The agreements will expand the range of trading options for Turkish companies and should bolster trade cooperation between Turkey and developing Asia.
Under the TFP, the ADB can provide guarantees to Akbank TAS, Aktif Bank, T. Garanti Bankasi A.S., Turk Ekonomi Bankasi A.S., and Turkiye Is Bankasi A.S. to minimize payment risks involved with exporting to challenging markets in Asia.
Cross-border trade is a key contributor to economic growth and job creation, and trade finance keeps such trade functioning smoothly.
However, smaller firms in Asia’s frontier economies in particular have trouble getting hold of trade finance.
The TFP aims to fill that gap by providing guarantees and loans to banks in support of trade in the most challenging markets. The TFP does not assume risk in relatively developed markets such as the People’s
Republic of China (PRC), India, Thailand, and Malaysia, but focuses on countries where firms have the most difficulty getting trade finance.
Last year, the five most active bank users of the TFP by country were Bangladesh, Vietnam, Pakistan, Sri Lanka, and Nepal. TFP is also increasingly active in Central Asia, where Turkey has traditional trade ties.
“Turkish banks are well-positioned in both Europe and Asia so they are in a unique position to support trade between the two continents,” said Steven Beck, Head of Trade Finance at ADB. “Developing Asia’s firms will benefit from greater trading opportunities, as will those Turkish firms looking to do business in Asia.”
In 2010, Turkey’s total trade expanded 23 percent on year to $299.4 billion, with exports rising 12 percent to $113.9 billion and imports up 32 percent to $185.5 billion.
Turkey conducts trade with partners in Asia, including PRC, Japan, Indonesia, Malaysia and Thailand but trade with Asia accounts for only a small share of its total trade.
ADB’s trade finance agreements with the five Turkish banks will help Turkey expand its trade to more Asian countries.
In 2010, the TFP supported 783 transactions worth $2.8 billion through over 200 global partner banks. Out of the trade deals supported last year, 277 were conducted by small- and medium-sized enterprises.
Turkey has been a development partner of ADB for two decades, having joined the bank as a non-regional member in 1991 and contributing over $115 million to the Asian Development Fund, which provides concessional loans to ADB developing member countries.
Copyright PPI (Pakistan Press International), 2011