Turkish construction firms search for new foreign markets after year of loss
Turkey’s construction firms have clinched record-high deals abroad and obtained considerable know-how and experience in realizing top-tier projects. Thanks to such crucial projects, Turkish construction firms recently ranked second on the list of national companies undertaking construction projects abroad, just behind Chinese companies.
However, a number of key problems within Turkey and in its key markets have reversed this rosy picture.
The sector declared 2016 a “dark year,” closing with $10.1 billion revenue in foreign projects. This figure was its lowest since 2004, according to data from a leading sector association.
The sector, which has undertaken a total of 8,830 projects worth $335 billion abroad since 1972, reached its peak in 2013, making $30.1 billion from its foreign projects.
The sector has started to lose its momentum abroad due to escalating security concerns in some of its key markets, such as Libya, and Turkey’s crisis with its main market, Russia.
Russia, Turkmenistan, Libya, Iraq and Kazakhstan had been the largest markets for Turkey, but they were replaced by Qatar, Uzbekistan, Bahrain, the United Arab Emirates and Kuwait in 2016, according to a recent report by the Turkish Contractors’ Association (TMB).
The oil plunge has also hit construction projects in some of Turkey’s main markets, as they have had to postpone such projects until oil prices increase once more.
Turkish companies have been engaged in strong efforts to diversify their construction markets and regain their original markets, but it does not seem to be easy for them to overcome their recent losses.
Most importantly, they need a strong recovery in Turkey’s international politics. Libya, Iraq and Russia had over 35 percent of the share in Turkey’s foreign construction projects since the 1970s, according to TMB data. However, Turkish companies have barely been able to undertake new projects in Russia since November 2015 after the jet crisis, despite the recent normalization in bilateral ties. Even some construction firms have yet to acquire their compensation due to their losses in Libya after the turmoil hit the country. The ups and downs in Turkey’s bilateral relations with Iraq, the ongoing oil slump and Iraq’s budgetary problems amid the escalating terror threat also slashed the number of construction projects there.
The TMB report noted that some companies have turned their focus to Sub-Saharan countries, but the commodity plunge has also negatively affected these countries, as they have also postponed their construction projects.
Like some key sectors, such as the tourism sector, the foreign construction sector is directly influenced by any country’s relations with other countries. A solid recovery in Turkey’s ties with some key countries, as well as some easing in energy markets, will help construction companies utilize their rich know-how and experiences and thus boost their business abroad once more.