Euronewsport Magazine reportage

Bora Can Yıldız, the Board Member of EID Construction

evaluated the market conditions in Middle East:

Turkey is in the big brother position

in the region.

Iraq is a growing market and Turkey gets significant shares from this market. Although it is a high-risk region, our proximity to the market and our cultural similarities determine the local people’s approach to us, our talented businessmen’ ability to solve problems ensure a sustainable and steady development which is free from political improvements.

Having been investing for many years in the market in which Koç Holding has entered recently, EID Construction is breaking grounds with the primary projects such as hospital projects deemed necessary by the Iraqi people. Highlighting that Iraq is the fastest growing markets of the world, Bora Can Yıldız, the Board Member of the company, shared his important experiences he gained in the region with our readers.

Your experiences on the market conditions of Iraq are really important for the businessmen who are interested in that region. Could you make a brief evaluation about the market?

There is a great need for infrastructure in Iraq. Considering that the war between Iran and Iraq started in 1979-1980, nothing has been done for the country’s sake for 8-9 years during the ongoing war. Thereafter, the country was completely destroyed at the end of the Gulf War. The southern Iraq was the region affected by the most. An embargo was imposed in the post-war era, which took approximately 10 years. Following the embargo, the Second Gulf War and American invasion as well as withdrawal of the military forces and abolishment of the national administration took place. Thereafter, the region suffered from the instability and sectarian tensions. The needs of the country were not met during this period of 30 years. Leaving the high level of needs in the market aside, we have to say that the market conditions are extremely challenging as well. When we started our operation in the region three years ago, ENKA was the only company there, beside us. There was only one plane to Basra in that period. However, THY has 7, Iraq Airlines has 3 planes flying to that direction now. Emirates has 7 flights as well. The number of flights was increased from 1 to 17 per week. We were there when both needs and risks were high. Especially safety was an important problem. However, we passed these hard phases.

Being a businessman carrying out operations in the southern region, how would you compare the Northern and Southern Iraq?
The northern Iraq is steadier than southern region. The northern region is way safer; however when we make a comparison between Baghdad and southern Iraq, I can say that southern region is safer.

The situation in Baghdad is very complicated; however, the southern population is completely shiite, there are no domestic turbulences. Yet, when we first got there, there were uncertainties as well. The reason why THY did not have any flights to that region was the safety problems. 

There is a general opinion stating that it has been in a better shape than the northern part for the last two years. 
It is not better than the northern region, however, better than Baghdad. For Turkey, the northern Iraq is way safer. There are local policemen and soldiers. You can easily go out there. When the ministers in Baghdad have me over, they do not let me go out after 10 o’clock even if they have their bodyguards escort me. Due to the risk of being kidnapped, you cannot hang out in suits. However, if you take the necessary precautions, it is an untouched and important market.

Did the political problems you have been going through recently affect the operations?
Yes, they slightly affected us. There is nothing official; however, I can say that there is a resistance against the Turkish companies.

Do you think this problem will be resolved?
Of course, it will. I think it will be resolved in the following years. The reason why we are loved there is that we have good relations with the people, because these people are our relatives in a way. I mean, the Turkish people, Iraqi people, Syrian people and Algerian people have lived together for many years. We have the same religion, same culture. We greet the same way while saying hello and good bye. The stand Turkey took during the wartime has created a great sympathy. For this reason, people love us so much. What I can say for the Southern Iraq is that I have witnessed the greatest hospitality there which I have never seen anywhere in the Arabia. Once the political tension is overcome, everything will be okay. Even if the politics change, the friendship remains. I think that the relationship between Turkey and Iraq will get worse, even if this situation continues for a few years. I cannot make any comments on politics; however the politicians change after a while. I am sure that the other politicians are not so hard on Turkey either. I think there is a tension between the present politicians. This will change one way or another. After all, the politicians have a limited period of office and political life according to the laws. I do not think these tensions will suddenly disappear right after the changes. There is an important question: Who is going to work there? There are some certain needs such as installation of a sewer system, construction of hospitals and schools. The electrical problems must be solved. People are dying because of high temperatures, lack of electricity. The Spanish, English, French or Italian people cannot carry out these operations. They cannot stand there. Chinese people cannot do it alone either. There is already a resistance against them as well. Even if it is a German or French company, it requires people to go out there, right to the site; and these people are Turkish people.
There are two ways to operate in the country. You can either take the project and do it yourself, or take it and have some other company do it; the latter applies to us. The local companies are not capable enough to carry out these operations. For this reason, one way or another, the Turkish people are needed on site. When I explain this situation to the people there, they acknowledge me to be right, because they are aware of the fact that we have been there for the last three years, we have provided bread for them, helped out the poor families, sent children to school, taken care of everything, done our job accurately, and therefore we have gained their sympathy despite of their formation in central units. We have always kept our promises. They see that we are right. They need job, and all these operations must be carried out. The businessmen must be exempted from politics no matter what has happened between the countries. You cannot tell a mother of a sick child that you could not build a hospital there because of the political tension. That hospital must be built. We are building four hospitals there now, and these constructions must be completed. Sometimes we experience some difficulties both geographically and in terms of safety. 

Are we politically in the right place to dominate in this region and to conduct business?

I cannot say anything about the governmental policies of Turkey. Politics and business are two different things. If you represent your country in the political arena, you have to make some sacrifices. They may not consider business at this point. I have nothing to say about it. The PM has a stand. They may not think like that there is a construction; it may have a negative influence on the customer. Turkey has leadership culture in the region. It is not a vision created only by our PM or minister of foreign affairs. It is the reality based on the historical grounds. When you are there, everyone says that they want to be in Istanbul, everyone watches Turkish TV shows, and everyone wants to be like Turkish people. Everyone asks why we have abandoned them, why we have not protected and supported them. It is the general idea in the country.  After Turkey had withdrawn from the region, there was only blood and tears as they say. After Turkey’s withdrawal from the regions including a considerable Turkish population, there has been nothing but tons of blood in Algeria, Syria, Iran, and Iraq. The geography we are talking about has 60% of the total petroleum reserves in the world, and has 40% of the total gas reserves as well. There are great mines under the ground. However, there is an unbelievable misery above the ground. There are so many interruptions. There are quite conflicts there. They say it is the heart of the Middle East. However, people are under fire there. What happens in the past should stay in the past. They may have stabbed us in the back, however we have to leave the past behind and be friends with those countries. Otherwise, we will be all alone. However, Turkey is really like a big brother for that region. Whoever I talk to and say that I am Turk, they ask me about the Turkish TV shows first, and then they say that they have Turkish relatives. When I attended to the World Economical Forum I said that luckily they did not admit us into the European Union. Thus, we got together with our relatives. We remember our own culture with them. We conduct business with them. Europe that did not let us in the Union is now trying to conduct business in those regions. How they are going to have the work done, even if they took the project? We were together with the CEO of a really important German company. The CEO of the Germany’s Central Bank had said: “Sirs, Turkey will be the financial center of the Europe for the next 10 years”. He told people to make their plans accordingly. The CEO of this company asked me what the source of Turkey’s power was. I told him that we were headed to Basra Desert then. You asked me that question with a young Turkish businessman next to you. We would go across Iraq and I could show you at least 100-200 more Turkish businessmen. You did not see any French or Italian businessman conducting such a business here. If you happened to visit Algeria, Libya, Turkmenistan and Kazakhstan, you would see Turkish businessmen all around. I explained him that the Turkish people are where the other people cannot go or walk in, and of course this bravery must be rewarded, as long as they do a decent job.

Do you have any other employees apart from those in Iraq?

We have projects in some other countries such as Kuwait and Qatar now. We signed an agreement with Libya. We established a joint company with the government. We worked with the government for a project worth $ 500 million. We made a deal, however, we could not finalize it because of the outbreak of war. However, we are negotiating again. We may revive the operations slowly.

Is it hard for you to conduct business in Northern Iraq?

We are focused on the southern region. 

Do you really have to make a choice between them?

Well, the current situation requires you to choose. I was together with the president of an important petroleum company. They said they had $ 3 billion worth investments in Northern Iraq, and they said that they wanted to invest in the southern region as well. They even proposed me to partner up. However, they stated that they were having hesitations since the laws were not steady yet. I mean, there is a possibility that we may be involved in the petroleum commitment business in the northern region; however, we are more focused on the southern Iraq for now.

What is your business volume there?
Our total volume is around $ 200 million. However, we aim at reaching $ 400 million in a few years.

Dunya Newspaper / EID Construction will create technology based projects in Southern Iraq

EID Construction intends to introduce technology to the region with its projects to be run in Southern Iraq in the upcoming period. Vice President Bora Can Yıldız said that they were engaged in ongoing business with the foreign investors within the field of oil pipelines, oil tanks and industrial facilities, Yıldız continued as follows: “We will focus on our industrial operations in the upcoming period. We will launch major projects, with which we can introduce technology to the region”.

Having been engaged in operations within many regions such as Jordan, Algeria, Libya, Sudan, Morocco, Dubai, Abu Dhabi and Kazakhstan up to this point, EID Construction continues to carry out projects in Southern Iraq as well. Stated that EID Construction was founded by three associated companies in order to conduct business in Middle East, Bora Can Yıldız, the Managing Partner and Vice President of EID Construction said: “We have been intensively operating in Southern Iraq for the last 4,5 years. First, we carried out two medium scaled projects in the Persian Gulf. We believed in the future of this region, we invested in the people here, we created employment opportunities. Although we had considerable opportunities in Turkey, we were still taking care of our businesses in that region. We even lost money in some of the businesses; however we kept our promises and earned the trust of the people here”. Stated that they were predicting they would double the number of the Turkish personnel, which is already over 500, by the end of the year, said: “The number of the Iraqi people employed by us is as high as the number of our Turkish employees. We will focus on our industrial operations in the upcoming period”.

Emphasized that they built an airport for the USA government, Bora Can Yıldız stated the following: “We finished and delivered the airport in a short period of time, in 11 months exactly. Thereafter, we started to construct two private hospitals, and awarded the contract to build a state hospital at the end of a tender process. We made some contacts with the oil companies over time. We have ongoing operations within the field of oil pipelines, oil tanks and industrial facilities, in particular”.

Bora Can Yıldız is at Big Project with "Young Turks" title

International respectable business magazine Big Project, gave publicity to Bora Can YILDIZ's success among region with the title of "Young Turks".

THE YOUNG TURKS

Ever since the GCC began its building boom back in the late 1990s and early 2000s, the region has become something of a honeypot for the global construction industry, with both the international giants and the regional minnows making a beeline for the cities of Dubai, Doha, Riyadh and Jeddah.

Following this surge in investments from the region’s governments, there have been the inevitable problems that crop up when the pace of construction reaches warp speed. When this culminated in the collapse of the residential market bubble and hundreds of delayed and ‘on-hold’ projects it became clear to the authorities that the old ways weren’t working any more.

Of course, we’ve since seen a sea-change in the way projects are undertaken, with increased government regulations and greater caution from both developers and contractors. And while the situation has undoubtedly improved, we still see occasional differences of opinion and conflicts that need legal recourse.

What most construction stakeholders put this down to is a lack of understanding between all parties. While they may speak the same language and share the same objectives, it’s often difficult for contractors and developers to relate to one another.

However, it now appears that there is a segment of contractors and construction companies that have noticed this gap and are rushing to fill it.

Having already snapped up some of the most prestigious mega-projects in the UAE, Turkish construction firms are well on their way to making themselves the preeminent force in the regional construction market.

A recent report published by a senior researcher at the International Institute of International Political Studies found that since the early 2000s, the relationship between Turkey and the Gulf states has improved significantly, with cooperation developed in a number of domains.

One of these domains is the construction industry, says Valeria Talbot, the senior researcher at ISPI who wrote the analysis.

With Turkey being the second largest exporter of construction in the world (after China), there has been a growing sense that the GCC could be the next major growth market for the Eurasian state.

“In an era of euro zone crisis and trade contraction with the European Union – which is the main Turkish trade partner and source of foreign direct investment – Middle Eastern markets represent a significant alternative for Turkey,” Talbot explains in her analysis.

“Trade volume with Gulf countries, and the Middle East in general, is expected to increase as economic and trade relations have great potential to be capitalised on, also taking into account the demographic growth that both Turkey and Saudi Arabia, the biggest market in the GCC, are experiencing.”

What has been noticeable is that the trade relationship between the GCC and Turkey is one that flows both ways, with $6.5 billion invested from the GCC into Turkey, with the UAE leading the way with 56% of the investment, a report by the Oxford Business Group has said, quoting the National Commercial Bank of Saudi Arabia.

Interestingly, Turkey’s investment into the GCC has arguably been more significant, with the UAE alone receiving $6 billion.

Leading this investment charge has been the construction sector, which has zeroed in on the huge number of infrastructure projects that are in various stages of development.

Bora Can Yildiz, president of EID Construction, tells Big Project ME that it’s no surprise that the GCC has emerged as one of Turkey’s main markets, given the long history between the country and the region.

“We have two faces, an Asian face – a Middle Eastern face – and we have a European face. We used to live together with our brothers for hundreds of years. So, for all Turkish companies, including construction, machinery, export, agriculture – whatever – the GCC is of big interest,” he explains.

“Although Turkey has a strong relationship with the European Union, we were not accepted in ‘the club’ in previous years and we were always on hold. This gave Turkey a chance to remember what it had forgotten before, a chance to turn back to its roots.

“So, we’ve grown our economic relations over the last two decades with the Middle East, and this has brought fresh and strong economic growth to Turkey,” Yildiz asserts.

The figures bear this out, with estimates showing that there are some 500 Turkish companies that have operated in Saudi Arabia, where in the first half of 2012 they worked on projects worth $12.1 billion. Meanwhile, in Qatar, by the end of last year, Turkish firms had carried out projects worth another $12 billion.

That’s not all. Now that work on the World Cup projects has begun, there has been significant interest from Turkish construction firms in the gas-rich Gulf state.

Projects estimated to be worth between $25 billion and $30 billion are up for grabs over the course of the next decade, the president of the Turkish Contractors Association (TCA) says.

“Considering Qatar’s share among Turkish contractors’ business volume has been around 5% for the past 40 years, according to an optimistic scenario, it is possible to estimate that Turkish contractors will undertake a total of $25 billion to $30 billion worth of business in the Qatari market,” Emin Sazak says.

As mentioned previously, Qatar was already an important market for Turkish contractors looking to expand their overseas presence, as evidenced by Qatar’s 5.2% share among the projects undertaken by Turkish contractors between 1972 and 2012.

However, by the end of 2012, the total value of Turkish contractors’ projects approached $1 billion, Sazak says.

Qatar’s infrastructure investment spending ahead of the FIFA World Cup in 2022, estimated by leading professional services group Deloitte to reach around $200 billion, has opened up new opportunities for other Turkish business people as well.

The Qatari government has already invited Turkish contractors to participate in the construction of a number of infrastructure, stadium and hotel projects planned for the giant international event.

“Frankly, the UAE, Qatar and Saudi Arabia are the most promising markets for us Turkish firms,” says Burak Kizilhan, the business development manager for AE Arma-Elektropanҫ, a Turkish MEP firm that has worked on a number of major projects in Dubai.

“We’re looking to be awarded mega-projects and for the last few years, only these countries have a lot of them. Apart from that, there are of course a number of Turkish companies who are active in Kuwait, Oman and Bahrain, but it is these (first) three countries that are the most important markets for us.”

Yildiz agrees with this and adds that from a personal point of view, moving to either Dubai or Doha made sense for his firm as it not only gave them access to the three major markets in the region, but also allowed them to set up a base from which they could target other expanding markets, such as Iraq and North Africa.

“We didn’t want to stay only in Turkey, we wanted to take our business outside. We had projects in Kazakhstan, Russia and recently, in Libya. But then we went to Basra City and we began to grow there. We now have $250 million worth of ongoing work in Iraq,” he explains.

“What we did in previous years was that we opened a contact office in Dubai and we did try to manage our relationships. We’re still doing that through our Dubai offices. It is a good base for us, because not only are there Middle Eastern companies (there), but also international companies that are working in the Middle East, they have their bases there. So it’s very easy to communicate and carry on the relationship with these countries, from Dubai.”

So what is that allows Turkish firms to succeed in the GCC? Both Yildiz and Kizilhan have strikingly similar theories on this.

“Actually, everybody asks me this question,” says Kizilhan. “First of all, it’s our culture. That is, Turkish and Middle Eastern culture. That’s important for the construction industry, where you’re dealing with manpower and not with computers,” he explains.

“The most important thing is that we can literally decide in seconds. We don’t deal with a lot of paper, we focus on the construction on the operation. We finish earlier than others and you can see examples of this all across the GCC.”

Yildiz points out that Turkey’s biggest natural resource is its pool of young, educated manpower that is ambitious and flexible enough to work in conditions that might phase older, more cautious competition.

“We have a very big body of educated manpower in Turkey, and this competitive environment of construction, and the international expertise gained after the 70s and 80s has taught Turkish firms to be competitive, to be fast and to work with a young organisation. When we brought this experience to the Middle East, it helped and it worked,” he asserts.

“Turkish people are more flexible than Europeans when it comes to tough, difficult conditions. It doesn’t make us afraid. In any part of the world that you go to, in the Middle East, in North Africa, in Mid-Asia, you’ll find Turkish companies and especially Turkish construction companies, because of their challenging, brave approach and their ability to adapt.”