nCa Report
The Organization of Turkic States (OTS) established the Turkic Investment Fund during the extraordinary summit of the Organisation of Turkic States on 16 March 2023 in Ankara. The founding countries were Azerbaijan, Kazakhstan, Kyrgyzstan, Uzbekistan and Turkey.
Baghdad Amreyev, who had completed his tenure as the Secretary General of the OTS, was appointed as the President of the Turkic Investment Fund.
Complete text of “Agreement of the Orzanization of Turkic States – On establishing the Turkic investment fund”
https://lex.uz/docs/6784321
According to the OTS website, the Turkic Investment Fund is the first and main joint financial institution established by Turkic States and aims to mobilize the economic potential of Member States of the Organization Turkic States to strengthen the trade and economic cooperation between them and to implement joint projects.
It will mainly support small and medium-sized businesses (SMEs) by providing them finance through the Fund’s assets as well as other competent financial institutions.
The priorities of the Fund will be fostering entrepreneurship, growth, job creation, research and innovation, socioeconomic development of the Member States.
The Fund shall support the following areas:
• Agriculture (food processing, agribusiness, agro parks etc.),
• Logistics and transport,
• Energy efficiency, renewable and alternative energy,
• Industrial projects in manufacturing (textile, motor vehicles, pharmaceuticals and medical equipment, aviation equipment, chemical etc.),
• Information and Communication Technologies,
• Tourism,
• Infrastructure projects,
• Public Private Partnership projects,
• Human development (education, health, research centres etc.)
• Creative industries (digital economy, cultural activities music, movie, design etc.)
• Natural and urban environment schemes (water, waste, clean air, urban transport etc.).
The first inaugural meeting of the Board of Governors of the Turkic Investment Fund (TIF) member countries was held in Istanbul (Turkey) in May 2024.
The initial capital of TIF will be $500 million. According to estimates of the Turkish Ministry of Finance, by the end of 2024 the Turkic states will occupy an important place in the world economy, reaching an economic volume of $1.9 trillion and a population of 178 million people.
The Turkish daily Sabah commented in a report on 19 May 2024 that TIF is inspired by institutions such as the European Bank for Reconstruction and Development and the Asian Development Bank and is headquartered in Istanbul.
“The Turkic Investment Fund stands as one of our concrete steps in recent years,” Vice President Cevdet Yılmaz told an inaugural meeting of the TIF Board of Governors in Istanbul.
“It marks a significant milestone in our collective efforts to strengthen the Turkic world in all areas and make it more resilient against various challenges.”
The fund’s foundation aligns with the Turkic World 2040 Vision, a strategic road map adopted in 2021 to enhance collaboration across member states.
The member states of the OTC, formerly called the Turkic Council, boast a combined population exceeding 170 million, a trade volume of about $1.2 trillion and a gross domestic product (GDP) surpassing $1.5 trillion, according to Yılmaz.
“Our member states’ exports reached $558 billion in 2022. This is indeed a significant figure. We have a share exceeding 2% of global trade. However, only 6% of this export is between member states. Of the $558 billion in exports, only $33 billion was conducted between member countries. This shows how much work we have to do,” he noted.
The TIF is planned to collaborate with international and national financial institutions, as well as trade chambers and private entities. It aims to facilitate regional trade, enhance economic cooperation, and create new opportunities for member countries.
In addition to the founding members of OTS – Türkiye, Azerbaijan, Kazakhstan, Kyrgyzstan, and Uzbekistan – Hungary, an observer state, has also joined TIF. The charter of the TIF permits the other countries to join TIF with the consensus of OTS.
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The Kazakh news service Kazinform recently interviewed Ambassador Baghdad Amreyev, the President of TIF.
Here is the text of the interview from Kazinform:
— The Turkic Investment Fund has officially started its activities. What are the main objectives of the fund and its current capital?
— Two years ago, at the Summit of the Organization of Turkic States, the leaders of seven Turkic countries decided to establish the Turkic Investment Fund. The main objectives of the fund are to unite the economic potential of our countries, promote mutual trade, support entrepreneurship, especially joint ventures, and finance projects that promote economic integration and rapprochement between our countries.
Of course, the fund will mainly finance projects that will meet the interests of all our countries. However, financing projects in itself is not the main task of our fund, because other financial institutions and banks exist for this. The uniqueness of our fund is that it was created to support joint projects aimed at strengthening the economic potential and integration of our countries. We strive to develop ties between states, and the heads of our countries are making efforts to do this within the framework of the Organization of Turkic States and other structures. But this is not enough, entrepreneurs also need financial support. This is exactly why the fund was created – to facilitate the implementation of joint projects.
The second important task of the fund is to use this unique mechanism to attract foreign investment. And although foreign investment is already coming to our countries, we want more. To do this, we plan to actively work with international financial institutions, attracting their capital for joint projects. There are projects that require significant resources, and we will use the potential of global funds and banks to implement them. These institutions are always looking for ways to minimize risks, and our fund, representing seven countries, is a reliable partner for them. Of course, we will take full advantage of their interest.
The third task of the fund is to promote the development of innovative sectors of the economy. Today, many new areas require relatively small investments, but can bring significant results. We strive to support all innovative projects, especially in the field of digitalization, in order to create the most favorable conditions for the development of technologies in our countries and increase their competitiveness in the global market. At the same time, we will promote solutions to social problems through projects in science, technology, education and other areas. Our fund is universal and is not limited to financing only – otherwise we would be a bank, not a fund.
— What is the fund’s current capital?
— The initial capital of the fund was determined at 500 million dollars. This is the first step. We have an agreement between the countries to increase the capital several times in the coming years, to 2-3 billion dollars. To successfully attract foreign investment, we need to have solid equity capital. This is our goal, which we are actively working on. Our partners perceive our plans positively, and I am sure that they are quite feasible.
— Which funds, individuals or organizations contributed funds to the fund’s capital?
— Since we are an interstate financial institution, the main capital is formed by contributions from our countries. In addition, we intend to attract investments and resources from other sources, including large global investment institutions, banks and funds. These organizations are also interested in cooperation with us, and I am sure that it will be mutually beneficial.
We are already negotiating. Just recently, as you know, Astana hosted the annual meeting of the Arab Coordination Group, which includes funds such as the Saudi Fund for Development, the Kuwait Fund for Development, the Abu Dhabi Fund for Development, the Qatar Fund, and the Islamic Development Bank. This is a significant demonstration of trust in Kazakhstan. They held serious negotiations with our government and also expressed interest in jointly financing projects in Kazakhstan and other countries of the Turkic world. I would like to express my gratitude to Kazakhstan for organizing this meeting.
We also cooperate with European and Asian financial institutions to attract maximum investment for large projects that will be important for our countries.
— Can you now name the funds or organizations that have already invested in your fund?
— It is still premature, as we are a new fund. The decision to create it was made two years ago, and this period was spent on developing the legal framework, approving documents and organizational measures. Usually, it takes 4-5 years to create a fund, but we were able to complete everything in two years. We officially began functioning in May [2024], and we plan to launch operational activities on November 1 [2024], after which we will be able to accept projects for financing. We are currently holding meetings with various partners, but the consideration of projects will begin after November 1. Our countries have high hopes for our fund, especially leaders and entrepreneurs. This is a truly unique, multi-format and multi-vector mechanism, and I hope that we will live up to these expectations.
— What specific projects will the fund’s investments be directed towards?
— The fund’s activities will cover almost all economic spheres, within the framework of which projects useful for our countries and entrepreneurs wishing to work at the interstate level can be implemented. The main goal is to create joint ventures and projects that contribute to the growth of the common economic potential. Everything that can bring our peoples closer together is the object of our efforts. We will work in all economic spheres to become an important mechanism for bringing our fraternal peoples closer together and integrating the economies of the Turkic countries.
— What criteria are used when selecting projects?
— The requirements for projects are the same as those of commercial banks. We are not aiming for big profits, as we are a fund for assistance. The effect of our work will be seen in the successful implementation of joint projects that will benefit our countries. But at the same time, we are not going to lose money, the return of capital is mandatory. All conditions are similar to those of commercial banks, but we offer more benefits and privileges, and fewer banking interests.
— What new technologies and innovations does the fund intend to support?
— We are particularly interested in startups in the digitalization field, as there are many promising projects here. We will consider them with great attention, as we want our fund to be effective from the very beginning and achieve its goals with minimal costs.
— Does the fund consider projects in the military sphere?
— The military sphere is not related to the economy, so our activities will not cover military issues. Since we are a financial institution and work within the framework of economic mechanisms, the military sphere is not in our area of interest. /// nCa, 20 September 2024