Download Turkey: A snapshot

Gridlines
summer, 2013
Turkey: A snapshot
There is much reason for optimism
about Turkey’s economic future.
While many countries have stumbled, the
Turkish economy has proven remarkably
resilient, expanding by 8.5% in 2011 — the
fastest growth of any major economy other
than China. This economic momentum has
bolstered the government’s confidence in
mapping out its ambitious long-term goals
for the infrastructure sector. By 2023, the
centennial of the foundation of the Turkish
Republic, the government plans to build
10,000 km of new high-speed train lines,
nearly 5,000 km of conventional rail lines,
and 15,000 km of new divided highways.
The government also intends for at least
one Turkish port to be among the 10 largest
ports in the world by 2023; and there are
similarly ambitious plans for Turkey to produce 30% of its electricity using renewable
energy resources by 2023, up from less than
20% in 2009. The overall goal is for Turkey
to become the world’s 10th largest economy
by 2023.
Turkey’s infrastructure sector has
already made impressive progress. In the
World Economic Forum’s Global Competitiveness Index for 2012-131, Turkey ranks
34th out of 144 countries for the quality
of its overall infrastructure, and the report
notes that the country “benefits from its
reasonably developed infrastructure, particularly roads and air transport.” Indeed,
its roads rank 43rd in the index and its air
transport infrastructure ranks 36th. However, Turkey’s ports (63rd) and the quality
of its electricity supply (77th) are said to
“require additional upgrading.”
Various segments of Turkey’s infrastructure
sector would clearly benefit from substantial investment. The European Bank for
Reconstruction and Development (EBRD)2
says the country’s air transportation market
remains underpenetrated, representing only 10% of total passenger traffic in
Turkey. Likewise, EBRD says only 35% of
Turkey’s population is connected to waste
water treatment facilities, and that the
country’s per-capita electricity consumption
remains far below average. These shortfalls represent significant opportunities for
growth. For example, Business Monitor
International (BMI) expects the energy and
utilities infrastructure sector to average real
growth of 9% a year from 2011-16, and the
transport sector to grow 11% a year in that
period3.
Still, considerable challenges
remain. Among them, BMI mentions
“rigid regulation,” “widespread corruption,” high inflation, and the nation’s hefty
current account deficit. It’s also challenging
for Turkish banks to finance major infrastructure projects. Nonetheless, the overall
outlook for Turkey’s infrastructure sector is
sunny, thanks to a fast-growing economy,
a government with long-term vision for the
sector, and mounting interest from private
investors eager to participate in the country’s economic rise.
1 See The Global Competitiveness Report 2012-2013; http://
www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2012-13.pdf
2 See Turkey Infrastructure Industry report, March 2012; http://
www.ebrd.com/downloads/loans/14b.pdf
3: See Turkey Infrastructure Report Q2 2012; http://www.
marketresearch.com/Business-Monitor-International-v304/
Turkey-Infrastructure-Q2-6839906/
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PwC | Gridlines, Summer, 2013 | 1
Major infrastructure projects
Railways: Turkey has an ambitious
strategy to expand its railways significantly
by 2023. The government’s plans include
the addition of 10,000 km of new highspeed rail lines and almost 5,000 km of
conventional rail lines. A high-speed train
operation between Ankara and Eskisehir
began in 2009, followed by a second operation between Ankara and Konya. According
to BMI’s Turkey Infrastructure Report Q2
of 2012, a $30 billion Chinese loan was
granted to build 7,000 km of high-speed
rail lines between Edrine and Kars, which
some analysts suggest would cut travel time
across Turkey by two thirds.4
Ports: Turkey’s ports have been undergoing
a process of privatization aimed at boosting efficiency and capacity. This included
the transfer of Samsun Port, followed by
the sale in December 2011 of the rights
to operate and develop Iskenderun Port
in Anatolia under a 36-year concession,
according to the investor, InfraMed.5 The
government wants at least one Turkish port
to be among the world’s 10-largest ports
(in terms of handling capacity) by 2023.
In a country with more than 8,400 km of
coastline, international maritime trade is a
vital aspect of the economy. About 90% of
Turkey’s foreign trade is carried out through
maritime transport.
Infrastructure construction in Turkey, market segmentation
By Category Type (%) 2010
Energy &
communications
infrastructure, 23.4%
Other infrastructure
projects, 34.0%
Rail
infrastructure, 11.2%
Water
infrastructure, 5.5%
Sewage
infrastructure, 6.9%
Source: ICD Research Analysis
2 | Gridlines, Summer, 2013 | PwC
Road
infrastructure, 19.0%
Air Transport: With air traffic surging
in Turkey, the government’s plans include
the construction of one airport with the
capacity to handle 60 million passengers
per year, plus three airports that can handle
30 million passengers per year. Another
goal is to expand the nation’s civil aviation
fleet to more than 750 aircraft, up from 340
in 2010.
4 China’s Land Bridge To Europe, F. William Engdahl, : The
China-Turkey High Speed Railway: http://low-intensity-conflictreview.blogspot.co.uk/2012_05_12_archive.html
5 http://www.eib.org/about/press/2012/2012-046-eib-sponsored-fund-inframed-investing-for-turkish-port.htm
By the numbers
•
•
Total infrastructure investment in
Turkey rose from $14.2 billion in 2010
to an estimated $20.1 billion in 2012,
according to the European Bank for
Reconstruction and Development.
Turkey’s Central Bank says FDI inflows
to the country’s infrastructure sector
surged from $747 million in 2004 to
$3.7 billion in the first nine months of
2011, with the largest portion of this
money invested in infrastructure for
electricity, gas and water supply.
•
In 2011, Turkey had 21,681 km of
divided highways. By 2023, the Ministry of Transport expects the total to
reach 36,500 km.
•
According to the European Bank for
Reconstruction and Development,
only 35% of the Turkish population is
connected to waste water treatment
facilities, versus 50-60% in similar
countries.
•
In 2010, the total number of passengers in Turkish airports was 105
million, up from 34 million in 2002,
according to the Ministry of Transport.
To meet rising demand in the booming
civil aviation sector, the Turkish fleet
expanded from 110 aircraft in 2002 to
340 in 2010.
Turkish infrastructure industry overview
Sub-sectors
2010
2011F
2012F
2013F
2014F
2015F
2018F
2020F
Total Infrastructure
Investment Size
(US$ bn)
14.2
16.8
20.1
24.3
28.7
32.2
45.8
55.1
Energy & Utilities
Investment Size
(US$ bn)
10.9
12.7
15.1
18.1
21.3
23.9
33.7
40.5
Transport Investment
Size (US$ bn)
3.3
4.2
5.1
6.2
7.4
8.4
12.1
0.0
Infrastructure Industry
Value Real Growth
(Percentage)
19.2
13.0
10.5
9.3
9.2
6.4
4.9
0.0
Infrastructure Industry
Value Real as of
GDP (Percentage)
1.9
2.1
2.2
2.3
2.3
2.4
2.5
2.5
Source: BMI Turkey Infrastructure Report Q4 2011 *Includes: Transmission grids, power plant, oil and gas pipelines
and water infrastructure
FDI Inflows to the infrastructure sector in Turkey
US million
Sub-sectors
2004
2005
2006
2007
2008
2009
2010
2011
Electricity, Gas and
Water Supply
66
4
112
568
1,068
2,126
1,814
2,597
Construction
3
80
222
285
336
208
330
220
Hotels and Restaurant
1
42
23
33
24
54
113
34
Transportation, Storage
and Communications
639
3,285
6,696
1,117
170
391
212
178
Real Estate, Renting
and Business Services
3
29
99
560
641
560
409
478
Education
0
17
0
0
0
1
17
49
Health and Social Work
35
74
265
177
149
106
111
160
Total
747
3,531
7,417
2,740
2,388
3,446
3,006
3,716
Source: Central Bank of the Republic of Turkey (CBRT) *2011 January-September
PwC | Gridlines, Summer, 2013 | 3
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