Building on momentum, Turkey and Serbia look to boost trade
The free trade agreement signed between Turkey and Serbia looks to be paying off, as both sides benefit from increasing trade and positive expectations over economic relations.
By Erisa Dautaj Şenerdem for SES Türkiye in Istanbul -- 24/02/12
With European economies stagnating, one bright spot in Serbia's economic relations has been with Turkey, where near 8% economic growth and a large domestic market helped boost Serbian exports by 95% -- from $109.5m in 2010 to $213m in 2011.
Serbia's exports to Turkey have mostly increased in metallurgy, textile, food, automotive and agriculture sectors. [Reuters]
"Economic relations between Serbia and Turkey are currently at their peak," Aleksandar Medjedovic, the head of the Turkish Foreign Economic Relations Board's (DEİK) Turkey-Serbia business council, told SES Türkiye.
Meanwhile, Turkey's exports to Serbia increased 16% -- from $306.4m in 2010 to $355m -- last year, according to data by the Turkish Ministry of Economy.
"Looking at the figures, we can say that the free trade area agreement between Turkey and Serbia, which entered into force in September 1st 2010, has worked in favour of Serbia," Erhan Türbedar, a foreign trade policy analyst at the Turkey Economic Policies Research Foundation (TEPAV), told SES Türkiye.
According to statistics from Serbia's Chamber of Commerce, the country's exports to Turkey have mostly increased in the textile, metallurgy, food, automotive and agriculture sectors, Türbedar added.
The Turkish market, with its large size and purchasing power, is a strong partner with high sales potential, according to Medjedovic. "At the same time, Serbian companies see that they can reach third markets like Iran, Iraq and the Turkic Republics easier through Turkish partners," he said.
"Apart from the traditional areas of goods and services being exported and imported, we note a considerable interest of Turkish construction companies to engage in infrastructure projects in Serbia," Medjedovic said.
Since one of Turkey's greatest strengths is in the contracting businesses, road construction and airport development projects are of notable interest, he said. There is also a significant increase in Turkish business plans to locate production facilities in Serbia.
"It seems that the Turkish industrialists have discovered Serbia as an attractive production location," Medjedovic said.
However, a DEİK report on Serbia notes that bilateral trade is below its real potential, with goods made in Turkey counting for only 2% of Serbia's market.
It also concluded that "compared to Turkey's investments in other Balkan countries, Turkish businessmen do not wish to, or hesitate to, invest in Serbia."
"Turkish people are not fully aware of Serbia and its potential," Filip Sanovic, economic counselor at Serbia's Consulate General in Istanbul, told SES Türkiye.
He noted, however, that there have been several Turkish investments in the past months, and more business people are going to Serbia to launch businesses.
The free trade agreement between Serbia and the Russian Federation, which includes a customs union with Belarus and Kazakhstan, allows for 99% of all goods to be exported from Serbia to Russia without any custom duties. This, as well as Serbia's membership in the Central European Free Trade Agreement (CEFTA) with the Balkan countries, should attract Turkish businessmen, he added.
The visa regime between Serbia and Turkey was abolished on September 2010. With this move, Medjedovic said, the last barrier for trade was removed.
"Informing people is of key importance for this issue. Fairs, business forums, [business-to-business] meetings, organised visits, can help a lot in this regard," Sanovic said.
But relations were not always on such a high note. When Turkey was one of the first countries to recognise the unilaterally declared independence of Kosovo -- a former Serbian province -- the friendship between the two countries cooled.
Türbedar said, however, things have recovered in the past couple of years, with a record-high number of official visits -- accompanied by business delegations -- between the two countries.
"Ankara considers Serbia as the key country for peace and stability in the Balkans. Meanwhile, from Serbia's point of view, it is understood that Belgrade is recently interested in Turkish capital for the development of certain infrastructure projects," he said.