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From www.halaljournal.com Country in Focus
Indeed. The statement sums up the positive sentiments about Turkey, looking at ongoing as well as potential changes across various facets of life, from governance to social administration. But of all the changes, it is the expected progress in Turkey’s economic sectors and trade policies that will be of utmost interest to investors and businesses. For a start, Turkey’s gross domestic product (GDP) growth in 2004 was more than 8% up on the year before, a rate that no country in the EU came close to matching. As ever, the caveat is in inflation, which hit 11.4% for 2004. Having signed a three-year stand-by agreement with the International Monetary Fund (IMF) last May, Ankara is expected to continue with tight fiscal policy and state-bank restructuring. Turkey has brought its government debt level closer to Europe’s while moving to privatise state-owned monopolies. It has shrunk government spending by USD4.5 billion a year while sending farm incomes plummeting. Turkey’s pursuit of a place in the EU has set in motion changes and reforms that have made this country of 70 million a more market-oriented economy, putting new pressures on Western Europe as it ties its fortunes closer to global trade. Declining agriculture sector For decades, Turkey’s fertile soil and hardworking farmers made the country one of the few in the world that was self-sufficient in terms of food. Its climate and adequate rainfall made possible a wide range of crops. But as the country shifted its emphasis to industrialisation, agriculture’s share in overall income has fallen progressively, slipping steadily from almost 50% of GDP in 1950 before it stabilised at around 15%. On one hand, despite the stagnant, if not declining, sectoral performance, agriculture remains an important part of foreign trade. Turkey enjoys a comparative advantage in exports of cereals, pulses, industrial crops, sugar, nuts, fruits, vegetables, olive oil and livestock products. Agriculture also continues to provide one-third of employment. On the other hand, with an aggressive drive to promote manufacturing and services sectors – at times, at the expense of agriculture – Turkey has over the years opened a window of opportunity for greater agricultural and food imports. In fact, between 1990 and 2001, Turkey’s relative food prices fell by 20% in comparison to the overall consumer price index. This odd phenomenon – at a time when Turkey had to battle rapid inflation – may have to do with more open trade policies pertaining to agricultural and food imports. Barring a setback in policy reform, this could augur well for demand of both food as well as processed, value-added products. Yet, despite the promising start, traders must not overlook the fact that much of Turkey’s import ban is still in place, effectively closing off a lucrative market to international exporters, particularly in meat and livestock segments. A confusing and ever-changing system of agricultural support, tariffs and others barriers to trade continues to dampen exports to Turkey. And even with changes underway in preparing Turkey’s admission into the EU, the largely protectionist farming practices within the continent itself and the multiple layers of bureaucracy that are at work will mean that meaningful changes in Turkey are going to be slower than desired. Processed food In the short to medium-term, opportunities lie in consumer-oriented processed food products. This is, of course, not an easy market, given that Turkey produces abundant agricultural commodities, has a fairly advanced processing sector and its consumers traditionally prefer fresh food. Still, opportunities exist in retail food, as well as in the hotel and food services sectors. As with most countries, a good local partner and shipping agent can often help new suppliers through a sometimes cumbersome regulatory process. Supermarkets have recently become popular venues, thanks to major investments and joint ventures between Turkish and European entrepreneurs. There are now more than 50 hypermarket and supermarket players in Turkey, including home-grown Migros and foreign-owned Carrefour and Champion SA of France. The customer base for these stores is middle- to upper-income shoppers who live in urban areas. They are familiar with modern-style foods and are drawn to specialty as well as ready-to-serve items. For Turkey to capitalise on its vast agricultural resources and to open more doors in reaching new markets, the republic can also make use of Halal certification expertise provided by countries that are way ahead in the area. This is an area worth exploring, considering Turkey’s history. At the insistence of the charismatic founder of the republic, General Mustafa Kemal who was subsequently referred to as Ataturk or “father of the Turks”, Turkey practises secular laws rather than Islamic laws. Due to tight controls over religion, for years, Turkey was, ironically, seen as more European than Islamic in eyes of the Muslim world. Turkey admitted this problem as much when in November 2005, Ankara reportedly started a process of designating foods and meat Halal. When questions were raised about the need for such a designation in a country that is almost 100% Muslim, the government’s explanation was that it would open doors to foreign markets. Kenan Malatyali, chief of the Turkish Institute for Standards (TSE), said some form of designation similar to that pioneered by Malaysia will “help increase exports”. Moving forward, expertise and services in Halal certification and procedures from Malaysia may prove useful in shoring up consumer confidence and the “religious credentials” that are needed for Turkey’s products, when it comes to reaching out to the Organisation of Islamic Conference (OIC) markets. In the long run, Turkey’s admission into the EU, should it materialise, will be more than just fulfilling the Turks’ decade-long wish. It will serve to succeed where the predecessor of Turkey, the Ottoman empire in the mid-19th century, failed. Back then, the empire introduced a series of reforms known as tanzimat, or reorganisations. These were modelled on European ideas about things such as property rights, education and taxes, and were meant to help the ailing empire’s economy catch up with its peers in the west. But the tanzimat did not get very far, and by the 1870s the empire was infamously described as “the sick man of Europe”. Over the years, many Turks have quoted this with perverse pride – they may have been sick, but at least they were part of Europe. Today, as Turkey gears up for reform again in preparation for EU’s entry talks, it may yet finally become a healthy, attractive man of Europe, with Islamic characteristics and elements of modernity fused beautifully in this country that, incidentally, is situated between the West and Asia. © Copyright 2006 by halaljournal.com |
