believe that Ukraine’s territorial integrity with Crimea as part of it needs to be restored without any reservation. Along the same line, we follow very closely the developments in Eastern Ukraine and call for the cessation of any separatist activities therein. And it is within this frame of mind, we are constantly calling our Russian friends to be part of the solution rather than the problem. So, I do not think that anything we say or do vis-à-vis Ukraine is surprising to Russia.
Q. Turkish President Erdogan has criticized world leaders for recognizing the events of 1915 as ‘genocide’ of Armenians. Turkey then pulled their ambassadors from the Vatican and Austria. Don’t you think that in this way Turkey might be isolating itself?
A. I don’t think that Turkey is in any way isolating itself as there are only a few countries which have chosen to characterise the events of 1915 as “genocide”. But even if that was the case, when you are accused of a crime like genocide you cannot worry about such things. You must tell the facts as they are. In this regard, we have a clear mind as to what happened in 1915 and we are not afraid to face our history. On the contrary, we have opened all our archives to allow the facts to be established. Furthermore, in 2005 we have proposed to establish a joint commission of historians to study the events of 1915 with the participation of historians from Turkey, Armenia and relevant other third countries. So we very much support shedding light to this dark chapter of history. But we want that to be done by the right people at the right platforms by the right means. And we certainly cannot agree to third party parliaments or governments writing or rewriting our history. This is absolutely not in their area of responsibility. If they are interested in getting involved in that matter, they should then encourage Armenia to open its archives or accept our proposal of joint commission of historians, both of which Armenia has rejected for so many years now. Furthermore, genocide is a specific legal term which requires an internationally competent court decision to establish it. As to events of 1915, there is no such decision. So we cannot understand and accept third party politicians to judge us on such an important matter without any legal or scientifically proven historical basis. And this is why we will continue to raise our voice against any such political manipulations no matter where they come from. Taking this opportunity allow me to also mention that, in addition to our efforts to bring facts to light by historians, we on a political level address both the Armenian government and people and express our sincere condolences for all those who lost their lives during the tragic events of 1915. Both our President and Prime Minister have issued several messages to this end. So, we are by no means turning a blind eye to the sufferings of the Armenians. We want to respect their memories in the most solemn way, but do so on the basis of historical facts and without losing sight of the present and even more importantly of our common future.
Q. What will be the responding step of Turkey to Georgia, if the country also recognizes the “Armenian Genocide”?
A. I do not think that this will be the case and thus I will not even speculate on such a possibility. Because the Georgian government and parliament have always been quite principled on this issue. They acknowledge the fact that a tragedy took place in 1915, but never attempt to put themselves into the shoes of historians or judges to characterize it in a particularly specific manner. In fact, as I said before, only in 23 countries, out of 193 independent states, there are parliamentary or governmental decisions to this effect. The rest has refrained from abusing their legislative and/or executive powers to make a judgment on a historical event which they are not part of.
Q. During your last interview with The FINANCIAL, you stated that the region is going through a turbulent time, both geopolitically and geo-economically. What are your expectations of further development of the situation a year from now?
A. Unfortunately I am not yet able to make a bright forecast for the near future. What is happening in and around this region is still quite worrying. In particular, the situation in the Middle East, and especially in Syria, with its repercussions all around the region in the form of sectarian strife, the situation in Ukraine with its economic and geo-political impact, and the so-called frozen conflicts in the wider region continue to create a very precarious situation. So, it is difficult to be optimistic in the short term. That said, we have no other option to continue to try finding solutions. First and foremost, such a tense situation is not sustainable at all. Besides, our region has a great potential and we cannot afford to deprive ourselves too long from its dividends. This is a responsibility we owe to our peoples and coming generations. I know, I may sound too naïve when I say such things. But we should not forget that Europe in the 20th century has been the centre stage of two destructive world wars, but then found its way to peace, stability and prosperity. So, not only I am optimistic personally, but my country, Turkey is determined to work towards this goal and bring its added value for the common good of all of us in this region.
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