South Korean money pouring into Turkey
Infrastructure, acquisitions and joint projects boom on bilateral trade deal
SINAN TAVSAN, Nikkei staff writer
ISTANBUL -- From building bridges and solar plants to snapping up cinema chains, South Korean companies are doing a lot more business in Turkey since a free trade agreement took effect in 2013.
In mid-March, a consortium led by SK Engineering & Construction won a contract to build the world's largest suspension bridge, in western Turkey. It beat out rival bidders from Japan, China and Italy in a build-operate-transfer arrangement, a type of infrastructure contract under which companies build and operate a facility before handing over its ownership. The construction costs will be recovered through tolls.
SK E&C has also decided to buy a 30% stake in a Turkish company that is building and operating power plants at four locations in Iran in that country's largest independent power production project, with a total generation capacity of 5,000 megawatts.
The 3.4 billion euro ($3.69 billion) deal makes SK E&C the first South Korean business to enter the Iranian market for independent power production.
The company is aggressively pursuing big infrastructure projects in Turkey. In addition to taking part in the construction of Yavuz Sultan Selim, another bridge over the Bosporus that was completed last August, SK E&C invested in the Eurasia Tunnel, which runs below the strait and opened in December.
Flocking to the opportunities
Other Korean companies making forays into Turkey include solar panel maker Hanwha Q Cells. It has won an order to build and operate a 1,000 megawatt solar facility, the country's largest so far, and plans to invest over $1.3 billion in the project.
Hyundai Motor, meanwhile, has set up a joint venture with a local conglomerate that now produces and sells some 240,000 passenger cars a year. The automaker considers Turkey a key exporting hub.
Samsung C&T is taking advantage of the Turkish government's desire to promote public-private partnerships in the hospital business. The company, together with Turkish and Italian partners, recently won an order for a $700 million hospital construction project in the southeastern province of Gaziantep. The 1,875-bed facility is slated to open next year.
In one of the biggest acquisitions in Turkey last year, a consortium led by CJ CGV, South Korea's largest cinema chain, spent $688 million buying its biggest Turkish peer.
With more Turkish companies coming to see their South Korean counterparts as equal partners, more joint projects like the one in Iran can be expected -- a trend that could end up pushing Japanese companies out of the picture.
This may happen even in the construction sector, where Japanese contractors and trading houses have been teaming up with local companies to gain footholds in the Middle East and Central Asia, regions where Turkish builders have a big presence.
Some say the increasingly close economic ties between South Korea and Turkey owes something to history. The two countries have maintained friendly relations since the Korean War, when many Turkish soldiers gave their lives defending South Korea.