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.”
