Turkish President Recep Tayyip Erdoğan will pay a one-day official visit to Ukraine on Feb. 3. The agenda is long and comprehensive. With host Ukrainian President Volodymyr Zelensky, they will preside over the meeting of the high-level Strategic Cooperation Council between the two countries, who are strategic partners. Thereafter, they will address business people at the Turkey-Ukraine Business Forum, which shall be held in Kyiv and attended by both leaders of the two countries, for the first time in 10 years.
Relations between Ukraine and Turkey are in their best period in history, and indeed, there are still many jobs that can be done and a long process of progress that can be achieved.
When we have a look at the names who shall attend the negotiations on Ukraine’s side, it is that the fields such as energy, economy, trade, defense, infrastructure, tourism are on the agenda and these areas are already among the strategic priorities of Ukraine’s leadership.
Ukraine is undergoing a splendid change, transformation following the Euromaidan Revolution, which prompted President Viktor Yanukovych to flee power.
Despite the complaints raised from time to time regarding the sufficiency of the speed of transformation, the changes can be perceived easily in infrastructure and the mentality of people. After the EuroMaidan, more structural reforms have been achieved than those made in the first 23 years of independence. In the last six months, the speed, scope, and depth of structural reforms have gathered pace in, what is called the “turbo regime” as it is expressed by Zelensky, who has been elected by the highest majority of votes in Ukraine’s history and whose party has obtained an absolute majority in parliament.
The swift change is undeniable. Zelensky, backed by unprecedented public support, is a person who knows the public and problems of the country well. He has been prioritized investing in the improvement of the country’s infrastructure such as roads, bridges, airports, ports to reach where the population public interacts with the state and digitalization of the state which shall decrease bureaucracy, which constrains structuring areas of corruption.
In Ukraine, it is targeted to make infrastructure investment in the amount of $25 billion in the forthcoming five years, and it is not possible to reach the targets without foreign investment. Credits are needed by international financial institutions as well as by bilateral agreements and contributions of the private sector. At the beginning of the week, Roads 2020 Forum, first in its field, has been held very successfully by the attendance of Prime Minister Oleksiy Honcharuk, Infrastructure Minister Vladyslav Krykliy Ukravdator general manager Oleksandr Kurbakov, and 500 local and international participants. The forum is a platform where the speakers have shared the targets transparently and have answered questions of participants devoutly, and thereby, infrastructure thrust has been started thereby.
In the last 20 years, Turkey has made huge investments and achieved developments in physical infrastructure and digitalization of state services. By e-state applications, access to public services by citizens has facilitated and also, the tax basis has expanded and thereby, the state has attained the means of investment, by which it can make larger investments. As a matter of fact, developments in these areas have had an impact on the increase of Turkey in the World Bank’s “Ease of Doing Business Index.”.
And, in infrastructure and engineering services, Turkey is a star country in the international arena. Just by the Public-Private Partnership Model, it has realized more than 200 infrastructure projects, with a total amount more than $150 billion in 20 years.
Among the largest 250 international contracting companies in the world, there are 44 Turkish companies. Turkish construction companies have completed many constructions in Ukraine, among which there are hundreds, thousands of miles of roads, transportation bridges, airports, stadiums, five-star hotels, which have reached a total project volume of $7 billion.
The motto “Turks build better roads” is common among senior officials of the state as well among the public. And, with this trust, the Turkish construction companies have contributed to the construction of Ukraine’s infrastructure in good quality for 15 years, have a share. Therefore, in this visit, it may also be discussed that the Turkish construction companies should play wider role in the infrastructure sector by their know-how, machine equipment means, capital and operating experience.
On the economy front, the government has set high growth targets in Ukraine. Reaching these targets may only be possible by attracting direct foreign capital in high amount. For this purpose, great importance is attached to improvement of the business environment and investment climate. Guarantees are given to domestic and foreign new investors and efforts are put for resolution of current problems.
Turkish capital in Ukraine is reaching the amount of $3.5 billion, approximately and one-third of this amount has entered the country in the last five years. Renewable energy has become the most popular sector for Turkish investors recently. In renewable energy, Turkish companies have made investments in excess of $200 million in the last two years only and investments made in this sector have also played a catalyst role for the investment of Turkish companies in other sectors, in Ukraine.
However, the concerns that new laws and regulations in this field may also have implications retrospectively or that, in started investments, rules of the game may be changed when the ball is in the game; have stooped the investments in this field generally. Decisions to be taken in the field of renewable energy shall have impacts, in excess of the sector, on the investment environment of the foreign investors, among which there are Turks, in the country and on their trust in the state’s commitment.
Tourism is another important topic that may be discussed at the visit. Since 2011, it is possible to travel without a visa between the two countries; after 2017, citizens of Ukraine and Turkey can visit each other with identity cards only. I remember the year 2004, the year when I have first come to Kyiv; Turkish Airlines did not have even a daily flight to Kyiv.
Today, the Turkish and Ukrainian airway companies have more than 200 mutual flights in a week and Turkish Airlines has ranked the second airway company which used Ukrainian air space, after Ukraine International Airlines, the flag carrier airway company of Ukraine.
Turkey ranks sixth among the countries which host the highest number of tourists in the world and the number of Ukrainian tourists who visited Turkey exceeded 1.5 million in 2019 and approximately 300,000 Turkish citizens have visited Ukraine. These are wonderful numbers, on the other hand, Ukraine, as a country that determined tourism as one of the sectors with priority, undoubtedly needs the experience, know-how of Turkey in this field and of course investments of Turkish companies.
Antalya, the largest five stars hotel region in the world today, has reached its current situation by the incentives granted by the state for tourism investments beginning from 1985. While Ukraine is starting a tourism thrust, in the forthcoming period, we will witness investments in Ukraine by Turkish hotel investors, operators, however, it is important to provide, by the state, investment incentives, convenient investment environment for domestic and foreign investors in the tourism sector.
In the last five years, Ukraine could not achieve significant progress in privatization, but this year, it is projected to privatize almost 500 companies. And, at least 1,500 state enterprises, the total number of which reached 3,600 in Ukraine, will have been privatized in few years in the forthcoming term, and this is one the largest privatization waves in the last decades, not only in the region but in the world as well. Turkey has gained privatization and concession income in the amount of $60 billion in the last 20 years. Turkish companies have become experienced in this field. Turkish companies will be interested in privatization in Turkey, ranging from the ports, airports, to privatization tenders. As a matter of fact, the director of the State Property Fund will make a presentation at the business forum.
And, when it comes to the free trade agreement, two separate meetings have been held between the negotiation delegations of the two countries before the visit. It is out of the question that Taras Kachka, the new trade representative of Ukraine who chaired the Ukrainian delegation in these negotiations, has contributed in a positive direction to the negotiation process.
It should be accepted that there are topics, regarding which both countries have sensitivities; however, when we look at the big picture, the free trade agreement will have such a huge impact on bilateral trade and investments, that the time lost up until now, is, unfortunately, a big loss for the business communities of both countries and for the wealth of the nations.
In this era, which we depict as a golden age, the fact that the trade volume, which reached $8 billion in 2008, has got stuck in the range of $4 to $5 billion in recent years. This is not acceptable.
We mentioned that Zelenskyy calls the current period the “turbo regime” of fast changes.
Honcharuk met representatives of the Turkish business community in the official visit of Zelensky in August in Istanbul before the new government was established and before becoming a cabinet member, said a priority is the completion of the Turkey-Ukraine Free Trade Agreement. On this visit by Erdogan, signatures will be achieved at the level of trade and economy ministers, before the final phase of signatures at the highest level. The goal of $10 billion in bilateral trade annually is not a dream, but a free-trade agreement is essential to achieving this aim.
Zelinsky is admired in Turkey because of his warm attitude to the public and the value he gives investors. His interest in Turkey, the Turkish business community and the rapid development of Turkey gives confidence and encourages Turkish investors. It is a reality that personal harmony between the leaders of the countries, contributes to the relations of the countries. They have started a warm sincere relation with Erdoğan, a leader who attaches importance to personal relations. There is no reason for not to reach a higher level in the economic relations of Turkey and Ukraine in the upcoming period.
While the registration process is continuing, the number of business people who have enrolled business forum to be held at the Ukraine Chamber of Industry and Commerce attended by both leaders has exceeded 800 in just a few days and this has made the forum may be the largest business forum in its field in Ukraine and is a good proof that the Turkish and Ukrainian business communities are ready for greater targets.
Burak Pehlivan is the chairman of the board of the International Turkish-Ukrainian Business Association.
