Egyptian and Turkish businessmen are stepping up cooperation in the wake of the signing of an FTA between their two countries, writes Sherine Nasr A few months after Egypt and Turkey signed a free trade agreement (FTA) late last year and even before its ratification, businessmen on both sides are taking positive steps to bolster their cooperation. Representatives of several Turkish companies visited Cairo last week in order to scout business opportunities, particularly in the textiles and ready-made garments sector. Adel Gazarin, Chairman of the Egyptian side of Egypt- Turkey Business Council says that the two countries' business communities are keen to see things move ahead, adding that "more contracts have been signed since the FTA was concluded". According to Bulent Savas, head of the Turkish side of the council, bilateral economic ties had already gained considerable momentum over the past few years. Turkish Direct investment in Egypt currently stands at $1 billion, mostly in the textiles, ready-made garments and energy sectors. Turkish interest in Egypt's textiles sector has been particularly strong since the latter signed the QIZ (Qualified Industrial Zones) with the US in December 2004. According to Savas "more Turkish companies are keen on investing in Egypt in order to make use of the profitable export opportunities to the US under the QIZ agreement." By virtue of the FTA, Turkish companies will have the advantage of operating from inside Egypt while also gaining free access to the US market. "Turkish companies will also be able to benefit from other advantages such as low operational costs, cheap labour and infrastructure as well as the availability of land upon which to set up their business locations." The Egypt-Turkey FTA sets guidelines for more trade liberalisation sectors other than textiles, such as agricultural products as well as processed agricultural and fishery products. Typical Egyptian exports to Turkey include rice, fish, fresh vegetables and fruits, while Turkish imports to Egypt are comprised of edible oils and hazelnuts. Savas says that more Turkish capital is now turning to Egypt for direct investment, while in the near past, Bulgaria and Romania were typical destinations for Turkish investors. Safak Gokturk, Turkish ambassador to Egypt, says that Turkish businessmen are now urging their government to accelerate the ratification of the agreement, which, they hope will take place during the current year. "This agreement is not simply about selling products." says Gokturk. "It will hopefully open the doors to greater cooperation in other fields as well such as the exchange of know- how and outsourcing, etc." The FTA should also help both countries upgrade their competitive edge in exporting to the EU. By virtue of the agreement, an Egyptian factory can import industrial inputs from Turkey, incorporate them in its local product and export it duty-free to Europe under Egypt's partnership agreement with the EU. Experts believe that bilateral trade between the two countries will also witness a considerable increase in the next few years. "The $1 billion trade volume in 2005 does not reflect the potential that already exists," said Ashraf El-Rabei, head of the Egyptian Commercial Representation. In fact, some believe that the volume of trade between both countries could jump to $3 billion once the agreement comes into effect. The very modest $1 billion Turkish direct investment into Egypt is also expected to double within the next few years. "I can see that Turkish businessmen are very serious about conducting business in Egypt." El-Rabei says, adding that "on our part, we provide them with whatever technical information they might need to know in order for them to take the right decision." Turkey is Egypt's sixth largest trade partner. In 2004, Egyptian exports to Turkey increased by 31 compared to 2003, while Turkish exports to Egypt increased by 34 per cent in the same year. Turkey is the second largest economy in the EuroPersian market with an estimated 580 consumers. In 2004, Turkish GDP reached $293.3 billion with an exceptional growth rate of 10 per cent.
