Forint’s waltz making Turkish companies dizzy

ISTANBUL - Hürriyet Daily News

Former Hungarian Prime Minister Ferenc Gyurcsany (2ndR) takes part to a protest against the government in front of the Opera in Budapest on Jan 2. AFP photo

Turkish businessmen who own businesses in crisis-hit Hungary have begun pulling out of the country and returning to Turkey due to a slump in profits caused by currency rates, said the head of a Turkish business association based in Budapest yesterday.

“There is an increasing number of Turkish businessmen leaving the country and shifting their investments to Turkey,” said Osman Şahbaz, head of the Turkish-Hungarian Business Association, speaking to Hürriyet Daily News in a phone interview. There are nearly 1,000 Turkish businessmen in Hungary, he said, noting that some of these business owners were considering shifting their businesses to Germany or the United Kingdom. 

The depreciation of the Hungarian Forint against the euro and U.S. dollar has also hit Turkish businessmen importing products from Turkey and neighboring countries, according to Şahbaz, who also owns Bosfor & Tempo Uno Kr, a textile company in Budapest. Due the forint’s depreciation against foreign currencies, revenues of Turkish businesses decreased by 18 percent in the fourth quarter last year, said Şahbaz. 

Şahbaz said, “The forint depreciated due to speculation the Hungarian government might delay talks with the International Monetary Fund.” He said, “One euro was nearly 282 forints nearly three months ago,” but increasing costs due to exchange rates have not yet been reflected in the prices. “We know that demand has slowed down in the country, and rather than hike prices we prefer to suffer a loss in revenues.” 

Akay Gökçe, head of the Turkish-Slovakian Business Council, said, “Turkish investors are concerned about the current economic situation in Hungary. Political difficulties in Hungary have caused a slowdown in attracting foreign direct investments, including those of Turkish entrepreneurs.” 

As the country is currently on the verge of a financial crisis, more Turkish business should be invited to Hungary, according to Gökçe. The red-tape discourages Turkish businessmen from investing in Hungary, he said. “Even some Turkish businessmen in the country with nearly 3 to 4 million euros of investment face visa difficulties.”

Currently, Çelebi Ground Handling, Global Rulman, Halkbank, Ege Seramik, Sarar, Novaplast, Karya Tour, Anunde Textile, Yataş, Temsa, Parson and Turkcell are among the leading Turkish firms operating in the Eastern European country, said the Turkish Treasury. 

However, “Turkish businessmen should realize the opportunities in Hungary,” said İsmet Güral, head of the Turkish-Hungarian Business Council at the Foreign Economic Relations Board of Turkey, and values of homes, hotels, shops and plants in Hungary slumped significantly due to the economic crisis. “I am also preparing to invest in Hungary,” said Güral, who is also owner of Güral Porcelain, one of the largest porcelain manufacturers in Turkey. 

Turkey’s exports to Hungary decreased from $604.08 million in 2008 down to $466.97 million last year, according to the Turkish Statistical Institute (TÜİK), while imports from Hungary rose to $1.37 billion last year from $1.28 billion in 2008.