2011-10784. Executive-Led Eurasian Trade Mission

AGENCY:

International Trade Administration, Commerce.

ACTION:

Update.

Mission Description

The United States Department of Commerce, International Trade Administration, U.S. and Foreign Commercial Service (CS) is organizing a Trade Mission to from June 20-24, 2011. This Executive led mission will include representatives from a variety of U.S. firms specializing in, but not limited to the following Industries:

• Oil and Gas
• Medical and Health Care
• Information and Communication Technologies (ICT)
• Environmental Technologies
• Shipping Transportation and Freight Forwarding

Mission participants will be introduced to international agents, distributors, and end-users whose capabilities and services are targeted to each participant's needs. This mission will contribute to National Export Initiative goals through increased sales of oil and gas equipment/services; information and communication technologies, medical and health care, environmental technologies, shipping transportation and freight forwarding, etc. in Turkey and Kazakhstan.

Participants will have an opportunity to meet with major international companies, integrated service providers, potential agents and distributors as well as potential public and private buyers in Istanbul and Ankara, Turkey and Almaty, Kazakhstan. The mission will include matchmaking meetings in different cities including site visits of commercial interest. We are targeting 15 U.S. company representatives responsible for their corporate activity in Eurasia.

Commercial Setting—Turkey

Turkey, the world's 17th largest economy, is a major consumer of oil and gas. Although oil and gas produced in Turkey currently meets only a small fraction of the country's demand, there are significant prospects offshore in the Black Sea, and onshore in the Thrace region of western Turkey, and the East and Southeast. Between 2002 and 2009, 747 wells were drilled. In 2009 alone, $716 million was spent for oil and gas exploration and production in Turkey. As of today, only 20% of onshore prospects and 1% of offshore prospects have been explored. Chevron and ExxonMobil announced important exploration efforts in 2009 and 2010 in the Western Black Sea Region. Companies offering technologies and services for exploration and production can also find a market in the geothermal sector: Turkey ranks No.1 in Europe and 7 in the world in terms of geothermal power potential.

Turkey is a crucial corridor between the energy-rich Caspian and Middle East and Europe. The planned 3,300 km NABUCCO natural gas pipeline will link Caspian and Middle Eastern suppliers through Turkey to Central Europe, and will create major opportunities for U.S. companies. The total capacity of the pipeline will be 25 to 31 BCMA. Estimated investment costs including financing costs for the entire pipeline system will be well over $10 billion. Other potential pipeline projects include Italy—Greece—Turkey Interconnector (ITGI) and Trans Adriatic Pipeline (TAP).

In addition to oil and gas exploration and production activities and pipelines, new refinery and petrochemical plants are planned over the next decade, with a projected increase of over 90% in refining capacity by 2019, to over 1.3 million BPD.

Turkey's oil and gas market provides excellent opportunities for U.S. companies within the following product areas:

1. Offshore and onshore oil and gas exploration and production equipment and services,

2. 2-D and 3-D Seismic equipment and engineering services,

3. Shale gas exploration and production equipment and services,

4. Horizontal Drilling equipment and services,

5. Petrochemical processing equipment and services,

6. Geothermal energy exploration and drilling equipment and engineering services,

7. Coal-bed methane production equipment and services,

8. Compressors, turbines, measuring meters, SCADA systems, and pumps for pipelines,

9. Pipeline construction equipment and engineering services,

10. Refinery processing equipment and refinery auxiliary units,

11. Oil and Gas Storage Systems.

Turkey has a population of approximately 75 million people and is a growing market for the medical products and services sectors. The Ministry of Health (MOH) is the largest provider of healthcare and the only public provider of preventive services in Turkey. At a national level, MOH is responsible for the country's health policy and health services. In fiscal year (FY) 2011, approximately $11.5 billion was allocated to the Turkish Ministry of Health (MOH) by the Government of Turkey (GOT). The MOH budget showed an increase of 40% year over year. A key driver behind Turkey's continued double-digit growth in health expenditure is the country's improved health insurance coverage. The implementation of state-funded health insurance for the lowest earners is expected to make a significant contribution to continued health expenditure growth over the next five years.

The construction of many private hospitals offers increased sales opportunities and less complicated procurement requirements compared to the confusing tender requirements used by government agencies. The Ministry of Health is also pursuing a number of Public Private Partnership (PPP) projects with Turkish and foreign companies to establish healthcare campuses, large medical complexes with several hospitals, labs and recreational areas, in large cities. These projects are also business opportunities for U.S. medical companies and healthcare service providers.

The Republic of Turkey has a number of private care facilities focused on cardiovascular care, OBGYN, orthopedics and minimally invasive outpatient ambulatory procedures. A number of private hospitals are procuring angio-cath, radiological equipment and advanced surgical and life support technologies. The procurement of air ambulances and diagnostic medical devices is also being considered. The MOH is working to establish a Council of Pharmaceuticals and Medical Devices, which will be independent from the MOH with the authority to regulate and control the medical equipment, pharmaceuticals, cosmetics market in Turkey.

Medical tourism is a new sector developing in Turkey. Increasingly, patients from Europe and the Middle East go to Turkey for medical treatment, as private healthcare is becoming more affordable. Turkey has become a popular destination for health care among these countries because most of the patients have already vacationed in Turkey and are comfortable with the country's infrastructure.

Currently, medical procedures in demand vary from simple procedures to fertility treatment, cosmetic surgery, and laser surgery. The most popular procedures are cosmetic and dental procedures, yet Turkey also has a good reputation in cardiology, ophthalmology, endocrinology, gastroenterology, rheumatology, nephrology, oncology, neurology, dermatology, gynecology/obstetrics, orthopedics, organ transplantation, and otolaryngology (ear, nose & throat). Some of these surgeries have long waiting lists in European countries, which is another reason why Turkey is an attractive country for medical procedures.

Turkey's health care market provides excellent opportunities for U.S. companies within the following product areas:

• Disposable products
• Advanced med/surgery equipment including angio-cath facilities
• Radiology and pathology
• Advanced diagnostics systems
• Optical devices
• Parts and components of medical devices
• Electronic instruments and appliances for physical and chemical analysis
• Vaccines
• Orthotic and prosthetic equipment
• OR/ER systems
• Dental equipment and devices

Turkey's Information Communication Technologies (ICT) market size is estimated to have reached $27.3 billion in 2010, with a breakdown of $20 billion in Telecommunications and 7.3 billion USD in Information Technologies. The Turkish ICT market continues its rise as one of the key growth markets in Turkey with an estimated growth of 8-10% for 2011, despite the economic global crisis.

Current PC penetration levels are estimated at 15%, but the Government aims for computer ownership at 51% and Internet usage at 48% by 2013. Meanwhile, a survey of Turkish primary and secondary schools showed that in 40% of schools, computers are still not integrated into education.

This is expected to significantly increase as the Ministry of Education plans to increase the number of computers and Internet connection. Schools in remote areas are to be connected to the net through satellite with the cooperation of the Turkish satellite company Turksat.

The consumer electronics market has significantly increased its share in the market. The consumer electronics market in Turkey is estimated at 3 billion USD. While the rest of the world averaged an increase of 10% in the consumer electronics market, Turkey averaged 35% annual growth in 2010.

In the Telecommunications market, Turk Telekom has 17.3 million fixed line subscribers, 6 million ADSL lines and 12.4 million GSM mobile subscribers through AVEA. Turk Telekom owns 99.9% of TTnet, Argela, Innova, Sebit, Sobee ve AssisTT companies. It also owns 81% of AVEA, one of the three GSM mobile operators in Turkey. Turk Telekom is the minority share of ALBtelecom in Albania. 55% of the shares of Turk Telekom belong to Ojer Telecom Inc. and 30% belongs to the Turkish Treasury. The remaining 15% is floated in the Istanbul Stock Exchange (IMKB). The value of Turk Telekom was over US $15 billion in 2010.

Turk Telekom will invest $3.42 billion thru 2010 for its Next Generation Network (NGN) project and will also replace its rural area switches with small telephone switches over 10,200 switch centers. Turk Telekom is in the process of introducing IP TV. Fixed line subscribers can now change their operators without changing their phone numbers as a result of the fixed line number portability regulation, which came into force in September 2009.

The three GSM cellular operators, Turkcell, Vodafone and AVEA and the fixed line operator Turk Telekom invested in equipment and services at a total value of $2-3 billion to expand their services. Turkcell has almost 36 million subscribers (56.6% of the total GSM cellular subscribers), Vodafone has 15 million (24.5% of the subscribers) and AVEA has 12 million almost 18.9% of the subscribers.

The total number of GSM cellular service subscribers reached almost to 64 million with an approximate penetration rate of almost 89%. The total telecom equipment and service market grew to $19.3 billion and is expected to expand in 2010 as the GSM sector is the driving force and the subscribers are expected to use more and more 3G services. Total number of 3G subscribers reached to almost 6 million while 2G subscribers decreased to 58 million. Fixed line subscribers are almost 17 million, reaching almost 100% penetration per house basis. Subscriber penetration for fix line is 23.5% and is not expected to increase anymore due to hard competition from the GSM cellular operators.

With the introduction of 3G last year; IPTV, online services, content and media services, E-business, personalized services, music download, games, multi-play, video services, and other mobile entertainment, has been developing rapidly, creating new business areas and revenues. BTK (Turkish Telecom Authority) is expected to conduct tenders for WiMax licenses in 2011.

Over 40 private long distance telephone companies have been also operating over the last 5 years, mostly using VoIP via an interconnection agreement with Turk Telekom. Some of these companies have established or continue to establish their own network.

This attractive consumer electronics trend has lured many international and national electronic retail supermarkets. German Mediamarkt, British Electro World, Turkish Teknosa, Vatanbilgisayar and Gold Bilgisayar have been competing for a number of years in Turkey.

Turkey's ICT market provides excellent opportunities for U.S. companies within the following product areas:

• Consumer Electronics
• Notebook PC's
• Audio Visual Equipment
• Wireless equipment/services
• IPTV
• WiMax (awaiting law)
• VDSL
• 3G & 4G related technologies/services

Commercial Setting—Kazakhstan

Kazakhstan has the Caspian Sea region's largest recoverable crude oil reserves and accounts for approximately two-thirds of the roughly 1.8 million barrels per day (bpd) currently being produced in the region. The Government of Kazakhstan and foreign investors continue to focus heavily on the hydrocarbons sector, which so far has received approximately 60% of the estimated $58 billion in foreign direct investment in Kazakhstan since 1991, and makes up approximately 53% of its export revenue. Existing oil extraction sites offshore in the North Caspian, combined with onshore fields currently under development, mark Kazakhstan as a potentially major near-term oil exporter. Already its oil production has reached 1.4 million bpd, with daily output expected to total 2.6 million bpd by 2015. As a result, foreign investors are increasing their focus in its energy infrastructure, including oil transportation routes such as the Baku-Tbilisi-Ceyhan pipeline.

Oil industry sources estimate that Kazakhstan could eventually attract up to $140 billion of foreign investment in its oil infrastructure. Industry experts and the U.S. Commercial Service in Almaty estimate that the current market for oil and gas field equipment and services will grow to $7.5 billion in 2010, and will continue growing at 15-20% annually over the next three years. Kazakhstan as yet has no experience in offshore production and operations. This experience gap offers many opportunities for U.S. service companies in rig work, support infrastructure, and environmentally sensitive technologies. The Caspian Basin's oil-bearing formations are generally quite deep (15,000 feet), under considerable pressure, and often contain a high degree of sulfur and other contaminants, making special drilling and processing equipment necessary. Additionally, U.S. oil and gas field equipment suppliers have the potential for solid growth over the next decade as new fields are brought on-stream and secondary recovery methods are introduced to existing deposits.

Kazakhstan's oil and gas market provides excellent opportunities for U.S. companies within the following product areas:

1. Oil and Gas Well Development;

2. Field Operation;

3. Offshore Oil and Gas Exploration/Exploitation Equipment;

4. Gathering, Treatment, Transportation and Storage of Oil, Petrochemical Products and Natural Gas;

5. Pumps, Fittings and Valves;

6. Gas Detection and Monitoring Systems;

7. Oil and Gas Field Chemicals;

8. Pipeline Construction Equipment; and

9. Pipeline Corrosion Controls.

Healthcare Sector

The sustainable growth of Kazakhstan's economy during the past years is reflected in all sectors of the country's economy, including healthcare. Providing the population with quality healthcare services is one of the government's priority tasks. Around USD2.8 and USD2.5 billion were allocated for healthcare sector from the state budget in 2010 and 2011 respectively. Role of the government is very significant, 80% of healthcare institutions in Kazakhstan are state-owned thus the principal end-users of medical equipment are state-owned healthcare institutions. Every year the government spends approximately USD170-200 million for purchasing medical equipment. Local production is relatively insignificant. Local manufacturers produce basic medical equipment that do not require innovative technologies. Market demand for specific complex medical equipment is met entirely by imports which makes up 90% of total market.

The most demanded medical equipment and services include:

• Diagnostic equipment;
• Medical lasers;
• Endoscope;
• Surgery equipment.

The pharmaceutical market is one of the most stable markets in Kazakhstan and has not been significantly affected by the economic crisis. In 2009, its volume amounted to approximately $800 million with a 2% market growth. Local production is estimated as 12% of the total pharmaceutical market. According to statistics, government purchases in Kazakhstan in 2009 are estimated at $368.2 million. The share of local manufacturers in government purchases is estimated at 11.8%. State procurement in 2009 can be broken down into three categories as follows: Hospital purchases at 49%, ambulatory purchases at 30%, and centralized purchases made by the Ministry of Health at 21%. The population of Kazakhstan in 2009 was estimated at 16.2 million with 70.2% of the population aged between 15 and 65 years. Approximately 7.9% of the population is over 65 and 21.8% is under 15 years of age.

Based on market statistics, U.S. companies producing the following pharmaceutical products have strong prospects:

• Systemic antibacterials,
• Oncology medications,
• Antihemorrhagics,
• Anti-diabetic medications, and/or
• Vaccines,
• Blood substitutes and perfusion solutions.

Telecommunication Market

The telecommunications sector remains one of the most dynamic and fastest developing sectors in Kazakhstan's economy. The country's telecom revenues in 2009 amounted to $2.8 billion, a 8.3% increase from 2008.

The following segments make up the telecommunication market in Kazakhstan: Mobile communications, fixed line communications, Internet and Data Transmission, Radio and TV broadcasting.

The market breakdown in 2009:

Mobile Communications—52.8%

Fixed Line Communications—20.1%

Internet—8.5%

Data Transmission—2.2%

TV Broadcasting—3.1%

Other—13.4%

In 2005, the government of Kazakhstan adopted a law that sought to demonopolize and liberalize the telecommunications market. The program was aimed at decreasing the monopoly of Kazakhtelecom, Kazakhstan's leading telecom operator (and over 50% government owned). Its main provision was to provide all operators equal access to the country's telecommunications network and to initiate a system of alternative operators of international and long-distance services (by abolishing Kazakhtelecom's exclusive license). In reality, the program has had little impact on Kazakhtelecom's dominance, as the firm still has a monopoly on telecommunication services, which has resulted in high tariffs for long distance and international phone communications and Internet access. There is a hope that Kazakhstan's goal to enter the World Trade Organization will positively impact the current situation in regards to market liberalization, as it will require the government to reexamine its regulatory oversight, which is currently fragmented.

Based on the government program on Development of the Telecommunication Sector, the best prospects for U.S. suppliers of the telecommunication equipment are:

• 3G telecommunication equipment (WiMAX);
• TV digital broadcasting equipment;
• Satellite telecommunication systems for providing Internet access and phone communication in remote areas;
• Equipment for digitization of the existing telecommunication networks including digital and/or interactive TV systems working on a frequency of 40 GHz and more.
• Equipment for DWDM technologies.

Mission Goals

The trade mission will assist representatives of American companies responsible for business activity in Eurasia with their efforts to identify profitable opportunities and new markets for their respective U.S. companies and to increase their export potential. The summary of results expected from the mission includes finding potential partners, agents and distributors, joint venture partners, and provide market knowledge for future expansion.

Mission Scenario

In Kazakhstan, mission members will be presented with a briefing by the U.S. Embassy's Commercial Officer, the sector specialists and other key Kazakh government and corporate officials. Participants will also take part in business matchmaking appointments with Kazakhstani private sector companies.

In Turkey, mission members will also be presented with a briefing by the U.S. Embassy's Commercial Officer, the Commercial Specialist for the various sectors represented and other key Turkish government and corporate officials. Participants will take part in business matchmaking appointments with Turkish private sector companies, which would be potential candidates for agent/representative or distributor. Depending on the availability, potential buyers may also be scheduled for meetings. The venue will be Ankara, the capital of Turkey where the public sector is headquartered and Istanbul where headquarters of most of the private sector is located.

U.S. participants will be counseled before and after the mission by the domestic mission coordinator. Participation in the mission will include the following:

• Pre-travel Webinars on subjects ranging from industry briefings to business practices in Turkey and Kazakhstan.
• Pre-scheduled meetings with potential partners, distributors, end users, or local industry contacts in Istanbul and Ankara, Turkey;
• Transportation to and from all airports and all mission-organized meetings, excluding air transport;
• Meetings with key Kazakh and Turkish Government decision makers and private sector firms;
• Participation in networking receptions in Turkey and Kazakhstan; and
• Meetings with CS Turkey's and CS Kazakhstan's sector specialists in Istanbul and Ankara, Turkey and Almaty, Kazakhstan.

Mission Timetable

Mission participants will arrive in Almaty, Kazakhstan on Sunday, June 19, 2011 and the mission program will take place from June 20-24, 2011. Departure to the United States or other onward destinations will be on Saturday, June 25, 2011.

Sunday, June 19, 2011

Almaty, Kazakhstan

• Arrival in Almaty, Kazakhstan

Day 1

Monday, June 20, 2011

Almaty, Kazakhstan

• Agenda Review and Market briefings by U.S. Embassy officials
• Matchmaking Meetings
• Networking Reception

Day 2

Tuesday, June 21, 2011

Almaty, Kazakhstan

• Possible Site Visit
• Matchmaking Meetings

Day 3

Wednesday, June 22, 2011

Istanbul, Turkey

• Morning departure to Istanbul
• Arrive Istanbul at noon
• Afternoon Embassy Briefing
• Industry Briefing
• Evening reception hosted by Consul General

Day 4

Thursday, June 23, 2011

Istanbul-Ankara, Turkey

• One-on-one matchmaking meetings with potential agents, distributors or partners
• Evening Departure to Ankara

Day 5

Friday, June 24, 2011

Ankara, Turkey

• 1-1 matchmaking meetings (afternoon)
• Sector briefings
• Evening Networking Reception at Ambassador's Residence

Day 6

Saturday, June 25, 2011

Ankara-Istanbul, Turkey

• Departure to Istanbul or to Europe for U.S. flights or weekend touristic site visits in Istanbul

Participation Requirements

All parties interested in participating in the Commercial Service Eurasian Trade Mission must complete and submit an application package for consideration by the Department of Commerce. All applicants will be evaluated on their ability to meet certain conditions and best satisfy the selection criteria as outlined below. A minimum of 15 and a maximum of 20 companies will be selected to participate in the mission from the applicant pool. U.S. companies already doing business with Turkey and Kazakhstan as well as U.S. companies seeking to enter these markets for the first time may apply.

Fees and Expenses

After a company has been selected to participate in the mission, a payment to the Department of Commerce in the form of a participation fee is required. Participation fee will be as follows:

SME ^[1] all stop cost: $3,160.

Large company all stop cost: $4,585.

One country cost: At actual rate only upon request.

Expenses for travel, lodging, most meals, and incidentals will be the responsibility of each mission participant. Delegation members will be able to take advantage of Embassy rates for hotel rooms.

Conditions for Participation

• An applicant must submit a completed and signed mission application and supplemental application materials, including adequate information on the company's products
• And/or services, primary market objectives, and goals for participation. If the Department of Commerce receives an incomplete application, the Department may reject the application,
• Request additional information, or take the lack of information into account when evaluating the applications.
• Each applicant must also certify that the products and services it seeks to export through the mission are either produced in the United States, or, if not, marketed under the name of a U.S. firm and have at least 51 percent U.S. content of the value of the finished product or service.

Selection Criteria for Participation: Selection will be based on the following criteria:

• Suitability of the company's products or services to the Eurasian Region equipment and services market;
• Diversity of company size, type, location, demographics and traditional under representation in business in Turkey and Kazakhstan, including likelihood of exports resulting from the mission;
• Consistency of the applicant's goals and objectives with the stated scope of the mission. Referrals from political organizations and any documents containing references to partisan political activities (including political contributions) will be removed from an applicant's submission and not considered during the selection process.

Timeframe for Recruitment and Applications

Mission recruitment will be conducted in an open and public manner, including posting on the Commerce Department trade missions calendar—http://www.ita.doc.gov/​doctm/​tmcal.html— and other Internet Web sites, publication in domestic trade publications and association newsletters, direct outreach to internal clients and distribution lists, posting in the Federal Register, and announcements at industry meetings, symposia, conferences, and trade shows.

The Department of Commerce International Trade Administration (ITA) is amending the January 5, 2011 Federal Register Notice (76 FR 537, Jan. 5, 2011) announcing the executive-led Oil & Gas Equipment and Services Mission to Kazakhstan and Turkey from June 20-24, 2011 to extend the deadline from April 29, 2011 to May 7, 2011 for applications for representatives of U.S. firms to participate in the mission. Because of the need for participants to make flight arrangements and obtain visas, ITA will review applications and making participation decisions on a rolling basis starting April 29th. We will inform applicants of selection decisions as soon as possible after April 29, 2011. Applications received after May 6, 2011 will be considered only if space and scheduling constraints permit.

Interested individuals are encouraged to apply as soon as possible. Participation is limited to a maximum of 20 companies.

Contact Information

U.S. Commercial Service Domestic Contact

Brendan Kelly, Tel: [phone], E-mail: [e-mail].

Jessica Arnold, Tel: [phone], E-mail: [e-mail].

U.S. Commercial Service Almaty, Kazakhstan

Jennifer Kane, Senior Commercial Officer or Azhar Kadrzhanova, Commercial Specialist, U.S. Consulate General—Almaty, 41 Kazybek bi Street, Almaty 050010, Kazakhstan, Tel.: [phone], Fax: [phone], E-mail: [e-mail] .

U.S. Commercial Service Ankara, Turkey

Michael Lally, Senior Commercial Officer or Serdar Cetinkaya, Senior Commercial Specialist, U.S. Embassy—Ankara, Tel: [phone], Fax: [phone], E-mail: [e-mail].

U.S. Commercial Service Istanbul, Turkey Gregory Taevs, Principal Commercial Officer, Tel: [phone], Fax: [phone], E-mail: [e-mail].

Elnora Moye,

Commercial Service Trade Mission Program, U.S. Department of Commerce.

Footnotes

1.  An SME is defined as a firm with 500 or fewer employees or that otherwise qualifies as a small business under SBA regulations (see http://www.sba.gov/​services/​contractingopportunities/​sizestandardstopics/​index.html). Parent companies, affiliates, and subsidiaries will be considered when determining business size. The dual pricing reflects the Commercial Service's user fee schedule that became effective May 1, 2008 (see http://www.export.gov/​newsletter/​march2008/​initiatives.html for additional information).