FTA opens doors for wider markets for both Turkey and Korea

Turkish Ambassador Mustafa Saribas during interview with The AsiaN (Photo: Kim, Nam-ju)

Interview with the Turkish Ambassador to Korea Mustafa Naci Saribas

Turkey and Korea embark on the first steps of a strategic partnership as a free trade agreement came in effect on May 1, 2013. In a recent interview with The AsiaN at the Turkish Embassy in Seoul, Amb. Saribas shares about Turkey’s economic achievements.

Saribas has served as a diplomat in Islamabad, New York, Brussels, Washington D.C. and Doha. He came to Seoul as the ambassador in June 2011 directly from Vienna, Austria, where he worked for 2 years at the OSCE (Organization for Security and Cooperation in Europe) as ambassador and permanent representative. Saribas enjoys listening to music, reading and playing tennis in his free time. He is married and has one son.

Turkey is receiving attention as a post-BRICS nation. What do you think the reason for this is?

Turkey had an economic crisis at the beginning of 2000 and thus has taken very strict measures since. For the last 9 to 10 years, we have seen steady growth in our economy. In order to have this economic growth, we have taken some structural changes and have also applied very tight fiscal policy. The very strictly implemented economic program has enabled Turkey to have a growth rate of 9% in 2010 and 9.6% in 2011. We were second after China in the world. And the average of our economic growth in the last ten years is around 5.6%.

While Europe, the United States and other economies of the world were facing economic problems, Turkey has been performing very well. And, as of today, Turkey is the 16^th largest economy in the world and 6^th largest in Europe. And our economic and political stability has led foreign investment in Turkey to amount to over 110 billion dollars for the last five to six years. So, while the world economy was facing a shortage of foreign investment, Turkey was able to receive a good amount due to its economic stability. And according to some reports prepared by the IMF and Economic Intelligence Unit, Turkey is expected to receive about 111 to 114 billion dollars of foreign direct investment in the 5 years between 2012 and 2016.

The investment system in Turkey is very liberal with many incentives for investors. We have introduced a new investment incentive program last June and we are now starting to pick up the fruits of this program. Some benefits of the program include tax reductions and free or very low price land acquisitions. There is no difference between a local investor and foreign investor. Turkey is divided into several regions and sectors, approximately five to six and tax reductions and other policies are calculated depending on the region and the sector invested in.

However, even though Korea has approximately 160 billion dollars of investment in the world, Korea is only investing 1 billion dollars in Turkey. So, I want to increase this number.

When talking about foreign investment, Turkey is a strategic place, located in the center of the Balkans, Europe, Russia, the Caucasus, Central Asia, and the Middle East and North Africa. Within 3-4 hours by plane, you can reach 56 countries. Turkey has the city of Istanbul, which unites Asia and Europe. Thus, Korean investors can invest in the Turkish market, which is very big and lively one of 75 million people, as well as the nearby region. Turkey has a very young and active population with half of the people below 30 years old.

We have very skilled labor and our unemployment rate is 9%, which is lower than the European Union unemployment figures. So, you could say Turkey is enjoying good economic figures. Our debt ration to GDP is around 30%, which is much better than the Maastricht’s criteria of public debt not exceeding 60% of the GDP.

Turkey is also doing very well in tourism. Turkey is receiving 32 million tourists a year. But, unfortunately only 150,000 are from Korea. We are the number 6 tourist destination in terms of number of tourists and number 9 in touristic revenue.

For the last 10 years, great economic reform has taken place under Prime Minister Erdogan’s term. How do you evaluate these reforms?

Economic and political stability has led to foreign investment and the creation of new jobs, which has helped the economy to grow at an average rate of 5% in the past ten years. Our fiscal policy and social security system has led to less unemployment. Turkey’s economic figures have been impressive, especially when the world was going through an economic recession. We have taken measures at the beginning of 2000 and have been implementing polices such as the banking system very seriously. I would say this is the secret behind Turkey’s economic success.

The Korea-Turkey FTA has now gone into effect. What expectations does Turkey have of Korea?

The free trade agreement between Turkey and Korea came into effect on the May 1. We have concluded it in a very short period of time and I am very happy about this because I give a lot of importance to this agreement. Not only will it be another way of strengthening our economic cooperation, but relation as “blood brothers.” Turkey calls only Korea, no other country, blood brother. Last year, when the former President Lee Myung-bak visited Turkey, our two countries updated our relations to the level of a “strategic partnership” in addition to blood brothers. I see this strategic partnership as the economic and commercial pillars of our relations.

Turkey and Korea’s trade volume is 7 billion dollars. 6.5 billion dollars are Korea’s exports to Turkey. So, Turkey’s trade exports to Korea are very small: only 500 million dollars. I believe that within 2~3 years, the trade volume between Turkey and Korea will increase to 10 billion dollars. While this trade volume increases, I also expect that Turkey’s exportation to Korea will also increase because trade is a two-way street. If only one lane of the street is in action and if there is no return, it cannot be sustainable.

The agreement that came into place on May 1 only covers trading goods. The investment and services part will start to be negotiated this July and according to the articles of this agreement, we have to finalize it within one year. The settling of the second agreement will provide an avenue for more opportunities for Korea to increase investments in Turkey and Turkish businessmen to invest in Korea.

The FTA between Turkey and Korea is very important as it is the only FTA Turkey has with any country in Asia. It will be a stepping stone for Turkish producers and businessmen to jump from Korea to the region. And, of course it will be an instrument for Korean businessmen and producers to jump from Turkey to Europe, Russia, the Caucasus, Central Asia, the Middle East and North Africa. So, the FTA will work for the benefit of both brotherly countries. Turkey has 19 free trade agreements and is negotiating with 21 countries and 5 country groups like ASEAN.

Please tell us about the presence of Korean firms in Turkey.

Hyundai has a car factory in Turkey and the capacity is around 120,000 cars. Now, we have decided to increase it to 200,000 cars. Some of these cars are sold domestically and others are exported to nearby regions. Hyundai was the best seller car in Turkey in 2012. Last year, Posco made an investment in Turkey for stainless steel. They will produce stainless steel and give it to the Hyundai factory, where it will used to make cars. There are more than 200 Korean firms in Turkey. And of course, Hyundai, LG, Samsung, Posco, GS, and SK are very well known and have a high reputation in Turkey. In addition to Gangnam style, Korean technology is well recognized and received in Turkey. Because we consider Korea very different from other countries, Korea has an advantage in Turkey to sell its products. There is a sympathy and special feelings for Korea in the minds and hearts of Turkish people and it shows from the sales figures. There are 3000 Koreans in Turkey and 2000 of them reside Istanbul.

Korea bid to construct Turkey’s second nuclear power plant project, but lost to Japan. Could you tell us more about the bidding background and how Japan succeeded in winning this bid?

Basically, Korea could not satisfy all Turkey’s requirements and therefore they lost the bid to Japan. The Korean companies asked for a guarantee from the Turkish government, but this is something we cannot provide. Also, I am told that the Korean companies are a little weak in project planning, especially when it comes to financing. This may have been another barrier for Korea to win the bid.

This year, the venue of the 2020 Olympics will be chosen. There is fierce competition between Turkey and Japan to host these Olympics. Please tell us why Turkey should host the 2020 Olympics.

Istanbul should host the 2020 Olympics because it will be the first time for Turkey to host the Olympics and Istanbul is a very special city: (1) it has a population of 14 million, (2) is the meeting point of two continents, (3) was the capital of the three great empires, Roman, Byzantine and Ottoman and (4) is in a great location connected to 56 countries in a matter of 3-4 hours. Not only is Istanbul a physical, but a cultural bridge including sports. We hope to receive Korea’s support in our bid to host the Olympics in 2020.

Turkey is a democratic model for Islamic countries. What are some reasons Turkey could succeed as a democratic nation?

In a nutshell, Turkey is willing to share its experience because although Turkey is a Muslim country, it has been a democracy since 1923. So, we are ready to share our experience with them and we are already sharing it. Every country has its own conditions. One suit cannot fit all. Turkey can be an inspiration, not a model for these countries. For example, we have provided our experience to countries going through the Arab Spring, such as Tunisia, Algeria, and Egypt. If they consult and when they consult, we respond to them. We have very close historic and cultural relations with them and share the same religion.

Amb. Mustafa Saribas at the Turkish Embassy (Photo: Kim, Nam-ju)

What are you and the embassy doing to make Turkey better known in Korea?

We are trying our best to introduce Turkey and the embassy in Korea culturally in addition to economically and politically. Culture attracts people very easily. You do not have to work for years on end. For example, look at what Psy has done for Korea. He has become one of the most famous people in the world. Everyone knows him. This is a big plus for Korea. I believe cultural activities are very important and it is our responsibility as the embassy to introduce our culture to Korea. Last year, we participated in the Yeosu Expo where we held several cultural activities such as folk dances, fashion shows, concerts, a military band parade, etc. We also held a road show last year and an exhibition of the emperors of Istanbul, which lasted 3 months in Seoul at the National Museum of Korea and 3 months in Busan. More than 150 pieces were displayed and some of them were displayed for the first time to the world. Due to Turkey and Korea’s special relationship, the Turkish government gave special permission for certain items to leave Turkey. Last year, the state theater of Turkey as well as some symphony orchestras also visited Korea and performed.

We are trying our best to take part in fairs here. For example, a couple of weeks ago, we participated in the Seoul Friendship Fair, which took place in front of the Seoul City Hall. The participants and visitors of the fair voted Turkey as the best booth. It was a victory for the Turkish Embassy to be chosen as the best booth considering that there were 50-60 countries participating in the fair. Being chosen by the participants as the number 1 booth gives us much encouragement to participate in future fairs and do more.

I am also visiting primary schools to tell children about Turkey and the relations between Turkey and Korea. As you know, Turkey participated in the Korean War. We sent 15,000 troops, third to the U.S. and the U.K, and we have lost more than 1,000 soldiers. We opened up and ran a school for children who lost their parents during the war from 1952 to 1966 and gave them shelter, food, and education. The name of the school was Ankara School and it was located in Suwon. I am grateful to the mayor of Suwon because even though the school does not exist anymore, he named the street next to the school, “Ankara Road” in memory of the school. We will soon open a park nearby the street named Ankara School Park. Culture is an instrument to let Koreans know about what Turkey had done during the Korean War. The middle age and elderly know, but the younger generations do not know.

How many Turkish are living in Korea and what are their occupations?

About 500-600 Turkish people are living in Korea. They are mainly students, scholars and small businessmen running restaurants. There are also a few engineers in the ship building industry.

What are some similarities between Turkey and Korea?

As you know, Turks migrated from Asia to Anatolia. Our origins are Asian. And in the Middle Ages, there was interaction between Turks and Koreans, which has been documented on stone tablets. Our relations did not start with the Korean War. The Korean War was just a step further to deepen our relations as blood brothers. Turkish and Korean are also in the same language basket, Ural-Altaic. Our grammar and sentence construction is exactly the same. So Turkish people can learn Korean in a very short period of time and they speak very well.

Another similarity is that we take our shoes off. No other Western country takes their shoes off. We also put an emphasis on giving respect to our elders and family members. We do anything for our families and I do not want this to change. I want the young generation to keep this tradition.