Opportunities for Regional Cooperation in the Defense Industry

Haluk BAYRAKTAR, CEO of BAYKAR and Chairman of the Board of SAHA Istanbul, Murat İKİNCİ, General Manager of Roketsan, Tareq Abdulraheem Al-HOSANI, CEO of the Tawazun Economic Council, and Faisal Al-BANNAI, Chairman of the Board of EDGE Group participated as panelists in the "Regional Cooperation Opportunities in Defense Industry" panel moderated by Murat ÖZDEMİR, Advisor to the President of Investment Office of the Presidency of the Republic of Türkiye.

Haluk BAYRAKTAR, Chairman of the Board of SAHA Istanbul, opened the discussion by briefly stating that the United Arab Emirates is an important partner of Türkiye and that the partnership between the two countries has an extremely significant potential. "The United Arab Emirates makes critical investments in innovation and new technologies. We are talking about an important potential here. When compared to previous years, Türkiye's exports are increasing by 15% in dollars. Exports will increase to US$ 4 billion this year from US$ 3.2 billion in 2021.

Tareq Abdulraheem Al-HOSANI, CEO of the Tawazun Economic Council, stated that SAHA EXPO contributed significantly to the development of the industry in terms of innovation, creativity, competitiveness, and quality by revealing the power and potential of the ecosystem, and that he was impressed by this event supporting the ecosystem and made assessments on Tawazun's current collaboration opportunities and the partnership potential of the two countries. “The 30th anniversary of the Tawazun Economic Council is soon to arrive. Over time, Tawazun's role has changed. We just underwent a reorganization, so we now report directly to the Presidency. We collaborate with the National Security Agency. We support the R&D efforts in our industry. The off-set program is managed by us. This constitutes the economic dimension of our activities. Türkiye and the United Arab Emirates have had these connections for 20 years. We can see the caliber of the Turkish products we import. The cost side has been professionally managed over the past 20 years. However, there have been minor issues in integrating these technologies into our own systems. A unique partnership model has been developed between the two countries when we consider Turkish products in general. Our industry is still growing today. The ecosystem in Türkiye offers us important opportunities. Here, we are not only expanding our collaboration at the product level. This collaboration benefits our ecosystem as well. In this way, we can make joint production, and I believe with investments, we can deepen the sector's technological base. We strive for the highest levels of quality and standards. We are talking about distinctive and highly competitive products. We can see for ourselves how qualified and high caliber they are.”

Faisal Al-BANNAI, Chairman of the Board of EDGE Group, stated that 23-24 companies in various sectors operate under EDGE Group and that they call themselves a technology company. AL-BANNAI said that despite being a young business, they had already developed and launched 70 products. "We are still a growing country in terms of the defense industry. We are one of the major actors. There are serious opportunities for Türkiye. In terms of the ecosystem, there can be cooperation opportunities between big businesses, and in this regard, we are in talks to develop new platforms and create new solutions. There is also the opportunity to cooperate with small and medium-sized companies. When we look at the industries in which we are now active, we have orders for subsystems and solutions that span 5-6 years. What we need, what kind of requirements we are talking about are quite clear. There are a lot of prospects for the Turkish ecosystem when we consider the two countries' potential.”

Murat İKİNCİ, General Manager of Roketsan, as the final speaker of the first session, stated that Roketsan has made serious investments in R&D, especially in missile technologies. "We have more than 40 projects underway. Our R&D budget for new generation missile systems exceeds US$ 30 million. Roketsan's annual revenue is approximately US$ 800 million dollars. Exports generate more than US$ 200 million. Our export rate is increasing very rapidly. Roketsan is a corporation that expands through exporting rather than by focusing on the domestic market. Roketsan can be categorized as a technology company. We develop new technologies using advanced materials. We develop many things not only for the defense industry, but also for other industries. For example, we are developing fuel cells for new generation systems for the energy sector."

During the second session of the panel, Moderator Murat ÖZDEMİR, asked a question to Haluk BAYRAKTAR, CEO of BAYKAR and Chairman of the Board of SAHA Istanbul, about the opportunities the KIZILELMA project offers in terms of regional cooperation and the latest status of the project. 

Haluk BAYRAKTAR stated that the KIZILELMA project is BAYKAR’s flagship and provided an update on the project’s status. "It has different configurations. With these different configurations, we have single-engine, twin-engine configurations with different levels of propulsion. In terms of engines, Türkiye has new investments in engine design and development, but we do not yet have a finished, ready-made product. Therefore, we are cooperating with a Ukrainian company. We are employing their engines in KIZILELMA. Ukraine is one of our strategic partner countries, as you know. We have started with a single engine, and we will switch to twin engines. In terms of cooperation, these are multibillion dollar projects. The KIZILELMA project’s costs are fully covered by BAYKAR. There is no state support of any kind because we do not want to encounter any restrictive conditions. We finance ourselves but this is a huge, long-term project. We are not just talking about the platform. We have several electro-optics and weapon systems. Therefore, we want to collaborate with friendly and brotherly countries, to bring all these countries together by acting as an umbrella formation, to partner in various fields, to meet their needs, to earn their trust in the system, and to utilize their products such as payloads or radars, so that everyone can have their own business share in the project. We want to make this a multinational project. By the end of 2022, exports will account for 98 percent of BAYKAR's revenue. The export rate is 75% when we consider BAYKAR's history. Cooperation with partners in the United Arab Emirates or other partners in the region offers significant potential. These strategic and technological relationships, business models, all these projects bring countries together and connect them. It forges a shared future for all of us. It fosters strong ties between countries.” 

During the second session, Tareq Abdulraheem Al-HOSANI, CEO of the Tawazun Economic Council, evaluated the potential collaborations. "Our defense industry started to develop 20 years ago. We have developed our engineering capabilities and we work closely with academic circles and engineering communities. At the same time, we are achieving the proper technology transfers with various international export contracts. Knowledge cannot simply be placed in a box and given to someone. In order to use that knowledge to your advantage, you must apply it and experience it. Here, we are creating human capital. We invest in our engineers. We have talks with Roketsan on what we can do for various products. We will also consider what kind of cooperation we can establish with BAYKAR. We have achieved success in certain products in the past, and we are ready to move forward. We are also quite interested in the field of space. Our mission to Mars is about to start. We would like to discuss with our partners in Türkiye how we can improve our capabilities. As a small country, our resources and funds are limited. We want to continue to serve both nations through this collaboration." 

Faisal Al-BANNAI, Chairman of the Board of EDGE Group, stated that EDGE Group focuses on three areas and that they need to be leaders in one or two areas with their strategic partners. “We focus on autonomous aerial, land and maritime platforms. We put a lot of time and effort into this to make progress. We believe the future is there. Electronic Warfare is another area we concentrate on. Electronic Warfare was extremely limited 10 years ago. There were only a few actors worldwide. We believe that the emergence of many innovative products will alter the current market's structure. The third area we focus on is smart weapons; it could be a smart UAV or a smart missile. Here, payloads and sensors are significant in this scenario. You are making a critical investment in your future by investing in them. Within the next five years and beyond, we want to grow on a global scale. We cannot achieve this by doing everything on our own. There are very, very few countries in the world that can do everything on their own. This is possible through partnerships with the proper ecosystem. We, at EDGE, are setting different strategies. We claim that we are developing in these areas. We have certain developments in the field of loitering munitions, but we don't need to develop certain products. We can serve the ecosystem at certain points. There are other options as well. We can collaborate with the major companies, like BAYKAR and Roketsan, to create our building blocks and develop next-generation solutions. In this way, we can gain a global competitive advantage. We need to develop a more adaptive and open-minded partnership model, and there are important opportunities here. That’s why we are attending this exhibition, we regard Türkiye as a key partner.”

The last speaker of the last session, Murat İKİNCİ, General Manager of Roketsan, stated that the world is undergoing a highly crucial transition and transformation. “Battlefields and technologies are evolving. New technologies, smart technologies are changing how to fight on the battlefield. You must value international collaboration if you want to compete in this changing climate. This is becoming more important on a global scale. For emerging countries like Türkiye and the UAE, keeping up with all the technical advancements and overcoming these challenges is not easy. Recession is coming to hit the global economy. We can all sense it. On the other hand, the supply chain is experiencing severe problems. Businesses in the field of high technology are having difficulties in accessing the appropriate components. For example, many high-tech companies cannot produce their products because they cannot find the proper electronic components in the market. The number of conflicts between countries has increased. There are also potential conflicts which we can clearly see. We thus need a robust and well-developed defense industry as many defense suppliers are introducing new rules and limitations to ensure that their products are used on battlefields. For instance, you need the relevant manufacturer's permission if you wish to integrate a weapon into your current platform, which really restricts you. We must work together and join forces to find a solution to this issue; doing so is not an option, but a necessity. And unfortunately, this is not a matter of financing. The budget allocated to the defense sector is insufficient to meet the needs in this field or those of the armed forces. We need human capital. Human capital is perhaps the major barrier in the domestic defense industry because we have very few skilled technicians and engineers. We are talking about the workforce who will develop our technologies. Therefore, we need to combine the human capital aspect with the budget so that we can develop successful defense products in the market. And our primary focus should be on the international market, not the domestic market. Let's develop such a defense solution that it will be valued on a global scale. Otherwise, we will waste both time and money. There are many factors that threaten both the UAE and Türkiye, so we must find a solution. But this solution must be developed at the domestic level because global manufacturers are introducing new rules, changing the rules, introducing limitations during the game. You buy a product from a company. Then they inform you that this product can no longer be used on this platform. We want to integrate our own munitions into our own platform. The manufacturer doesn't allow this, putting forward some technical reasons. Therefore, we need to overcome these problems. We need to demonstrate our engineering prowess. We must also demonstrate our financial capabilities. With the UAE, we have had some extremely significant experiences. This journey that we set off on in the early 2000s has been very fruitful. We have accomplished various projects. Türkiye and the UAE have the same goals in terms of space and defense. We should strive for our future common goals. We observed highly advanced serious engineering capabilities in the UAE. They are also allocating funds to increase their capacity, which Türkiye is doing the same. If we join forces, both Türkiye and the UAE will benefit as two friendly and allied countries. To wrap up, let me say that Roketsan, as a guided missile and smart munitions provider, is ready to support the UAE in all areas including space and missile technologies, and to foster cooperation