Relations between Turkish President Recep Tayyip Erdogan and Egyptian President Abdel Fattah el-Sisi have been frosty for many years.
When Egypt’s democratically elected President Mohammed Morsi was deposed by then-General Abdel Fattah el-Sisi in 2013, Erdogan immediately sided with the imprisoned Muslim Brotherhood leader, calling el-Sisi a coup d’état, a murderer and a tyrant.
Erdogan adopted the Muslim Brotherhood’s signature hand gestures and frequently referred to Turkish opposition politicians as “El-Sisi” derogatorily to express his dislike for Egypt’s new president.
Egypt, meanwhile, has accused Turkey of supporting the Muslim Brotherhood and giving safe haven to its members.
The two countries supported opposing sides in the Libyan conflict.
Egypt and Turkey have also been at odds over gas extraction in the Mediterranean.
But despite these differences, Egyptian-Turkish relations are thawing as the world endures multiple crises and both countries’ economies continue to struggle.
Turkish President Recep Tayyip Erdogan (left) and his Egyptian counterpart Abdel Fattah el-Sisi were once on bad terms but have since reconciled after difficult times. Photo: Murat Cetin Muhurdar/Turkish Presidential Palace/AA/Photo Alliance
Improved Turkish-Egyptian relations
A year ago, Egyptian and Turkish business delegations met for the first time in nine years, and ties between the two countries have gone from strength to strength since then.
Turkish businesses have long been unhappy with the state of the Turkish economy. President Erdogan’s low interest rate policies have led to a continuing rise in inflation, which is now officially at 61.5%. Rising fuel costs and uncertainty over the central bank’s interest rate policy have exacerbated the problem.
Turkey’s new Finance Minister Mehmet Simsek and the new Governor of the Central Bank of the Republic of Turkey Hafize Gayye Ercan have also failed to create stability despite initiating a return to traditional economic policies. They say the Turkish economy will regain stability in 2025 or 2026 and inflation will return to single digits. But many businesses are not prepared to tolerate such uncertainty.
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Turkish companies are facing rising production costs, high fuel prices and unpredictable foreign exchange and interest rate policies, which is leading many to consider relocating overseas.
Egypt, for example, has much lower labor and production costs than Turkey, and in April, Egypt removed the requirement for Turkish nationals to obtain a visa before entering the country.
So far this year, Turkish investment in Egypt has totaled $2.5 billion (€2.2 billion), and is expected to rise to $3 billion (€2.7 billion) by the end of 2023.
Turkish companies operating in Egypt will also have the opportunity to trade duty-free with third countries, allowing them to enter new markets.
“Egypt was already an attractive country to do business in, but the visa exemption for Turkish nationals marks a real turning point,” Mustafa Denizer, president of the Turkish-Egyptian Business Council, told DW. Turkish companies have been considering relocating to other countries for years to stay competitive, Denizer said. [Egyptian] Visa waiver scheme introduced, generating significant momentum [for them to move there]”
Currently, 35 Turkish industrial companies are operating in Egypt with annual sales of more than $1.5 billion (1.3 billion euros), the expert said.
Denizer said Turkish companies based in Egypt could access different markets thanks to free trade agreements with the United States, the EU, South America and some African countries.
Inflation in Turkey puts pressure on businesses. Image: DesignIt/Zoonar/picture alliance
Egyptian labor costs are one-third of those in Türkiye
In Turkey, the average monthly labor cost per worker is about $500 (459 euros), while in Egypt it is a fraction of that at just $150 (137 euros). Fuel is also much cheaper in Egypt, which is why major Turkish companies such as Arçelik, Cisekam, Temsa and Yıldız Holding have already relocated their production to Egypt.
For example, Temsa says it manufactures buses and vans in Egypt and exports them around the world. Yildiz Holding’s local confectionery brand, Pladis, has been very successful in Egypt’s market, the second largest in the Middle East and North Africa (MENA) region, while Yesim Textile operates apparel factories in Cairo, Alexandria and Ismailia, supplying many world-renowned sports brands. Electricity giant Arçelik, known in Europe for its brand Beko, recently invested $100 million (€91 million) in a new Egyptian factory that is due to be operational by the end of the year. A number of companies, including Iskefe Holding, LC Waikiki and Eroglu Group, have also announced further investments.
Some 70,000 people already work for Turkish companies in Egypt, excluding those employed by suppliers, and one-third of Egyptian textile and clothing products are now produced in Turkish factories.
Turkish companies welcomed in Egypt
Denizer, who works in the textile industry, said Turkish companies have received a warm welcome in Egypt: “Our companies are very welcomed and looked after in Egypt.”
But Turkish companies are facing a shortage of foreign currency in Egypt. A lack of dollars means Turkish companies producing for the Egyptian domestic market often have to delay payments. The Turkish and Egyptian central banks are currently in talks to find a solution to the problem, Denizer told DW.
In October, Turkish Trade Minister Omer Polat and a business delegation visited Egypt, accompanied by Ibrahim Burkay, chairman of the chamber of commerce in the economically powerful city of Bursa.
“Our goal is to increase trade between Egypt and Turkey to $15 billion (13.7 billion euros) in the next five years,” Burkai said, compared with $7 billion (6.4 billion euros) last year.
Bursa companies are focusing on two sectors in particular: automotive and textiles, according to Bourkai. “There are also opportunities for Egyptian companies to cooperate in other countries,” he added. Bourkai also sees great potential for trade fairs in Egypt. “We can benefit from many years of experience in this sector,” he said, adding that plans for a major textile and fabric fair are already underway.
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This article was originally written in German.
