turkish contracting in the international market · in 1970s, turkish contractors began pursuing...

TCA - Turkish International Contracting - 2019 / February

TURKISH CONTRACTING IN THE INTERNATIONAL MARKET Brief overview Construction plays a crucial role in Turkey’s economic development, accounting for nearly 8-9% of GDP and employing almost 2 million people. When the direct and indirect impacts on other sectors are taken into account the share of the construction sector in the Turkish economy reaches 30%. The constantly growing global competitiveness of Turkish contractors and building materials producers, contribute significantly to the balance of payments of Turkey. In the period of 1972-2018 Turkish contractors have undertaken around 9600 projects in 123 countries, with a total value of 380 billion USD. On the other hand Turkey is among the world’s leading producers of building materials. Turkey's unique geographical location contributes a great deal to the global competitiveness of the Turkish contracting services abroad. Turkey’s strength in the field is not only due to its location, but also the cost effective service provided at international standards, high client satisfaction, credibility in partnerships, extensive knowledge and vast experience in a wide variety of projects, familiarity with the business environments in the neighbouring regions, qualified manpower and a calculated risk-based approach to business. Based upon 2017 data, 46 Turkish contracting companies ranked among “The World’s Top 250 International Contractors" list, published on August 2018 by the leading international industry magazine "ENR - Engineering News Record". With this number Turkey ranked second in the world after China.

COUNTRY 2017 2016 2015 2014 2013 2012

China 69 65 65 65 62 55

Turkey 46 46 40 43 42 38

USA 36 43 38 32 31 33

Japan 14 13 14 14 14 15

S. Korea 11 11 13 12 13 15

Spain 11 11 11 11 13 12

Italy 11 14 15 15 16 17

India 6 3 4 3 4 4

Germany 4 2 4 4 5 4

Australia 4 3 3 4 4 4

Other 38 39 43 47 46 53

TOTAL 250 250 250 250 250 250

Turkish contracting companies successfully compete on 5 continents and in 123 countries offering affordable services of high quality. They are open to enhancing international partnerships not only in the field of contracting, but also in construction industry investments, ranging from the production of building materials to infrastructure, housing, industrial plants and tourism projects in the African, Eurasian and Middle Eastern countries. Turkish contractors continue to increase their competitiveness with extensive know-how and experience gained in all kinds of challenging projects and in all forms of business environments.


History The Anatolian Peninsula, on which Turkey is located, has a history that dates back to 8000 B.C., when the earliest human settlements emerged. The region has been the birthplace of 13 major civilizations, which flourished and left behind many magnificent sites and structures. The incredible richness and diversity of Turkey’s cultural heritage is an important factor that fostered the maturity of a building tradition in Turkey that has developed over millennia – from the Hittites to the Romans, Byzantines, and Ottomans. The development of the Turkish construction sector over the last 95 years since the foundation of the Turkish Republic can be evaluated in five successive periods: Preparation, internal market activity, international market penetration, market and product diversification and global competition. The first two periods continued until the beginning of the 1970s. Following its foundation in 1923, the Republic of Turkey experienced a rapid modernization process along with political, economic, social and cultural reforms with major infrastructure and industrial investments made throughout the country. In the 1920s special measures, including the employment of foreign experts in public agencies, had to be undertaken by the government to overcome the shortage of local engineers and architects. Under the influence of these public policies, and partly due to the economic crisis witnessed in Europe in those years, many European engineers, architects and entrepreneurs came to Turkey; and in 1925–1926 at least one third of the 28 construction companies established in Istanbul were of European origin. The 1930s was the period of formation of the first generation of Turkish engineers, who founded many large scale construction companies and successfully executed numerous challenging projects both in Turkey and abroad. The political change experienced in Turkey in 1950 and the country's accession to NATO in 1952 were the important milestones in the history of the Turkish construction sector with regards to infrastructure investments realized in the following years. In the same period, the first wave of Turkish engineers graduated from universities and began their careers in an environment that offered great opportunities for the establishment of their own companies; and it was those businessmen who founded in 1952 the oldest non-governmental organization in the Turkish construction sector, the Turkish Contractors Association (TCA). Construction of water supply projects in the 1950s, large dams and power plants in the late 1960s and early 1970s provided many opportunities to Turkish contractors to spread their activities throughout Anatolia. 1972–1979 Period In 1970s, Turkish contractors began pursuing business opportunities in foreign markets. Libya was the first country to export Turkish contracting services in 1972, whereas in less than 10 years Turkish contractors extended their activities to the Middle Eastern countries. With a share of 65.7% in the overall business volume Libya was the number one market for Turkish contractors in this initial period of international business, followed by Saudi Arabia (27.7%), Kuwait (3.9%), Iraq (2.6%) and Iran (0.1%). The major field of activity in this period was industrial plant (30.1%), followed by seaport (%27.1), road/bridge/tunnel (17.8%) and irrigation projects (5.9%).


1980–1989 Period The 1980s was an important decade in the restructuring of Turkey’s economy. Starting from 1983, parallel to the developments in western countries, the country experienced a significant transition from closed economy of the 1970s to the market economy. Together with convertibility of Turkish currency, new agencies, such as the Housing Development and the Public Participation Administration were founded and new concepts, such as privatization and liberal economy were introduced to the country’s economic system. In the same period important infrastructure investments started in Turkey. Ataturk Dam (2400 MW), highway projects (approximately 2000 km) and telecommunication investments provided excellent opportunities for Turkish firms to cooperate with international partners, and thus improve their technical and managerial skills and become acquainted with the global finance system. At the end of the 1980s the political changes in Eastern Europe provided further opportunities to Turkish contractors. Many companies focused on the Russian Federation as well as the newly formed Central Asian republics. In the same period they extended their activities to other markets including Iraq, Saudi Arabia, Yemen, Jordan, Iran, the United States, Tunisia, the United Arab Emirates and Kuwait.


Despite a relative decrease in proportion (56.6%), the majority of foreign business continued to be in Libya, with Iraq (19.9%) and Saudi Arabia (16%) ranking second and third, maintaining position they had occupied during the previous decade. Dissolution of the Soviet Union and emergence of the new Central Asian republics besides the Russian Federation (1.7%) were the new developments of this period. During this period the shares of housing (40.2%) and dam projects (15.1%) increased, followed by road/bridge/tunnel (6.4%) and industrial plant projects (4.8%).

1990–1999 Period In 1990s, economic depression and political uncertainties in the Middle Eastern countries and Libya forced Turkish contractors to turn their attention to other countries in the nearby regions, with the new focus on Eurasian, Balkan and Asian countries. Many large-scale projects in the Russian Federation, Ukraine, Central Asian Republics, Germany and Pakistan were realized in this period. Within the period of 1990–1999 the projects completed in the Russian Federation and other Eurasian countries accounted for almost 60% of the total international business.


Market diversification was the major trend that characterized this decade. While the share of the Russian Federation increased to 35.1%, Libya’s share decreased drastically to 11.6%, followed by Kazakhstan (10%), Turkmenistan (9.2%) and Azerbaijan (4.2%). Other important developments were considerable decrease in the proportion of works in Saudi Arabia and disappearance of Iraq from the scene. Despite a decrease in the share of housing works (20.3%) compared to the previous period, housing continued to be the number one activity in this period as well. Housing was followed by industrial plants (15.3%), tourism facilities (8.6%) and road/bridge/tunnel works (7.8%).


2000–2009 Period Until the end of 2000, Turkish contracting companies have undertaken 2050 projects with a total value of approximately 42.4 billion USD. After the economic crises of 2001, foreign contracting services have experienced a very rapid development. The annual volume of business undertaken abroad increased sharply from 4.4 billion USD in 2002 up to nearly 25 billion USD in the year 2007. Under the effects of the global crisis, this figure decreased to 20.3 billion USD in 2009. In the period of 2000–2009, the majority of foreign contracting business was undertaken in the Russian Federation (21.3%) and followed by Libya (10.4%), Turkmenistan (10%), Kazakhstan (8.4%) and Qatar (5.2%). Although more than 30% of the international works carried out by Turkish contractors since 2000 was in the housing sector, the share of housing works decreased to 10.7% in the period of 2000-2009; meanwhile the share of commercial center (10.7%), road/bridge/tunnel (10.6%), power plant (6.9%) and social cultural facility (6.8%) projects showed a significant increase.


The factors which contributed to the rapid development of overseas contracting services during the period of 2000-2009 can be grouped under three main categories: reduced business opportunities in Turkey; the attractiveness of business opportunities abroad; and the increasing competitiveness of Turkish contractors: Domestic investments decreased significantly after the crisis in 2001. Furthermore, the

"abnormally low tenders" in bids created unfair competition for qualified companies and forced them out of the internal market, eventually turning their attention to the international market.

Having realized large-scale infrastructure projects in cooperation with foreign partners in Turkey between 1985 and 2000, Turkish contracting firms gained significant experience in production at international standards, project management and relations with international financial institutions.

Investments in oil and gas exporting countries, which are geographically close and culturally familiar to Turkey increased as a result of booming oil prices and this development created attractive business opportunities for the Turkish contractors.

Due to the above mentioned factors the annual international business volume of Turkish contractors grew at a pace that far surpassed the annual targets. In this period, market diversification and specialization in certain types of projects were the major trends. The number of countries in which Turkish contractors was working increased considerably, causing the percentage of work in each country to decrease relatively. In the aftermath of the interventions in Afghanistan and Iraq, the rebuilding activities in these countries were closely followed by Turkish contractors, and as a result, Iraq in particular has become one of the most important markets for Turkish contractors. 2010-2018 Period During the period of 2010-2013, the annual volume of international business undertaken by Turkish contractors grew by 29% and reached its peak, increasing from 23.5 billion USD in 2010 to 30.4 billion USD in 2012 and 30.3 billion USD in 2013. In 2014, with a decrease of 10%, the annual business volume realized as 27.3 billion USD. It continued falling afterwards, accounting for 23.4 billion USD in 2015, 13.9 billion USD in 2016, 15.6 billion USD in 2017 and 20 billion USD in 2018.


Russian Federation (16.9%), Turkmenistan (15.3%), Iraq (8.1%) and Saudi Arabia (6.9%) have been the leading markets for Turkish contractors in this period. The projects completed in these countries accounted nearly half (47.2%) of the total amount of international works while the major fields of activity were road/bridge/tunnel (15.3%), housing (12%), airport (8.7%), power plant (8.6%) and railway (7.3%) projects respectively.

Turkish International Contracting Services (1972–2018) In the period of 1972-2018, according to the country distribution of international works undertaken by Turkish contractors, the Russian Federation has been the leading market with a share of 19.3%, followed by Turkmenistan (12.6%) and Libya (7.6%). Russian Federation has maintained its position as the largest market for the Turkish contractors in terms of total projects undertaken. Within the 1972-2018 period, according to the regional distribution of international works, the share of Eurasian countries took the lead with 45.9% and was followed by Middle Eastern (26.6%), African (17.8%), European (5.9%), Asian and Far Eastern (3.2%), North and South American (0.6%) countries. It can be said that almost half of the international works of Turkish contractors have been undertaken in the Eurasian countries, in other words 91% of the projects have been realized in Eurasian, Middle Eastern and African countries within the 1972-2018 period.


Within the period of 47 years, significant progress has been made in the sector in terms of market, product and business diversification, while several Turkish companies started specializing in certain project types, such as international airports, railways and urban rail systems. In this respect, in the 1972-2018 period the share of housing projects in the overall international business decreased gradually, whereas the shares of road/bridge/tunnel, commercial center, power plant, airport, industrial plant, railway, socio-cultural facility, tourism facility and petrochemical plant projects increased substantially.


Distribution of Projects by Country (1972-2018)

Country Number of

Projects Total Project Value (USD)

Share ( % )

Russian Federation 1961 73.121.151.933 19,3%

Turkmenistan 1016 47.789.659.219 12,6%

Libya 602 28.875.374.694 7,6%

Iraq 973 25.672.738.080 6,8%

Kazakhstan 486 24.636.056.420 6,5%

Saudi Arabia 353 23.251.706.654 6,1%

Qatar 144 16.914.847.311 4,5%

Algeria 348 15.581.338.208 4,1%

Azerbaijan 397 12.656.949.651 3,3%

UAE 133 11.294.914.789 3,0%

Kuwait 38 7.017.709.135 1,9%

Afghanistan 696 6.590.639.380 1,7%

Ukraine 177 5.868.411.367 1,5%

Oman 51 5.553.011.087 1,5%

Georgia 226 4.604.557.579 1,2%

Iran 52 4.160.013.216 1,1%

Morocco 63 4.132.719.077 1,1%

Romania 172 4.087.318.140 1,1%

Pakistan 63 3.424.313.359 0,9%

Others 1655 54.070.878.569 14,2%

TOTAL 9606 379.304.307.868 100,0% Others: Poland, Uzbekistan, Sudan, Tanzania, Ethiopia, Jordan, Albania, Nigeria, Bulgaria, Yemen, Kosovo, USA, Israel, Germany, TRNC, Switzerland, India, Ireland, Egypt, Bahrain, Macedonia, Cameroon, Tunisia, Belarus, Angola, Kyrgyzstan, Ghana, Senegal, Mozambique, Bosnia Herzegovina, Croatia, Tajikistan, Lebanon, Congo, Venezuela, The Netherlands, Latvia, Moldova, Equatorial Guinea, Mali, Syria, Serbia, Kenya, UK, Gabon, Lithuania, Greece, Cuba, Mongolia, Rwanda, Montenegro, Hungary, Sweden, Ivory Coast, Guinea, Djibouti, Brazil, Uganda, South Sudan, France, Mauritania, Sri Lanka, Maldives, Belgium, Bangladesh, Somalia, Philippines, Papua New Guinea, Burundi, Chile, Malta, Malawi, Nepal, Malaysia, Palestine, Sierra Leone, Austria, Eritrea, New Zealand, Madagascar, Chad, Republic of South Africa, Peru, Thailand, Spain, PRC, Seychelles, Czech Republic, Armenia, Niger, Italy, Finland, Luxembourg, Colombia, Argentina, Vietnam, Democratic Congo, Australia, Gambia, Estonia, Burkina Faso, Liberia, Zambia, Denmark Source : Ministry of Trade of Turkey


Assessment of the Last Four Years In 2015 Turkish contracting companies undertook 270 new projects in 59 countries, amounting nearly 23.4 billion USD. With a total share of 69.7%, Russian Federation, Kuwait, Algeria and Turkmenistan turned to be the leading markets, followed by Saudi Arabia, Azerbaijan, Kazakhstan, Congo, Iraq and Ghana. Turkish contracting firms undertook 196 projects in 56 countries, amounting nearly 13.9 billion USD in 2016. With a total share of 41.6%, Qatar, Saudi Arabia, Russian Federation and Uzbekistan were the leading markets followed by Bahrain, UAE, Kuwait, Senegal, Pakistan and Ukraine. The total value of the projects completed in 2016 was quite low compared to the last three years. This situation was mainly explained by political and economic difficulties experienced in the North African, Middle Eastern and Eurasian countries which are the most important markets for the Turkish contractors. Especially unfavorable developments in Iraq and Libya, which have always been among the top markets for Turkish contracting, is thought to be the main reason for this decline. Distribution of Projects by Country in 2015 and 2016

2015 Total Project Value (USD)


Russian Federation 6.250.503.095 Qatar 2.402.072.483

Kuwait 4.516.295.606 Saudi Arabia 1.384.331.894

Algeria 3.026.293.617 Russian Federation 1.152.784.809

Turkmenistan 2.478.484.540 Uzbekistan 862.324.741

Saudi Arabia 1.365.349.159 Bahrain 789.234.166

Azerbaijan 1.039.155.640 UAE 679.088.868

Kazakhstan 744.983.020 Kuwait 626.266.592

Congo 559.881.359 Senegal 497.637.847

Iraq 489.040.745 Pakistan 480.558.412

Ghana 405.977.390 Ukraine 464.797.915

Other (49 Countries) 2.491.039.101 Other (46 Countries) 4.593.450.990

TOTAL 23.367.003.272 TOTAL 13.932.548.717

Source : Ministry of Trade of Turkey


In 2017, Turkish contracting companies undertook 293 projects in 56 countries, amounting nearly 15.6 billion USD. In this period Tanzania, Saudi Arabia, Russian Federation and UAE were the leading markets with a share of 52.2%. In 2018, Turkish contracting companies undertook 283 projects in 54 countries, amounting nearly 20 billion USD. In this period Russian Federation, Saudi Arabia, Qatar and Sudan were the leading markets with a share of 53.4%. Distribution of Projects by Country in 2017 and 2018



Tanzania 2.531.336.000 Russian Federation 3.904.661.116

Saudi Arabia 2.084.054.869 Saudi Arabia 3.043.098.463

Russian Federation 1.856.342.966 Qatar 2.028.970.732

UAE 1.655.584.593 Sudan 1.668.742.518

Algeria 1.076.136.351 Poland 1.530.527.811

Iraq 1.035.859.679 Kazakhstan 1.487.573.366

Georgia 739.476.392 Turkmenistan 755.483.543

Kazakhstan 656.531.658 Algeria 562.880.432

Qatar 496.488.009 Romania 478.600.000

Nigeria 382.093.320 Kuwait 445.119.063

Other (46 Countries) 3.061.664.544 Other (44 Countries) 4.060.306.233

TOTAL 15.575.568.381 TOTAL 19.965.963.277

Source : Ministry of Trade of Turkey

turkish contracting in the international market · in 1970s, turkish contractors began pursuing...

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