Can Foreign Companies Enter the Turkish Public Procurement Market? (2)

In the second piece of this article series, I will discuss the extent of Turkish public procurement markets openness to foreign competition. According to the official statistics of the PPA, the total value of public procurement conducted through tenders within the scope of the PPL was 128.2 billion TL(approximately 41 billion USD) in year 2015. The rest of the 140 billion TL (approximately 45 billion USD) mentioned yesterday is composed of procurement according to exemption clauses of the PPL and direct procurement clauses of the PPL, for which there is not much data available to conduct analyses in this regard. Of the 128.2 billion TL total, 30,5% in terms of contract value (39,2 billion TL) was below thresholds, and 69,5% (89 billion TL) was above thresholds. In terms of the number of tenders, 88,4% (82.078) were below thresholds and 10.795 (11,6%) were above thresholds. This means that contracting entities had the discretion to close the tender to foreign competition only at 30,5% of total contract value. Of the 39,2 billion TL below thresholds, only 4,5 billion TL (7.625 tenders, apprx. 1,5 billion USD) was opened to foreign competition. This data shows that contracting entities had used their discretion to close tenders to foreign competition heavily in 2015. But, even with these figures the total value of procurement open to foreign competition was 93,5 billion TL in year 2015(apprx. 30 billion TL), constituting nearly two thirds of the total public procurement value.     

Out of the 93,5 billion TL open to foreign competition, in 26 billion TL worth of contracts (total 1.266 tenders), contracting entities applied price advantage for domestic tenderers. This means that in only 27% of contract value, the domestic tenderers benefited from the price advantage clause. The 26 billion TL includes just services and works, since in goods tenders price advantage clause is applied in favor of domestic origin goods. Out of the total of 19,3 billion TL worth of goods procurement open to foreign companies, 7,5 billion (apprx. 39%) TL worth of contracts was conducted by tenders in which price advantages were applied for domestic origin goods.

Let’s summarize this statistical analysis, with outcomes for foreign companies who submitted tenders in the Turkish public procurement market in year 2015. In 2015, only 340 foreign companies were awarded 360 contracts worth 2 billion TL (apprx. 650 million USD) This is just 1,5% of total contract value in 2015. So even though, a huge public procurement value is open to foreign competition, foreign companies were either reluctant to submit tenders in Turkey or unsuccessful in tenders they attended. In the next article of this series, I will discuss how foreign companies can engage in the Turkish public procurement market, the challenges, the opportunities and some tips to be successful in Turkish public tenders. 

Umit ALSAC
Public Procurement Consultant
E-mail: ualsac@gmail.com