The Great Potential Between Türkiye-Uae

The United Arab Emirates (UAE) will continue to be an important trade and investment centre for our country

COUNTRY PANORAMA 01.02.2022, 13:54 10.02.2022, 11:07
The Great Potential Between Türkiye-Uae

With its stable political structure, dynamic and robust economy, liberal trade regulations, and investor-friendly legislation, the United Arab Emirates (UAE) ranks high in trade and investment potential among the countries in the region. In the 2020 Ease of Doing Business Report, a guide for businesspeople, ranked UAE 16th out of 190 countries. This is a significant indicator for further trading and increasing investments with the UAE. The UAE will continue to be an important trade and investment centre for our country both regionally and globally. First, it is essential to look at current trade levels to analyse potential trade and investment areas better. While Turkey was a net exporter in its bilateral trade with the UAE between 2014- 2017, it became a net importer during 2018-2020. According to the trade data of 2020, the export volume decreased by 22% compared to the previous year, while the import volume increased by 30%. Finally, in the January-August period of 2021, exports increased by 1.2% compared to the same period of the previous year and reached 3.6 billion dollars. On the other hand, imports decreased by 0.4% to 1.6 billion dollars. According to 2020 data, gold and jewellery, automotive, machinery, and electrical devices stand out in exports. Examining Turkey-UAE trade relations on a sectoral basis and addressing the capacity utilisation rates will guide us on which sectors the Turkish private sector should focus on in the upcoming period and what it should do to increase the capacity utilisation rates.

The main products imported by the UAE from the world are electrical equipment, gold and jewellery, machinery, automotive, energy, plastics, aircraft, iron-steel goods, iron-steel and personal belongings, supplies and materials given to sea and aircraft. According to the ITC (International Trade Center) export potential calculations, the unutilized export potential in Turkey's exports to the UAE is 1.8 billion dollars. According to 2020 data, Turkey ranks 10th in gold and jewellery imports from the UAE on a sectoral basis. Turkey is yet to use approximately 237 million dollars of its export potential in the jewellery and precious metals sector. There is an export potential of 187 million dollars in the Clothing-Textile sector, which is not used in Turkey's exports to the UAE. On the other hand, the unutilized export potential in the machinery and electrical products group is 156 million dollars. Considering that the group mentioned above is one of the prominent sectors in UAE imports and exports below Turkey's potential, Turkey has an export potential to the UAE in this sector. In the automotive sector, one of the leading sectors in which our country is a leader in exports, Turkey ranks 20th in the UAE's automotive imports. In the motor vehicles group, the unutilized export capacity of Turkey's exports to the UAE is approximately 270 million dollars. On the other hand, as it is known, the UAE imports a considerable part of its food requirements. The unutilized export capacity of food products and fruits is 96 million dollars and 66 million dollars, respectively. In this context, both of these sectors have the potential to export to the UAE.

When we look at the Turkey-UAE bilateral trade in general, to raise the current level we see great export potentials that cannot be used in the gold and jewellery, clothing, machinery and electrical products, motor vehicles, food, fruit, and plastic sectors. With the positive developments in political relations, we can predict that the Turkey-UAE trade volume will increase in the coming period. The idle export capacities for the Turkish private sector can be reached to the potential level by focusing on the target sectors. In addition to the sectoral opportunities offered by the UAE, the fact that Dubai is the world's 3rd largest re-export centre also provides attractive opportunities for Turkish business people to increase their export volumes with other Gulf countries, especially Kuwait, Bahrain, Saudi Arabia and Oman. In addition, the UAE has free trade access to Saudi Arabia, Kuwait, Bahrain, Qatar, Oman, Jordan, Egypt, Lebanon, Morocco, Tunisia, Palestine, Syria, Libya and Yemen, thanks to the GAFTA (Great Arab Free Trade Agreement).

The "Abu Dhabi 2030 Plan" of the UAE is also important in determining which sectors have more potential in terms of trade and investment. The main sectors planned to be given priority in development are aviation and space, information technologies, renewable energy, transportation, tourism, health and export-oriented industry, and petrochemistry. Finally, when we look at the role of the participation finance sector in the UAE, we see that the country has a well-established participation finance sector with a total assetsize of approximately 782 billion dirhams (212 billion dollars). Despite the pandemic in 2020, the growth in participation financing was 3.6% against the contraction in traditional banking. 

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