World Bulletin/News Desk
An ailing Egyptian economy, hit further by an ongoing political impasse, now worries Turkish businesses among others who have long-running investment and trade relations with the North African country.
The Egyptian armed forces ousted Egypt's first democratically elected president, Mohammed Morsi, on Wednesday, fueling concerns of a deeper economic recession in the country. Turkish companies and trade unions doing business in Egypt met on Thursday to discuss the developments in the country, calling on political players to ease the tension before harming the economy further.
The North African country had already been struggling with budget problems since the January 2011 revolution that forced former President Hosni Mubarak to step down. Egypt's descent into even deeper political turmoil will almost certainly put a multi-billion dollar international bailout on hold and lead to an even more painful economic crisis, with worsening fuel shortages and higher prices of basic goods.
One of Turkey's leading trade partners in the region, Egypt hosts 250 Turkish companies with an estimated investment of $2 billion. Turkish investments in Egypt are mostly focused on the construction and textile sectors along with food and infrastructure. Around 60,000 Egyptians are employed by Turkish entrepreneurs within Egypt. Turkey sold $1.59 billion worth of products to Egypt last year.
Most Turkish businesses in Egypt have reservations regarding the upcoming period of uncertainties while others are optimistic that things will return to normal faster than expected. The Foreign Economic Relations Board's (DEİK) Zuhal Mansfield was in the optimistic camp on Thursday.
Evaluating the latest developments, Mansfield said Turkish businesses are determined to maintain and even make new investments in Egypt, underlining that the country remained a critical door to African markets. “I can easily say that Turkish companies have learned how to survive under similar conditions. … We ourselves faced coups in Turkey and the key here is not to panic but continue working hard,” she asserted. Mansfield opts to encourage Turkish firms to maintain market shares in Egypt even though the cost of investing in Egypt could be a headache for many in the near future.
Observers argue that increasing fuel shortages and blackouts and a sudden and sharp depreciation of the currency could make everything relatively more expensive. Add to this list of higher costs employee salaries. Furthermore, a depletion of foreign currency reserves could make importing critical oil and food items into Egypt difficult, affecting Turkish exports to this part of the world. Mansfield notes that mutual trade volume between Turkey and Egypt reached $5.2 billion in 2012, a figure which the Turkish government and ousted Egyptian President Morsi had earlier pledged to increase to $7 billion.
According to representatives of textile producers -- one of the two major trade items with Egypt -- there is a threat of foreign buyers canceling textile products orders from Egypt. İstanbul Ready-to-Wear and Apparel Exporters Association (İHKİB) President Hikmet Tanrıverdi said in İstanbul on Thursday that large customers of textile produced in Egypt, such as the EU and the US, could cancel or delay their orders due to the current political developments.
Another union that has members doing business in Egypt is the İstanbul Chamber of Commerce (İTO). The union's head, İbrahim Çağlar, in a written statement on Thursday elaborated on moves to help minimize losses for Turkish businesses in Egypt. Underlining that Turkey and Egypt have long-running trade and political relations, Çağlar said they would also consult with the Turkish government and Egyptian local authorities to help ease tensions that pose a risk for investments.
The army enjoys a unique role in Egypt's economic life; it has de facto control on 87 percent of Egyptian soil according to the laws. All civil projects and investments in this realm are monitored and approved by the armed forces. The army itself is active in a number of investment fields from energy and food to electronics and heavy industry. Army personnel are among those employed in army facilities.Güncelleme Tarihi: 05 Temmuz 2013, 10:01