Page 96 - TURKRptJun19

but ultimately, all those operations are swelling the public debt and raising the cost of rolling it over, bringing closer the prospect that Turkey will have to go to the International Monetary Fund. The government’s mounting interest expenses eat into the budget shares of education and health care, foisting the burden of imprudent policies on taxpayers at the end of the day”. Sonmez also noted: “Moreover, there is already speculation that real estate stakes accumulated at the ‘sponge’ fund might be sold well below their value to some sub-funds close to the government. Thus, public losses might also turn into profits for certain cronies down the road.”
Approval processes for construction tenders won in Saudi Arabia by Turkish contractors now take longer than they used to, the head of the Turkish Contractors Association has said, referring to a change in attitude among officials in the wake of the row between Ankara and Riyadh over the Jamal Khashoggi consulate murder last October. “We feel the coldness when it comes to the relations with the government. An official process that previously took three months, now takes a year over there,” Mithat Yenigun was reported as saying by Reuters on May 16.
Last year, Turkish contractors registered $19.4bn of work abroad, with Russia accounting for 25% of those projects and Saudi Arabia 19%. At their peak, Turkish companies won around $30bn worth of international contracts a year in 2012 and 2013, according to the contractors association. Business declined as conflicts in Libya and Iraq meant less infrastructure work in those countries. Strained ties with Moscow affected business with Russia, though the past couple of years have seen Russia and Turkey strike up a warm relationship after resolving differences. Turkish contractors are second only to Chinese companies in terms of international contracts, according to the latest annual survey of the Engineering News Record (ENR). The Turkish Contractors Association says Turkish companies are presently targeting reaching an annual volume of $50bn of work with potential business in Africa, Russia, and Iraq, where they hope Ankara’s pledge of $5bn credit for reconstruction will boost business in building roads, highways, railways, Mosul airport, a hospital as well as some mosques and residential projects. At home, Turkey is in the midst of a biting recession and Turkish contractors, which for years rode high on a domestic economy furled by cheap credit and a big dependence on construction for growth, are struggling. Those that took out foreign currency loans are facing soaring debts because of the collapse in value of the Turkish lira which sank into a currency crisis last year. Yenigun also told Reuters that Chinese firms are eyeing partnerships with Turkish construction firms in Africa and are looking to take stakes in Turkish companies, saying: “They asked if we could sell stakes or cooperate. They want to partner up with us, they are very willing to work with us. They also have unlimited money. That is what we lack.” Yenigun was further cited as saying that Chinese firms, with a 10-15 year headstart in Africa, now see Turkish firms as potential rivals, but are also looking for opportunities for joint work in sub-Saharan countries. Turkish contractors had proved themselves in the region, Yenigun reportedly said, with large infrastructure projects which provide jobs by employing local workers during construction.
Some 300 Iranian nationals obtained Turkish citizenship under a “golden visa” scheme between last September and February this year, state-run news service Anadolu has reported. The scheme offers citizenship in exchange for a certain level of real estate investment. In September, the government cut the investment threshold from $1mn to $250,000. Since September, 1,276 foreign nationals from 63 countries have been granted golden visa citizenship, with Iranians constituting the largest group with 289. In the first quarter of this year, Iranians purchased 946 pieces of real estate in Turkey. That put them in the second place after Iraqis, who bought 1,782 properties. Also in the first three months of this year, property sales to foreign nationals hit a total of 9,618 units.
96 TURKEY Country Report June 2019 www.intellinews.com