DEİK Turkey-Italy Business Council - A Win/Win Framework Developing Defence Industry Relations Between Italy and Turkey

An Exclusive Interview with DEİK/Turkey-Italy Business Council Chairman Zeynep BODUR OKYAY

Issue 88

Defence Turkey: DEİK/Turkey-Italy Business Council was established with the agreement signed with Confindustria in Rome on June 14, 1990, and since then has been carrying out studies to improve Turkish-Italian economic and commercial relations. Can we start our conversation with your assessment of DEİK/Turkey-Italy Business Council’s organizational structure and its role in the development of trade relations between the two countries over the last 18 years?

Zeynep BODUR OKYAY: Both Italy and Turkey are two regional powers who share a common history and values, and partnership relations between them goes back many years. Good relations in the political sphere also is demonstrated in the trade scene. Our trade relations with Italy entered an upward trend in the 2000s, and in general terms, this increase has continued to accelerate since 2003. In 2017, Italy became the 6th largest export destination for Turkey.

Since its establishment, the Turkey-Italy Business Council has been carrying out various activities to advance trade ties between the two countries, raise awareness about joint investment opportunities, address the problems of Italian companies already established in Turkey and pave the way for new investments in order to raise Turkish companies’ awareness about the Italian market. Within the Business Council, there are companies which have investments and commercial relations with Italy. Together with our companies within the Council, we hold consultations on how we can use our experience in the Italian market to create new collaborations. As a result of these consultation meetings, over the years, we tried to create platforms both in Italy and Turkey where the business people of the two countries could come together and we continue to work in this direction. We consider SMEs as the driving force behind the economies of both countries and we have made it one of our goals to strengthen this force with new collaborations.

Defence Turkey: What can you tell us about the completed and planned DEİK/Turkey-Italy Business Council events in 2018? 

Zeynep BODUR OKYAY: As the Turkey-Italy Business Council, we organize a wide variety of events from meetings with limited participation, where the large investor companies can come together around the same table and discuss what needs to be done to improve trade, and including small meetings, in which SMEs in various sectors conduct bilateral meetings and share information on commercial legislation of the two countries, or major business forums. While focusing on regional and sectoral cooperation meetings, we also continue to work on establishing cooperation in third countries. When organizing these events, we collaborate with various business and public institutions.

Last year, we organized meetings for the infrastructure, health and energy sectors. We organized business committees for the health sector in Bologna and the energy sector in Milan. In these events, we had very valuable cooperation with the Italian Trade Association (ICE), diplomatic mission representatives in both countries and our counterpart Confindustria. In addition, we organized consultation meetings on establishing cooperation in the African market. In this context, I would like to emphasize the importance of the cooperation agreement signed by Italian SACE and Turkish Eximbank last year. As Chairman of the Turkey-Italy Business Council, I believe that this agreement will provide great convenience both in mutual investments as well as investments in third countries.

Defence Turkey: Can you share some information about the trade volume between Turkey and Italy, the number of Italian or Italian-invested companies in Turkey, if any, the number of Italian companies active in the defence sector in Turkey, financial value of the direct investments made by Italian investors to Turkey and the number of Turkish companies currently operating in Italy?

Zeynep BODUR OKYAY: The volume of trade in 2017 increased by 22% compared to the previous year and reached US$ 20 billion. In addition, the data of the first 6 months of 2018 achieved 14% more growth compared to the same period in 2017. While our trade volume is increasing, I hope that our mutual investments will increase in terms of variety and volume in the coming period.

At present, Italy is the 5th largest foreign investor operating in Turkey. According to the data of Central Bank of the Republic of Turkey (CBRT), between the years of 2005-2017, the amount of Italian Foreign Direct Investment (FDI) in our country has reached US$ 2,143 billion. In 2017, Italy ranked 11th with a figure of US$ 124 million and had a 1.7% share within the US$ 7.44 billion worth of foreign direct investment in Turkey. According to the data based on the first 5 months of 2018, the amount of foreign direct investment from Italy to Turkey realized was US$ 56 million. Italian companies in Turkey seem to focus mainly on food, apparel, chemical products, electrical-electronics, machinery manufacturing, furniture, iron-steel and automotive in the industrial sector; while focusing on trade, tourism, communication, banking and investment financing in the service sector.

Italy’s prominent and major companies have representative offices in Turkey. Some of the important ones among these are Telecom Italia Mobile (Avea), Fiat, Iveco, Chicco, Merloni, De Longhi, Magnetti Marelli, Pirelli, Ermenogildo Zegna, Astaldi, Trevi, Caltagirone Group (Çimentaş), Banca Intesa, Banca di Roma, Instituto Bancario, Assicurazioni Generali, Barilla Alimentare (Filiz Gıda), Menarini International, Omron Electronics, Inelli Plastik, Scavolini and Veneta Cucina.

According to the data of the Central Bank of the Republic of Turkey, between the years 2005-2017, the amount of Turkish Foreign Direct Investment in Italy was around US$ 276 million. Italy ranked 15th with a figure of US$27 million and a 0.8% share within Turkey’s US$3.18 billion worth of total direct investment in 2017. In the first 5 months of 2018, the amount of Turkish investments in Italy reached US$ 7 million.

Companies registered in Turkey, have more than 50 affiliates or subsidiaries in Italy. Especially in Northern Italy, there are many businesses run by Turkish citizens. However, these enterprises are smaller in size than the enterprises in other European countries. Recently, many Turkish companies have started to purchase companies and brands in Italy. Consumer electronics producer Dikom, bath brand ISVEA, ceramic manufacturers Edilcuoghi, Edilgres and Campani, shoe manufacturer Lumberjack, 150-year-old chocolate producer Pernigotti, design company Bertone, and Capri Palas and San Clemente hotels in the tourism area are among Italian companies recently purchased by Turkish entrepreneurs.

While the revealed data in terms of investments are satisfactory, what’s more significant is that Italy and Turkey have economic structures that are complementary to each other. Therefore, we are aware that there is much more to be done in terms of both mutual investments and trade relations. I would also like to emphasize that Italian companies have recently started to cooperate with Turkish companies in third-country markets, particularly in Central Asia.

Defence Turkey: Does DEİK/Turkey-Italy Business Council conduct studies in the field of the defence industry? If so, can you illustrate some of your activities in this area?

Zeynep BODUR OKYAY: Turkey-Italy Business Council envisages to improve and deepen the relations of the two countries with a 360-degree perspective in accordance with DEİK’s purpose. Without any sector distinction we consider it our duty to support all companies that wish to evaluate mutual investment opportunities and help them in their time of need. Looking back, we have come a long way. Today, Italy is one of the most important supporters of Turkey in the European Union. Defence and aerospace is an important sector in terms of relations between the two countries. During the visit of our President to Italy at the beginning of this year, one of the important names in the delegation was the Minister of Defence.

Defence Turkey: One of the commercial cooperation areas between the two countries is the defence industry. The T129 ATAK Helicopter, GÖKTÜRK-I Satellite, MELTEM-III/ATR-72/600 Maritime Patrol Aircraft, Long-Range Air and Missile Defence System (UMBHFSS/GUMS) are the most important defence projects that first come to mind, projects that Turkey conducts with Italy. What kind of studies does DEİK/Turkey-Italy Business Council currently carry out for the defence industry, which constitutes an important joint trade area between the two countries? What kind of support and facilities do you provide to the Turkish and Italian companies operating or willing to operate in this field?

Zeynep BODUR OKYAY: Yes, the ones you have mentioned are some of the important defence and aerospace projects carried out between the two countries. Italy is the world’s 8th largest economy; one of the top 15 countries in defence and aerospace exports. It has strong brands and a strong industrial tradition. Turkey, in the last 15 years, has made significant progress, especially in defence and aerospace. While the global fellowships were progressing, we also focused on local and national projects. In Turkey and Italy, as in all over the world, the largest parties within this sector are the states. As a Business Council, we gather companies with public representatives at the right time and place, provide rapid communication, convey mutual requirements to parties and contribute to the development of relations within the framework of the win-win principle. On behalf of the private sector, we express our concerns regarding the obstacles and rigidities in the investment environment and follow the implementation of necessary measures.

Defence Turkey: We would like to thank you on behalf of our readers for your time and wish you continued success in your work