Dimensions on Nepal - Turkey Relation: Present Status and Future Prospects
The Turkish Center for Asia Pacific Studies - January 11, 2021
Dr. Bamadev Sigdel
Visiting Professor, People’s Campus in Kathmandu
Senior Researcher, Centre for Policy Studies and Rural Development (CEPRUD), e-mail: bamadevsigdel@gmail.com
Rishav D. Sigdel
President, Human Action for Rapid Development (HARD Nepal), e-mail: sigdelrishav@gmail.com
TURKISH CENTER for ASIA PACIFIC STUDIES
Nepal – Turkey Investment and Tourism Relation
The foreign investments in Nepal are regulated and administered by Foreign Investment and Technology Transfer Act (FITTA) 1992 and Industrial Enterprises Act (IEA) 2016. The Department of Industries (DoI) in Kathmandu is the sole agency for administration and implementation of FITTA in Nepal. Registration of foreign invested industries could be made through DoI / Foreign Investment Cell (FIC) by foreign entrepreneurial in Nepal.
There are almost 94 countries involved in foreign investment sphere of Nepal by the end of 2019. Their cumulative investment in Nepal has stood of Nrs. 333,056.95 million worth (US$ 2,954,728.09) of foreign investment commitment in Nepal along with 5,052 projects range from agriculture, industry, energy, service, tourism, etc. It has been expected that these enterprises could employ up to 269394 Nepali labor with its full fledge functioning. Few years back, India was the major investor country in Nepal. Now, China has toppled India on foreign investment front in Nepal. Foreign investment from China and India in Nepal reached to 1,668 and 802 enterprises with the investment worth of Nrs. 120,354.79 million (US$ 1,067,732.35) and Nrs. 98,538.31 million (US $ 874,186.57), respectively in 2019. The other major investor countries in Nepal are the United States, South Korea, Japan, the UK, Germany, etc. Nepal has failed to attract Turkey’s investment and joint-venture enterprises in Nepal stood at mere 25 projects with just Nrs. 1,870.34 million (US $ 16,592.80) investments in 2019. It is expected that these enterprises will employ just 833 Nepali workers with their full operation. It is revealed that Turkey’s investment on Nepal’s total investment scenario is below 1 percent (0.57 percent) (see, Table 2).
Table 2. Major Investor Countries in Nepal
Introduction
The healthy gross domestic product’s growth fueled Turkey’s diplomatic, trade, humanitarian, and cultural activities across the Global South. The launch of the Asia Anew Initiative (ANI) appears to represent a continuation of such efforts, rather than a “new” approach or a fundamental shift in Turkey’s strategic orientation.[1] Since the early 2000’s, Turkey has sought to expand its presence and influence across the global South, ranging from Sub-Saharan Africa and Latin America to East Asia. The Southern dimension of Turkish foreign policy has included the opening of numerous new embassies and overseas offices of state endorsed institutions. Nepal and Turkey established diplomatic relation on 15 November 1962. The relations between the two countries have remained friendly, cordial, and cooperative ever since. [2]
Turkey is among the world’s developed countries with its 19th largest nominal Gross Domestic Product (GDP) in the world. It is newly industrialized countries in the world. Similarly, Turkey is among the world’s leading producers of agricultural products, textiles, motor vehicle, transport equipment, construction materials, consumer electronics and home applicants. [3] Turkey has succeeded to place it as one of the major donor countries for developing countries of the world with its economic prosperity. Official Development Assistance (ODA) has increasingly become an integral part of Turkey’s proactive foreign policy. Turkey has come forward as an active stakeholder in regional and global stability in line with the policy objective of contributing to the creation of a more peaceful and stable environment in the neighboring regions. [4] Turkish International Cooperation and Development Agency (TIKA) was established in 1992 with the responsibility of implementing Turkey’s development cooperation policy; in-charge for coordinating Turkey’s development cooperation with various national actors, as well as international organizations and bilateral donors. Presently, TIKA’s activities have been reached more than hundred countries of the world.
Turkey’s Official Development Assistance to Developing Countries and Nepal
Turkey formally launched its first international assistance program in 1985 focusing on institutional capacity building in Sub-Saharan Africa. In 2011, Turkey hosted the Fourth United Nations (UN) Conference on the Least Developed Countries, culminating in Istanbul Program of Action (IPA) and cementing its role as a global champion for Least Developed Countries (LDCs). [5] Turkey’s ODA amount was US$ 967 million in 2010 which increased approximately nine folds and reached US$ 8.6 billion in 2018. In 2019, Turkey provided US$ 8.7 billion ODA equivalent to 1.15 percent of its Gross National Income (GNI). This represented an increase of 1.6 percent in real terms from 2018 due to slight increase in both bilateral and multilateral aid. Turkey’s ODA to developing and least developed countries was just US$ 85 million in 2002 which ballooned up to US$ 9084 million in 2017. [6]
Turkey shares deep rooted historical and cultural bonds with South Asian countries. Ankara also believes that enhancement of its relation and cooperation with South Asian countries significantly contributes to regional peace, stability, and cooperation. Turkey has somehow provided economic assistance to all South Asian Countries. By 2016, Pakistan received US$ 4.66 million aid, Bangladesh US$ 1.98 million, India US$ 0.74 million, Nepal US$ 0.25 million, and Bhutan US$ 0.10 million ODA from Turkey. The Asian countries benefitting from Turkey’s ODA in the top list in 2017 were; Palestine with US$ 410 million, Afghanistan with US$ 36 million, Kazakhstan with US$ 20 million, Kyrgyzstan with US$ 18 million, and Pakistan US$ 20 million. [7]
Turkey extended its assistance to the people of Nepal in the transitional period following natural disasters and ten years long armed conflict. Turkey had provided the humanitarian assistance to Nepal which is worth equivalent to US$ 50,000 for 250,000 flood affected people in 2009 via UN Office for the Coordination of Humanitarian Affairs (OCHA). Moreover, Turkey has also provided US$ 97,500 through TIKA for the construction of a dormitory for the female students at the Kathmandu University.
Turkey had delivered humanitarian assistance after the very intense earthquake which struck Nepal on 25 April 2015 and took part to rescue operation. It had provided US$ 2 million development assistance to Nepal. [8] Turkey’s aid agencies had also sent a search and rescue team of 65 people during the time of this calamity in Nepal.
Nepal – Turkey Trade Relation
The Federal Democratic Republic of Nepal is strategically located between the two big economic power houses, China and India. Recently, the progress of Nepal shows the economic adaptability along with the inclusiveness, human resource, and social indicators of the Sustainable Development Goals (SDG). SDGs are also important to Nepal as it aspires to graduate to a developing nation from the LDCs status in the next few years. [9] Nepal has shipped an estimated US$ 979.8 million worth of goods around the globe in 2019. That dollar amount reflects a 48.4 percent increase since 2015 and a 26.6 percent increase since 2015 and a 26.6 percent up stick from 2018 to 2019. [10] Though trade is key component of economy; trade deficit has posed challenge to Nepal’s development. Nepal’s trade deficit has grown more than tenfold from 2004/05 to 2016/17. Nepal’s import is increasing rapidly while its export to overseas countries is slow. Nepal’s export to India, China, and other countries of the world in 2019 was 64.6 percent, 2.7 percent, and 32.7 percent respectively while import remained at 64.7 percent, 15.1 percent and 20.2 percent respectively for India, China and other countries of the world by this time. Nepal’s total trade deficit stood at Nrs.1,321,450.62 million (US$ 11,723,302.16) in 2019 with the aforementioned countries of the world. [11] Nepal exports mostly to India (US$ 394 million), the United States (US$ 1.99 million), Turkey (US$ 40 million), Germany (US$32 million), and the United Kingdom (UK) (US$ 26.6 million). Similarly, Nepal imports mostly from India, China, the United Arab Emirates (UAE), France, Hong Kong, etc., countries and their import figure remained at US$ 7.26 billion, US$ 1.08 billion, US$ 395 million, US$ 275 million, and US$ 220 million, respectively in 2018. [12]
Nepal’s major exportable items are carpet, pashmina, handicrafts, etc., to Turkey; while food items and machineries are the major imports from Turkey. Despite the ample potentialities of export of goods in Turkey, Nepal has failed to export more goods and earn foreign currency from such activities. Medicinal herbs, tea, coffee, cardamom, etc., are other probable exportable commodities in Turkey for Nepal in the years to come.
Table 1. Nepal-Turkey Trade
Nepal’s export to Turkey was Nrs. 865.7 million (US$ 11,945.63) in 2011; it rose to Nrs. 1274.5 million (US$ 11,306.78) in 2019. Similarly, Nepal’s import from Turkey in 2011 stood at Nrs. 1849.9 million (US$ 16,411.46); it increased up to Nrs. 2989.5 million (US$ 26,521.47) in 2019. According to TurkStat, the Turkish-Nepalese bilateral trade volume was around US$ 81 million. Nepal had favorable trade position for the years 2016 and 2017. For other years, Nepal had trade deficit with Turkey (see, Table 1 and Graph 1). Presently, Turkey is Nepal’s major export partner after India and the United States. Nepal-Turkey Chamber of Commerce has partnered with the Istanbul Chamber of Commerce for enhancing trade relationship between the two countries. It was believed that the main reason for such lower profile of trading ties between Nepal and Turkey is lack of knowledge about each other culture, economy, and ways of doing businesses. [13]
Graph 1. Nepal-Turkey Trade
Nepal is uniquely endowed with rich and diverse natural and cultural attraction due to its geographical location in The Himalayas. Strategically located between the two fastest growing emerging economies, China and India; tourism in Nepal is a sector of competitive advantages which could be instrumental in spreading benefits and providing alternative economic opportunities to have meaningful prosperity for the Nepalese people. Months prolong lockdown, closure of international border and halt in international flights with the spread out of Coronavirus pandemic; Nepal faced set back on the arrival of tourists from majority of the countries of the world. This affected tourism sector adversely; decreased earnings from tourism sector for the Government of Nepal and entrepreneurs involved with this sector. Not only this; majority of workable people involved with tourism businesses remained idle and lost their jobs as well as earnings.
The total number of tourists visited in Nepal stood at 1,197,191 in 2019. Their average length of stay is twelve days. Majority of tourists visit in Nepal are spending their time on the holidays and for pleasure, pilgrimage, trekking, mountaineering, and other purposes. People from China, India, the United States, the UK, and Sri Lanka dominate on tourism scenario in terms of arrival. Nepal had earned US$ 724.3 million from tourism sector in 2019. Of the total tourists arrived in Nepal; 83 percent such tourists travelled by air while 17 percent by land. It reveals that the number of tourists from Turkey is pretty low (less than 300 in 2019); concentration of Turkey’s tourists is on mountaineering followed by trekking and entertainment. Only few Turkish tourists visit Nepal for business purposes.
Turkish Airlines is a major carrier offering direct flights from Kathmandu to Europe and beyond from its new Istanbul hub. It has been operating flights to and from Kathmandu since 2013, and more than 90 percent of its passengers are bound for onward destinations in Europe and North America. Thus, Turkish Airline has facilitated foreign tourists to visit Nepal with the start of its services. Turkish tourism industry has enjoyed a recovery in the past two years from a sharp slum in visitors largely caused by anxieties that followed the 2016 failed coup attempt, and the series of terrorist bombings in big cities in 2015 and 2016. The data shows that a total of 46.8 million tourists visited Turkey in 2019. [14]
Conclusion and Future Ahead
Turkey joined in foreign aid scenario in the world with the increase of its economic capacity. ODA has become an integral part of Turkey’s foreign policy goals. Nepal is receiving less amount of Turkey’s ODA in comparison to other South Asian countries, e.g., Pakistan, Afghanistan, India, etc. Other assistance entities of Turkey had worked on rescue operation on behalf of earthquake in 2015 affected families and communities in Nepal.
Nepal has good trading potential with Turkey. Slow linkage improvement and lack of knowledge along with interaction among business communities, intellectual forms, and exchange of visits to disseminate the society, culture, etc., by both sides are the main causes for such slow pace of economic cooperation and socio-economic as well as cultural ties in between Nepal and Turkey. Turkey’s investments stake in Nepal comes to mere one percent; which is very low compared with other investor countries in Nepal.
Tourism is another facet of Nepal-Turkey relation. Nepal has unable to attract more and more tourists annually from Turkey. Despite of its own Turkish Airlines (direct flight) from Istanbul to Kathmandu; almost Western tourists are coming in Kathmandu via this Airline. Due to COVID-19, there is hardly regular international flights which have been arranged by the Government of Nepal.
Nearly 25 percent population engage in agriculture sector in Turkey; they are producing varieties of food staples, fruits, vegetables, etc., with the use of newer technology, compatible irrigation system, use of fertilizers and better seeds. Nepal could borrow such agro-techniques through which it could produce bumper products from agriculture and allied sectors. For this, farmer’s visits programmers to Turkey’s farmlands could be induced in Nepal; Nepal could request Turkey’s concerned ministries to have such intensive training for Nepali farmers through diplomatic level. Nepal could also revive its tourism sector studying / visiting and knowing the clues how Turkey revived its tourism sector which was almost ruined few years back due to internal strife, bombing, etc. Turkey has become successful to renovate and preserve its historical sites, mosques, and its rich culture; through which it has become successful to attract more and more tourists and thereby by rendering employment opportunities and earning more foreign currencies. For this, there should create mutual understanding in between concerned entities of Turkey and Nepal.
Nepal should have permanent embassy in Turkey to deepen politico-economic relation between the two countries in the years to come. There are around five thousand Nepali living in Turkey and are involved with different jobs. Turkey may need more cheap labor force in addition to its labor to boost further its economy. Nepal could be manpower supply destination for Turkey in this respect. Turkey is Nepal’s third export destination. Tastes, habits, custom, market of Turkey is still un-explored from Nepalese side. Cooperation activities like the organization of trade fairs, visits of Nepalese Chamber of Commerce persons, organization of seminar / webinar, and discussion programs can be intensified to have more trade and bilateral relation of mutual interest in between the two countries. Additionally, Turkey’s NGOs working in developing countries could come to Nepal on its socio-economic upliftment of the poor people residing in the rural areas. Permanent residential provision of cultural and trade attaches in both countries could also support on the promotion of more trade and socio-cultural ties between Turkey and Nepal.
Nepal is in between two emerging economies; China in the North and India in the South. Having vast population of them with large market space; Turkey’s entrepreneurial could invest in Nepal to produce commodities needed for Indian as well as Chinese consumers. Establishment of agro-processing industries, herbs processing industries, aromatic industries, etc., is possible through joint efforts. The commodities produced by such industries could be exported to India, China, and other countries. Turkey could invest in Nepal in travel and tourism-based enterprises too which could yield win-win situation for Turkey and Nepal in the years to come. There are the possibilities of establishments of health tourist spots particularly in hill and mountain regions in Nepal with the joint-venture initiatives as Nepal has more conducive climate for it. Last, there should be the provision of intensive research, academic exchange, cultural delegation, etc., time to time at people level with the joint initiatives of people or academics for the further deepening of relation between Nepal and Turkey.
Endnotes
[1] Selçuk Çolakoğlu, “Turkey’s Asia Anew Initiative: Assessment and Shortcomings”, Middle East Institute, October 15, 2019.
[2] “Nepal-Turkey Relations”, Nepalese Ministry of Foreign Affairs. mofa.gov.np.
[3] “Turkey”, IMF. https://www.imf.org/en/Countries/TUR.
[4] “Turkey’s Development Cooperation: General Characteristics and the Least Developed Countries Aspect”, Turkish Ministry of Foreign Affairs. www.mfa.gov.tr.
[5] “Turkey: Development Cooperation Profile”, OECD, 2020. www.oecd.ilibary.org.
[6] Faris Kočan and Jana Arbeiter, “Is ‘TIKA’ Turkey’s Platform for Development Cooperation or Something More? Evidence from The Western Balkans”, International Journal of Euro-Mediterranean Studies, Vol.12, No.1, 2019, pp. 4-21.
[7] Selçuk Çolakoğlu, “Turkey in Asia: The Scope of Ankara’s Opening to East Asia”, Centro Studi di Politica International (CeSPI), No.9, July 2020, pp. 1-37.
[8] “Turkey-Nepal Political Relations”, Turkish Ministry of Foreign Affairs. www.mfa.gov.tr.
[9] “National Review of Sustainable Development Goals”, Nepal National Planning Commission, Kathmandu, 2017.
[10] Daniel Workman, “Nepal’s Top 10 Exports”, World's Top Exports, 2020.
[11] Nepal Trade and Export Promotion Centre. www.tepc.gov.np.
[12] “Nepal”, OEC, 2020. oec.world.
[13] “Turkey’s Investors Are Careful”, Business 360; October 13, 2020.
[14] Turkish Ministry of Culture and Tourism. https://www.ktb.gov.tr/?_dil=2.