Turkey enters Far East via Japan

What is important, analysts argue, is applying the "Gateway Model" in Turkey's expansion into the Far East in terms of boosting economic ties with the region, in which Japan is a leading economy.

Turkey enters Far East via Japan
Scheduled to meet with Japanese Emperor Akihito this week in Tokyo, President Abdullah Gül will be the first Turkish president to pay an official visit to Japan, if the late President Turgut Özal's attendance at Emperor Akihito's enthronement 18 years ago, in November 1990, is not taken into consideration.

The presidential visit, from June 4-8, comes at a time when the Japan Credit Rating Agency (JCR) has issued a warning on Turkey, saying its "political and economic environment has turned more serious" in its latest "Sovereign Quarterly Review" report. The JCR rated the Turkish economy "BB- but stable" in its latest report, released in May, by downgrading it from "B+" to "BB-/Positive." The report listed several negative factors that needed to be watched: a closure case filed against the ruling party, a widening current account deficit, a falling consumer price index and rising inflation.

According to a copy of the quarterly report provided to Today's Zaman by JCR chief analyst Yoshihiko Tamura, Turkey was praised for positive factors such as improving macro indicators, its completion of International Monetary Fund (IMF)-backed programs, progress on reforms geared toward EU membership and the country's geopolitical importance. The JCR report notes the significance of the completion of the IMF programs and adds, "Despite a challenging external environment, the Turkish economy has continued to perform reasonably well, with its economic activity showing resilience and foreign direct investment [FDI] inflows staying buoyant."

It states Turkish authorities responded to turmoil in the global credit market and inflation by taking important steps to bring their economic program back on track. It especially singles out "the adoption of a social security reform as a major achievement that will contribute to long-term sustainability of public finances." It welcomes recent actions taken to strengthen tax administration, reform the energy sector and enhance the soundness of banking operations.

Gül's visit includes a host of meetings with Japanese officials and businessmen with whom Gül will be making a sales pitch for more direct investment in Turkey, which already stands at almost $7 billion from Japan. Foreign Trade Minister Kürşad Tüzmen and Economy Minister Mehmet Şimşek are also accompanying him. Gül will meet with CEOs of major Japanese corporations and talk with leaders of trade and commerce organizations.

What is important here, analysts argue, is applying the "Gateway Model" in Turkey's expansion into the Far East in terms of boosting economic ties with the region, in which Japan is a leading economy. It is obvious that Japanese carmakers establish their bases in Turkey to export more cars to Europe by using a customs union agreement between Turkey and the EU. Likewise Turkey can use its partnership with Japan to enhance its economic ties with the greater Far East region.

As it stands right now Turkish exports to Japan were only $247 million in 2007, a low figure if you look at the $3.7 billion in Japanese exports to Turkey last year. It is by and large very difficult for Turkish goods to enter into the market because of high costs associated with brand marketing and advertising in Japan. As a result not many Turkish products are known in Japan. What complicates export prospects is the difficulty encountered in standards in packaging and labeling. The bulk of Turkish exports come from food items, especially fish, amounting to $64 million in 2006.

Japan is also a funding source for major infrastructure projects in Turkey. The Japanese Bank for International Cooperation has provided $7.5 billion in loans since 1972. Over the last two decades, the extension of credit and loans has grown at unprecedented levels, with Japanese companies partnering in and providing funds for a number of technical projects. The Japanese government opened a Japan International Cooperation Agency (JICA) office in Ankara in 1995 to further relations with Turkey. Among major projects is the Marmaray Project, a 13.3-kilometer tunnel, part of which will run underneath the Bosporus.

President Gül's agenda includes increasing travel and tourism opportunities for the Japanese. He hopes the top-level visit will encourage more Japanese to spend their vacations in Turkey. About 17 million Japanese spend their holiday abroad every year; Turkey attracted only 170,000 of them last year even though Japan declared 2003 "The Year of Turkey" and organized more than 165 activities across Japan to commemorate the friendship between the two nations. The Turkish government is reciprocating by declaring 2010 "The Year of Japan." President Gül will extend an invitation to Emperor Akihito to lead ceremonies in Turkey that year.

Today's Zaman

Güncelleme Tarihi: 04 Haziran 2008, 08:15