Qatar and Turkey strengthen their bilateral trade

by  — 20 December 2015

Turkey is one of the strongest and long-time regional allies of Qatar in the Middle East and North Africa region. Diplomatic relations have grown even closer this year, with the visit of Turkish President Recep Tayyip Erdogan in December when both the countries signed several agreements. But are the benefits of this being reflected in growing bilateral trade?

Istanbul, which straddles Europe and Asia across the Bosphorus Strait, is one of the world’s most popular tourist destinations. The number of Qatari travellers to Turkey increased by 35 percent in the first nine months of the year, exceeding 31,500 visitors.

Although the volume of trade between Qatar and Turkey was only USD1.31 billion (QAR4.7 billion) in 2014, this figure is not a true reflection of the deep business relations these two countries share. The Turkish President Recep Tayyip Erdogan’s visit to Qatar this month has further strengthened the political, economic and military relations between the countries. Qatar and Turkey signed 16 agreements and memoranda of understanding in the areas of defence, energy, education and travel. Among the most significant ones are the long-term liquefied natural gas (LNG) sale deal between Turkey’s state-owned gas grid BOTAŞ and Qatar’s national petroleum company, Qatar Petroleum.

Besides these new agreements, which are expected to open up fresh business opportunities, Turkish companies are already involved in a staggering amount of construction work in Qatar. Industry data suggests that close to USD15 billion (QAR54.8 billion) worth of construction projects have already been undertaken by Turkish firms in Qatar. The iconic Museum of Islamic Arts, Hamad International Airport and Qatar National Convention Centre have all been constructed by one of the many Turkish companies operating in the state, as have other significant projects, such as Salwa Road, North Road, the Ras Laffan-Mesaieed Gas Pipeline project, and Qatargas’ onshore facilities.

Turkish companies such as STFA Construction, Nurol, Enka, Tekfen Construction, Yuksel Construction and TAV Construction all have a strong presence in the Middle East, and in Qatar. STFA Qatar’s finance and administration manager, Turgut Dizdaroglu, is also chairman of the Doha-based Turkish Businessmen Association (TBA-Qatar). He says that the association represents nearly 45 Turkish members who are doing business in Qatar, and Turkish professionals working for non-Turkish companies or institutions. These include contractors, mechanical, electrical and plumbing (MEP) companies, steel manufacturers and erectors, logistics, equipment and materials suppliers, and service providers for large- and medium-sized companies.

Ahmet Demirok, Turkish ambassador to Qatar, says, “Turkish and Qatari markets are growing rapidly and there are a lot of opportunities for businessmen from both sides. Turkish contractors have enough technical and financial capabilities, enthusiasm and cultural adaptability to enhance business volume by contributing to Qatar’s infrastructure and urban structures.”

But trade relations between Turkey and Qatar go far beyond the construction sector. For example, Turkey exports a range of products, from iron and steel, electronic devices and equipment to transport vehicles, construction materials, furniture, textile products and food items, to Qatar. Last year’s export volume from Turkey to Qatar was close to USD345 million (QAR1.2 billion).

On the other hand, Turkey is one of the largest buyers of LNG, chemical and plastics products from Qatar. The total import from Qatar was pegged at USD965 million (QAR3.5 billion) in 2014. The new energy deal will further boost the trade volumes.

Qatari investors have also invested heavily in real estate, banking and the media industry. Turkey expects to see more Qatari investment in profitable areas such as agriculture, energy, tourism and manufacturing.


Defence cooperation

Another area of key strategic partnership between the countries is defence. This received a further boost earlier this year when Qatar and Turkey signed a comprehensive military accord. This strategic agreement will not only allow both countries to deploy soldiers in each other’s territory, but will also help increase cooperation in the areas of military training, defence industry and joint military drills. The Turkish president’s recent visit has further strengthened this tie.

Not just the military cooperation, both countries have a huge defence market potential to tap. This October’s High Tech Port fair in Doha, in which close to 70 Turkish defence companies participated, is testament to the shared view that both countries have of the huge potential that they can explore together. In fact, Turkey has a strong domestic manufacturing industry, with its defence exports in 2014 rising to an all-time high of USD1.65 billion (QAR6 billion), a 17.7 percent increase over the previous year. Turkey is developing its first indigenous military-civilian regional jet, TRJet – a prototype of which was showcased at the High Tech Port event in Qatar.

Hakan Kurt, general coordinator of High Tech Port, says Turkey has an important engineering capacity and products that give the country a strategic advantage, whereas Qatar has a dynamic investment capacity and an ability to create aggressive trade models. “Combining these two potentials would upset the balance in the region, while also bringing a partnership that would lead to significant shifts in the global level,” he adds.

It can ostensibly be a beneficial situation for both countries, as mutual projects developed in defence and aviation industries could increase the common market of Qatar and Turkey. The distribution of profits can take the relationship between the two countries from a market relationship to a strategic partnership.

“Our aim is to increase the business volume of the Turkish defence industry in Qatar to USD5 billion (QAR18.2 billion) in the medium term (in 10 years). Turkey has both the capability and the potential partnership projects to achieve this aim,” Kurt says.

In the near future, he adds, Qatar and Turkey will carry out significant projects in the areas of high technology, defence and construction. “I personally find the BMC partnership to be very important in that respect. A partnership between one of Turkey’s biggest industries, BMC, and Qatar, Ministry of Defence will generate a highly crucial player for this region,” he adds.

According to Kurt, Turkish companies that participated in the fair left Qatar with a business volume of USD500 million (QAR1.82 billion). At the end of 600 partnership meetings, Turkish Airlines Technic had generated a business worth of USD50 million (QAR182 million) through its agreement with Qatar Airways; while Qatar’s Ministry of Science and Technology, ictQATAR, signalled that a business volume of USD200 million (QAR728 million) will be created with Turkey, especially in the areas of cyber security and smart cities.


Culture and tourism

The Turkish president who was bestowed with Qatar University’s honorary doctorate during his visit also announced that the two states have decided to lift the visa requirement for travelling between the countries. Qatar and Turkey have been celebrating 2015 as the Year of Culture, which has seen a number of cultural events taking place throughout the year. Demirok, the Turkish ambassador to Qatar, tells The Edge, “Turkey and Qatar are home to rich and diverse cultural practices and this year gives a great opportunity to release the potential in cultural and social fields and to cement our relations at grassroots level.”

Events such as these are obviously organised to encourage the tourism sector. In the first nine months of 2015, the number of Qataris who travelled to Turkey increased by 35 percent compared to the same period in 2014, exceeding 31,500 people.

Mehmed Kursad Caymaz, general manager, Turkish Airlines, Qatar, says, “Qatari tourists used to travel to Turkey for short holidays, but now it has been observed that many visitors own properties, have made investments and have started to discover new domestic destinations, all leading to longer stays in Turkey.”

Currently, Turkish Airlines operates 14 weekly passenger flights and with the newly added cargo flight, the number has increased to 15 flights between Istanbul and Doha.

Furthermore, Qatar Airways flies to three destinations – Istanbul Sabiha Gökçen Airport, Istanbul Ataturk Airport and Ankara – from Doha, taking its total flights to 18 per week.

Caymaz acknowledges the importance of the rapidly-growing Qatari market. “Turkish Airlines already flies twice daily to Istanbul from Doha. We are planning to start flying to even more cities so that the entire country can take advantage of our network and visit Istanbul and other Turkish destinations,” he adds.

The Gulf Cooperation Council (GCC) region currently contributes five percent of Turkey’s tourism revenue, with Qatar being one of the highest contributors.

“Turkey is considered a promising investment destination by Qataris who are now looking beyond just real estate investments in Turkey and this is a good sign,” he says, adding that both need to cooperate on a variety of sectors from travel and tourism to engineering and technology.   

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