HASAN KANBOLAT

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HASAN KANBOLAT
August 02, 2011, Tuesday

Effects of Syria on Hatay’s economy

Businesses in Hatay province in southeastern Turkey until recently had been very pleased with the elimination of the visa regime between Turkey and Syria, which had led to a skyrocketing of the number of people passing through the border crossings between the two countries.

The number of Turks crossing into Syria increased 99 percent, from 733,132 in 2009 to 1,459,580, in 2010. Of the Turks visiting Syria, 59 percent were tourists, 40 percent were involved in cross-border trade and 1 percent were those with residence permits. In 2010, the number of Syrians visiting Turkey rose to 900,000 with a 76 percent increase compared to 2009. However, only 6 percent of Syrians coming to Hatay would stay in Hatay, with the rest travelling to İstanbul by plane or by road. Those staying in Hatay did so to visit relatives or conduct cross-border trade deals. Syrians staying in Hatay from Thursday to Sunday each week were a source of income for businesses in the city. Now people are quite concerned about the cessation of this flow of Turks and Syrians across the border. Given the investments they had made and loans they had obtained anticipating an increasing number of Syrian and Turkish tourists in mind, businessmen are worried about their idle facilities.

Although there has been a visible reduction in the number of tourists and other visitors in Hatay since March 2011, the start of the unrest in Syria, the Syrian middle class has started to transfer some of their wealth to Turkey via Hatay. According to statistics provided by the Central Registry Agency (MKK), there were only 542 new investors from Hatay who entered the stock exchange in the last year, but the number of total investments from Hatay rose from TL 392 million to TL 611 million. Of these 542 new investors from Hatay, 538 made their investments within the last six months. Given that the İstanbul Stock Exchange (İMKB) İMKB-100 index rose 17 percent in the same period, it is clear that new investors from Hatay are playing with big numbers. Each investor who entered the stock market from Hatay acquired shares worth TL 404,000, thereby boosting the per investor portfolio value of this city by 50 percent. The fact that Gaziantep and Şanlıurfa, also provinces neighboring Syria, are among the top provinces exhibiting the highest per investor portfolio value increases strongly suggests that Syrian funds are flowing to Turkey. In the same period, Gaziantep’s portfolio value was TL 190 million and in 2010 it rose to TL 293 million with 528 investors. In Şanlıurfa, the portfolio volume rose from TL 35 million to TL 67 million with 298 investors. Despite a small increase in the number of new investors, the portfolios of Hatay, Gaziantep and Şanlıurfa have doubled and this indicates that rich investors are turning to the stock market from these provinces.

According to the Banking Regulation and Supervision Agency’s (BDDK) Turkey’s Financial Map statistics, foreign currency deposits of real persons in Turkey showed no change between March 2010 and March 2011 while there was an increase in Hatay amounting to TL 404 million ($228 million). This increase continues. A similar increase could be seen in other provinces neighboring Syria, in particular Kilis, where an increase of 48-percent was higher than the one in Hatay in terms of percentages but less in terms of volume. The increase in foreign currency deposits of companies in Turkey was 36 percent, but it was 101 percent in Hatay. Thus, real persons and companies in Hatay deposited some $410 million in banks during the last year.

The flow of money from Syria to Turkey usually goes via jewelers or relatives in Turkey. The sums deposited to a jeweler in Syria are transferred to another jeweler in Hatay with a 3-5 percent commission or is carried over the border by relatives. Then they are deposited in Turkish banks with references to the addresses of relatives in Turkey.

In the face of tragic incidents in Syria, it appears that Syrians are trying to save their money and future via Hatay.