Turkish business community in Ukraine is represented by over 1,100 companies and continues to expand even as the war is still going on. Ukraine and Turkey have successfully maintained bilateral trade at the pre-war level. The ratification of the Ukraine-Turkey Free Trade Agreement (FTA) by Ukraine’s parliament, the Verkhovna Rada is expected to pave the way to further rapid growth in bilateral trade and investment in Ukraine. Turkish businesses are also showing great interest and are already intensively working over the implementation of recovery and reconstruction projects in Ukraine, inter alia, with the engagement of third-country parties.
Burak Pehlivan, president of the Turkish-Ukrainian Business Association (TUİD) sat down with Ukrinform to talk about these and other projects, and the already achieved successes and prospects for bilateral economic cooperation between Ukraine and Turkey. The interview began with an online conversation on the streets of London, where Mr. Burak was on a working visit, continued in Ankara at the time the President of Ukraine Volodymyr Zelensky was in the Turkish capital for an official visit, and ended at the TUID office in Kyiv. Within a span of less than two weeks, Mr Pehlivan travelled 19,000 miles and visited 11 different countries, saying this high travelling speed and level of activity are what is required by today’s business environment.
IN 2024, TURKEY TOOK THE LEAD IN LAUNCHING NEW BUSINESSES IN UKRAINE
– What are the results of economic and trade cooperation between Ukraine and Turkey achieved this year and in 2024?
– Despite the war ongoing, Turkish-Ukrainian economic and trade relations retain their viability, dynamics, and progress. In 2024, 1,109 companies with foreign capital were launched in Ukraine. Approximately 20 percent of them were companies with Turkish capital. Last year, Turkey was at the top of the list of countries that had launched the highest number of businesses in Ukraine. As of this day, over 1,100 Turkish companies have their operations in Ukraine. Turkish investment in Ukraine has reached almost USD 5 billion. That being said, despite all the negative consequences of the war, despite difficult situation, difficult trials, interest in Ukraine from Turkey and Turkish businesses remains strong.
Turkey-Ukraine bilateral trade reached $7.5 billion in 2021, the last pre-war year. In 2022 and 2023, we maintained this average trade turnover between Turkey and Ukraine at $7.5 billion, despite a 30 percent decline in Ukrainian economy and export/import trade. In 2024, however, bilateral Turkish-Ukrainian trade fell down to $6.2 billion against the background of a decline in Ukraine’s national production capacity and exports to Turkey. That said, however, Turkish exports to Ukraine remained stable at approximately $3.5 billion.
If we look at the value of exports from Turkey to Ukraine, whose population currently amounts to 27-28 million, it is the same as the value of Turkish exports to Egypt, a country with a population of 117 million. Thus, Ukraine continues to be an important market for Turkish businesses. Looking at the bilateral trade structure, one can see that Turkey’s trade with Ukraine is quite balanced out. By this balance, I mean what we sell the most.
UKRAINIAN EXPORTS TO TURKEY ARE MADE MOSTLY OF AGRICULTURAL PRODUCE AND ROLLED METAL PRODUCTS
– What kind of products exactly?
– Iron and steel products account for 15 percent, and fruits and vegetables 8 percent, followed by petrochemical products. None of the products exported by Turkey to Ukraine exceeds 15 percent of total exports.
The reverse situation is with Ukraine’s exports to Turkey, with agricultural/food produce, iron ore and metals amounting to approximately 85-90 percent of the country’s total exports to Turkey.
In other words, Ukraine sells mainly agricultural produce, iron and steel to Turkey, which is excusable, given what Ukraine’s economy experienced during the war.
The third aspect of importance is contractual services. To date, Turkish contractors have executed over 300 projects exceeding $10.4 billion in Ukraine. These projects include the construction of an airport, a stadium, 5-star hotels, industrial facilities, thousands of kilometers of roads and highways, bridges, power plants, and hundreds of thousands of square meters of residential space in Ukraine.
Turkish contracting companies have completed about $1 billion worth of new projects and about $1 billion worth of ongoing projects over the wartime years. If you look at the overall picture, Ukraine ranks 12th worldwide by the amount of works awarded to Turkish contractors. The focus here is on our good bilateral relations, economic and political relations, geographical proximity, and the fact that 43 Turkish companies are in the Top List of 250 international contractors. Of all the international construction companies currently operating in Ukraine, only companies from Turkey continue being engaged in recovery and reconstruction projects in extremely challenging wartime conditions.
– What are your expectations for 2025? What are your expectations for after the war is over?
– Over the 33-year history of relations between our two countries, we have consistently developed them. Two wars, two revolutions, countless economic crises, the pandemic and various problems in Ukraine and Turkey have not disrupted this trajectory. Why? Because the economies of the two countries complement each other, support each other, the countries are strategic partners. Our geography and the Black Sea bring us closer to each other. Therefore, there is a natural partnership between the two countries in economic and commercial relations. Therefore, despite everything, this positive trend will continue into 2025. However, the change in the level and momentum of our economic relations is contingent on when and how the war ends. When we look at 2025, we definitely see an impact of geopolitical events related to the war, they will affect the tempo and extent of the growth. We must take this into account. But no matter what, the positive trend will still persist. Turkish investments, primarily in the energy sector, will continue to flow into Ukraine. Turkish companies have already invested over $300 million in Ukraine over the wartime years. This trend will progress. More Turkish companies will come to work in Ukraine in any event, and a balanced development process in bilateral trade will keep going.
However, in the event a ceasefire is achieved, with the terms and content of this ceasefire clearly agreed upon, this could give a significant boost to bilateral relations, trade, and investments, as well as the contribution Turkish businesses are making to recovery and reconstruction of Ukraine.
FREE TRADE AGREEMENT AS A “PIE”: WE NEED TO MAKE IT BIGGER RATHER THAN LOOK AT WHOSE SLICE IS LARGER
– You are perhaps aware of the current situation with the ratification by Ukraine of the Free Trade Agreement with Turkey?
– A Free Trade Agreement between Turkey and Ukraine began to be negotiated in 2007. This issue emerged on the agenda way back in 1998. So, we see that 26-27 years have passed by from 1998. This is a lengthy process. The agreement was signed as part of the most recent visit by our president to Ukraine on February 3, 2022, just three weeks before the war broke out. And today it is three years ago.
Turkey ratified the agreement in 2024. We are waiting for the ratification of the agreement by Ukraine.
We are continuously telling our Ukrainian friends that trade between Turkey and Ukraine should keep on growing. It is like one big pie. No matter who eats more, all that means is to make it bigger. This is where we are now. Look, the Free Trade Agreement is not in effect yet, but Turkey, for the first time in its foreign trade history, that is, in 33-34 years, recorded a trade surplus with Ukraine for 2024, unlike in previous years where the trade surplus was invariably enjoyed by Ukraine.
The signing of the agreement affects a very right direction in economic relations between the two countries. While being not that important, war termination, the achievement of a peace will also have their impact.
TURKISH INVESTMENTS IN UKRAINE’S ENERGY SECTOR AMOUNTED TO $600 MILLION AND WILL GROW FURTHER
– In which areas is cooperation most successful today?
– The Turkish and Ukrainian economies are complementing each other. In sectors such as means of transport, machinery and equipment, Turkey is sometimes the first, sometimes the second biggest exporter to Ukraine.
Another aspect of significance is that the renewable energy sector is becoming an ever-growing focus in Turkish-Ukrainian relations. Turkey is currently ranked among the world’s leaders in terms of the amount of investment in renewable energy.
Turkish companies account for eight percent of renewable energy generation in Ukraine. For the time being, Turkish investment in the energy sector has already hit approximately $600 million and will grow further to the point where over 10 percent of Ukraine’s renewable energy generation will be provided by Turkish companies.
Second, Russia is known to have targeted on Ukraine’s energy infrastructure and continues doing so. Some fifty percent of energy infrastructure in Ukraine have been destroyed — fully or partially, in one way or another. Nowadays, Turkey ranks perhaps first among the TOP-3 biggest suppliers of machinery, equipment, and materials, in particular transformers and cables to Ukraine’s energy sector. Ukraine also needed autonomous power generators, having imported at least $800 million worth of generators over the wartime. Again, more than half these generators come from Turkey, directly or indirectly, thus making Turkey one of the largest contributors to Ukraine’s energy security.
– Which areas do you think are profitable and effective to develop in the future?
– Cooperation will undoubtedly progress and grow further. As Turkish business community, we attach great importance to collaboration, especially with third countries, in the recovery and restoration effort in Ukraine, and particularly so as part of trilateral collaboration with other countries. What am I talking about? We are working on business models that bring together businesses and businessmen from three countries, for example, Turkey-Japan-Ukraine, Turkey-Sweden-Ukraine, Turkey-Poland-Ukraine, Turkey-South Korea-Ukraine and Turkey-USA-Ukraine. Why? Let’s say that Japan has financial capabilities and technologies, but Japanese companies are lacking experience operaring in a particular industry or under particular conditions. “Therefore, when Japanese capital, access to financing and technology are combined with the knowledge, experience and expertise, machinery and equipment capacity, and human resources of Turkish companies specializing in this field, a very strong synergy will occur.
Following this track, we held the trilateral Turkey-Ukraine-Japan Business Forum in 2023 and organized similar events in Istanbul with our friends from Finland last year. We brought together Finnish, Turkish and Ukrainian companies. Regarding cooperation with Ukraine, Finland also has advantages in technology, ease of access to finance. We have already said about the ability of Turks and Ukrainians to implement projects. We held the third trilateral meeting in a more limited group in Stockholm, at the Ministry of Foreign Affairs of Sweden, where we brought together Turkish, Swedish and Ukrainian companies.
Latest data suggests that Ukraine’s recovery and restoration needs have reached $524 billion. Classical methods and ideas are no longer sufficient to address the country’s recovery and reconstruction needs. Like I said above, we need new creative solutions in this regard. As Turkish business community, we are continuing work at the local level to put these solutions into practice.
– The President of Ukraine has recently paid a visit to Turkey. The matters discussed with the President of Turkey included economic cooperation among others. Has anything new been outlined in this area?
– President Zelensky’s visit once again highlighted the importance the economies of our two countries have for each other. As part of the visit, First Deputy Prime Minister – Minister of Economy of Ukraine Yulia Svyrydenko and Minister of Agrarian Policy and Food of Ukraine Vitaly Koval met in Ankara with almost 100 Turkish businessmen. This meeting was hosted by the Union of Chambers of Commerce and Commodity Exchanges of Turkey — one of the largest business associations not only in Turkey but also worldwide. The Minister of Trade of the Republic of Turkey Omer Bolat and the Minister of Agriculture and Forestry İbrahim Yumakli will visit Ukraine in the coming days, accompanied by a large business delegation. There is a strong desire and intention among businessmen of the two countries to cooperate and do business together. Actually, this is reflected in bilateral investments and trade. The high level of relations between the two countries, strategic partnership is an important factor of progress, development and business promotion, despite difficult challenges of all sorts. The earlies possible entry into force of the Free Trade Agreement between Ukraine and Turkey is going to provide a strong boost to the momentum of bilateral trade and investment.
Interviewed by Olha Budnyk, Ankara
Photo courtesy of TUID and via interviewer
Source: Burak Pehlivan, President of the Turkish-Ukrainian Business Association (TUID)
