Aug. 29, 2016

Mehmet Şimşek

Saudi Arabia

Mehmet Şimşek

Deputy Prime Minister, Turkey

Mehmet fiimflek, Deputy Prime Minister of Turkey, on Saudi Arabia's achievements, encouraging greater bilateral investment, and looking ahead to the future.


Mehmet Şimşek has been Deputy Prime Minister of Turkey since November 24, 2015. He previously served as the Minister of Finance (2009-15), one of the longest serving finance ministers of Turkey. He was elected to Parliament in 2007, 2011, and 2015 representing the Justice and Development Party (AK Party). Before entering politics, he worked for Merrill Lynch in London for seven years. From 1998 to 2000, he was a senior economist and bank analyst at Deutsche-Bender Securities in Istanbul. Earlier in his career, he worked for UBS Securities in New York (1997) and as a senior economist at the US Embassy in Ankara (1993-97).

The world economy is growing at a low pace though below potential. Only Saudi Arabia and Turkey have managed to deliver the commitment that G20 countries made in terms of achieving two percentage points higher growth by 2018. I am impressed by the improvement in the investment climate in Saudi Arabia and that is reflected in the kingdom's strong performance.

More recently, emerging markets have come under pressure. The Chinese economic slowdown is the single biggest threat and the slowdown is meaningful. That slowdown leads to significantly lower commodity prices and commodities exporters tend to suffer. Therefore, diversification becomes important and Saudi Arabia's work in diversifying its economy from hydrocarbons is extremely relevant.

As for Turkey, we have done well in the last decade. If you compare Turkey to other emerging markets (excluding China and India), Turkish GDP over the last decade has doubled in every single sense. We have created almost 7 million jobs and we have reduced poverty. Inflation is still high but in single digits. We have achieved a balanced budget last year at a year when we had two elections, which is quite a success. Finally, debt to GDP ratio is only 32% whereas in the EU is over 90% and 110% for OECD countries.

We have a comprehensive reform program and I think strong focus on structural reforms is the only way out for emerging markets. We have identified 25 transformation programs and are currently implementing them. We consider joining the European Union a positive step but it will not make a difference in our development plan if the joining did not take place. We are working on enhancing rights in Turkey and we aim to be the second strongest economy in Europe in the coming years particularly because we have a diversified economy.

We are working on enhancing the investment climate in Turkey. Saudis are now investing $15 billion in our country and they seek to double this amount in the near future. There are close to 800 Saudi companies investing in various economic sectors in Turkey. The major investment sectors are power, telecommunications, and real estate, with the former adding up to $6 billion investment. They are willing and ready to enhance and develop these investments. Saudi investors are welcome to approach Turkey instead of investing in Western countries. Also, Turkey can greatly contribute to Saudi Arabia's economic development. Saudi Arabia is today facing housing shortages. We were able to build 650,000 units in Turkey within six years. Turkey could provide up to 800,000 housing units in the kingdom within 10 years, if asked to participate in Saudi projects. We prefer to make agreements on government level to apply risk management. Turkey is willing to increase the level of investment in the kingdom, which currently stands at $30 billion.

Economic relations, trade, and investments between the two countries are improving but there is so much potential. Saudi Arabia is a great success story and so is Turkey. We are open for business and all we can do at the political level is to facilitate good business relations between the two nations but ultimately it is the business community that will make the difference.

In our part of the world, geopolitical risks are fairly significant. We were ignored previously in the region, but now we are working on enhancing our shared values, history, religion, and culture. There is pain in our region and we have clear policies that aim at ensuring stability in the region, part of which is not to intervene in the affairs of our neighboring countries. Our region is unfortunately going through tough period. Our geography is our destiny. We need to look decades ahead. However, it is noteworthy that today's EU, which is one of the most prosperous regions of the world, was built after World War II. So there is hope. We just need to work together; Saudi Arabia and Turkey have an excellent political relationship.