Turkish-Egyptian economic relations have expanded rapidly over the past few years and indications are that this trend is likely to continue, reports Nesma Nowar Egypt-Turkey economic rapprochement has always been significant for both countries. The two countries have complementary economic interests. Egypt is an important market for Turkey to invest in and Egypt is keen to foster economic ties with Turkey, forging stronger links with one of the region's most important geopolitical players. The volume of trade between Egypt and Turkey has witnessed great strides in recent years. According to the Turkish Ministry of Foreign Affairs, Turkey's trade with Egypt increased two and a half times in three years. The volume of trade between the two countries increased from $1.1 billion in 2006, $1.5 billion in 2007 to $2.3 billion in 2008. Egypt's exports to Turkey in 2008 reached $943 million with an increase of 39 per cent in comparison to the previous year while Turkey's export to Egypt stood at $1.4 billion, an increase of 58 per cent. In 2009, Turkey's exports to Egypt doubled reaching $2.6 billion. A remarkable part of this increase was the result of Turkey's iron and steel exports. Hassan Erdem, chief commercial councilor at the Turkish Embassy in Egypt, attributed this significant boom to the Free Trade Agreement (FTA) signed between Egypt and Turkey in December 2005. He said that since the FTA entered into force in May 2007, bilateral trade volume between the two states has more than doubled reaching $3.1 billion in 2010. He added that over 200 Turkish companies are operating in Egypt with investments of $1.5 billion employing 52,000 Egyptians. According to the Egyptian Ministry of Trade and Industry, nearly 85 per cent of Turkish companies operating in Egypt have been established since 2004. Turkish investments in Egypt rose to $1.5 billion from $60 million in the last five years. A large portion of this increase has been in the sectors of textile and confectionery. Erdem pointed out that Turkish investors are attracted to Egypt in part due to the good potential of the Egyptian market, driven by a fast growing population, and the hardworking labour force. Another major factor in spurring Turkish investments, he said, is Egypt's strong duty-free market access, such as the Qualifying Industrial Zones (QIZ) which follow a preferential trade protocol allowing Egyptian products customs-free access to US markets. Erdem stated that Turkish companies which invested in Egypt since 2005 currently are the biggest exporters to Turkey. "We are very happy about that and it is very good for both sides." Agricultural products, oil, chemical materials, textiles, machinery equipment, the automotive industry, medical equipment and iron and steel were the priority sectors for Turkish investment in Egypt. Turkish exports to Egypt include automotive spare parts, chemicals, petrochemicals and machinery equipment while Turkey's imports from Egypt include chemicals and raw materials. Erdem affirmed that bilateral trade between Egypt and Turkey will continue to grow at a rapid pace. He said that although the recent political instability in Egypt has affected negatively on the trade volume between the two countries, trade flow between Egypt and Turkey will continue growing as well as Turkish investments. "Business is business," he noted. Turkey's exports to Egypt from January-April 2011 were $979 million, while Turkey's imports from Egypt in the same period reached $605 million. Erdem said he believes that more collaboration between Turkish and Egyptian companies should take place in the coming period. "What we can do more for Egypt is to cooperate with Egyptian companies to produce something locally," Erdem told Al-Ahram Weekly. "We are trying to create partnerships between Turkish and Egyptian companies." He pointed out that one Turkish company, in collaboration with an Egyptian company, will be investing $497 million in order to establish a plant in Sinai. The plant will produce soda ash, a chemical used for the manufacture of glass. "This would be the largest investment coming from Turkey." The project would start as soon as it obtains the licence from the Egyptian Industrial Development Authority. Egypt enjoys several economic advantages for attracting investments, including the existence of an integrated system of free trade agreements between Egypt and the most important economic blocs in the world such as the European Union, the Common Market for Eastern and Southern Africa (COMESA) and the Arab countries. This, according to Khaled El-Mikati, board member at the Export Council for Building Materials, has helped in boosting Egypt-Turkey trade which has more than tripled in recent years. El-Mikati stated that these trade agreements have also helped in lowering the cost of doing business in Egypt in comparison with Turkey. This has urged some Turkish investors to relocate their factories in Egypt because of the lower electricity and labour cost. This is confirmed by the Turkish industrial zone which was established by a Turkish company in cooperation with an Egyptian company in 2007. This industrial zone, El-Mikati said, comprises Turkish investments as well as Egyptian-Turkish investments. Egypt currently has an industrial base that stretches across more than 87 industrial zones in various parts of Egypt. El-Mikati further pointed out that it is easy to attract Turkish investors to Egypt due to the proximity of culture of both states. "When the Turkish investor comes here, he does not feel different," he told the Weekly. He added that more trade relations and cooperation between Egypt and Turkey are highly recommended as Egypt would benefit from Turkey's experience in different fields, especially in technology and industry. For the coming period, El-Mikati said that it is very important to have a clear direction and vision because the uncertainties which currently overshadow Egypt's decision-makers might drive investors away. He added that there should be incentive packages for investors, especially export incentives, in order to attract Turks to come and produce in Egypt and therefore increasing export activities which would in turn increase the flow of foreign currency. El-Mikati believes that the FTA between Egypt and Turkey has benefited both states. "It is a win-win situation, Turkey is Egypt's gateway to Europe and Egypt is Turkey's gateway to Africa," he said. The FTA signed between Egypt and Turkey includes, most notably, full tariff exemption of Egyptian industrial commodity exports and a gradual liberalisation of Egyptian industrial commodity imports from Turkey on a yearly basis up to 15 years. Regarding agricultural commodities, both countries shall exchange lists of sensitive commodities based on their comparative advantages. Besides the FTA, other relevant agreements include a memorandum of understanding between Turkey, Egypt and Syria on Cooperation in the Field of Tourism in 2009 and the Agreement on Road Transportation in 1994. There are other bilateral cooperation mechanisms as well, such as business forum meetings, meetings of the Joint Economic Committee and the Turkish-Egyptian Joint Economic Commission on Tourism. Meanwhile, developing relations between Egypt and Turkey in various fields in recent years has led to a rise in the number of the tourists going both ways. According to the Turkish Ministry of Foreign Affairs' figures, approximately 42,000 Egyptian tourists visited Turkey in 2006 and this figure reached 53,000 in 2007 and 57,000 in 2008. In 2009, the number of the Egyptian tourists who visited Turkey was 67,000 with an increase of 15 per cent in comparison to the previous year. Similar number of Turkish tourists visited Egypt. Over 40,000 Turkish tourists visited Egypt in 2009, and this increased 37.5 per cent to 64,000 in 2010.
