Turkey - High-Risk Overseas Ventures Will Take Toll As Turkish Contractors Lose Libya10 May 2011 • by Natalie Aster
Turkmenistan has topped the list of the largest overseas markets for Turkish contractors, followed by Libya, Russia and Iraq, according to a recent study by the Turkish Contractors Association. While Central Asia has traditionally been a sphere of operation for Turkish engineering and construction companies, Iraq - especially northern Iraq - is quickly becoming the new market of choice for Turkish contractors. This is a trend we believe will continue in the coming years as business relations take root - not dissimilar to the early experience of Turkish contractors in Central Asia two decades ago.
The countries cited by the report as being the largest for Turkish contractors highlight the Turkish industry's high appetite for risk - especially at smaller companies - when venturing overseas. In total, the Turkish companies booked US$20.3bn in projects overseas in 2010.
Favouring Frontier Markets
Overseas Orders Allocation, 2010, Total US$20.3bn
The loss of Libya, the second largest market in 2010 in terms of international orders will certainly have a negative impact on Turkish contractors' 2011 revenues. It will prompt diversification, and therefore we anticipate there will be an even greater focus on frontier markets like Iraq, but also a more active pursuit of contracts in Qatar and Russia, especially as the two countries prepare for sporting tournaments. The study further shows that infrastructure projects related to preparations for sporting events contributed a high share of orders, the third highest after highway and bridge construction and housing.
The cultural and ethnic ties Turkey shares with its neighbours in Central Asia and the South Caucasus have led to the strong presence of Turkish construction companies in the region for many years, hence Turkmenistan's strong showing at the top of the list. This started in the early 1990's, when Turkey was the first country to step in and seek commercial ties with the newly independent Central Asian states. While political tensions with the government of northern Iraq remain high, on a commercial level, ties between Turkish companies and the government of Kirkuk have been growing, laying the foundations for future cooperation.
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