Identifier
Created
Classification
Origin
06ADANA42
2006-02-23 10:21:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Consulate Adana
Cable title:  

TURKEY: SOME ENTREPRENEURSHIP EMERGING IN EASTERN MED ZONE

Tags:  ECON ETRD EFIN TU ADANA 
pdf how-to read a cable
This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 02 ADANA 000042 

SIPDIS

SENSITIVE

NOT FOR INTERNET DISTRIBUTION

E.O. 12958: N/A
TAGS: ECON ETRD EFIN TU ADANA
SUBJECT: TURKEY: SOME ENTREPRENEURSHIP EMERGING IN EASTERN MED ZONE

UNCLAS SECTION 01 OF 02 ADANA 000042

SIPDIS

SENSITIVE

NOT FOR INTERNET DISTRIBUTION

E.O. 12958: N/A
TAGS: ECON ETRD EFIN TU ADANA
SUBJECT: TURKEY: SOME ENTREPRENEURSHIP EMERGING IN EASTERN MED ZONE


1. (SBU) Summary: The adaptability of the business community
along Turkey's eastern Mediterranean coast to new opportunities
created by the changes and growth in Turkey's economy contrasts
with the rest of the region's traditional agricultural and
industrial communities. These coastal businesses are both more
entrepreneurial and more anxious to take advantage of the
region's location to build links with other countries in the
region. In visits to the Turkish-Arab Businessmen Association,
the Mersin Free Zone and discussions with Mersin shipping agents
we saw this new vision at work. End Summary.

--------------
TURAB LOOKS TO MIDDLE EAST FOR GROWTH
--------------


2. (U) TURAB (Turkish-Arab Businessmen Association) was
established in 2003 by a group of businessmen with the purpose
of promoting bilateral trade between Turkey and Arab countries,
and certain countries in Central Asia such as Turkmenistan,
Azerbaijan, Kazakhstan. They chose the port city of Mersin to
the west of Adana as TURAB's headquarters due to its central
position in the Middle East region and transportation
capabilities. The association plans to open branches in
Turkey's largest cities in 2006 and to establish a commercial
network that would speed up data exchange among members.
TURAB's President, Mehmet Hadra, told us he was counting on
increasing Turkish exports to the region of products like
automotives; durable goods; textiles and apparel; processed
food; organic food and vegetables; and construction materials.


3. (U) Association members doing business with Arab countries
explain that they export to the bulk of those countries through
L/C's (letter of credit) or EFT's based on CAD (Cash Against
Documents). They have only had payments problems with Algeria
and Sudan. They said that in some cases, most commonly with
Sudan and Algeria, they use "hawala" networks (informal transfer
outside the banking system). (Note: The use of such systems is
illegal in Turkey.End Note) Given Mersin's newly privatized
port facilities and the region's large land transport industry,
Hadra and his colleagues see potential for increasing transit
trade, including for U.S. companies, through Turkey to Iraq and
other countries in the region.

-------------- --

MERSIN FREE ZONE SEES PRIVATIZED PORT AS A BOON
-------------- --


4. (U) Mersin Port is indeed a port of growing importance in
the Mediterranean basin. Established on an area of 776.000 sqm,
the Mersin Free Zone (MFZ) started its activity in 1987 as the
first free zone of Turkey. The Port was recently "privatized"
(actually a long term management concession agreement) and is
now being run by a private Singaporean company that has plans to
make significant investments.


5. (U) Linked to the port is the Mersin Free Zone. Turkey's
free zones lost much of their attraction to investors when they
were stripped of some of their tax free status for income and
corporate taxes in 2005. Nonetheless, Edvar Mum, the General
Director of the zone's management company, MESBAS, says he is
optimistic. He believes that SME's from the EU are migrating to
the east, namely, Turkey and Romania. He is also counting on
the new port management to bring in more transshipment business
to Iraq, Egypt, and other countries in the region, as well as to
the Turkish hinterland. Mr. Mum said he hoped Mersin eventually
could challenge Alexandria's container transshipment business.
Furthermore, Mum hopes that some of the exemptions will be
restored. He said some AKP (Justice and Development Party) MP's
are preparing to present a proposal to the Turkish parliament
that extend the time restriction in tax exemption until 2019.
The zone's annual trade volume figure for 2004 was $2.7 million,
while it was around $2.0 million for 2005.

-------------- --------------
YUMURTALIK IS BECOMING REGIONAL SHIPBUILDING CENTER
-------------- --------------


6. (U) With an area of 4.5 million square meters, the Adana
Yumurtalik Free Trade Zone (TAYSEB) to Adana's east is one of
the largest free trade zones in Turkey and the first and only
Turkish free trade zone designed for heavy industry. With nearly
unlimited space and a solid supply of electricity, water and
communications infrastructure, TAYSEB provides opportunities for
E.O. 12958: N/
a wide variety of industrial and commercial busiess, including
heavy industry and transit operations.


7. (U) TAYSEB's manager, Muharrem Pusa, says that 18
companies are active in the zone, hree of which have made n
investment of about $40milio. ANK idusries owns a large
plot tht t hpe tous fo apetrochemical business whih t
hoes vetualycoul
be link to the growig Ceyhan energy hub.
He is most excited about a new $350 million shipyard project by
Turkish Hay Sipbuilding, which will create one of Turkey's
lagest shipyards. Expected to reach full capacity i 4 years,
it will be capable of building 12 ship per year. On completion
of the dockyard, Pusat expects an annual sales volume would be
around $1billion, compared to about $80 million in 2005.

--------------
REGIONAL SHIP REPAIR, REFIT BUSINESS
--------------


8. (U) Meanwhile, another shipyard project, in the Silifke
area near Mersin, was approved by the National Security Council
(MGK) in 1999 and allocated 425,000 square meters of land by the
Turkish Cabinet. In October 2003, a joint venture of the Mersin
Chamber of Shipping, Mersin Chamber of Industry and Commerce,
and Silifke Chamber of Industry and Commerce group called the
Ortak Girisim Grubu (MOGG) was awarded a 49-year BOT
(build-operate-transfer) contract for the port. However since
March 2004, when the opposition CHP won local municipal
elections, several lawsuits citing environmental concerns have
been filed against the project. If the legal disputes are
settled, this could become the first civilian dockyard to
service ships from Turkey as well as those from Syria, Lebanon,
Israel and Egypt, says Cihad Lokmanoglu, the President of the
Mersin Chamber of Shipping.

--------------
COMMENT: WELCOME ENTREPRENEURIALISM
--------------


9. (U) This positive outlook along the coast is an example of
how the improvements in Turkey's overall economy are being
reflected in the regions. It reflects the changing economic
base of this corner of Turkey, which is moving away from
traditional industry, such as textiles, and agriculture (fruits
and cotton),to a services-oriented economy. Many local
businesspeople see the region's future in bridging Turkey to the
Middle East. Transit business with northern Iraq holds
considerable potential in the medium term, while the longer term
depends on economic and political stability and development in
the neighborhood.
REID