The Development of Economic Relations Between Turkey and The Netherlands

Although macroeconomic indicators of Turkey and The Netherlands differ from each other to some extent, both countries also have some similar characteristics. Turkey and The Netherlands can be considered as two countries which are strategically located along the boundary lines of Europe, one in the East and the other in the West. This gives them a unique position as being a distribution hub between Europe and other surrounding regions. However, the two countries have not yet been able to create a synergy from the advantages of their geopolitical locations and trading activities together.

Turkey has become a very attractive country for foreign investors in the last 5 years. Total FDI in Turkey between 2005 - 2007 has reached approximately $52 billion level. At the same period, The Netherlands provided the highest amount of FDI with $11.3 billion. As of March 2008, there were a total of 1,428 Dutch origin companies operating in Turkey. Dutch companies such as Philips, Unilever, Shell and ABN AMRO have decades of long presence in Turkey. In fact Philips started operations in Turkey back in 1930 under the name Türk Philips Ltd. As of June 2008, the total amount of Turkish investments in the Netherlands has reached $3.9 billion level.

The breakdown of Dutch companies in Turkey points out that “real estate and construction” (22% of total) is the most prominent sector for Dutch investments in Turkey. Large Dutch developers such as Corio, Redevco and Multi Turkmall are either undertaking new commercial projects or acquiring local companies and real estate in Turkey. Furthermore, there are a lot of smaller sized Dutch origin companies which are specialized in the construction and marketing of residential projects in resort regions. Wholesale and retail trade (11%), tourism & catering (8%), transport & communications (7%), machinery & metal/plastic processing (8%), textile & ready-to-wear (7%) and IT-media publishing & education (6%) are other popular sectors for Dutch origin companies in Turkey. 53% of all Dutch origin companies in Turkey are located in Istanbul and 35% are located in Antalya, Mugla, İzmir and Ankara. On the other hand, the breakdown of Turkish companies in The Netherlands points out that “financial services and banking” is the largest sector for Turkish investments. Major Turkish banks in The Netherlands can be listed as Koçbank, Garanti Bankası, Yapı Kredi Bankası, Demir-Halk Bank, Dışbank, Ziraat Bankası, İş Bankası and Akbank.

As mentioned above, despite geographic size, The Netherlands is one of the most important economies in Europe due to its unique role in international trade activities. The Netherlands is considered as the main port for entering the Europe and a major logistics center for the EU countries. Many foreign investors perceive The Netherlands as a distribution center for entering the European market. One of the similarities between Turkish and Dutch economies, is the fact that exports make up a considerable amount of the total GNP in both countries. In The Netherlands exports constitute almost 60% of the GNP making the country vulnerable to global economic volatilities.

Economic and trade relations between Turkey and The Netherlands started some 400 years ago. In the Ottoman era the economic relations between the two countries were based solely on the trade activities. Following the foundation of the Turkish Republic, Turkish – Dutch Foundation was established in 1934 in order to promote trade and economic relations between the two countries. In the years ahead various trade and economic agreements were signed between the two countries.

As of 2007, The Netherlands has a very strong economy with GDP per capita at $ 38,754 and a growth rate of 3.5%. Total GDP in The Netherlands is EUR 789.1 billion and the inflation rate is only 1.3% as of 2007. As of the same period the country has a trade surplus of $ 66.5 billion. Although main export and import items in The Netherlands are pretty much the same, re export is the driving force behind the trade surplus. However, in Turkey’s case, most of the export items depend heavily on imported raw materials and intermediary goods. Therefore Turkish economy is facing a widening trade deficit hovering around $ 46 billion as of 2007. The development of economic relations between the two countries is encouraging as the trade volume is constantly rising since 2002 and Turkey has a trade surplus in economic relations since 2004. As of 2007, Turkey’s exports to The Netherlands were EUR 2.2 billion and imports from The Netherlands were EUR 1,9 billion.

As far as the tourism sector is concerned, Turkey continues to be one of the most popular travel destinations for Dutch tourists. The total number of tourists coming from The Netherlands to Turkey in 2007 was 1,053,669. Due the increase in trade and passenger traffic with Western Europe, the demand for transportation services has increased and Dutch enterprises such as Den Hartogh and Corendon have established local subsidiaries in Turkey. Telecommunication and IT sectors in Turkey are also attractive for Dutch investors since Turkey offers valuable opportunities with its large consumer base and qualified technical staff in these areas. As a result, firms operating in these branches including GreenCat, TopTel and BitBrains consider Turkey as a location for their investments abroad.

Turkey and The Netherlands do not have any major political conflicts and the political relations between the two countries have been very consistent for years supporting a favourable trade and investment environment between the countries. The mutual understanding between the two countries on global balance of forces helps to build a partnership on political fronts. In this context, The Netherlands continues to be well aware of the geopolitical location and influence of Turkey in the region.

Turkey and The Netherlands have much to share in common from regional security to global trade and investment activities. The presence of Turkish community (approximately 380,000 people) in The Netherlands and presence of a considerable amount of Dutch visitors in Turkey each year, put another emphasis on the importance of partnership between the two countries. The trade volume between the two countries that currently stands around of EUR 4.1 billion should be increased since The Netherlands remains to be one of the important markets for Turkish exporters and the share of exports to The Netherlands remains relatively low among Turkey’s export markets. Current breakdown of goods and services exported to The Netherlands also points out that Turkish exporters should work harder to diversify their export items to The Netherlands. On the other hand, Turkish and Dutch firms still have many new areas for investments in both countries as investment climate between the two countries remains supportive and investor sentiment is high.

  

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