Türk Yurtdışı Müteahhitlik Hizmetleri


Turkish Contracting in the International Market

 

Construction plays a crucial role in Turkey’s economic development, accounting for well over 6% of GDP and employing some 1.3 million people. When the direct and indirect impacts on other sectors are taken into account the construction sectors share in the Turkish economy reaches 30%.

After a period of rapid growth in the 1980’s, the Turkish construction sector witnessed a serious decline between 1993 and 2001. Policies adopted after the two economic crises of 1999 and 2001 initiated a recovery in the sector that started in 2002. Increased economic stability, decreasing exchange and interest rates and attractive long term loans that stimulated the demand for housing played a major role in this process; and consequent growth rates of 13.9% in 2002, 7.8% in 2003, 14.1% in 2004, 9.3% in 2005 and 18.5% in 2006 made construction the number one contributor to economic growth in the country. In 2007 growth rate of construction sector was 5.7%; however, the growth rate of the sector decreased to -7.6% in 2008.

The constant increase in global competitiveness of Turkish Contractors and construction products is facilitating the yield of significant contributions from the sector to the balance of payments.

In the last 36 years, up until the end of 2008, Turkish Contractors have undertaken almost 5,000 projects in 70 countries, with a combined value of some 130 billion USD. Turkey ranks among the top 12 producers of building materials in the world, with such products as cement, glass, steel and ceramic tiles taking a leading role.

A research team that prepared a report on the "Strategic Plan for the Construction Industry" in 2004 said of Turkey: "In no other country with the same per capita income it is possible to find a construction sector that is as competitive as the Turkish construction sector."

As is the case for many other export-oriented economic activities in Turkey, the unique geographical location of Turkey at the crossroads of three continents - Europe, Asia and Africa - contributes a great deal to the global competitiveness of Turkish construction products and services abroad. However, Turkeys location is only one contributing factor to this competitiveness of the sector, as the country can also boast cost effective service at international standards, high client satisfaction, credibility in partnerships, extensive knowledge and experience gained in a wide variety of projects, familiarity with the business environments in the nearby regions, qualified manpower and a calculated risk-based approach to business.

In 2008, 10% of the "Top 225 International Contractors" announced by the leading international industry magazine "ENR - Engineering News Record" were Turkish companies. With 23 companies among the top 225, Turkey ranked third in the world after China and United States.

The investment environment in Turkey is becoming increasingly attractive for both local and foreign investors and a positive growth rate in construction is expected in the years ahead.

The Turkish construction sector comprises a group of businessmen at the crossroads of three continents that are active in each country in the Eurasian market of 580 million people, covering an area of 26 million km2. Turkish Contractors are open to international partnerships, not only in the field of contracting but also in construction industry investments, ranging from the manufacturing of construction materials to infrastructure, housing, industry and tourism. Extensive know-how and experience gained through working abroad for nearly four decades in all kinds of challenging engineering projects and in all forms of business environment are among their distinctive strengths.

History

From the earliest settlements of mankind dating back to 8000 B.C., the Anatolian Peninsula on which Turkey is located has been the center stage of world history, where 13 major civilizations have flourished, leaving magnificent sites and structures behind. The incredible richness and diversity of Turkeys cultural heritage is an important factor that fostered the maturity of a building tradition in Turkey that has developed over millennia - from the Hittites to the Romans, Byzantines, Seljuks and Ottomans.

The development of the Turkish construction sector over the last 86 years since the foundation of the Turkish Republic can be evaluated in five successive periods: getting prepared, internal market activity, international activity, market and product diversification and global competition. The first two periods continued until the beginning of the 1970’s.

After the foundation of Turkish Republic in 1923, and along with the ambitious modernization process that accompanied the political and social reforms, important infrastructural and industrial investments were made all over the country. In the 1920’s special measures, including the employment of foreign experts in public agencies had to be taken by the government to overcome the shortage of engineers and architects. With the influence of these public policies and partly due to the economic crisis in Europe in those years many European engineers, architects and entrepreneurs came to Turkey. In the 1925-1926 periods at least one third of the 28 construction companies established in Istanbul were of European origin.

The 1930’s marked the arrival of the first generation of Turkish engineers who in the following decades founded many large-scale construction companies, and had great success in the realization of many challenging projects, both in Turkey and abroad.

The political change that Turkey experienced in 1950 and its accession to NATO in 1952 are important milestones in the history of the Turkish construction sector in terms of the development in infrastructure investments that followed. In the same period, the first wave of Turkish engineers were graduating from universities and beginning their careers in  an environment that offered great opportunities for the establishment of their own companies; and it was those businessmen that founded the Turkish Contractors Association (TCA) in 1952, making the organization one of the oldest NGOs in the Turkish construction sector.

Water supply projects during the 1950’s, energy projects and the construction of large dams and power plants in the late 1960’s and early 1970’s provided many opportunities to Turkish Contractors to develop their activities throughout Anatolia.

1970-1979 Period

In the 1970’s Turkish Contractors actively began pursuing business opportunities in foreign markets for the first time.

The first country to which Turkish Contractors exported their services was Libya in 1972, where they launched projects by importing the necessary technology from European countries. In less than 10 years, their activities had extended to countries in the Middle East. With a share of 68.22% in the overall business volume, Libya was the number one market for Turkish contractors in this initial period of opening to the international arena. Other countries were: Saudi Arabia (14.32%), Kuwait (10.62%), Iraq (6.72%), Greece (0.05%) and Iran (0.01%).

The major field of activity in this period was housing (29.80%), followed by road/bridge/tunnel works (17.07%) harbors (16.79%), industrial plants (15.49%), and urban infrastructure projects (7.60%).

1980-1989 Period

The 1980’s was an important decade in the restructuring of Turkey’s economic status. Starting in 1983, the country passed through a major change from the closed economy of the 1970’s to a market economy, which was introduced only very recently in some western countries. Together with the convertibility of Turkish currency and the termination of many restrictions on the economy, new agencies, such as the Mass Housing Administration and the Public Participation Administration, were founded and new concepts such as privatization and liberal economy were integrated into the country’s economic system.

In the same period Turkey commenced substantial infrastructure investments. Ataturk Dam (2400 MW) the Turkish Motorway Program (more than 2,000 km) and telecommunication investments provided excellent opportunities to Turkish firms to cooperate with international partners, and thus improve their technical and managerial skills and become acquainted with the global finance system.

At the end of the 1980’s the political change in Eastern Europe provided further opportunities to Turkish Contractors, and many companies oriented themselves more towards The Russian Federation and the former Soviet Union countries where there were strong cultural relationships with the Central Asian countries. In the same period they extended their activities to other markets, including Jordan, Yemen, Iran, Saudi Arabia, the United States, Tunisia, the United Arab Emirates and Kuwait.

Despite a relative decrease in proportion (54.56%), the majority works abroad continued to be in Libya. Saudi Arabia (21.79%) and Iraq (14.38%) ranked second and third, thus maintaining the position they had occupied during the first decade. The emergence of the former Soviet states was a new development that occurred at this time (4.59%).

During this period, housing (36.75%) and urban infrastructure projects (16.15%) increased, as well as road/bridge/tunnel (6.57%) and irrigation projects (5.30%).

1990-1999 Period

In the 1990’s, economic depressions and political uncertainties in the countries of the Middle East and Libya forced the Turkish Contractors to turn their attention to other countries in the nearby regions, turning their focus predominantly to the Commonwealth of Independent States, Eastern Europe and Asian countries. Many large-scale projects in the Russian Federation, Ukraine, the Caucasus, the Central Asian Republics, Germany, Pakistan and the Far East were realized at this time.

In the 1990-1999 periods, the projects completed in the Russian Federation and the CIS states accounted for almost 60% of international business.

Market diversification was the major trend that characterized this decade. While the share of the Russian Federation increased (to 34.69%), Libya’s share saw a drastic decrease (to 12.22%), followed by Kazakhstan (7.31%) and Turkmenistan (6.66%); while Pakistan (6.62%), Uzbekistan (3.35%), S. Arabia (3.16%), Bulgaria (2.56%), Azerbaijan (2.53%), the United States (2.47%) and Croatia (2.22%) emerged as new markets. Other important developments were the considerable decrease in the proportion of works in Saudi Arabia (3.15%) and the disappearance of Iraq from the scene.

Despite a decrease in the share of housing works (25.44%) compared to the previous period, housing continued to be the number one activity in this period as well. Housing was followed by road/bridge/tunnel works (12.70%), industrial facilities (9.03%) and commercial centers (7.79%).

2000-2008 Period:
"Booming Global Competitiveness"

Within the five year period between 2002 and 2008, the annual volume of business undertaken abroad increased from 1.7 billion USD to 23.6 billion USD. The internal and external forces and factors that have contributed to this rapid development can be grouped under the following three categories: the attractiveness of business opportunities abroad; reduced business opportunities in Turkey; and the increasing competitiveness of Turkish Contractors:

·       Domestic investments decreased significantly after the crisis in 2001. Furthermore, the "abnormally low tenders" in bids created unfair competition for qualified companies and forced them to move out of the internal market. They eventually turned their attention to the international market and pursued aggressively business opportunities in other countries.

·       As a result of booming oil prices, investments increased in the oil and gas exporting countries. This process created attractive business opportunities for Turkish Contractors given their geographical proximity to these countries and their familiarity with local business environments, providing additional advantages in competition.

·       Having realized large-scale infrastructure projects in cooperation with foreign partners in Turkey between 1985 and 2000, Turkish contracting firms gained significant experience in the fields of project management, contract management and production to international standards.

As a result of the factors stated above the annual international business volume of Turkish Contractors grew at a pace that was far beyond the annual targets.

Further market diversification and specialization in certain types of projects were the major trends in this period. The number of countries in which Turkish Contractors was working increased considerably, causing the percentage of work in each country to decrease relatively. Nevertheless, the Russian Federation maintained the first rank (18.90%), followed by Libya (10.73%) and Kazakhstan (8.07%). In this period, the United Arab Emirates (7.05%), Qatar (6.57%), S. Arabia (6.06%), Azerbaijan (4.12%), Romania (3.86%), Turkmenistan (3.84%), Iraq (3.33%), Oman (2.93%), Afghanistan (2.79%), Algeria (2.69%), Jordan (2.47%), Bulgaria (1.99%), Ukraine (1.85%),  Morocco (1.83%) and Ireland (1.46%) emerged as new markets. In the aftermath of the interventions in Afghanistan and Iraq, the rebuilding activities in these countries were closely followed by Turkish Contractors.

The types of work undertaken during this period and their relative shares in the total business volume were as follows: road/bridge/tunnel works (15.28%), commercial centers (12.80%), housing (9.41%), industrial plants (7.56%), pipelines (7.47%), social and cultural facilities (7.39%), airports (6.98%), power plants (5.38%) and petrochemical plants (4.13%).

In this period, significant progress was made in terms of the scope and size of projects being undertaken. Market, product and business diversification continued further, while several companies started to specialize in certain project types, such as international airports, railways and urban subway systems.

Within the 36 year period between 1972 and 2008, the shares of CIS, Middle-Eastern and African countries in the overall international business volume of Turkish Contractors were 47.26%, 23.36% and 19.06% respectively. In other words, the total share of CIS-Middle East-Africa countries reached 90%.

With a share of 49.10%, the CIS region ranked first in terms of its share of total international business undertaken in 2008. The Middle and East Africa followed with shares of 27.80% and 15.80% respectively. The total share of CIS-Middle East-Africa in the overall annual international business volume increased to 92.7% in 2008.

The shares of the CIS, Africa and the Middle East in the overall international business of Turkish Contractors in 2007 were 38.30%, 29.70% and 24.30% respectively. A comparison of these figures with those of 2008 reveals that the CIS countries continue to rank first in the international business of Turkish Contractors.

Statistics from 2008 also indicate that the share of the CIS and the Middle East increased significantly, while the share of Africa decreased from 29.70% to 15.80%. This rise in CIS is due to the fact that the business undertaken in Turkmenistan increased from 1.6 billion USD to 5.4 billion USD. Also, Turkish Contractors are still very successful in the Russian Federation and Azerbaijan.

When the distribution of projects undertaken by country in 2008 is considered, Turkmenistan (5.4 billion USD) takes the first place, having a value equivalent to one quarter of the total business volume, followed by the Russian Federation (3.4 billion USD), UAE (3.1 billion USD), Libya (2.1 billion USD) and Iraq (1.4 billion USD) respectively. In other words, the total business undertaken in Turkmenistan, The Russian Federation and UAE in 2008 (11.9 billion USD) constituted more than half of the total business undertaken abroad by Turkish Contractors.

Building construction (45%), industrial facilities (20.2%), transportation (20.0%) and infrastructure projects (7.7%) took an important place in the breakdown of the business undertaken by sector in 2008.

Up until 2000, more than 30% of the international works of Turkish Contractors were in the housing sector. However, this ratio has changed completely over the last years, with housing now accounting for 16.5% of the total, while industrial buildings, oil refineries and road-tunnel-bridge projects have seen a significant increase. In the nearby regions today, where local companies are far more experienced and competitive in house-building, Turkish Contractors tend to specialize on more sophisticated projects, such as international airports and urban rail transportation systems. Another important trend in recent years has been the growth in interest of Turkish Contractors for direct investments and property management in the neighboring countries.


 

Source: Undersecretariat of Foreign Trade

 

 

Source: Undersecretariat of Foreign Trade

 

 

Source: Undersecretariat of Foreign Trade


 

 

DISTRIBUTION OF PROJECTS UNDERTAKEN IN 2008 BY REGION / COUNTRY

Region / Country

Number of Projects

Total Value of Project ($)

Share %

CIS Countries

275

11.630.261.430

49,10%

Turkmenistan

97

5.375.902.770

22,70%

Russian Federation

78

3.387.864.932

14,30%

Azerbaijan

24

1.088.282.553

4,60%

Kazakhstan

27

688.564.354

2,90%

Ukraine

15

680.186.231

2,90%

Georgia

11

252.956.004

1,10%

Moldova

3

62.286.000

0,30%

Belarus

4

39.778.972

0,20%

Uzbekistan

13

20.217.274

0,10%

Kyrgyzstan

2

18.013.599

0,10%

Tajikistan

1

16.208.741

0,10%

Middle East Countries

133

6.578.604.393

27,80%

UAE

26

3.069.010.489

13,00%

Iraq

72

1.436.001.931

6,10%

S. Arabia

14

893.410.100

3,80%

Qatar

6

651.799.498

2,80%

Jordan

4

403.326.647

1,70%

Iran

2

102.718.222

0,40%

Syria

4

14.411.446

0,10%

Yemen

1

5.388.000

0,00%

Israel

4

2.538.060

0,00%

African Countries

60

3.748.521.968

15,80%

Libya

36

2.065.280.207

8,70%

Sudan

1

850.000.000

3,60%

Algeria

14

510.082.035

2,20%

Ethiopia

2

208.299.906

0,90%

Tunisia

4

112.075.959

0,50%

Guinea

1

1.637.150

0,00%

Djibouti

2

1.146.711

0,00%

European Countries

68

1.490.685.210

6,30%

Romania

42

480.627.242

2,00%

Bulgaria

5

446.784.045

1,90%

Macedonia

9

306.446.683

1,30%

Ireland

1

242.083.311

1,00%

Albania

2

10.790.715

0,00%

France

8

2.682.634

0,00%

Germany

1

1.270.580

0,00%

Asian Countries

21

174.640.375

0,70%

Afghanistan

19

171.509.111

0,70%

Pakistan

2

3.131.264

0,00%

Other Countries

5

62.518.000

0,30%

USA

2

44.000.000

0,20%

TRNC

3

18.518.000

0,10%

Grand Total

562

23.685.231.376

100%

Source: Undersecretariat of Foreign Trade


 

 

DISTRIBUTION OF PROJECTS UNDERTAKEN BETWEEN 1972 AND 2008

BY REGION / COUNTRY

Region / Country

Number of Projects

Total Value of Project ($)

Share %

Middle East Countries

882

30.227.309.670

23,36%

Iraq

449

6.246.280.749

 

S. Arabia

118

6.009.301.186

 

Qatar

38

5.787.718.010

 

UAE

57

5.553.544.207

 

Jordan

27

2.245.025.430

 

Oman

17

1.499.847.078

 

Iran

23

731.915.730

 

Kuwait

20

594.525.185

 

Israel

104

580.651.499

 

Yemen

11

575.662.866

 

Bahrain

2

141.002.200

 

Lebanon

5

136.747.729

 

Syria

11

125.087.801

 

CIS Countries

2.495

61.162.429.455

47,26%

Russian Federation

1152

28.712.996.366

 

Turkmenistan

521

13.308.010.613

 

Kazakhstan

278

8.806.637.835

 

Azerbaijan

184

3.956.800.230

 

Ukraine

126

2.388.762.552

 

Uzbekistan

75

1.650.921.096

 

Georgia

73

961.616.894

 

Kyrgyzstan

29

437.204.500

 

Tajikistan

27

419.197.342

 

Belarus

15

407.569.890

 

Moldova

14

106.182.137

 

Armenia

1

6.530.000

 

African Countries

532

24.662.098.199

19,06%

Libya

347

18.291.149.050

 

Algeria

85

2.147.881.326

 

Morocco

21

1.236.255.280

 

Sudan

28

1.171.012.138

 

Tunisia

7

712.125.959

 

Egypt

24

557.527.485

 

Ethiopia

5

246.307.906

 

Nigeria

1

128.000.000

 

Ghana

3

42.749.994

 

Mali

2

39.555.305

 

Cameroon

1

25.800.000

 

Guinea

2

25.037.150

 

Sierra Leone

1

24.200.000

 

Kenya

1

12.300.000

 

Djibouti

3

1.457.071

 

Gambia

1

739.535

 

Asian Countries

273

3.648.594.761

2,82%

Afghanistan

228

1.875.388.242

 

Pakistan

33

1.556.686.264

 

India

6

112.055.000

 

Malaysia

3

58.661.758

 

Nepal

1

40.183.497

 

Philippines

1

5.270.000

 

Indonesia

1

350.000

 

European Countries

305

8.411.409.243

6,50%

Romania

143

3.541.174.165

 

Ireland

21

1.291.937.024

 

Bulgaria

28

1.137.242.933

 

Germany

39

744.812.785

 

Croatia

1

600.000.000

 

Macedonia

13

431.407.858

 

Albania

15

351.901.037

 

Poland

10

203.745.000

 

Latvia 

5

43.366.764

 

Bosnia Herzegovina

8

29.442.000

 

Lithuania

2

26.637.363

 

Greece

8

3.197.680

 

Belgium

1

2.780.000

 

France

8

2.682.634

 

England

1

890.000

 

Finland

1

116.000

 

Denmark

1

76.000

 

American Countries

33

906.682.959

0,70%

USA

31

856.057.959

 

Chile

1

48.000.000

 

Mexico 

1

2.625.000

 

Other Countries

60

387.618.152

0,30%

TRNC

60

387.618.152

 

Grand Total

4.580

129.406.142.439

100%

 

Source: Undersecretariat of Foreign Trade

 


 

 

Distribution of the Projects Undertaken in 2008 by Sectors

Sectors

Number of Projects

Project Value ($)

Share

BUILDING

316

10.664.907.742

45,0%

TRANSPORTATION

70

4.736.296.077

20,0%

INDUSTRY

83

4.777.114.389

20,2%

HYDRAULIC WORKS

14

1.546.004.255

6,5%

INFRASTRUCTURE

52

1.817.513.166

7,7%

OTHER

28

143.395.747

0,6%

 

 

 

 

 

 

 

 

 

 

 

 

Detailed Breakdown

 

Sub Sectors

Project Value ($)

Share

BUILDING

Military Facilities

130.303.980

0,6%

Hospitals

1.210.156.624

5,1%

Administrative Buildings

420.546.267

1,8%

Residence

3.915.507.428

16,5%

Socio-Cultural Facilities

2.565.405.800

10,8%

Commercial Centers

2.075.713.530

8,8%

Tourism Facilities

347.274.113

1,5%

TRANSPORTATION

Airports

1.551.771.358

6,6%

Roads/Bridges/Tunnels

2.164.743.234

9,1%

Ports

1.019.781.485

4,3%

INDUSTRY

Depots-Warehouses

48.987.981

0,2%

Energy

1.591.080.251

6,7%

Factories

1.498.408.417

6,3%

Communications

224.036.440

0,9%

Power Plants

1.414.601.300

6,0%

HYDRAULIC WORKS

Dams

689.679.613

2,9%

Irrigation Systems

856.324.642

3,6%

INFRASTRUCTURE

Waste Water

16.005.791

0,1%

Potable Water

52.970.209

0,2%

Urban Infrastructure

1.748.537.166

7,4%

OTHER

Provision of Staff

44.312.949

0,2%

Other

99.082.798

0,4%

Source: Undersecretariat of Foreign Trade

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