Cairo- Egypt and Turkey maintained the thread of trade relations, and it remained the only means of connection between the two countries throughout the last decade, and was not affected by the severing of diplomatic relations between them in 2013.
As efforts to normalize diplomatic relations continued, Egypt and Turkey looked to achieve a boom in direct investment alongside trade to achieve economic integration.
Trade between Cairo and Ankara dominated the features of the economic partnership, and achieved steady and rapid growth thanks to the signing of the free trade agreement in 2005, which entered into force in 2007. It remained far from political differences and tensions, which led to a tripling of the volume of trade exchange.
In light of the strong trade relations with Turkey, Egypt hopes to achieve economic integration through trade and investment through three paths:
- Encouraging the flow of Turkish investments into Egypt, especially in industrial fields.
- Developing a free trade agreement to increase trade exchange and maximize Egyptian exports to Türkiye.
- Increasing tourist groups and programs to attract more Turkish tourists.
Increase trade exchange
The list of exports and imports between the two countries consists largely of manufactured goods, not just oil products, which helps them revitalize local industries and ensure easy access to important foreign markets in light of their need for hard currency.
Cairo and Ankara are looking forward to increasing the volume of bilateral trade to reach $15 billion over the next five years, compared to $10 billion last year. Egypt also hopes to attract Turkish investments in priority development sectors.
Chemical products occupy first place among the most frequently supplied Turkish exports to Egypt, followed by plastic materials, then food products, while ready-made clothing and textiles come in fourth place, iron materials and metal machinery in fifth place, and finally transport vehicles and related parts.
As for Egypt, the most important groups of goods it exported to Turkey are:
- Fuels, mineral oils and their distillation products
- Plastics and their products
- Fabrics and threads of synthetic textiles
- Inorganic chemical products
- Agricultural fertilizers
- Electrical machines and appliances
During the participation of Egyptian Finance Minister Mohamed Maait in the Turkish-Arab Economic Forum, which was held in Istanbul under the title “A New Era of Partnership,” Cairo sent positive messages to the Turkish financial and business world in order to open the door to economic integration.
Egypt presented itself to the Turkish partner as having competitive capabilities based on a strategic geographical location that qualifies it to become a regional center for production and export, especially with the great development of infrastructure, in a way that stimulates domestic and foreign investment, and the adoption of national policies supportive of the industry.
The Egyptian Minister of Finance focused on the importance of international and regional partnerships in light of the global economic crisis, and the importance of opening new horizons to enhance trade relations with Turkey, for several considerations related to the volume of exports and imports, for example:
- Türkiye is the sixth largest destination for Egyptian exports, with $3.2 billion.
- Türkiye is the third largest exporting country to Egypt with $3 billion.
- Turkey is one of the largest countries in foreign investment in Egypt in 2022, amounting to $103.5 million.
- About 790 Turkish companies operate in Egypt with investments estimated at about $2.5 billion in several sectors.
Egypt has resorted to improving the investment climate through several axes, such as issuing the “State Ownership Policy Document,” moving forward with the “Government Offerings” program represented by selling state assets to enhance the role of the private sector, issuing the “Golden License” to investors, and building an advanced infrastructure capable of… To accommodate more productive projects.
What are the opportunities for economic integration?
Professor of Finance and Investment at Cairo University, Hisham Ibrahim, says – in his interview with Al Jazeera Net – that “Egypt and Turkey are moving in the direction of economic integration, due to the great similarity in the two countries’ economies and their heavy reliance on manufactured goods and not just raw materials, which strengthens the nature of non-oil economic relations and opens “New horizons for their ambitions in this regard.”
Ibrahim adds that Egypt and Turkey need to increase investment flows, benefit from the new investment environment that Egypt has created, increase capital in existing projects, and pump other funds into new projects.
The economic expert expected that the diversified economy of both countries would help them achieve the goals they talked about during the many meetings between them at the ministerial level, noting that the diversification of trade relations would be in light of the diversity of production volume and diversity of needs.
Ibrahim considered that the opportunity for economic integration between the two countries remains greater than in other countries, some of which depend on oil derivatives, pointing out that there are many similarities between Egypt and Turkey, in addition to their having large markets given the population of each country and their geographical proximity to each other.
Normalization of relations
For his part, the Turkish economic expert and political analyst Yusuf Katiboglu depended, “Achieving the trade and investment goals depends on returning normal relations between the two countries to their previous state and filling the vacant spaces in economic relations by increasing the volume of trade exchange and raising the volume of investments, which will reflect positively on the government and people of the two countries.” .
He said in statements – to Al Jazeera Net via phone – that trade and investment routes, which were not interrupted despite the diplomatic rupture between the two countries in 2013, have become clearer and easier, and he expected momentum to occur as a result of the diplomatic and political rapprochement between Cairo and Ankara and the return of the exchange of ambassadors and visits by officials.
Recently, according to Ihsanoglu, Egypt succeeded in attracting Turkish investors who benefited from golden investment licenses and the construction of production factories. They also benefited from Egypt’s geographical location, cheap labor, and the Egyptian market in particular, and the African market in general.
The Turkish economic expert believes it is important to focus on common interests and mutual benefits, noting that there are files of utmost importance and common benefit to both parties, and perhaps the most important of them in the future is the file of demarcating maritime borders and participating in “areas with riparian borders” that contain large amounts of natural resources east of the country. Mediterranean Sea such as oil and gas.