Gulf Construction Online - Turks eye piece of reconstruction pie

Turkey

Turks eye piece of reconstruction pie

With an impressive portfolio of international projects behind it, Turkey's construction industry is now looking to new markets such as Iraq and Afghanistan.

01 September 2003

The construction sector has been one of the major contributors of growth in the Turkish economy.

With an average share of 6.5 per cent in terms of GNP (gross national product) and 6.9 per cent in terms of total employment, the industry holds a lot of promise for further growth.
The sector, which has diversified over the years, has also played a crucial role in building and enhancing Turkey's relations with other countries.
Turkey's construction industry, which has more than three decades of experience in executing international contracts, is now turning its attention towards Afghanistan and Iraq, where prospects for reconstruction seem bright.
Turkish firms have already completed some reconstruction work in Afghanistan, including the construction of office buildings, relaying of roads and tunnel works, that have earned them a reputation in the region. Following their successes, the firms wait for the suspension of hostilities in Iraq, to participate in the reconstruction of the nation, in partnership with firms from the US and the UK.

It was in the 70s that the major construction companies began prospecting for clients outside Turkey. This move was largely provoked by the slump in the local construction sector. Turkey's economic crises had dealt a severe blow, forcing them to focus on the emerging markets elsewhere for growth.
The discovery of oil in many of the Middle East and the North African countries made things easier as it heralded the creation of new cash-rich countries in the these regions, who were raring to grow.
Most Turkish firms, largely due to the country's proximity to these regions, were quick to tap the markets of Libya, Saudi Arabia and Iraq.
At one point of time the construction services carried out in Libya alone accounted for more than 50 per cent (up to 76 per cent during 70s) of overall international construction volume.
The situation however saw a slide by the late 80s down to 57 per cent as a result of delayed progress payments made by the Libyan government. The growth of the market continued till the late 80s and the early 90s.
By the 90s, the Russian Federation and the Commonwealth of Independent States (CIS) opened up its markets for construction activities. Turkish contractors, because of their linguistic and cultural similarities had a competitive advantage over firms from other geographical regions.
Turkey maintained an edge over the other EU countries for a while, purely on the basis of lower labour costs, but with the entry of Chinese and South Korean contracting firms, the advantage thinned out.
The economic crisis in the Russian Federation in August 1998 saw the suspension of construction activities in these markets also. Due to a lack of domestic financial resources, and a drop in the credibility of the Russian Federation, progress payments to the foreign contractors could not be made on time and most of the small Turkish contractors with sparse financial resources were pushed into bankruptcy.
The larger Turkish firms, however, stayed on in the market by cutting down on staff and slowing down the construction rate. These firms also managed to survive because of their experience in handling a similar situation in other markets. 'Delayed progress payments are not uncommon in the domestic construction market and the Turkish contractors are comparatively more experienced in dealing with its consequences,' says a spokesman for a leading Turkish construction firm.
It is quite impressive that the Turkish contracting companies have undertaken projects in 53 countries until now that are worth more than $48 billion in contracting value. The list includes Kazakhstan, Romania, Saudi Arabia, Azerbaijan, the Russian Federation, Uzbekistan, Germany, Bosnia-Herzegovina, Ireland, India, Morocco and Afghanistan.
Turkish construction and engineering firms are able to design, erect, build and operate almost all kinds of civil and industrial projects, such as dams, hydroelectric power plants, industrial plants, large scale petroleum and natural gas pipelines, thermal power plants, fertiliser plants, petrochemical complexes and refineries, motorways, tunnels, large housing projects, high-rise buildings, hotels and tourist resorts.