The IMAGE.UA magazine, March 2008

Ukraine-Turkey

TWO BIG COUNTRIES OF THE GREATER EUROPE

Interview by IMAGE.UA with Mr Erdogan Iscan, Ambassador of Turkey to Ukraine

How does the image of a country affect the investment attractiveness?

It is obvious that the business community requires long-term assurances for the security of their investments. The image of the country is a crucial determinant in terms of the perception of potential foreign investors. The image is made up of, among others, the durability of political stability, the existence of the supremacy of law and the effective functioning of the independent judiciary as well as the availability of easy procedures in establishing and maintaining business.

The first wave of foreign investors who arrived in early 1990s were encouraged by the enormous business opportunities. Nevertheless, the circumstances of that period had discouraging effects on many of the investors. Later, in view of the improving conditions, foreign investors continued to be attracted, though still with caution.

I am pleased to see improvements in the investment climate in Ukraine, but it is still hard to conclude that it is as favourable as it should be. The signing of the protocol concerning the admittance of Ukraine to the WTO as a member is a very promising development. Once it is ratified and Ukraine becomes a member of the WTO, it will have an accelerating impact on Ukraine’s integration into the world standards which will improve the country’s image.

Turkey is one of most important strategic investors for Ukraine. In which branches have the investment projects been most successfully realized?

Ukraine and Turkey are two sizable countries of wider Europe, sharing the Black Sea. Two states have common objectives and similar concerns regarding the future, especially in terms of the further integration into the European structures. Relations between our countries in all spheres have visibly intensified in the past couple of years. Our economic relations reflect what we may describe as the perfect political dialogue existing between the two states. While the regular exchange of visits at the high level outline the road map strengthening relations between the two countries, effective bilateral mechanisms have also emerged whereby experts maintain dialogue with a view to overcoming difficulties. The Inter-Governmental Turkish-Ukrainian Commission of Trade Economic Cooperation brings together the representatives of both state and private sector to elaborate joint positions. The last meeting of this Commission was held in Kyiv in March 2007.

It is also important to note that the negotiations for Free Trade Agreement (FTA) were launched in June 2007 in Ankara, before the realization of Ukraine’s membership to the WTO. We are hoping to conclude the FTA at an early convenience, which will definitely bolster economic relations between Ukraine and Turkey.

The volume of bilateral trade was about 1 billion Dollars in 2001, and it reached over 5 billion Dollars in 2007. During President Yushchenko’s visit to Turkey in June 2005, the target was set for 10 billion Dollars by 2010. We are getting close to the target set by the two Presidents. Turkey is Ukraine’s second largest export market after the Russian Federation. Ukraine’s exports to Turkey in 2007 amounted to close to 4 billion Dollars. The balance in trade is in favour of Ukraine.

On the other hand, Turkey leads in terms of investments. More than 400 Turkish companies operate in Ukraine. The actual volume of their investments has exceeded the threshold of 1 billion Dollars. Furthermore, the total value of the construction projects which have been undertaken by Turkish contractors is around 1 billion Dollars.

Tourism is another important field of cooperation. The number of Ukrainians who visited Turkey for tourism rose from 100,000 in 2001 to almost 600,000 in 2007. We aim to have 1 million tourists from Ukraine by 2010. Meanwhile, the number of Turkish tourists visiting Ukraine is negligible, due mostly to the unfavourable visa regime implemented by Ukraine. I can confidently assure you that, should issuing visas to Turkish citizens be facilitated, the number of Turkish tourists who would wish to visit Ukraine would rise sharply. The last meeting of the Turkey-Ukraine Joint Tourism Commission was held in Antalya, Turkey, in March  2007.

How would the EURO 2012 affect business relations between Ukraine and Turkey?

We congratulate Ukraine on winning the 2012 European Football Championship bid together with Poland. It is a great opportunity to upgrade the international image of the country as well as to tremendously improve the infrastructure. This will constitute further incentive both for the Ukrainian Government as well as foreign investors, including the Turkish investors, to intensify cooperation. Reliable Turkish companies have already started their inquiries with a view to taking part in this process. We have been assisting them to establish contacts with the relevant counterparts in Ukraine. On the other hand, it is for the Ukrainian Government to set as soon as possible the rules and the mechanisms under which the foreign investors may participate in the tenders.

Which company would you recommend as an example of successful business cooperation?

There are over 400 Turkish companies of different sizes that operate in Ukraine. Many large-scale companies successfully maintain their operations or have already completed outstanding projects. It is hard to name those many companies, but, a few may be cited with a view to giving an idea as regards the scope of their operations. In the service sector, we may refer to Astelit Life :)) which is originally a Turkish company, Turkcell. Its investments have already reached over $ 700 million. It is regarded as the fastest growing company in its field. Onur has successfully completed the Kyiv-Odesa highway. Now it is building other highways, including the one connecting Kyiv and Lviv. Dogus is building one of the bridges over the Dnipro River in Kyiv. It is also expanding its investments. Lastly it undertook a water purification project in Zaporozhia. Ulker has an exemplary factory in Kyiv producing food products. Its market share is expanding. The stadium that is constructed by Enka in Donetsk will be one of the most excellent in Europe. It is important also in view of preparations for EURO-2012. There are so many other outstanding projects in the field of construction, housing as well as hotels, which have been successfully completed in different parts of Ukraine by the Turkish companies.

What are the dynamics of the growth of Turkish investments in Ukraine?

Turkey is among the twenty largest economies in the world with a GNP of 400 billion Dollars. Turkish contractors have so far successfully completed over 3,000 projects in 67 countries across the four continents. Their total volume reached 78 billion Dollars as of 2006. Taking into account this potential as well as the strong political will, it is obvious that the actual status of economic relations between Turkey and Ukraine still falls short of the long-term potential. Fortunately, the impetus given by the increasing political will led to impressive progress in the recent years. Only in the last two years the total trade volume increased by almost 40 %. The common political will should also be reflected on the mutual investments.

Meanwhile, the experince of the Turkish companies indicate that improvements are required in the investment climate. This question seems to have two aspects.

The first aspect relates to the general problems which are common for all the investors including the Turkish ones. All foreign investors in Ukraine point to the imperfection of legal infrastructure, insufficient financial and legal guarantees as well as insecure conditions for conducting business. We note with satisfaction that reforms are under way and the prospective WTO membership will accelerate the reforms.

In addition to the general problems, Turkish investors also need to have a facilitated visa regime. The present regime has quite discouraging effects on the potential investors. It is extremely difficult to obtain Ukrainian visas for  Turkish citizens, while Ukrainian citizens can go to Turkey very easily on visas issued at the ports of entry upon arrival. The geopolitical ties as well as the promising perspectives between Turkey and Ukraine require establishing visa-free regime.

Turkey stands ready to abolish visas for Ukrainian citizens on a reciprocal basis. But it is understood that Ukraine considers visa-free regime a longer-term objective. Thus, we proposed to conclude a visa facilitation agreement which will envisage facilitation of issuing visas to Turkish citizens, particularly to business people in the short-term. In October 2007, negotiations were launched on concluding a visa facilitation agreement. The Ukrainian side is examining the draft text submitted by the Turkish side. The conclusion of the visa facilitation agreement will not only encourage business people to invest in Ukraine, but also the potential Turkish tourists to visit this beautiful country.

The goal of our edition is to form a positive international image of Ukraine, to present positive experience of investments and partnership. In your opinion is there a need today for such mass media as IMAGE.UA which is focusing on positive development trends of their country?

Definitely, we need opinion makers to help build the true image of Ukraine. All potential foreign business people first and foremost want to understand the circumstances prevailing in the country where they intend to invest. They obtain information from their respective embassies. Also, the reports by international institutions play a leading role. Additionally, national sources, official as well as civil, contribute to the making of the image. It goes without saying that, in view of the multiplicity of the sources, the credibility is measured on the basis of accuracy.

FROM THE PAST TO THE FUTURE

Message to IMAGE.UA readers by Mr Erdogan Iscan, Ambassador of Turkey to Ukraine

A fundamental task of a diplomat is to give the accurate picture of the country to which he or she is accredited. In order to fulfil this task adequately, in addition to own observations, one needs to establish proper contacts and have access to reliable sources, among which the media constitutes a highly significant one. I have been following with interest the IMAGE.UA since its first publication. It has been a prominent source for me in respect of drawing a true picture of Ukraine. I extend my sincere congratulations to IMAGE.UA for playing an important role in forming a positive image of Ukraine for the interested foreign political observers as well as for potential foreign investors.

As a Turkish diplomat, I had been profoundly curious and had a genuine desire to have an opportunity to represent my country in Ukraine. I feel lucky to have been given this privilege. Since I assumed my duties, I have had wonderful experiences. I have been observing the remarkably strong will of the people to transform the society and align it with contemporary norms and practices, despite considerable difficulties and obstacles. Obviously, it is not an easy task if you take into account that it has only been 17 years since Ukraine gained independence. The transformation process will have to continue with a view to integrating fully into the international structures. On the other hand, we must not lose sight of the tremendous achievements so far, in spite of the huge dimensions of the targets. One would fairly see the huge progress by comparing Ukraine 1991 and Ukraine 2008. There is every reason to rely on the highly sophisticated intellectual capacity of the Ukrainian people and remain optimistic about the bright future of this country.

The feelings of the Turkish people toward the Ukrainian people have always been friendly, despite the controversial history of the region that our peoples have had to share. They have influenced each other and thus certain common characteristics have emerged throughout history, which play an important role in shaping the future of our friendly cooperation.