OVER THE BORDER

Turkey 2013 | ECONOMY | B2B: TRADE WITH IRAQ

Following the economic downturn in Europe, Turkey has looked increasingly to countries like Iraq as alternative export destinations.

Fulvio Villa
FULVIO VILLA
Turkey General Manager
GEFCO
EmIn Taha
EMIN TAHA
Chairman
Taha Kargo

How did the company get started in Turkey?

FULVIO VILLA Over a decade ago, the situation in Turkey was obviously different from how it is now. It was a big gamble at the time, but luckily we won. When we came originally, it was because of our main clients. Then, as now, we try to follow our clients wherever they go. We try to be at their service in as many countries as we can. The company is 75% owned by RZD and 25% by Peugeot. At that time, it was 100% Peugeot, and we wanted to come and be at the service of Peugeot as the importer of Citroën in the country. It was a good start, and developed a lot of other competencies, which were linked to the group. This is why we came here originally, and we have stayed because of the opportunity that the country offers.

EMİN TAHA When I came to Turkey, I was a trader. However, I was unable to find any logistics companies with a good employee base or the right experience, structure, and organization. I sensed there was a gap, and I decided to fill it because I couldn't rely on any company with which to undertake commercial and financial services in the Middle East, especially between Turkey and Iraq. This was 1994, and it was the time of UN-imposed sanctions, so you couldn't export anything to Iraq without UN permission. You had to apply to the Turkish Consulate, which forwarded your application to the Iraq embargo commission at the UN in New York. One permit could take weeks or even months. At that time, there weren't any companies that specialized in getting those permits. I decided to open my own company that would specialize in trade with Iraq. I started in Northern Iraq and then moved into the south and west of the country. We essentially facilitate trade by providing everything from logistics to trade finance for Iraqi traders who want to import goods via Turkey.

What significance does Iraq hold for Turkey in trade terms?

FV Today, there are two gates to the Iraqi market. One is the UAE, and the other is Turkey, specifically Mersin. Mersin and other ports like Iskenderun are very important for the Iraqi market. Iraq is currently attracting a lot of interest and importing many goods. As this is what we do, it is perfect for us. Iraq is just at the beginning of its market growth. It is in need of reconstruction as a country, so at the moment you have a lot of goods being transported there just to be consumed. In time, however, there will be a shift to the next step, which is production and an attempt to diversify from the oil sector. We will soon see machine and industrial parts being shipped there to be reassembled.

ET When I first started out, many Turkish companies were apprehensive about exporting to Iraq; they weren't sure they would receive their payments. I reassured them that they would be paid and I facilitated this. Today, we have become a leader of Turkish-Iraqi trade over the last 20 years. Trade between Turkey and Iraq has grown immensely since I started this business in 1994. Back then the total amount of trade would have been $500 million maximum. Now, it is almost $11 billion. That is phenomenal growth. Iraq is now Turkey's second largest trading partner after Germany. I used to have just 10 or 12 Iraqi customers, now we have 15,000. My customers can be divided into three categories: small merchants, medium businesses, and big businesses. The small merchants come to Turkey with between $10,000 and $50,000, at most $100,000. More than $100,000 and up to $500,000 are the mid-level businesses, and above that are the big customers.

What is your vision for the future?

FV We are one of the leaders in the automobile market with 14% of the market, placing us around number four in the rankings. Competition is important though, and it keeps us constantly developing and bettering ourselves. We think that we play a role in making the market better by forcing our competitors to improve, too. We want to expand in Turkey, but we do not want to open more agencies. We have sufficient coverage currently, but our existing agencies can grow.

ET We would like to open depot offices in industrial zones and offer high-quality services in Turkish cities. Turkey aims to raise exports to $500 billion, and we want to get a large portion of that. We would like to open more offices in Iraq as well. We have also opened a construction and tourism company as well.