tepav The Economic Policy Research Foundation of Turkey

Ali Sökmen

New Delhi, UNESCAP Policy Dialogue Meeting

November 19, 2014

Connectivity in SSWA and the G20 Presidency of Turkey

What Happened at the G20 Summit in Brisbane this week?

Turkey took over G20 Presidency

Infrastructure as an emerging priority

But the focus is on finance and investment

We think that regional connectivity is highly important

Investments need to focus on bringing forward complementarities

Connectivity in SSWA from G20 Perspective Slide 2

Connectivity and trade integration goes hand in hand

Connectivity in SSWA from G20 Perspective Slide 3

Source: World Trade Organization

Could India and Pakistan, or India and China do what France and Germany did?

No wonder Nobel Peace Prize was given to the EU (as opposed to ASEAN or NAFTA)

SSWA region lags behind in terms of connectivity

Connectivity in SSWA from G20 Perspective Slide 4

COUNTRY Index Rank (out of 140)

Turkey 59 Sri Lanka 64 India 71 Bangladesh 102 Pakistan 114 Nepal 123 Islamic Republic of Iran 134 Myanmar 135

DHL Global Connectedness Index Ranks of SSWA

Source:DHL

Istanbul

Frankfurt

Islamabad

Tehran

Dhakka

Mumbai

How would you ship your cargo from Istanbul to Karachi or Mumbai?

via Rotterdam

Karachi

Container train railroad

Shipping liner service

Connectivity in SSWA from G20 Perspective Slide 5

Security and political problems are major obstacles to regional connectivity

Connectivity in SSWA from G20 Perspective Slide 6

How can we ship our products these days?

Connectivity in SSWA from G20 Perspective Slide 7

İskenderun

Amman

Duba

Port Said

Türkiye

2001

3235 km

2011

2846 km

Result: Our export range is shrinking

Seizing the opportunity:E-trade can overcome obstacles of distance and size

Connectivity in SSWA from G20 Perspective Slide 9

The average export range of Turkey: Traditional vs. E-commerce

Sources: PayPal, TEPAV calculations

Turkey

Top 10 markets, traditional

2599 km

E-commerce top 10 markets

4308 km

Seizing the opportunity:E-trade can overcome obstacles of distance and size

Connectivity in SSWA from G20 Perspective Slide 10

The average number of countries exported: Traditional vs. E-commerce

3

45

23

34

Traditional exporters

eBay firms-largest %10

eBay firms-smallest %10

eBay firms

Source: PayPal, Commerce 3.0: A Springboard for Turkey's Small Business to the Global Economy

A paradigm shift is necessary to take advantage of e-trade Current trade infrastructure and legislations

are based on B2B commerce

B2C commerce requires reforms across all levels Infrastructure

Customs regulations

Payment systems

Returns…

Establishment of trust is a necessary condition

Connectivity in SSWA from G20 Perspective Slide 11

Conclusion

Turkey’s G20 Presidency is an opportunity to link investments on connectivity with private sector needs

Investing in infrastructure needs to into take account the following

Coordinating customs and transit procedures between governments

Taking into account political and security risks

Seizing new opportunities such as e-trade

Connectivity in SSWA from G20 Perspective Slide 12

THANK YOU!

Slide 13