Turkey and UAE as Trade Partners: Generalist Overview

                            Fig 1: national flag of Turkey (Source: senojflags.com)                                               

Turkey 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. Though still in its crawling phase, the bilateral trade between the two nations has witnessed a significant growth. According to a study conducted by researcher Ahmed Al-Ananbeh of MoFT’s Department of Analysis and Trade Information, bilateral trade between the nations 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, with a small population, considered richest among the world in terms of per capita income; other an emerging economy of great geo political significance, placed between the crossroads of Europe and Asia, with a predominantly western orientation. UAE is presently the 3^rd largest export destination for Turkey, with Turkey’s export to UAE increasing from US $ 2.892 billion in 2006 to US $ 7.473 billion in 2008. There had also been a gradual increase in UAE’s non oil export and re export to Turkey. In 2010 Turkey accounted for 1.4% of UAE’s non oil trade with the world. Other than trade both the nations are also exploring business opportunities with each other. Presently UAE’s investments in Turkey are worth US $ 5.01 billion and turkey’s investments in UAE are worth US $ 6.51 billion. (moft.gov.ae, 2011)

In the light of growing relationship between the two nations, “Management Guru” blog will write a set of articles, exploring the various facets of the relationship. The very 1^st blog in the series will just give a generalist overview- country profiles, nature of trade, attractiveness of both the destinations etc. This will be followed by further articles attempting a detailed analysis of the trade consisting of individual items, future prospects, areas of improvements, alternative scenarios etc.      

Turkey and UAE: country profiles

The following part will compare the two nations across various social and economical parameters along with the graphical representation of data pertaining to the trade figures of both the nations. 

Table 1: - compares Turkey and UAE across various social and economic parameters

                                  Source of data: CIA fact books, Euro Monitor etc.                        

Fig 2: Value of Import for UAE in US $ billion, over the period of years.   Source: National Bureau for Statistics, United Arab Emirates

Fig 3: Value of non oil Export and Re Export for UAE in US $ billion, over the period of years.   Source: National Bureau for Statistics, United Arab Emirates

UAE Turkey: Trade Statistics

Table 2: Data pertaining to total weight of Export of Turkey to UAE and vice versa

                                Source of data: National Bureau of Statistics, UAE  

Table 3 : Data pertaining to total value of Export of Turkey to UAE and vice versa 

                                Source: National Statistics Bureau, UAE

Nature of Trade between Turkey and UAE

Major exports from Turkey to UAE include aluminum, precious stones, food stuffs and beverages, plastics followed by animal products, chemicals, vegetable products etc. The following pie chart shows the percentage wise break up of major export items from Turkey to UAE in 2010.

                      Fig 4: percentage wise break up of Turkish export to UAE in 2010

In the given figure

(a stands for base metals and their articles; b stands for pearls stones and other precious metals; d stands for others; c stands for articles of woods; e stands for food stuffs; g stands 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. The major export items are – Pearls and precious stones followed by plastics, rubber etc. The following pie chart gives a percentage wise break up the UAE’s export to Turkey

                      Fig 4: percentage wise break up of UAE's export to Turkey in 2010

(In the given figure A stands for pearls and precious stones; B stands for articles of stones, Mica etc; C stands for plastics, rubbers etc; D stands for products of chemicals, E stands for food stuffs and beverages; F stands for others.)

Future Prospect

Presently the trade between Turkey and UAE is in its crawling phase, with GCC and UAE comprising a comparatively smaller share in Turkey’s overall trade in the MENA region. But it has huge latent potential with both the nations taking strong measures to boost their relationship further. In Q1 2011, the total trade volume between them stood over US $ 1.3 billion, 50 % increase compared to the same period last year. (Khaleej Times, 2011). 

The following part of the blog will evaluate the future prospect of trade between Turkey and UAE.

Turkey’s attractiveness

Turkey is an attractive, trade partner and investment destination for UAE. Turkish attractiveness is due to a wide range of Economical, Socio-Cultural, Legal and Geographical 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, it 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.

·         Since both UAE and Turkey are Islamic societies and UAE had also been once part of the bigger Ottoman empire- both the nations share rich and glorious Islamic heritage and there should be comparatively less cultural differences between them.

·          UAE nationals do not require VISA before their arrival to Turkey; they can apply for a VISA once they arrive.

·         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 Attractiveness

Like Turkey, UAE also offers attractive business opportunities, for an emerging economy like Turkey. Other than the common cultural and geographical factors that it shares with Turkey, 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 19^th 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, 2^nd largest Emirate of UAE enjoys the status of a regional distribution center and is the 3^rd 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 and is expected to handle 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- Abu Dhabi 2030 and Dubai 2015- UAE is aggressively trying to transform and diversify its economy, thereby providing ample business opportunities for its trade partners.

Though both the nations seem as attractive trade partners,  the future for them is also fraught of hindrances  Lot of Turkish people are interested in visiting Turkey for trade; for which they need to apply for visa before their arrival. (The same does not hold true for UAE nationals visiting Turkey). Downside of UAE is that though it is one of the richest nations in the world, its small population of 4.7 million 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 that has to be taken care of in order to bolster the burgeoning trade between the two nations.        

References 

1>     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>   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/business_July203.xml&section=business&col=

3>   3> Middleeastelectricity.com, 2011, Turkey-UAE investment reach $ 10 billion in 2010, available at http://www.middleeastelectricity.com/Global/Middle_East_Electricity/pdf/TurkeyUAEinvestmentshit10bin20104Mar11GN.pdf

4>    4> World’s richest countries.com, 2009, home page, available at http://www.worldsrichestcountries.com/