inspect the magazin

7 51

ECONOMY BUSINESS FOREIGN TRADE ANALYSIS

YOUR COMPLIMENTARY COPY

SPECIAL REPORT

SEPTEMBER 2016 ISSUE 38

The True Story Behind The Coup Attempt:Turkey starts off with a clean slate

2023 targetour servıces exports

are goıng to Hıt150 bıllıon usd

AnoTHER F ıRsT FRoM T ı M !

turkish exporters assembly (tıM) announced “Turkey’s 500 biggest services Export Companies”

research for the first time in 2016.

the aplications for the Turkey’s 500 biggest services Export Companies until 20 september 2016 research will continue.companies may apply online at http://www.tim.org.tr/tr/500.html free of charge.

J o ı n T H E R Es E A R C H n o W *s EC u R E Yo u R P l A C E A M o n G T H E b ı G G Es T

*

TuRkEY’s

500 bıGGEsT servıces export coMpanıes

27 COVER

The Turkish Perspective 1

11 BRIEFING05 FIRST

Contents06 | Expansion of Turkey’s railways06 | Export of high-tech

engineering services07 | Toyota moves to Turkey07 | Akkuyu turns into strategic

investment08 | A call for ‘special support’ to

Turkey09 |Turkey is on the road of being

an energy center09| Turkish Airlines passengers

increase by 4.4% 28 |

TRUIMPh OF SOLIDARITYTurkey has caught a unique

opportunıty for solıdarity. Entire country came together in unity

against attempt to their own will.

32 |

COLLABORATION VS CRISISTurkey eluded the betrayal

attack of Fethullahist Terrorist Organization thanks to its strong

ties with democracy.

38 |

TURkEY PERCEPTION OF wEST Western world left coup and anti-

democratıc movements behinds decades ago. So it is hard for them

to understand the danger that Turkey has gone through.

44 |

A NEw PhASE IN FOREIGN POLICIESTurkey is a vital member of international community not only because of its geostrategic importance but also its potential.

50 |

SPEEDING UP ThE INVESTMENTSTurkey eluding the failed coup attempt taking without any damage is on the road to reach its 2023 targets with no hesitation.

56 |

CLOSING ThE RANkSTurkey is a very funny place if you do not live in, said one of our foreign friends.

11 | NORMALIzATION OF ThE REL ATIONSThe normalization process started before 15 July coup attempt between Russia and Turkey remains unaffected

14 | ThE “MAIN” FOOD SUPPLIER

15 | ENGINE OF ThE ECONOMY

17 | ShAPING ThE DAILY LIFE

18 | FRESh APPETITE FROM TURkISh PRODUCERS

20 | ExPLORE ThE wORLD wITh TURkISh AIRLINES As the flag carrier of Turkey, Turkish Airlines continues to expand its extensive network.

22 | FOREIGN INVESTORS CONFIDENT ON TURkEYVarious international investors operating in Turkey showed solidarity in their condemnation of the bloody coup attempt of July 15, 2016

62 AGENDAFAIRS, ExhIBITIONS, SUMMITS,

MEETINGS IN SEPTEMBER

63 FIGURESThE BASIC INDICATORS OF TURkEY IN ThE FIRST hALF OF 2016

ThE TRUE STORY BEhIND ThE COUP ATTEMPT Turkey starts off with a clean slate.

Why West didn’t understand the danger? Why Turkey couldn’t explain it?

7 51

P1

Online2

MANAGEMENTPublisher on behalf of Turkish

e xPorTers assembly/ Chairman of The Turkish e xPorTers assembly

MEhMET BÜYÜkEkŞİ

STR ATEGIC PARTNER PresidenT of Prime minisTry

invesTmenT suPPorT and PromoTion agenCy

ARDA ERMUT

manager in Chargeh. BADER ARSL AN Phd

PUBLICATION BOARDM. İLkER AYCI

TEMEL kOTİL PhdBÜLENT AYMEN

MUSTAFA ÇIkRIkÇIOĞLU PhdSÜLE YMAN kOCASERT

zEkERİYA ME TEFURk AN k AR AYAk A

PUBLICATION MANAGEMENTPresidenT

MEhME T MÜCAhİD DEMİ[email protected]

viCe PresidenTYAŞAR MAMATİ

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ProjeC T CoordinaTorAhMET DAMGACIOĞLU

[email protected]

EDITORIAL

ediTorMUSTAFA YİĞİT

[email protected]

usa media CoordinaTorŞENAY ÖzDEMİR

euroPe CoordinaTorİNANÇ ATILGAN

gulf CoordinaTorFE Y z A GÜMÜŞLÜOĞLU

ConTribuTing rePorTersk AR ACA BOzGE Yİk

SERPİL k ASAP

sPeCial ConTribuTorsPROF. DR. ALİ ALP

DR. YENER COŞkUN

DESIGNCreaTive direCTorAhME T SAİD ÇELİk

[email protected]

arT direCTorhARUN Ak TUNÇ

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PRINTINGbİlne T maTba aCilik ve

ambal a j san. a .Ş. dudullu organİze sanayİ bölgesİ

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T. 444 44 03 • www.bilnet.net.tr

ConTaC TT. +90 212 216 19 48

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neither text nor photographs from this publication may be reproduced in full or part without acknowledging the source and securing prior permission from the

publisher.

sePTember 2016 issue 38

Online theturkishperspective.com

[email protected]

The Turkish PersPecTive DigiTalThe Turkish Perspective website is to be launched soon. a new meDium To learn, analyze anD moniTor everyThing abouT Turkish economy anD business, is born. The Turkish PersPecTive DigiTal will share The laTesT news, inTerviews wiTh Decision makers, ProviDe in-DePTh analyzes anD will be The foreigner’s guiDe in Turkey regarDing regulaTions anD legislaTions.

More than a magazine, the Turkish Perspective will now be more interactive and responsive, as expected from Turkey’s main voice for international audience.

JUNE 2016 ISSUE 35 ECONOMY BUSINESS FOREIGN TRADE ANALYSIS


BRIEFINGUmbrella of Compassion opened in istanbUl

INDEPTHCentUries old bridges to be rebUilt: balkans and tUrkey

BRANDSkeystones of export

b nal yildirim has beCome

the new prime minister.

RISK PROOF

JERSEYRISK PROOF

JERSEYRISK PROOF

JERSEYTurkey invites the foreign

investors to choose the winning

colorsTurkey invites the foreign

investors to choose the winning

colors

EURO 2016Jersey ofTurkish NationalFootball Team

JULY 2016 ISSUE 36 ECONOMY BUSINESS FOREIGN TRADE ANALYSIS


UlUpienis ArUm stdsgs litdAtiAspis perAtqUi ddolorem periorio MaxiMe PreM İs Di occUm etU Bore

BRIEFINGKeystones of export

EXPORTERS

TOP

BRANDSUmBrellA of compAssion opened in istAnBUl

INDEPTHcentUries old Bridges to Be reBUilt: BAlKAns And tUrKey

AUGUST 2016 ISSUE 37 ECONOMY | BUSINESS | FOREIGN TRADE | ANALYSIS


DemocracyDawn of

SPECIAL REPORT

Heading to a Brighter Future

ECONOMIC SUSTAIN-ABILITY P22

FDI FLOW kEEPS ITS PACE P28

TURkEY INSPIRES ThE REGION P40

WhERE IS TURkEY hEADING TO? P46

business

culTure

invesTmenT

innovaTion anD science

viDeo of The Day

news

branD markeTing

Editorial

a nEw phasE for turkısh ExportErs After coup attempt our economy appears to stable again and has entered to a permanent growth platform.

On the other hand, our biletarel relations with Russia entered to a normalization process with the visit of our President to Russia on Tuesday, August, 9. After all we expect to begin the recovery our foreign trade with Russia. We believe that we will make progress in a short time particularly in fresh fruit and vegetables, textile industries, in all sectors in which we operate on Russian market. In this context, we will continue to work with determination to reach our goal, foreign trade volume of $ 100 billion with Russia.

When we look at the European market, Brexit decision of United Kingdom in June 24 seems to have a limited effect. However, we accept this limited effect of Brexit on the markets as a major advantage, because European Union is our biggest export partner. We are waiting for the results of the EU special summit which will be held in Bratislava on 15-16 September. In this summit decision of United Kingdom on exiting Euroepean Union and possible

W e see unexpected a positive side effects of terrorist attempt which

occured on Friday night July 15th. By means of this unfortunate incident, both our nation and all political parties united against this betrayal attack, also a dialouge channel has been consisted among the political parties. We accept the start of a new democracy movement as an important gain even after such a tragic incident.

After coup attempt our economy reverted to its stable position again and has entered to a permanent growth platform so to say, throwing off small scratches. We, the exporters, are very excited about on how this crisis can be transformed to opporunities and strike up a conversation, which is unprecedented in history of our country, between NGOs and goverment.

Despite the state of emergency, implementation of our suggestions which we have uttered for a long time, increases our motivation. For instance, “Green Passport” application which aims to abolish the buıreaucratic obstacles of our succesful exporters face, let them easily travel anywhere in the World and avoid the lose of time based on visa processing, came true. Our other suggestion, state support on the issue of R&D and design activities, was approved by the Assembly. International Labour Draft Law enacted on July 28 allows our companies to employ qualified foreign workers. Also, “Turkey Asset Fund” which will make a big contribution to increase of investments has been discussed in Parliment.

future effects of this decision will be discussed.

If we look at global developments, while growth expectations in the USA revised down, the dollar remained stable based on the rate hike expectation of the FED, but we see that it maintains potential of build-up. On the other hand, developing countries continue to benefit from the global monetary expansion and low interest rate environment. Also, we hope to create a positive atmosphere in the course of our relationship with USA and EU countries in G20 leaders summit which will be held in China on 4-5 September. Our market research rapidly continues within the scope of Africa strategy that is applied in general,in order to increase growth expectation to Africa by the Ministry of Economy in 2023. We increased our export to Africa six time more than it was with our President’s valuable support to this strategy. We aim to further increase it with strengthening our relations with all countries on the continent.From this point of view, we are concentrated more on Africa, we are organizing trade missions. We have organized 15 business delegations to Africa since 2004, we will again organize 7 business delegations in the rest of 2016. We want all of our exporters to use the advantages of potentials in this market.

We, the exporters, will countinue our hard working for our country to leave this tragic incident behind, by the economic and democratic reforms and new stimulus packages.


MEHMET BÜYÜKEKŞİPRESIDENT (TIM)

We will continue to work with determination to reach our goals.

C

M

Y

CM

MY

CY

CMY

K

TW_200x270.pdf 1 24.02.2016 14:58

5The Turkish Perspective

First INVESTMENT, INNOVATION, EXPORT, ENERGY, FDI, AUTOMOTIVE, AVIATION

INVESTMENT

the new brıdge lınkseurope & AsıA For the thırd tımeThe third bridge over the Bosphorus in Istanbul was opened on August 26 with a ceremony attended by many particapants all over the world.

Content: The New Bridge Links Europe & Asia For The Third Time P0 Expansion of Turkey’s Railways P06 Export of High Technic Services P06 Toyota Moving to Turkey P07 Automotive Export is at Top Since July 2008 P08 Turkey Is On the Road of Being An Energy Hub P9 Editor: Serpil Kasap

million in labor force loss a year, an annual economic loss of $1.785 billion.

Meanwhile, construction work on the 169-kilometer-long Kurtköy-Akyazı section and 88-kilometer-long Kınalı-Adayeri section, both parts of the North Marmara Highway Project, has started. Amounting

The bridge, built over the Bosporus strait as part of the North Marmara Highway project, will be the world’s largest suspension bridge. It will be the second one to be operated by the private sector.

The bridge, which cost $3 billion, has a total of 10 lanes - eight highway lines and two

rail lines running in both directions, and is located on the 148-kilometer-long Odayeri-Paşaköy section of the project.

The 59-meter-wide bridge measures 164 meters from end to end and has 322-meter-high bridge towers. It will be a first in the world as it includes a rail system on the same level. The bridge, which

is 1,408 meters over the Bosporus, will be the longest suspension bridge in the world with a rail system.

The bridge is expected to alleviate traffic in Istanbul and eliminate air pollution and environmental problems arising from urban traffic. Thus, it will help save nearly $1.45 billion for energy and $335

The bridge is the only brdige on the world which consists railways on the same level

First6


INVESTMENT

to 257 kilometers in total, the roads should be finished by the end of 2018, bringing the entire North Marmara Highway into service at that time.

The bridge is the third to connect the Asian and European sides of Istanbul over the Bosporus strait.

Expansion of Turkey’s railways

The Turkish government is investing heavily in its railway as it aims to deliver a modern network by 2023.

T urkEy’s high-sPEEd train lines, which are expected to constitute 10,000 of the country’s total 25,000 kilometers of

railway by 2023, will be a significant contribution to economic, social and cultural development.

Turkey’s best trains are now modern & air-conditioned. Savvy travellers can use a train for long distances (for example, Ankara to Konya, Izmir or Kars) then a short bus trip to reach places off the rail network, for example the South coast resorts or Cappadocia.

Around 150 million passengers a year are transported on the 10,000-plus kilometers of the Turkish rail network. Less than ten percent of the rail network is double tracked. Turkey is therefor planning to increase its economic output on the rails to strengthen its transportation and logistics sectors. With projects such as the Marmaray, the expansion of various high-speed routes and the modernization of railway stations, the Turkish railway company has set tangible targets for the coming years. The five-year plan involves extending the conventional railway network from 8770 to 10,556 kilometers and the high-speed network from 888 to 2496 kilometers by 2018. This involves investments of around 20 billion euros in construction measures and the procurement of rail technology.

INNOVATION

stAte support to e-gAmes Turkey’s ever-growing gaming companies are ready to show off at the prestigious Gamescom in Cologne, which will open its doors on Aug. 17 to an estimated 350,000 visitors.

Some 700 companies from around 100 countries attend the Gamescom event every year.

Turkey will occupy a 500-square-meter stand, the largest at the venue, as it is the “partner country” this year.

Turkey is partnering this year’s fair with support from the Middle East Technical University’s (ODTÜ) technology start-up launchpad ODTÜ Teknokent, the Turkish Game Developers Association (TOGED), the Turkish Exporters’ Assembly (TİM) and other state and civil institutions.

Some 20 companies from ODTÜ Teknokent will seek business opportunities during the event.

The fee for automobiles starts at TRY 9.90 and for heavy-tonnage vehicles starts at TRY 13.20, and will be calculated according to wheelbases and wheel numbers. Passing from the Asian side to the European side is free of charge, but the reverse route will incur these

fees. Vehicles have to pay an additional TRY 0.24 per kilometer, depending on the distance that they cover on the junctions while exiting the bridge. All link roads, from Odayeri to the Mahmutbey toll booths have been completed on the European side.

It is possible to enter and exit the bridge through Riva, Çamlık, Paşaköy and Kurtköy on the Asian side. With the bridge coming into service, heavy vehicles started passing through the Yavuz Sultan Selim Bridge instead of the Fatih Sultan Mehmet Bridge.

59meters

wIDTh OF ThE BRIDGE

1408meters

MAIN SPAN OF ThE BRIDGE

metershEIGhT OF ThE BRIDGE

322

lANES OF MOTORwAY ON ThE BRIDGE

8

2lANES OF RAIlwAY ON

ThE BRIDGE


ENERGY

4.500PREDIcTED TO PRDOUcE 10% OF ThE cOUNTRY’S ENERGY

NEED

mw60

ThE PROjEcT’S OPERATION SPAN

YeArs$32

ESTIMATED cOST

bıllıon

AkkuYu nucleAr wıll be Fırst For turkeYAkkuyu Nuclear Plant will be the first nuclear plant of Turkey and it is

estimated to produce at least 10% of the country’s energy need.

s TraTEgiC CooPEraTion is underway with Russian

nuclear energy company Rosatom to build Turkey’s first nuclear power plant in Mersin.

In the aftermath of the meet-ing between President Erdoğan and Russian President Putin on Tuesday, Prime Minister Binali Yıldırım designated Akkuyu as a strategic investment base where the first steps will be taken. The incentive to be given to Rosatom will be further discussed. The

Russian nuclear energy company will revive Turkey’s first nuclear power plant Akkuyu, a project that was initially kick-started in the framework of agreement signed between the two countries in 2010 and estimated to cost $22 billion. When completed, the plant will have four reactors each producing 1,200MW of electrical power and will meet 10 percent of the country’s energy requirement with a total energy production of 4,500MW.

akkuyu Turns into strategic investment

After President Erdoğan and Russian President Putin’s meeting, the government and Rosatom decided to take steps for strategic cooperation involving the

construction of Turkey’s first nuclear power plant.

turkeY bolsters locAllY mAde Fleet wıth new vessel Turkey’s bid to keep its defense capability domestic continues with the commission of a new amphibious landing ship scheduled for Saturday as Sancaktar will join another locally-made ship commissioned last year.

Sancaktar, “standard bearer” in Turkish, will be commissioned with a ceremony on Saturday, nine months after Bayraktar, “flag bearer”, another landing ship was inaugurated.

The ship is the creation of Turkish engineering while its battle command systems and software are designed by national defense contractors ASELSAN and HAVELSAN.

It has an overall length of about 139 meters and can travel at a speed of 18 knots per hour. The Undersecretariat for Defense Industries described it as the largest warship built by a Turkish company with the latest technology.

Turkey’s projects for domestic defense capabilities are not limited to Sancaktar and Bayraktar. MİLGEM’s national ship project aims to further expand the domestically-made fleet alongside the three navy corvettes already produced.

EXPORT

EcONOMY

budget surplus ın Fırst sıx monthsTurkish Finance Minister Naci Ağbal made a statement about budget surplus of Turkey in August 15.He said: “Fiscal discipline, which constitutes one of the most powerful aspects of the Turkish economy, will be maintained in the coming period,” he said in a statement.

Ağbal vowed to continue making structural reforms without pause, which he said would add further strength to the Turkish economy.

Government revenues in July stood at 42.5 billion liras ($14.3 billion), a 6.1 percent increase year-on-year, while budget expenditures were 42.4 billion liras ($14.35 billion), down 6.8 percent from a year earlier.

According to the ministry, Turkish government’s budget revenues reached 317.5 billion liras ($107.5 billion) in the first seven months of the year, a 14.4 percent increase over the same period last year.

akkuyu Power Plant will be the first nuclear plant of Turkey.

First8


AUTOMOTIVE

perFormAnce oF Automotıve sectorAverage monthly exports of the automotive sector in the first five months of

2016 have reached $2 billion

INVESTMENT

$215 mıllıon ınvest to turkısh constructıon gıAnt The International Finance Corporation (IFC), the private sector arm of the World Bank Group, became a shareholder in Turkish construction giant Rönesans Holding through a $215 million worth investment deal announced on Monday.IFC’s investment is expected to increase the competitive power of Rönesans to grow on a global scale and support the holding for potential public offeringsIncreasing cross-border investments in developing countries is among the five strategic goals of the IFC, and the partnership with Rönesans aims to increase the group companies to boost their investments in regions such as Africa, Middle East and Caucasus.

FDI

globAl compAnıes vow turkeYA number of multina-tional companies have pledged to continue making investments in Turkey despite the recent failed coup attempt in the country. Following companies made statements about their confidence on Turkish economy; Siemens, Voda-fone, Abraaj Group, StatKraft. Besides continuing operations companies declared they will work on new investments.

E xPorTs from the Turkish automotive industry reached the highest level on a monthly basis in June with $2.1

billion compared to the same month in 2008.According to the monthly report of the Automotive

Industry Exporters’ Union (OİB) released on Sunday, exports of the sector, which account for some 18 percent of Turkey’s total exports, increased by 9 percent compared to same month last year. Average monthly exports of the automotive sector in the first five months of 2016 have reached $2 billion, while exports increased by 12 percent to $11.7 billion in the January-June period compared to the same period last year. OİB Chairman Orhan Sabuncu said that the sector is getting closer to achieving its year-end goal of $23 billion worth of exports.

automotive Export hit a record since

July 2008 Automotive Industry Exporters’ Union has declared

the export performance report of automotive industry.

FDI

A cAll For ‘specıAl support’ to turkeYHyundai’s top management has asked for exclusive support for Turkey in a call to the company’s partners and subsidies across the globe after the 7/15 coup attempt.Ali Kibar, the head of Kibar Holding, Hyundai’s partnering company in Turkey for the last 26 years, elaborated on details of a high-level meeting with their partners after the 7/15 coup attempt in Turkey.

2,1 $bıllıon

TOTAl AUTOMOTIVE EXPORT INjUlY 2016

INcREASE IN AUTOMOTIVE EXPORT

cOMPARED TO jUlY 2015

9%INcREAS IN

cOMERMMERcIAl VEhIclES

67%


ENERGYAVIATION

a CCording To Brenda Shaffer, who is adjunct professor at the Center for Eurasian, Russian and East European

Studies (CERES) at Georgetown University, Turkey today is already a critical oil and natural gas transit state.

“The Bosphorus is one of the world’s most important oil transit lanes (and thus an important potential energy choke point). Oil from multiple sources, including Azerbaijan and Iraq, is exported via Turkey’s ports. Turkey receives natural gas today from four different projects spanning across Russia, Azerbaijan and Iran, and from 2018 it will receive gas from another project, with the establishment of Trans-Anatolian Natural Gas Pipeline (TANAP),” Shaffer explained in the statement that she gave to Anadolu Agency.

A senior research fellow at the Center for European Reform, Rem Korteweg, also reiterated that Turkey’s importance for Europe as a transit country for non-Russian gas.

Korteweg underlined the importance of Turkey’s crucial role in the future to develop sufficient diversified sources of gas supplies to meet both domestic and Europe’s energy security objectives. He also gained the attentions of public to the normalization process between Turkey and Russia said:

“If Ankara is able to reach an agreement with Moscow on the construction of the Turkish Stream, Turkey could also become an alternative route for the export of Russian gas into the European market.”

As a result it can be said; Turkey taking concrete steps to reach its 2023 targets, will have a crucial role in energy market according to experts.

Turkey is on the road of being an

Energy hub Turkey’s strategic role as an energy transit country could in the long term evolve to a regional gas hub,

say experts after the process of Turkey – Russia normalizations.

turkısh Aırlınes pAssengers ıncreAse bY 4.4% Turkish Airlines, the country’s national flag-carrier, announced Tuesday it had increased its total number of passengers by 4.4 percent in the first seven months of 2016 compared to the same period of the previous year.

The total number of passengers during the January-July period was 35.9 million compared to 34.4 million in the same period of 2015, according to a statement from the company.

The number of passengers rose by 5.9 percent on domestic flights and 3.2 percent on international flights, the company said.

Seat occupancy declined from the same period last year by 4.3 percent to 73.7 percent.

Turkish Airlines also added 14 new destinations from last year, giving it a total of 290 destinations worldwide-49 domestic and 241 international.

Its number of planes increased by 44 to 333, including 11 cargo aircraft, in the first half of the year from 289 in 2015.

The national flag carrier’s shares lost nearly five percent on Tuesday trading at 5.32 lira, equivalent to $1.81.

INNOVATION

export hıgh-tech engıneerıng servıces to romAnıA And pAkıstAn For the first time, Turkey is to export engineering services in submarine modernization, an area which requires high technology. Turkish Defense Technologies Engineering (STM), the principal partner of the Undersecretariat for Defense Industries, has won the tender on the modernization of Pakistan’s French-made and Romania’s British-made submarines.

The Turkish defense industry, which previously developed Pakistan’s largest military supply vessel, has won a nearly $500 million worth of submarine modernization task in Pakistan and Romania. As a country which is already capable of modernizing its own submarines, Turkey will for the first time export engineering services in a high technology-requiring area.

POLITICS

A fter the politic and economic crisis took

place between Turkey and Russia following the shooting of the Russian jet, Turkey and Russia took decisions on normalizing their relations to maintain their old friendship. Turkey’s simultaneous rapprochement with Russia captured world’s attention and changed the direction of expectations in the region. Now all eyes are on Turkey

and Russia wondering if the bilateral trade and mega projects before the ties were damaged will continue or not.

As these questions are in mind Turkish and Russian leaders met in St. Petersburg. Turkish-Russian relations are expected to strengthen after President Erdoğan and Russian President Putin’s meeting, paving the way for new energy projects as well as contributing to many sectors

of the economy. The meeting was important because it was the first official meeting between Turkish and Russian leaders after the fighter jet crisis in November 2015.

It is expected that the trade volume target of $100 billion, which was set before the fighter jet crisis, will be revived along with new energy projects, tourism activities, trade of food and industrial goods.

By RAMAZAN GÜZyURDU

POLITICS, AUTOMOTIve, NUTRITION, PLASTICS

The Turkish Perspective

Briefing

Recep Tayyip Erdoğan and Vladimir Putin met in St Petersburg.

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11Content: The Main Food Supplier P14 Engine of the Economy P15 Shaping the the Daily Life P17 Fresh Appetite from Turkish Producers P18 Editor: F. Karaca Bozgeyik

NormalızatıoN of the relatıoNsThe normalization process started before 15 July coup attempt between Russia and Turkey remains unaffected.

Briefing

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SePTeMBeR 2016 ISSUe 38

russıaN affect oN turkısh tourısmAssoc. Prof. Dr. Mehmet Akif Okur says: “According to the gathered before the crisis, Russian travel agencies were among the best customers of Turkey’s seaside resorts. In 2014, about 4.4 million Russians visited Turkey. According to the available data, at least 3.3 million of them were tourists. The revenue from Russian tourists was $3.5billion. And expectations were higher for the coming seasons because of the downing of a passenger jet over the Sinai Peninsula made alternative destinations riskier. But, after the ban of the Russian government, these numbers declined dramatically. In May 2016, the loss in the amount of Russian tourists was around 92 % compared to the same month of 2015.” This statistics show us the crucial role of Russian tourists in Turkey’s tourism sector.

On July 1, Putin signed a decree on the removal of the prohibition of charter flights and package tour sales to Turkey and the Russian government announced that works were initiated to this end.

One day after Putin’s statement, package tour sales to Turkey started again, with Turkish holiday spots regaining their position as one of the most popular tourist destinations for Russian tourists.

A couple of weeks ago, Russian deputy Prime Minister Arkady Dvorkovich said the visa restrictions between Turkey and Russia might be lifted if a certain security level was ensured.

According to the intelligence received from Turkey Ministry of Tourism visa process between Russia and Turkey will be removed by 1 January 2017.

On July 1, Putin signed a decree on the removal of the prohibition of charter flights and package tour sales to Turkey

Cupica eti, sederox medo, que is nonducid pecrimuracio inc videmedit. Bem te tem, sis; inihillaric tum

Putin in St. Petersburg, Turkish President Erdogan said that Turkey was interested in the resumption of the Turkish Stream project to ensure, inter alia, stable supplies of natural gas to Europe. In turn, Vladimir Putin complimented the Turkish authorities: “As for the Turkish Stream, our colleagues in Ankara continued working on it even during the crisis of relations,” Putin said. President Putin noted that the work on energy projects would require “political decisions.” “The Turkish side has already made a number of decisions, pertaining to the nuclear power plant and the Turkish Stream,”

cooperatıoN ıN eNergyDuring the crisis period, Turkey has continued to import Russian gas. Despite debates which have attracted large public attention, Turkey has remained as the second-largest buyer of Russian natural gas. And Russia is still Turkey’s largest natural gas supplier. Speaking to Russian news agency TASS, in his Russia visit Erdoğan underlined Turkey’s role in the Russian market as a natural gas buyer. By this July, we imported 12.5 billion cubic meters of natural gas from Russia. This shows Turkey is an important partner (for Russia) in terms of the economy” he said.

According to data from the Energy Market Regulatory Authority (EPDK), Turkey imported 27 billion cubic meters of natural gas from Russia in 2015. The Turkish Stream pipeline project is expected to play a crucial role in energy imports. If the project is completed, Turkey aims to purchase 15.7 billion cubic meters of Russian natural gas per year through the pipeline which will be constructed through the Black Sea. Moreover, a second pipeline that is planned to be constructed will carry Russian natural gas to southeastern Europe through Turkey.

During the press conference after the meeting with Vladimir

In 2014, about 4.4 million Russians visited Turkey. According to the available data, at least 3.3 million of them were tourists.


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The Turkish Stream pipeline project is expected to play a crucial role in energy imports.

Putin said. The head of Gazprom, Alexey Miller, stated that Russia was already in talks with Turkey on the subject of the Turkish Stream project. At the same time, Russian Minister for Energy, Alexander Novak, said that for the time being, it goes about the construction of a gas pipeline to Turkish consumers only. The work on the second line for European consumers will be resumed only after the EU provides adequate guarantees.

top food supplıer of russıa turNs Back to the marketsAs well as the automotive industry, chemicals, ready-to-wear products, electronic instruments and mining products; Turkey’s exports of consumable goods fell significantly because of Russia’s sanctions, which were Moscow’s revenge for downing a Russian warplane that violated its airspace on Nov. 24 last year.

On Jan. 1 Russia put a ban on the import of tomatoes, oranges, apples, cabbages,

salt, broccoli, tangerines, cucumbers, pears, apricots, peaches, plums, grapes, strawberries, onions, cloves, turkey and chicken from Turkey.

Arkady Dvorkovich, Russia’s first deputy prime minister, said: “We have already started consultations with Turkey about the lifting of the existing food embargo. As part of these plans, representatives of Russian veterinary and phytosanitary services have already visited Turkey in order to check the quality of Turkish products prior to the resume of their supplies to Russia.” Dvorkovich added the issue had been discussed during a meeting in St Petersburg last week (9 August) by Russian President Vladimir Putin and Turkish President Recep Tayyip Erdogan.

cooperatıoN ıN strategıc ıNvestmeNtIn the aftermath of the meeting between President Erdoğan and Russian

President Vladimir Putin in St. Petersburg, Prime Minister Binali Yıldırım designated Akkuyu as a strategic investment base where the first steps will be taken. The incentive to be given to Rosatom will be further discussed. The Russian nuclear energy company will revive Turkey’s first nuclear power plant Akkuyu, a project that was initially kick-started in the framework of an agreement signed between the two countries in 2010 and estimated to cost $22 billion.

The Akkuyu Nuclear Power Plant was given the status of strategic investment. In this context, talks with Russian energy giant Rosatom are expected to start soon. Turkey will sit at the table with the Russian energy company in a new bargaining method to be implemented for the first time in Turkey.

While Turkey’s interests will be the priority in the meetings, the company’s reasonable demands will be satisfied as well.

Despite debates which have attracted large public attention, Turkey has remained as the second-largest buyer of Russian natural gas..

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Turkey exports nearly 2 million tons wheat flour all over the world.

NUTRITION

By SeRPİL KASAP

markets are the countries in the Middle East, North Africa and the Commonwealth of Independent Countries and Far East Countries.

Wheat has a great importance because it is grown in almost all parts of Turkey by a large number of farmers and constitutes the main nutrient for the majority of the population. Cereals are grown on 12 million hectares (50%) of 24 million hectares of arable land in Turkey.

The Turkish wheat flour sector has a major position in the world, in wheat flour export, with its high production capacity. Approximately 1.200 wheat flour factories, which are operating in almost every province in Turkey, have the total production capacity around 30 million tons.

Turkey exports nearly 2 million tons wheat flour all over the world. Turkey has been exported the wheat flour to 123 countries up to day and approximately 1.1 people all over the world consume Turkish wheat flour. Quality of pasta, produced by the Turkish pasta sector, which is among the most competitive players in the food processing industry, is recognized in international markets. Turkey has a strategic advantage in production of pasta since durum wheat is grown in Turkey. Turkey is among the major producers and exporters of pasta with an annual production capacity of around 1 million tons. Because durum wheat can be produced in our country, Turkey has a strategic advantage. Turkey took 5th place in the world pasta production with 852 thousand tons and the share of production is 6.3%.

The important point about our country’s developing of wheat flour export is increase of unit price. This situation is

O n the world %75 of available soil for

agriculture is used to produce cereal. The most important reason for this; besides getting the basic nutrients like bread, pasta and rice from these cereals, like barley and corn are importance for feeding animals and humans.

Cereal makes a big deal part of world’s commerce. With total 1,9 billon world’s production of cereal, about %30 of this amount takes place in commerce in 2004. In our country, annually 18.5 million hectare soil is being planted and approximately 13.5 million hectar of it is planted with cereal. In cereal planting area, approximately with %67, wheat appears in first line. In our country, 19.000 thousand tons wheat, 6.300 thousand barley, 6.300 thousand tons rye 210 thousand tons oats, 110 thousand tons triticale were produced in 2014. But in

2015, 22.500 thousand tons wheat, 8.000 thousand tons barley, 330 thousand tons rye, 250 thousand tons oats, 125 thousand tons triticale were produced. While the total is 25.920 thousand tons in 2014, in 2015 with increase %20, total was guessed 31.205 thousand tons.

Sector, drawing a rising graph,whether production or export, is dynamo of country’s economy. Sector has export, which has more than 190 counrty, and wide bazaar area. With attracting changes in sector, export density of Middle East countries, Africa and European union are other bazaars which are outshining.

Turkish cereals, pulses, oily seeds and products sector, which has great potential and is among the leading growers of cereals and cereal-based products, has a 30% share in total exports of agricultural products. Main export

the “maıN” food supplıer Cereal, product of group which reflecting fertility of soil creates main source of human’s nutrition.

Sector, drawing a rising graph,whether production or export, is dynamo of country’s economy.


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A utomotive industry is the primary buyer

of iron and steel, petro chemical, rubber, textile, glass, elctronics industries. Automotive industry is also the major motivator of technologic developments in these industries. All the vehicles that tourism, infrastructure, construction and aggriculture sectors need is provided by automotive industry.

Automotive industry in Turkey is established due to the principal of import substitution in 1960s. But

eNgıNe of the ecoNomy Automotive industry is one of the leading industries of Turkish economy with its high value added production, employment it create and its interaction with other branch of industries.

By F. KARACA BOZGeyİK

AUTOMOTIve

Original product producers have invested more than 12 billion dollars between 2000 and 2014 to their activities in Turkey.

an element which determines getting strong position of Turkey’s world wheat trade. Turkey’s highest share belongs Iraq with %51,2 in export of wheat flour.

The other important export product pasta, which takes place in world pastry products, actualized 9,3 million dollars level with increasing %2,4 ,compared to 2014. As of 2014, there are 5 countries in export of pasta, which are Italy, China, Turkey, Tailand and USA. Our country takes place in 3th with %5,4 around 163 countries.

Our export actualized increasing share with %4,1 in 1,1 million dollars level .

When evaluate January 2016’s export, pastry products takes places in 1th with 22 million dollars and %31 share in 69,8 worth of dollars. Respectively, pasty products follow the pulse products with 18,5 million worth of dollars and herbal oilswith 8,3 million value of dollars.

When evaluate export of January 2016, Turkey General Cereals and Pulses, Oil Seeds and Products Exporters Union, pasty products takes place in 1th with share %24 and 109 million worth of dollars in 462 million dollars sector. Pasty products follows respectively 98 million dollars with milling products and 70 million dollars with herbal oils.

When our country is evaluated according to January 2016 exporting countries about General Cereals and Pulses and Oilseeds Exporters Association, Iraq takes place in 1th with 124 million dollars export and %27 share.

For 2023, according to classification of Cereals and Pulses, Oil Seeds and Products sector TİM (Turkey Exporters Assembly) which aims to 3,7 million dollars export, is the biggest sub-sector in agricultural category.

our automotive industry has gained a feature of being a competitive sector with the breakthrough took place in the beginning of 1980s. The sector speed up with the effects of advantages provided by customs union and global firms producing in Turkey. Within the scope of developments took place production and export increased swiftly. Especially the qualified labor force and process of quality reached in production made Turkey center of production for global markets.

Automotive industry in Turkey is established due to the principal of import substitution in 1960s.

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Original product producers have invested more than 12 billion dollars between 2000 and 2014 to their activities in Turkey. These investments upgraded production abilities of producers significantly. By this means Turkey became an important ring of global value chain. Turkish automotive industry meeting the expectations of international quality and security standards, thanks to its high value added production understanding became a competitive industry.

Automotive sector exports rose to $13.46 billion in the January-July period, an increase of 11 percent compared to the same period last year. In addition, the sector’s exports increased by 5.21 percent in July despite the nine-day holiday and problems developing in neighboring countries. While automotive exports were $1,641,980 billion in July 2015, it hit $1.73 billion in the same period of 2016. According to the Turkish Exporters Assembly (TİM) database, the automotive sector exported to 180 countries and autonomous regions along with 12 free zones during the first seven months of the year. The automotive sector closed the season as the leader by a landslide with the biggest share of Turkey’s total exports, at 18.1 percent, reaching

$80.45 billion during the first seven months of the year, a drop of 4.9 percent. Following the automotive sector, the apparel sector came in second with a 13.4 percent share followed by the chemicals and chemical products sector with 10.7 percent. Only European Union countries and the U.S. were among Turkey’s top 10 export destinations in the automotive sector. Germany led the way with the largest number of exports, reaching $2.22 billion in the January-July period, an increase of 15.91 percent in comparison to the same period last year. Italy was the second biggest export destination with $1.45 billion, increasing by 41.44 percent compared to last year, followed by Britain with $1.37 billion and France with 1.36 billion.

Uludağ Automotive Industry Exporters Association Chairman Orhan Sabuncu, underlining that there wasn’t any problem in automotive industry’s production and export after the failed coup attempt took place in July 15, said:

“The automotive sector is based on long-term collaborations. The recent events will not easily affect our relations. I do not know for certain, but I do not think there was an increase in the number of orders for last week” Sabuncu also pointed out that they expected exports in July to

be higher than last year’s level despite the nine-day Bayram holiday.

While banks have responded to a call from President Recep Tayyip Erdoğan to revive the markets by drop their interest rates on home loans, the automotive sector expects interest rate cuts on loans for automobile purchases.

Authorized Automotive Dealers Association (OYDER) Chairman Alp Gülan said that in comparison to the previous year the automotive sector experienced losses in sale numbers. Explaining that in July sales remained below 30 percent of sales from same period of the previous year, Gülan said an interest rate cut would be highly crucial for the automotive sector to balance the decrease in sales. He said that 58 percent of automotive sales use loans, and pointed out that the most important point affecting sales in the sector was interest rates and terms for loans.

Toyota Turkey Marketing and Sales CEO Ali Haydar Bozkurt indicated that loans were preferred in auto sales, adding that the automotive sector was sensitive to changes in interest rates.

Hyundai Assan General Manager Önder Göker said: “The solutions recommended for the home loans have immediately shown effect. If a similar discount is applied to auto loans, it will make great contributions to sales.”

Nissan Turkey General Manager Sinan Özkök said that while automotive brands feature product and price campaigns, they try to balance sales with financial campaigns. He said that what mattered for the sector is finding the appropriate financial option for customers and that as for cost, interest rates are the major element considered.

Turkish automotive industry meeting the expectations of international quality and security standards, thanks to its high value added production understanding became a competitive industry.

Automotive sector exports rose to $13.46 billion in the January-July period

automoBıle sector’s map

Automotive sector exported to 180 countries and autonomous regions along with 12 free zones during the first seven months of

the year.

12AUTOMOTIve SeCTOR

exPORTeD TO

free zoNes

180AUTOMOTIve SeCTOR

exPORTeD TO

couNtrıes

PLASTICS


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the sector has foreign trade surplus, thus it plays an important role in the fields of foreign trade and closing the current deficit, which are two of the most important the problems of Turkey.

If measures toward solving current problems were taken, the Turkish plastics industry has the opportunity to become a strong, competitive and important regional actor due to its inherent advantages.

The domestic production of basic plastic raw materials resulted in a strong plastic processing industry in Turkey. At present, there are about 5,000 plastics processing companies which are mainly small and medium scaled. The plastic processing sector follows the latest developments in the plastic processing industry and manufactures all types of plastic products ranging from traditional to the latest developed plastic products, such as plastic construction

and irrigation products, plastic auto parts, plastic table and kitchenware, all plastic parts of electrical and household items, all kinds of plastic packaging products and most composite, plastic parts.

The Turkish plastic processing industry owes its success to its comparatively recent foundation. Accordingly, this relatively young sector uses the latest technology, developments and designs. As a result, Turkey has the biggest plastic processing capacity in Eurasia.

The Turkish plastics industry has considerable competitive advantage in global markets. This is mostly due to plastics being a young and dynamic industry in Turkey. The Turkish Plastics industry growth rate is greater than its competing countries. Turkey is in close proximity of both raw material producers and leading consumers of plastics, which enables the industry to respond swiftly to demands. These two attributes pose a tremendous opportunity for the development of the industry in Turkey. Turkey has a plastics consumption market that is not yet saturated. This makes the Turkish plastics industry attractive for investments. Additionally, the shift of production from Europe to the East will open up further investment opportunities for Turkey.

Turkish plastic products are exported to a wide range of countries in the world. Turkey is now exporting various plastic products to more than one hundred countries throughout the world. The plastic products are exported mainly to the European Union Countries, the Russian Federation and former Soviet States, the Eastern European Countries and the Middle East Countries.

P lastic Industry is a sector that generally produces

intermediate goods. This sector is a very important supplier of the service industry with products such as packaging materials etc. along with the manufacturing industry which mainly comprises of the fields of construction, agriculture, durable consumer goods, automotive and electronics.

The share of Turkey in the global plastics industry is 1.6%. In terms of plastics processing capacity in Europe, Turkey ranks 6th behind Spain, while ranking second in the production of synthetic fibers and third in window profiles. The industry is composed of more than 6000 companies, most of which is small and medium size enterprises (SME), and provides employment for more than 160,000 people.

In addition to its contributions in production, value added and employment,

shapıNg the daıly lıfeGrowing over national economy every year, Turkish Plastics industry puts in a successful performance and proceeds to become a global player with its processing capacity.

By OKAN hARMANKAyA

Turkey has a plastics consumption market that is not yet saturated. This makes the Turkish plastics industry attractive.

The Turkish plastics industry has considerable competitive advantage in global markets.

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of the rare countries where the prosperous, fertile and large agricultural areas with different regional ecological conditions allow the production of fruit and vegetables of quality in optimum conditions.

If we take a look to the history of exportation in the sector of fresh fruit and vegetables, it became possible in 1980, with the liberalization of seeds and saplings importation, to produce international varieties in Turkey, by adapting the time of planting

of the seeds and extending the production period to the climate conditions of Turkey. These last years, last technological advances are used in harvest and post-harvest storage and conservation (cooling, controlled atmosphere cold storage, modern packing houses) as well as in the packing techniques and the transportation to the markets is made in appropriate conditions with suitable vehicles.

Many national and multinational companies, working in export sector, have begun to import saplings to grown up fruit (cherries, apples, grapes, citrus fruit) on large areas, handling the fruit obtained in their own packing houses and selling it on national and international markets. Some other companies are producing vegetables according to the consumers’ demands, by contract

Fresh appetite from

turkısh producersTurkish Fresh Fruit and Vegetable Sector is not only important for the foreign currency inflow but also its strategic place in growing Turkish economy.

The fresh produce grown in Turkey mainly consists of grape-like fruits, pomefruits, stone fruits and citrus fruits.

Turkish Fresh Fruit and Vegetable Sector holds a

strategic place in the economy of Turkey by its contribution to the employment in the related sectors as production, packing and logistics, beginning from the stage of production with farming workers to the stage of packing and transportation with the workers in the packing houses. And if we consider the sector of fresh fruit and vegetables, we can say that it is one of the main subsectors of our agriculture. Turkey is one

NUTRITION

By eRSİN AKTAş



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farming system. All types of quality systems are used to make ready the products to be exported from the groves or fields on, ensuring the product safety. These quality systems are meticulously controlled by the Turkish representatives of European auditing firms, providing them the company with the related certification (HACCP, EUROPGAP, ISO etc.).

What is remarkable with the Turkish fresh fruit industry is not only the great diversity in the number of fruits grown but also the astonishing quantity of the total produce, about 18,2 million tons in 2013. The fresh produce grown in Turkey mainly consists of grape-like fruits, pomefruits, stone fruits and citrus fruits. Turkey is the world leader in the production of Apricots (%18 of world production), Cherries (20% of world prod.), Figs and Quinces (25% of world prod. for each)

and Grapes (6% of world production). Citrus fruits have always been a traditional export item of Turkey. The total citrus fruit production in 2014 season is approximately 3,6 million tons. Oranges being the most important variety with an output of 1,6 million tons, the production of other varieties are as follows; soft citrus 942.226 tons and lemon 726.283 tons, grapefruit 228.799 tons.

The main market of Turkish Fresh Fruit and Vegetable Sector, which prioritizes the quality factor, is Russian Federation.

Nowadays considering the final situation, where an excessive international competition in the sector of fresh fruit and vegetable must be taken into account, the Management Board of Turkey Fresh Fruit and Vegetable Sector is currently formed by 4 Unions of Fresh Fruit and Vegetables throughout Turkey : Mediterranean, West

In the meantime, Turkish exotic fruits namely figs, quinces and pomegranates are becoming more and more familiar to foreign importers.

Mediterranean, Eastern Black sea and Uludağ Unions. Their objective is to work so that to give benefit to the economy of the country by protecting Turkey’s share in markets already found and by finding out new markets and in this framework, to ensure better conditions to exporter companies in the sector in order to compete with the other competing countries.

In the meantime, Turkish exotic fruits namely figs, quinces and pomegranates are becoming more and more familiar to foreign importers. Turkey ’s export drive has resulted in its fresh fruit produce being shipped to more than 50 countries throughout the world. Turkey has begun to enhance her market shares in the CIS countries. Other principal export products of the fresh fruit and vegetables sector are cucumbersgherkins, peppers and onions. The Russian Federation, Iraq, Germany, Ukraine, Bulgaria, Romania, Saudi Arabia, the Netherlands, the United Kingdom and Poland have been major destinations for Turkish fresh fruits and vegetables. The Russian Federation, the leading export destination of the aforementioned product group, had a 36% share in Turkey’s total fresh fruit and vegetables with 829 million USD. Iraq is another major market, which has dramatically increased its share in Turkish fresh fruit and vegetables exports during recent years.

Many vegetables are available all the year round due to the adaptation of undercover production techniques. Major products grown undercover are tomatoes, cucumbers, green peppers, melons, aubergines, green beans, squashes.

how dıd the sector acted ıN 2015?

Sector is not important for the foreign currency inflow but also

its strategic place in growing Turkish economy.

50eMPLOyeeS IN The

SeCTOR

thousaNd

1.5%ShARe OF The SeCTOR IN

TOTAL exPORT

2015

2COMPANIeS ACTING IN

The SeCTOR

thousaNd

2TOTAL exPORT IN 2015

BıllıoN dollars

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T urkish Airlines is continuing to increase

its service to more exotic destinations as passengers seek more options in less-explored parts of the world.

Already carrying the title of “the airline that flies to more countries than any other in the world” with a network of 290 destinations in 116 countries, Turkey’s national flag carrier Turkish Airlines continues to expand its extensive flight network. Representatives of the Turkish Airlines held meetings in with relevant authorities for the start of the new service to Seychelles, an island nation in the Indian Ocean, at the end of October.

Discussions that centered on the arrival date of the Turkish Airlines’ first flight to Seychelles at the end of October is an opportunity for

Explore the World with Turkish Airlines As the flag carrier of Turkey, Turkish Airlines continues to expand its extensive flight network.

Turkish Airlines is continuing to increase its service to more exotic destinations as passengers seek more options in less-explored parts of the world.

AvIATION

Turkish Airlines to carefully plan its targets regarding this unique destination.

Turkish Airlines plans their Seychelles service with three flights and hopes to increase the number of flights to the islands in the near future. “We are happy to see the arrival of Turkish Airlines to our shores. We are a mid-ocean tourism destination that remains dependent on adequate air access to make our tourism industry work” Minister Alain St. Ange said as he was presented with a replica model of the Turkish Airlines aircraft that will be on the Seychelles route by the end of October this year.

Turkish Airlines has expanded its expanded its coverage of exotic holiday destinations in the Indian Ocean and Southeast Asia.

For a relaxing getaway somewhere truly exotic Turkish Airlines offers its passengers many options. Destinations such as Maldives and Mauritius that Turkish Airlines started to fly in 2015 attracted the attentions of passengers.

The six-time winner of Europe’s Best Airline award, offers travelers and explorers a wide choice of routes from its Istanbul hub with an

exemplary service quality.

Flying to Maldives, Mauritius and hundreds of other destinations, Turkish Airlines will soon add Seychelles to its flight network.

WIFI 20x26cm ING.indd 1 22.07.2016 16:30

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Akfen Holding from Turkey, Aeroports de Paris and Accor Hotels from France, Port Singapore Authority from Singapore, Heinemann from Germany, and Souter Investments and United Insurance Brokers from the United Kingdom all expressed their confidence in Turkey in an announcement published in the Financial Times. The companies reaffirmed that Turkey’s well-functioning and globally well-integrated economy provides a conducive environment for doing business. Saying that they collectively believe in the future of Turkey, the investors stated that they would pursue their operations in Turkey and continue their investments to support the development of the country for years to come.

Top executives of Citibank, General Electric, Intel, Dow, PwC, Ford Otosan, Cargill, and Medtronic, in a statement to Anadolu Agency, expressed their support for the future of Turkish economy on July 26, 2016. Çiğdem Ertem, Middle East, Turkey, and Africa Regional Director of Intel said that “Intel produces technology, and we believe that technology is the main driver of the future of the economy. With its young and innovative population, Turkey has huge potential. We, as Intel, believe in the future and

INveSTMeNT

They reaffirmed their support for the democratically elected government, institutions, the rule of law, and the Turkish people. Drawing attention to the importance of a functioning democracy, CEOs of these companies emphasized the significance of an uninterrupted flow of trade and investment. Companies such as Socar, the Abraaj Group, CEZ Group, Aeroports de Paris, Accor Hotels, Port Singapore Authority, Heinemann, Souter Investments, United Insurance Brokers, Citibank, General Electric, Intel, Dow, PwC, Ford Otosan, Cargill, Medtronic, Vodafone, Rolls Royce, Spot Blue, Coca-Cola, Procter&Gamble, Visa and The Walt Disney Company stated that their investments would continue uninterrupted. Trade chambers such as American Business Forum, the Turkish British Chamber of Commerce and Industry, and the France-Turkey Chamber of Commerce condemned the attempt in their press releases.

SOCAR Turkey Chairman Vagif Aliyev said in a statement that SOCAR’s investments in the country will continue increasing after July 15. Aliyev said that the company is “proud of the honorable and globally praised resistance of the coup attempt by the people and the government of the

Republic of Turkey.” This stance has encouraged SOCAR’s investment appetite in Turkey, he continued. He explained that SOCAR Turkey will complete Turkey’s first private sector oil refinery, STAR, in Izmir in 2018, which will reduce Turkey’s current account deficit. The company’s investments in Turkey are over USD 18 billion.

On July 26, 2016, the Abraaj Group (Abraaj), which has been investing in Turkey for over a decade, announced the final closure of its first dedicated Turkey fund, the Abraaj Turkey Fund I (ATF I). The group was able to raise a further USD 40 million investment, bring the total for ATF I to USD 526 million. Abraaj is a leading private equity investor operating in Africa, Asia, Latin America, the Middle East, and Turkey.

Turkey’s well-functioning and globally well-integrated economy provides a conducive environment for doing business.

foreıgN ıNvestors coNfıdeNt oN turkey

Various international investors operating in Turkey showed solidarity in their condemnation of the bloody coup attempt of July 15, 2016.

vagif aliyev, SOCAR Turkey Chairman

government. Chairman of TBCCI, Emma Edhem, said that stability and order returned quickly, which has allowed business activities to resume fully in the aftermath of the attempt. She expressed that despite these events there is still great potential for UK-Turkey business relationships, adding that TBCCI is committed to supporting existing and new opportunities. There are around 3,000 British companies investing in Turkey. The stock value of the companies’ combined

investments is USD 21 billion, making the UK the second largest investing country in Turkey.

Stating that Turkey has a bright future, Patrick Regis, who serves as Rolls Royce Turkey CEO and also on TBCCI’s Board of Directors, said that Rolls-Royce has a long-term strategy in Turkey and that it will not change its plans in moments of instability. Similarly, Vodafone Global CEO, Vittorio Colao, acknowledged that the Vodafone group is a continual and long-term investor in


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economy of Turkey, and we will pursue our investments.”

Canan Özsoy, CEO of General Electric Turkey said that “Operating for 60 years in Turkey with now over 2,000 employees in 8 different plants, General Electric will increase its investments in aviation, logistics, energy, healthcare, and innovation.”

Serra Akçaoğlu, CEO of Citibank said that “With more than 40 years of history and 500 employees, Citibank retains loyal to Turkey. The bank will continue to provide support to existing customers and potential investors who wish to invest in Turkey.”

Haydar Yenigün, General Manager of Ford Otosan said that “Expressing our deep sorrow for the people who lost their lives, we think that July 15 was the day that democracy truly became manifest in the Turkish people. We believe that collaboration provided in the wake of the coup attempt will accelerate growth dynamics in Turkey.”

Czech Republic-based energy company CEZ Group reaffirmed its confidence in the Turkish economy. They assured that their investments would continue without interruption. Considering itself a part of the country, CZE Group said that their production and sales operations will continue as planned. CEZ is an integrated electricity

AmCham noted that American companies have also declared that they are against interventions of any kind against democracy.

conglomerate with operations in Central and Eastern Europe and Turkey.

Trade chambers also did not hold back in their condemnation of the July 15 coup attempt. American Business Forum in Turkey (ABFT) issued a press release on July 20th, condemning the coup attempt and stating that the unity and integrity of the democratic and constitutional Republic of Turkey were targeted. The release mentions that in the aftermath of this tragic event, the business world, political parties, and various segments of society adopted a common stance with the aim to protect democracy. In this context AmCham noted that American companies have also declared that they are against interventions of any kind against democracy.

The France-Turkey Chamber of Commerce published on their website a statement regarding the failed coup attempt in Turkey. Zeynep Necipoğlu, the Chairman of the Chamber, strongly condemned the dramatic and bloody attempt carried out on July 15. She reaffirmed the chamber’s support for the democratically elected government, institutions, the rule of law, and the Turkish people. The France-Turkey Chamber of Commerce, established in 1885 and having 450 members, provides support for economic and commercial relations between Turkey and France.

The Turkish British Chamber of Commerce and Industry (TBCCI) published on its website a message and wholeheartedly condemned the coup attempt and reaffirmed their support for Turkey’s democratically elected

serra akçaoğlu, CEO of Citibank

haydar yenigün, General Manager of Ford Otosan

canan Özsoy, CEO of General ElectricÇiğdem ertem, Middle East, Turkey, and Africa Regional Director of Intel

patrick regis, Rolls Royce Turkey CEO

vittorio colao,, Vodafone Global CEO

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Turkey and that it is proud of its activities in the country. Moreover, David Walker, the Chairman of international property company Spot Blue and also a TBCCI Board member, said that Turkey has come a long way from 2003. Since that time the economic performance has improved immensely and continues to do so. He added that Turkey is a resilient, growing country that does not, and will not, stand still. After 16 years of investment in the country, Spot Blue will continue to invest there.

EBRD, Goldman Sachs and Credit Suisse invested in one of the largest global restaurant operators, Turkey-based TAB Gıda, which has issued USD 150 million of preferred stock to finance its future growth plans. The European Bank

for Reconstruction and Development (EBRD) is buying USD 50 million of the issuance. Goldman Sachs and an investment vehicle advised by Credit Suisse Special Investments Group are investing USD 80 million and USD 20 million respectively. TAB Gıda is the world’s largest Burger King master franchisee with exclusive operating rights in Turkey and China.

Head of International Investors Association of Turkey (YASED) Ahmet Erdem told Anadolu Agency on August 18, that nearly 33 percent of their members, including Coca-Cola, Visa, Procter&Gamble and The Walt Disney Company have chosen Turkey as a hub of their operations. Galya Frayman Molinas, president of Coca-Cola Turkey, Caucasus and Central Asia said that they will keep their investments in Turkey in line with full confidence on the country’s economy. Tankut Turnaoğlu, chief executive officer of Procter & Gamble Turkey & Caucasus, who also serves as YASED vice chairman said that geographical location, modern infrastructure, high-quality labor force and ease of doing business were the prominent factors for Turkey to be chosen as a regional center. Berna Ulman, director of Southeast Europe at Visa Europe said Turkey acts as a leader in global payment world and pointed out that Visa actualized many worldwide firsts in the country. Giovanni Mastrangelo, who serves as country product manager for Turkey, Israel, Greece, Cyprus and Malta regions at The Walt Disney Company said they would like to triple their growth in Turkey in the following three years.

President Erdoğan addressed top representatives of global companies operating in Turkey at the Presidential Complex in Ankara on August 2. He reassured attendees that the three-month state of emergency, which fully complies with EU procedures, will have no impact on the business environment in Turkey.

Erdoğan underlined that, Turkey ison track to reach 2023 goals.

President Erdoğan noted that international investors should reach out to ISPAT

ecoNomıc ıNdıcators sıgNalıze swıft recovery aNd NormalızatıoN

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Head of International Investors Association of Turkey (YASED) Ahmet Erdem told Anadolu Agency on August 18, that nearly 33 percent of their members, have chosen Turkey as a hub of their operations.


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ISPAT supports high-technology, value-added, and employment-generating investments.

turkey eyes leadıNg posıtıoN ıN gloBal gamıNg ıNdustry

Turkey has embarked on a special campaign called Turkey Loves Indies (www.turkeylovesindies.com) with the aim of targeting new and existing digital game developers from around the globe and better communicating to them the business opportunities that await them in Turkey. The campaign will offer game developers the chance to develop their dream game in Turkey.

The Turkey Loves Indies campaign, a joint initiative of the Investment Support and Promotion Agency of Turkey (ISPAT) and the Game Developers Association of Turkey (TOGED), kicked off on August 15, 2016 in Germany following the launch of www.turkeylovesindies.com. The online platform provides developers with all the information they need about game development opportunities in Turkey. Specifically, developers can learn about all types of government incentives and support programs, including funding, training, design,

logistics, consulting, and tax exemptions.

In order to broaden the campaign’s reach, Turkey became the partner country of Gamescom -- a global event visited by over 345,000 visitors and around 6,000 media employees -- and sponsored two events, namely Respawn and the Game Developers Conference.

ISPAT supports high-technology, value-added, and employment-generating investments. In this regard, it believes the future is bright for the ICT sector, including software. ISPAT will participate in global gaming events to engage with indies, startups, and corporates in the industry in a bid to maintain a connection between corporations and individuals, including game designers, software engineers, programmers, visual artists,

During his speech, Erdoğan underlined that, on track to reach 2023 goals, a set of targets including becoming one of the top 10 largest economies in the world with an increasing national income of up to USD 2 trillion, per capita income of up to USD 25,000, and foreign trade volume of up to USD 1 trillion, Turkey places a great emphasis on international investors.

Erdoğan also emphasized that Turkey stands tall in the face of adversity, never once in the past 14 years canceling an investment project due to unfortunate incidents. Touching on the business procedures, he promised the audience that any bureaucratic red tape holding up investment projects will be eliminated in a timely manner. With regard to investment projects in Turkey, Erdoğan noted that international investors should reach out to ISPAT as the agency serves as an intermediary between investors and the government, ensuring clear communication.

modelers, and voice processing experts. ISPAT hopes to accelerate the technical, social, and economic improvement of game development companies in Turkey and increase their standards, success, and popularity internationally.

With its relatively new and yet-to-expand ecosystem, Turkey harbors huge potential for indies. Graced with a growing young and dynamic population -- one of the keys to success in the gaming industry -- and generous government incentives, Turkey is soon to become a major player in the global gaming industry.

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T urkey Global Innovation Index ranking was 58th

in 2015, this year all at once increased 16 rows, was ranked 42nd with 39.03 points. Global Innovation Index report which is anounced every year has been declared, in cooperation with Cornell University, INSEAD (The

Innovation Input Lower Index and Innovation Output Lower Index. Input Lower Index consists of 5 basic components and these components consists of 3 indicators:

1- Institutions and Organizations (political environment, regulatory environment, business community)2- Human Resources and Research (education, higher education, research-development)3- Infrastucture (Informatics, general substructure, sustainable environment)4- Development of Market (facility, investment, trade and competition)5- Development of Business (knowledge workers, innovationenvironment, fund of knowledge)As to Innovation Output

Lower Index consists of 2 basic components:

1- Output of Knowledge and Technologies (knowledge generation, influence and dissemination)2- Innovations (intagible assets, innovative productions and services, online creativity)Turkey is ranked fourth

among middle-income countries in Global Innovation Index ranking. China which is participated in among top 25 innovative countries this year is placed on the top. EU member Bulgaria is second. Third country is United Arab Emirates and then there is Turkey. In this rank, Turkey takes place as a country of North African and West Asian. From the perpective of this region, Turkey is fourth in top innovative countries. In the top three, Israel, Cyprus and United Arab Emirates (UAE) are takin place in this region.

Turkey Increased 16 Rows in

gloBal ıNNovatıoN ıNdex 2016Global Innovation Index report which is anounced every year has been declared.

INNOvATION

By F. KARACA BOZGeyİK

Business School for the World), World Intellectual Property Organization (WIPO) in August.

The main theme of the 2016 report has been determined as “Winnig the Global Innovation”. Global Innovation Index is examined in a multi-dimensional

ıN a perfect world for ıNNovatıoN, who would do what?

THE GLOBAL INNOVATION INDEX 2016Top ranking countries/economies for selected indicators from the Global Innovation Index 2016

Data: World Intellectual Property Organization

www. globalinnovationindex.org

ground onthe activities of countries’ innovation. 2016 report which has aimed the long-term growth of countries, promotion of production activities and development in the direction of business is analyzed. Generated data for innovation index is based on two lower axes. These are

Briefing26

ın turkey.

27The Turkish PerspectiveThe Turkish Perspective

Special ReportEDITOR MUSTAFA YİĞİT

Turkey Managed the Crısıs Fought Against To The Misunderstandings

On Its PerCePtıon With Equanimity Now It Is Time For

Closıng the ranks and

sPeedıng uP the ınvestMents P50

P56

P32

P38

the terrorıst

attaCk took PlaCe ın

ended uP wıth

The Trıumph of Soldıarıty

7 51 P27

truıMPh of solıdarıty

28 Special Report/ Truimph of Solidarity


Since the country’s leaders called on people to “take to the streets for democracy” on the night of a coup attempt on July 15, large crowds have filled streets and squares.

truıMPh of solıdarıty turkey has caught an unıque

opportunıty for solıdarıty. entıre country came together ın unıty agaınst attempt to theır own wıll.

The Turkish Perspective 29The Turkish Perspective

30


Special Report/ Truimph of Solidarity

ın mythology, Cassandra was the daughter of prıam, the Kıng of troy. the god apollo gave her the power to see what would happen ın the future, but wıth a curse he also made sure that no one would belıeve her. cassandra who was left wıth the Knowledge of the future events, predıcted the dısaster of troy but nobody has belıeved her.

Based on the myth of Cassandra there is a modern syndrome and metaphor recognized by experts; the cassandra syndrome or complex, which is applied in cases of valid alarms, which are disbelieved. the syndrome applies mostly in psychology and politics or science, and the french philosopher gaston bachelard named it in 1949.

ın turkey after the failed coup attempt situation is really similar. turkish authorities that declared fethullahist organization as a terrorist group were not believed by the western world. even after the coup attempt took place explanations of the foreigners do not take turkish authorities on the danger of this terrorist organization serious. we can say that turkish authorities are going through a cassandra syndrome in the eyes of western world.

another thing that is similar with the myth is the trojan horse incident. ın the myth the enemy expected from out of boarders were inside. the enemies that turkish people and government faced in the failed coup attempt were also among themselves. similarities of the enemies in myth and turkey are not limited with this. they both are professional in hiding their real identities.

failed coup attempt was useful for a sense. turkey is united more than ever around the principles of legitimacy, transparency and accountability against any and all groups that may seek to subvert them for their own interests.

since the country’s leaders called on people to “take to the streets for democracy” on the night of a coup attempt on July 15, large crowds have filled streets and squares in what they called a “democracy watch” or “vigil.” ın every city and town, crowds waving turkish flags attend rallies continuing until the early hours of the morning. many sleep in makeshift tents or benches after the rallies and leave for work in the morning, an unprecedented event in turkey’s modern history.

also opposition parties united against the betrayal incident. mhp chairman bahçeli and chp Chairman Kılıçdaroğlu put aside their differences

and expressed full backing for the fight against the fetÖ, which they blame for the failed coup attempt on July 15.

according to presidential spokesperson Ambassador İbrahim Kalın; “Since everyone has paid a price during the gülenist terror organization’s (fetÖ) heyday in turkey especially between 2008 and 2013, the general mood is one of “enough is enough”. people demand merit-based, transparent and accountable governance, one that will serve the people and the country and not the interest of a particular group and/or deranged imam. people demand the end to the fetÖ nightmare that destroyed so many innocent lives over the last six years to seven years. the government is determined to respond to this demand and has the support of the people.

ın this new process, the biggest loser is certainly gülen and his global network known as fetÖ in turkey. with the coup attempt, gülen has lost everything, including members, schools, companies, money and more importantly, support, credibility and respect. he and his followers may have thought of taking over the country through a military coup and demonization of president recep tayyip Erdoğan, but the greatest mistake of his life turned out to be an opportunity for turkey, whereby the entire country came together in unity and solidarity against him and his criminal network.”

as a vital ally of West, Turkey’s desire is to see its allies working in collaboration with him.


the welfare gap with the west is our priority. hence, attempts to abandon and keeping us away from the west are targets of the failed coup attempt. turkey will not fall into this trap.”

Şimşek also said a decision by ratings agencies to downgrade turkey would be a mistake. “ıt would not have been a surprise if turkey’s rating had been downgraded in the wake of the coup attempt,” he said. “but we said ‘let us tell you, then do however you please.’” the predictions of ratings agencies did not occur, Şimşek said. “Now that FETÖ has been crushed, turkey will relax,” he added. “the democracy and the economy of the country have been strengthened. we did not back down from reforms even during the state of emergency.”

as a conclusion it can be said that turkey who has survived over a coup attempt knows the perpetrators of the betrayal attack. ıt is expected western world to see the proofs and back up turkey.

as a vital ally of west, turkey’s desire is to see its allies working in collaboration with him.

Failed coup attempt was useful for a sense. Turkey is united more than ever around the principles of legitimacy, transparency and accountability

deputy Prime MinisterMehmet Şimşek said: “Our citizens deserve the most advanced democratic standards, and cutting the welfare gap with the West is our priority.”

also there is negative reaction to western media in the public. the western media’s coverage of the July 15 coup attempt has been far from fair or accurate. It does not reflect the Western values and professional and ethical standards of journalism. ın articles published in turkish media western world is criticized harshly.

for example the following quotation shows the public’s perception on west directly: “putting aside the anti-Erdoğan animus that drives some Western journalists, this approach falls short of presenting an accurate picture of the social and political dynamics in turkey. ıt also leads to deep suspicions about the credibility of western media and feeds conspiracy theories, which the western media then blame on the people in turkey. ıt is shameful, to say the least, that some reporting downplayed the magnitude and severity of the bloody coup attempt and instead sought to use the post-coup measures to attack Erdoğan again. It looks like the standards of media accountability are very low when it comes to covering turkey.”

Deputy Prime Minister Mehmet Şimşek explained why the public is addressing the west for the coup. ın a tv program he attended he said: “there is an incredible international campaign against turkey – a systematic attack financed by FETÖ (Fethullahist terrorist organization)”

Many politicians in the United States have financed their campaigns with Gülenist funds, Şimşek said, noting that such aid had spawned propaganda against turkey. “such generalizations will cause harm in the way the coup attempt could not,” he said. “turkey has been facing the west for centuries. our citizens deserve the most advanced democratic standards, and cutting


collaboratıon vs crısıs

32 Special Report / Collaboration vs Crisis

collaboratıon vs crısıs turkey eluded the betrayal

attack of fethullahist terrorist organization thanks to its strong ties with democracy.

Ucon dellerra me o intrari mursusq uodit. Re hiliu seneque mentes culis, Catam sentrum lare, quium, norum, ocrid fue cons idit, oc or publicones noximur proxim cer puloccios addum


34


Special Report / Collaboration vs Crisis

Failed coup attempt that took place in front of the entire world targeted turkey’s democratic institutions. the main target was to crash down the stable economic system and peace in turkey.

By this way terrorists thought that they could take the support of the public. this was their only way to gain their legitimacy in international era too. having these on their mind, with the coup attempt terrorists thought they may achieve their duty. but did they have a plan for the future? as it is clearly seen they didn’t.

People who filled the streets on the night coup attempt was happening, didn’t let the betrayal terrorists to reach their goals. people from different backgrounds came together and they stood solid against to this incident. in the following days of the coup attempt people didn’t draw from the streets and showed their sense of solidarity to entire world. a bad incident like a coup attempt gave birth to a good conclusion. this unity led a way to a new reconciliation in the society.

the demand of reconciliation coming from the roots of the society also effected the institutions of the government in a positive way. all the institutions of turkish state acted as a body and coordination among them was impressive.

especially the expectations of the experts were that economy will be affected negatively fro the coup attempt. but the hard work of bureaucrats and politicians kept the damage under control and turkey recovered its small wounds fast.

Deputy Prime Minister Mehmet Şimşek, Minister of economy nihat zeybekçi and governor of central bank murat Çetinkaya played a critical role on this recovery process. From the very first time that coup attempt took place coordination and collaboration among these institutions eased turkish economy’s new route.

the turkish economy will not suffer permanently from the failed coup attempt on July 15, despite a short-lived, downward impact on growth, deputy Prime Minister Mehmet Şimşek said on July 18. He also said turkey’s macroeconomic fundamentals were solid and the government would swiftly shift its focus back to carrying out structural reforms, in a televised

interview on bloomberg ht.speaking in a tV interview following the

declaration of a state of emergency after the failed military coup on the night of July 15, Şimşek vowed that turkey’s economic base is “solid,” adding that it has repeatedly surprised observers with its resilience during previous global economic crises and geopolitical rifts.

“A significant part of this debt is related to finance of trade, which means being in debt to companies who sell goods to us on credit. will they stop selling goods to us? this is important,” he said. turkey does not expect to experience difficulties about any rollover of its external debt, he added.

“Secondly, there are financial institutions with which turkish banks have had relations for a very long time. will they quit relations all of a sudden?” he added. after standard & poor’s downgraded turkey’s credit rating one notch – triggering fears of significant capital outflow – Şimşek admitted that credit costs might edge up due to credit rating agencies’ decisions.

Mehmet Şimşek acted like a hero who is in touch with politics and public at the same time.

5millionQuiatia cum in conecatur

mostio et experep

taturModit, veliquias

eremquam

Turkey’s economy has remained unaffected by the July 15 coup attempt, said Turkish Prime Minister Binali Yıldırım.


can the money gone abroad from turkey can turn in. turkey’s economy has remained unaffected by the

July 15 coup attempt, turkish prime minister binali Yıldırım has said, adding that the amount of cash that flowed into the country since the failed putsch had surpassed the amount that exited. “the coup attempt did not have even a shadow of effect on the economy,” the prime minister said while addressing party deputies on aug. 16. “as of august 15, the money that entered turkey [since July 15] is $1 billion above the money that exited,” he said. the rate of participation in labor has reached a record 5.2 percent, he said, adding that 28 million people were employed in the country.

“this shows that we have seen terror and coup attempts but the economy is not affected by these at all. our economy is now even stronger than it was before July 15.” the central bank has not felt the need to pump cash into the markets since april 28, Yıldırım said, adding that the reserves increased to $126 billion from $120 billion. “turkey is still the country to invest in,” he said. “we will increase our savings. citizens will provide 90 million worth of savings in 10 years with the contributions of the

he successfully played his role of relaxing the markets and the public in stressed times. besides his performances on live tV shows he also met with investors and other bureaucrats to take necessary precautions that may relax the liquidity in the state.

he encouraged the public to spend money and strengthen the cash flow. Turkish citizens have sold some $9 billion for turkish liras since the start of the military coup attempt on July 15, deputy prime Minister Mehmet Şimşek said during an interview with broadcaster cnn türk on July 27. “turkish citizens exchanged over $9 billion into liras as July 26, which is of grave importance. when looking at the data, the loss of value for the turkish lira, the rise in the stock market and market risk premium, it can be seen that the foundations are secure and strong,” said Şimşek, while evaluating the possible impacts of the bloody attempt on the turkish economy. “foreign capital entries have begun, minor amounts went out and they continue to be drawn,” Şimşek added.

also prime minister was closely interested in the investors and situation of the economy. he met up with investors and gave confidence to them. Right after the coup attempt he worked on the issue how

The demand of reconciliation coming from the roots of the society also effected the institutions of the government in a positive way.

People who filled the streets on the night coup attempt was happening, didn’t let the betrayal terrorists to reach their goals.

Prime Minister was closely interested in the investors and situation of the economy.


state,” Yıldırım said, referring to a recent change in the individual pensions system. the government has improved the capital in eximbank and development bank in a bid to ease access to cash and support investments, he said. reforms in customs and company taxes are also in the pipeline, he added.

Turkey’s economic confidence index in July rose by 14.9 percent compared to the previous month, signaling no damage to confidence in the country’s economy after the failed July 15 coup attempt.

According to official data released by the Turkish Statistical Institute on July 18, Turkey’s economic confidence index increased from 83.33 in June to 95.73 in July. Reports showed an improvement in the confidence index was driven by increases in all sub indices except consumer confidence, including services, retail trade, construction and real sector confidence. Services confidence index increased to 100.86, retail trade confidence index increased to 103.56, construction confidence index increased to 82.95 and real sector confidence index increased to 106.3 in July. The construction confidence index also saw a 2.5 percent rise to 82.95, while real sector confidence also rose 1.9 to 106.3 in July.

turkey’s central bank cut the overnight lending rate, the highest of the multiple rates it uses to set policy, by 25 basis points to 8.75 percent in line with expectations, while it kept its benchmark one-week repo rate on hold after a failed coup attempt on July 15, which has derailed the markets. the bank said it would maintain tight monetary policy given inflation

96%economic confidence index in July

17July

tl market liquidity measures

21July

stock repurchase announcement

Mehmet Şimşek: teleconference with foreign

investors

22July

communication policy

announcementEmlak Konut:

prohibiting contractors to

lay off workers

Turkey’s economic confidence index in July rose by 14.9 percent compared to the previous month.

tımelıne of precautıonsAll the institutions of Turkish state acted as a body and coordination among them was impressive.

expectations, after cutting interest rates for the fifth straight month, in a written statement on July 19.

the bank also noted it would take measured steps toward policy simplification. “Recently, domestic developments have led to fluctuations in financial markets. the (monetary policy) committee assesses that the recent liquidity measures have alleviated the volatility in financial markets. Moreover, the tight monetary policy stance, the cautious macro-prudential policies and the effective use of the policy

36 Special Report / Collaboration vs Crisis

instruments laid out in the road map published in august 2015 have increased the resilience of the economy against shocks.

also considering its contribution to the effectiveness of monetary policy, the committee decided to take a measured and cautious step towards simplification,” said the bank. “the committee has indicated that inflation may display a marked increase in the short term due to developments in unprocessed food and tobacco prices. meanwhile, the core inflation trend is expected to improve gradually. yet, the developments in inflation outlook necessitate the maintenance of a tight liquidity stance,” warned the bank, adding that future monetary policy decisions would be conditional on the inflation outlook. economy minister nihat zeybekci told Reuters in an interview late July 18 he expected the central bank to continue with “bold” rate cuts, adding he would understand if it took no action this time following the coup attempt.

turkey’s central bank cut its requirement on aug. 9 for the reserves banks must hold, as part of an effort to increase the amount of cash available to the turkish economy. the bank said its moves could provide up to 1.1 billion Turkish Liras ($370 million) and $600 million to the financial sector. Reserve requirement ratios for banks were cut by 50 basis points, according to a statement.

the central bank also said it was adjusting reserve option coefficients for some of its foreign exchange and gold facilities, a measure of how much gold or forex a bank may hold as part of its reserves. the changes are intended to reduce funding costs for banks, which may lead to lower loan rates. they come after turkey’s currency, the lira, weakened to record lows against the dollar following a failed coup last month. “we estimate that these moves should

result in 0.5 percent contribution to banks’ annual earnings,” said BGC Partners economist Özgür Altuğ. Altuğ had forecast such a move in a note issued before the central bank statement, saying such steps might be taken to convince banks to cut their loan rates.

a state of emergency declared after the July 15 coup attempt exacerbated the lira’s losses, but central bank governor murat Çetinkaya.

as a result it can be said that turkey has successfully passed the test of facing a state of emergency. the communication and collaboration of the governmental institutions pumped confidence to the markets and people didn’t panic. this shows us the faith of turkish people and institutions to the democratic values. besides not giving up on their rights they stood up and fought for their gained rights. now the future is brighter than any time before for them.

1auGustannouncement

of support to emlak konut

3auGust

finance Ministry:

restructing of public claims

Launching Efforts to

Establish Turkish Sovereign Wealth

Fund

10auGust arrangements

about individual pension system to boost savings

25July

fX reserve measures

9auGust

reduction in reserve

requirement ratios

27July

tl market liquidity measures

Emlak Konut: announcement

of lowering mortgage loan

rates

Considering its contribution to the effectiveness of monetary policy, the committee decided to take a measured and cautious step towards simplification


23auGust

marginal funding rate

has been reduced from 8.75 percent to 8.5 percent by

central bank

38 Cover /Turkey Perception of West

turkey perceptıon of westThere is the same

question in the minds of Western World today: Where is Turkey heading? Are we loosing an ally?



turkey perceptıon of west

western world left coups and antı-democratıc movements behınds decades ago. so ıt ıs really hard for them to understand the danger that turkey has gone through on the nıght of july 15.


after the terrorıst attcak, 7/15, there ıs the same questıon ın the mınd of western world today: where ıs turkey headıng? are we loosıng an ally?

on the night of Coup terrorists, claiming to speak for the entire turkish armed forces, said they’d done so in the name of protecting democracy - despite the fact that justice and development party and President Recep Tayyip Erdoğan were democratically elected.

turkey blames the western authorities had been silent until the coup attempt has failed and these kind of behavior is opposite to the western and democratic values. In here we should examine the statements by other countries done that night.

united nations secretary-general ban ki-moon has called for calm and said “the un is seeking to clarify the situation.”

us president barack obama urged all parties in turkey to back the “democratically-elected” government.

Detailing a call between Obama and Secretary of State John Kerry, who in Russia for talks on Syria, the white house said both agreed “all parties in turkey should support the democratically-elected government of Turkey, show restraint, and avoid any violence or bloodshed”.

european council president donald tusk called on the day after failed coup attempt, July 16, for a swift return to turkey’s constitutional order. “turkey is a key partner for the european union. the eu fully supports the democratically elected government, the institutions of the country and the rule of law,” Tusk said at a regional summit in mongolia. “we call for a swift return to Turkey’s constitutional order,” he said.

the democratic order in turkey must be respected and all must be done to protect lives, german chancellor angela merkel’s spokesman said on Twitter. Germany’s Foreign Minister Frank-Walter steinmeier also condemned “any attempts to change the democratic order in turkey by force”.

The reactions from the Western world were like it was written above. Several surveys following the coup indicate that a fair share of the turkish public believe the U.S. was behind the coup or at least played

a facilitating role for the coup plotters. according to a survey by pollster andy-ar, 64.4 percent of respondents believe Fethullah Gülen was behind the coup attempt, while 3.8 percent directly blamed the United States. The survey showed 72.6 percent of respondents thought other states supported the attempted military junta. the public’s sentiment is largely attributed to the presence in the u.s. of gülen, the prime suspect behind the coup plot, who has a green card and has lived since 1999. turkey seeks Gülen’s extradition on charges of terrorism.

elements in turkish media have claimed that the central ıntelligence agency (cıa) and a senior u.s. commander had a hand in the coup plot, and many turks resent a perceived stance by american media regarding the coup that amounted to justification and blame of President Recep Tayyip Erdoğan, which has fueled public outrage against the u.s.

despite the soft messages came from western world Eastern world had backed up Turkey more. Some examples like Russia and Qatar were important.

russian foreign minister sergey lavrov highlighted the need to avoid all “bloodshed”, saying that “problems in turkey need to be resolved in accordance with the constitution”.

Kremlin spokesman Dmitry Peskov said Moscow was “deeply concerned” at reports from Turkey, saying Russia’s priority was to secure the safety of Russian institutions and citizens in turkey.

Qatar “expressed its strong denunciation and condemnation of the military coup attempt, lawlessness, and violation of the constitutional legitimacy in the republic of turkey”, according to a foreign ministry statement.

as it is mentioned above “public’s opinion on the address of coup attempt is west. that should concern Turkey’s allies on Western world” says the experts. To avoid this idea from the public and act calmer turkey hosted joe biden, vice president of united states of America in capital, Ankara. Biden met with Prime


Minister Binali Yıldırım and President Recep Tayyip Erdoğan and confessed that they were really late to understand the danger of coup attempt.

(Biden) expressed his unyielding support for turkish democracy and praised the turkish people’s commitment to democratic institutions,” it said in a statement. “the vice president urged that the investigations into the coup’s perpetrators be conducted in ways that reinforce public confidence in democratic institutions and the rule on law.

Speaking at a joint news conference with Turkish Prime Minister Binali Yıldırım, Biden said that the Turkish officials have made it clear to him that rule of law will prevail during the investigation of the coup. he added that he feels guilty for not coming to turkey sooner after the coup bid of the fethullahist Terrorist Organization (FETÖ) on July 15, which targeted the democratically-elected government of turkey.

there is the same question in the minds of western World today: Where is Turkey heading? Are we loosing an ally?

Turkey with its strategic moves in this period answered the question well. “Turkey isn’t heading east, turkey isn’t heading west. turkey is in the place where it was yesterday. It will also be in here tomorrow. Turkey has a unique sense of world perception and will continue its duty on the spot where it has been staying as a bridge between the civilizations. since the foundation the modern turkish republic.

Turkey blames Western authorities because they been silent until the coup attempt has failed.

There is the same question in the minds of Western World today: Where is Turkey heading? Are we loosing an ally?



BRINGING GULF CAPITAL TO AFRICA THROUGH TURKEY turkısh busınessman oktay ercan, who ıs dressıng up the sudanese army belıeves “turkısh know-how and gulf capıtal” ıs a golden combınatıon for successful ınvestments ın afrıca.

e staBlished in 2001 as a sudanese-turkish joint-venture, sur military clothing factory has become the biggest textile factory in Sudan. The company produces clothing for the armed forces across middle East and North Africa at the first fully integrated military textile industrial complex in the world, where they currently produce 1 million uniforms per year. with qatar becoming the third partner, sur International has significantly increased its investment capacity. oktay ercan, turkish businessman and the founder of sur ınternational tells more about his success story and gives some tips for the Turkish firms to be more dominant in the african market.

could you tell us more about sur international? How and where did it start? I started this journey in 2001 in Sudan, and we are continuing with the Qatari armed forces becoming our third partner. as a company, sur ınternational has an interesting and unique structure. ıt is the only company in the world that is established by the armed forces of two different countries and an investor from a third one. ın this sense, sur is a model; particularly for the development of muslim countries. sur is the most important investment and development model based on a partnership among sudan, qatar and turkey.

How did you end up in sudan?Actually it was completely a coincidence. I was running a textile firm in Turkey. In 2000, a delegation from the sudanese ministry of defense came to turkey. they also visited us as a company producing clothing for the turkish armed force. they came to purchase from us, but it turned out that they did not want only my products but also my company. Their wish was to establish a similar textile complex in Sudan. At first, I thanked for their kind offer, but later on I accepted it. After visiting, I saw the potential in sudan and decided to invest in the country. sudan is one of the best investment decisions ı have taken in my professional life. ıt is only a matter of geographical distance, we feel at home in Sudan with full of peace and confidence.

ıs there any particular reason why you specialized in military clothing? Do you also produce civilian clothing? military clothing has been my primary business field since 1998. I have specialized in this field. It is a difficult and challenging market but exciting and enjoyable at the same time. Now we are one of the biggest producers in military textile. We produce military uniforms from cotton at our fully integrated complex. Our target is to become an important actor in this sector. ın addition to military uniforms, yes we are producing civilian clothing as well. Yet, we are not ambitious in the fashion industry, but rather in corporate textile. We have been producing for schools, hospitals, hotels, factories, airlines and public institutions.

How has your experience in sudan been so far? what kind of challenges have you faced? Did sudan’s domestic politics have any negative impact?I had no difficulty in Sudan to be honest with you. both the government and the people of sudan have trusted me from the very beginning. ın return, ı have done my best to increase my investments and serve the country. ıf you are talking about the embargo, of course it has negative impacts, but we are businessmen. We have to deal with this kind of challenges in one way or another.

“I have done my best to increase my investments and serve the country. “


By FEyZA GÜMÜŞLÜOĞLU


yours must be a competitive sector. which countries are posing the most serious competition in sudan and elsewhere?our target market is the middle east and africa. of course we have rivals but due to our unique company policies and strong partnership structure, ı can say that we do not really have a rival. We are receiving partnership offers from many african countries, winning tenders. SUR is on the path of becoming a brand in the region.

How does Qatar contribute to your business? Do you have future partnership plans with other Gulf countries as well? sur ınternational and the qatari armed forces became partners in 2012. Qatar brought more power to us. It did not only improve our finances, but also our vision. ı personally learned a lot from them. we receive great support from qatar. ı hope this partnership and our successful investments will last for long time. Qatar may be a small country, but it has a great vision. of course we have partnership plans with other Gulf countries as well, especially with the United Arab Emirates and saudi arabia. particularly saudi arabia has important investment opportunities in recent years.

Gulf countries usually prefer europe for investment, Africa is still a virgin place for them. with turkey-sudan-Qatar partnership, you are kind of a bridge connecting these countries, bringing Gulf capital to Africa. Based on your experience with Qatar, what are the opportunities for the Gulf in Africa, and how can turkey contribute to the Gulf countries?gulf countries are actually interested in africa. but the biggest challenge is that they might encounter some management difficulties in Africa. Due to these difficulties they do not prefer Africa for investment. Yet, investment opportunities in africa can get successful results by expanding the model we have established. ıf ı formulate that model: opportunities in africa-

Turkish companies have great potential in the region. Turkish products are viewed at the level of European standards in the Middle East and North Africa.

capital from the gulf and management from turkish entrepreneurs. By applying this model, we can make strong, profitable and low risk investments in Africa. We set the best example of this model. African and Gulf states can make investments in partnership with private companies. Their regulations allow it. This brings great business opportunities for the turkish companies, particularly in the fields of energy, construction and industry. My aim is to explain this model to Turkey. This way, Turkish investors will find capital, Gulf investors will have a reliable partner, and Africans will receive good service.

turkey has begun to pay more attention to African market in recent years. what is the potential in Africa for turkish companies? what sectors are the most promising?Very good question. Regretfully, we as Turkish companies have not shown a desirable level of success in the region. ın order to be more successful, our companies need to be more patient. also they should make more effort in order to know the region and its people. Trust and success follow only after taking these steps. Unfortunately Turkey’s trade volume with Africa is below desired levels. Personally, I try to share my 17-year experience with different companies and businessmen as much as possible. but responsible authorities in turkey should also take necessary steps.

what should turkey do in order to grow further in the African market?turkish companies have great potential in the region. Turkish products are viewed at the level of European standards in the middle east and north africa. we have to develop better marketing and publicity strategies. we also have to start accepting long-term letters of credit, and the Export Credit Bank of Turkey’s (Exim Bank) support is important in this regard.

turkey witnessed a failed coup attempt on July 15. As a businessman who has strategic partnerships with different countries in the region, how do you see the possible short and long-term effects of this incident? thanks god turkey returned from the abyss. ı believe this tragic incident will contribute to us a lot. Our democracy martyrs did not sacrifice their lives for nothing. I have no doubt that Turkey will emerge out of this much stronger. when ı look at the middle east and north africa, ı see that turkey has become more beloved and trusted after the recent unfortunate developments. people’s love for turkey and the turks increased greatly, and this surely will have positive impact on our economy. after july 15, ı personally witnessed special requests coming from foreign investors to buy Turkish products and work with Turkish companies to show solidarity. Both Sudan and Qatar have always been supporting Turkey, and I am honored to have partnerships with them.


44 Special Report / Speeding Up The Investments


a new phase ın foreıgn polıcıes

Turkey is a vital member of international community not only because of its geostrategic importance but also its potential.



the inCident turkey went through on the night of July 15 will last as an unforgettable memory on the country’s recent history. although turkey has survived through many anti-democratic interventions in the past. 7/15, which has been the bloodiest of all the attempts to abolish the democratically elected governments, left more than 200 dead and 1000 injured behind. but turkey instead of losing the controls despite the expectations has benefit from the opportunity and sees this tragic incident as a chance to construct a stronger democracy.

yet, the reactions from turkey’s allies were disappointing against the terrorist attack on July 15. the easy way is to believe in the conspiracy theories suggesting that it was a intervention which is linked to some allies of turkey in the West, but as we see from the statements and behaviors of turkish government, turkey didn’t choose the easy option. Despite many allies of turkey failed to show understanding and full solidarity with the people of turkey who risked their lives to stop the coup, turkey didn’t develop a negative behavior against its partners. instead turkey mainly focused on explaining the danger that country has gone through.

as it is known turkey is a vital member of international community not only because of its geostrategic importance but also its potential. being the bridge between Western and eastern cultures turkey is a stabilizer in international area. as being the only secular and democratic muslim country of the region turkey is the balance point in the crisis that occur among countries. country’s eastern-based culture helps it to understand the east and socio-politic values that today country own helps turkey to empathize with West.

turkey’s relations with the West have been problematic, to say the least, in the last couple of years. particularly after 2009, Western democracies and allies began to perceive turkey as a liability rather than a strong asset with which they could develop a constructive partnership on the southern flank of NATO.

it is sad to observe that the reaction of Western media to the July 15 failed coup attempt seems to be influenced by a background, which consist manipulations of fethullaist terrorist organization. the brave resistance of turkey’s public to protect its parliamentary democracy, civilian control over the military and peace and stability in the country, however, is being neglected at first.

an old diplomat Ünal Çeviköz in his article asks the question that is in everybody’s mind to turkey’s allies: “the coup attempt aimed to destroy all of these values in Turkey. It was the first time in Turkey’s history that a democratically elected parliament was under armed attack. It was the first time that the members of turkey’s army killed innocent civilians. It was the first time that Turkey’s military and police clashed in an armed confrontation. if this is not enough to understand how evil forces had penetrated turkey’s system in each and every area of its public administration, then what is?”

turkey’s relations with the united states and the West in general are very important pillar of european and euro-atlantic security. after the end of the cold War, many held the view that turkey’s strategic importance had decreased. some even suggested the

turkey as a vital member of international community is in the beginning of a new chapter in its international relations perception. after 7/15

46 Special Report / S

German chancellor angela Merkel talked about her regrets over not condemning the July 15 coup attempt in turkey.

AUGUST 2016 ISSUE 37 ECONOMY | BUSINESS | FOREIGN TRADE | ANALYSIS


DemocracyDawn of

SPECIAL REPORT

Heading to a Brighter Future

ECONOMIC SUSTAIN-ABILITY P22

FDI FLOW kEEPS ITS PACE P28

TURkEY INSPIRES ThE REGION P40

WhERE IS TURkEY hEADING TO? P46

the pkk and the pyD. he also touched upon the fight against PKK terrorists in Turkey’s southeast and said that the country will continue counter-terror operations with determination. he added that the opposition republican people’s party (chp) and the nationalist movement party (mhp) have expressed their support for Turkey’s fight against terrorists.

in international community there are some comments criticizing turkey on the behalf of weakening the state, ending up the jobs of fetÖ members. according to turkish government these comments are manipulative and partial and that they have been developed as part of an ideological agenda. first the pkk, followed by Daesh, fed into these manipulative comments through their terrorist attacks and established the groundwork for the thesis of weakened security due to the enfeeblement of the turkish state. the fact that turkey has been struggling against these terrorist organizations for a long time, and that both organizations have carried out worse attacks, was almost never mentioned throughout this process.

negative perception about turkey in the international community is losing its influence. for example pointing the incidents on the night of July 15, chancellor merkel said, “i believe that our condemning the coup attempt in turkey is quite necessary, just imagine that what if our army bombed our bundestag.” german chancellor angela merkel talked about her regrets over not condemning the July 15 coup attempt in turkey while she touched upon the turks in germany.

Biden: “I am, the president is and the american people are for the suffering and loss you have endured.”


nato alliance had already become obsolete. on the contrary, turkey with its secular, democratic, pluralistic civil society and not dysfunctional parliamentary system, as well as its military reliability and capabilities, has rapidly proven to be a strong partner to cope with growing radicalism in north africa and Middle East, particularly in the fight against Islamic state of iraq and the levant (isil) terrorism.

the visit of the u.s. chief of staff to turkey, therefore, was a crucial litmus test between the two allies to prove that turkey and the u.s., in spite of all the negative propaganda to endanger its fundamentals, were still bound in a sustainable strategic alliance.

Turkey today is not only fighting against this political issues but also terrorist organizations, including isis, the pkk and ypg/pyD. terrorist organizations are attacking turkey to take advantage of the July 15 failed coup attempt. isis, pkk and its syrian offshoot pyD and ypg have all launched attacks on turkey following the brutal coup attempt.

turkey has increasingly become the target of both global power groups and regional terrorist groups. the gülenist terror group (fetÖ), the outlawed pkk and Daesh have been organizing constant and simultaneous attacks in turkey, which is not coincidental, as these illegal groups are used as a tool in the proxy wars in the region.

Giving his first interview on Turkish TV since the July 15 Gülenist coup attempt, President Erdoğan said the fetÖ has the most extensive terrorist organization network and acts jointly with Daesh,

In lateste issue of the turkish perspective 7/15 was mentioned as a terrorist attcak. today international community aprroves this idea.

48

as a MeMBer of nato, turkey Will enhance its economic anD strategic relations With russia, iran, sauDi arabia anD the gulf states. turkey Will continue to try to take a role in bringing stability anD peace in the region.

another example is vice president of usa, biden. he visited the turkish parliament in ankara and saw the heavy damage from the July coup attempt, saying later: “i saw some of the damage myself today, and met some of the members of your parliament, including the speaker. i can understand mr. president how some of your countrymen would feel that the world didn’t respond to the existential crisis your country is facing rapidly enough. that’s why i wanted to personally be here, and i was asked by the (u.s.) president to personally be here to represent him, to tell you and all of your colleagues and your countrymen how very, very sorry i am, the president is and the american people are for the suffering and loss you have endured.” he added that the u.s. was “committed to doing everything we can to help bring justice for all those responsible for this coup attempt.

in recent years, turkey has developed relations

with the eu, russia and other countries in the region, relations which transcend the traditional hierarchy. pushing the eu to adopt a new understanding of union, developing relations with russia and israel in line with a new economic and political understanding, the idea that turkey will include saudi arabia and iran in these new formations, and discussions about making trade and investment agreements between turkey, russia and iran on the basis of national currencies.

as a result we may say that turkey is in the beginning of a new chapter in its international relations perception. in this new phase as a member of nato, turkey will enhance its economic and strategic relations with russia, iran, saudi arabia and the gulf states. turkey will continue to try to take a role in bringing stability and peace in iraq and syria, and improve its relations with egypt and various african countries.

48 Special Report / S


negative perception about turkey in the international community is losing its influence.

speedıng up the ınvestments


Yavuz Sultan Selim is the only brdige on the world which consists railways on the same level.


speedıng up the ınvestments

turkey eluding the failed coup attempt taking without any damage is on the road to reach its 2023 targets with no hesitation.



the terrorist attack against democracy that took place on july 15 mainly targeted the stable and strong economic structure of turkey. by this way coup plotters aimed to break down the confidence of foreign investors to the country.

the main target of Coup plotters was to wipe off the confidence to Turkey in the eyes of foreign investors. By this way they aimed to leave Turkey alone and achieve their goal of taking the control of governmental body of the state. But thanks to its strong economic structure Turkey didn’t get out of line. The country is continuing to be the rising star of the region despite the big betrayal attack.

Institutions of Turkey are continuing their studies to relive the foreign investors. Many critical steps are taken to achieve this.

While the government continues a giant move to promote the economy in the aftermath of the coup attempt on July 15, investors are eyeing the new legislative package of incentives for exports. Economy Minister Nihat Zeybekci said the new incentive package would take historic steps to support investments that would accelerate the country’s economy, including 20 years of tax exemption, a 10-year fixed price for electricity, purchase guarantees and having loan interest paid by the state.

Suggesting that the approach towards incentives was changing completely, Zeybekci said that supports would cover local as well as foreign investors, without exception. “The roadwork and infrastructure for the land to be invested in will be conducted by the government. The products will be provided with an exchange guarantee,” Zeybekci said.

According to the statement made by Development Minister Lütfi Elvan Turkey plans to establish a new incentive system to attract foreign investment to Turkey. With the new system, a project-based support mechanism will be created.

After negotiation by the Economy Ministry with any firm wanting to invest in Turkey, an additional incentive opportunity, over and above the current incentive system, will be presented to the potential investors, provided that the investment makes an important contribution to Turkey. When the aforementioned system is enacted, this will be the first time such an incentive mechanism will be implemented in Turkey.

Elvan further added that this project-based incentive system would provide benefit to strategic sectors of capital importance in terms of supply safety and affect large scale investments, such as in petrochemicals. Elvan said that the draft law on the new incentive system had this week passed the Planning and Budget Commission and would be submitted to the General Assembly in Parliament. Noting the importance of drawing foreign investment, Elvan stated that Turkey had performed well over the past 14 years in terms of attracting foreign investors, and the government would continue and increase investment in Turkey, thanks to this system.

To encourage the foreign investors and give them a confidence Mehmet Şimşek made a teleconference with them. After continued meetings with global investors following the recent coup attempt, Deputy Prime Minister Mehmet Şimşek said global investors’ perception of Turkey was improving and they had “huge” interest in a rapidly normalizing Turkey. Şimşek said he has kept meeting global investors to answer questions regarding the Turkish economy in the aftermath of the July 15 coup attempt, tell them about ongoing projects and set the perception right,

20years

Tax exemptation planned by the government for

FDIs

development Minister Lütfi Elvan anounced the new incentive system that aims to attract foreign investors.


adding that he addressed 895 global investors and analysts via a teleconference on Tuesday.

Noting that the teleconference, which was organized by the International Investors Association (YASED) and Citibank, was “highly productive,” Şimşek said that global investors responded positively to the meeting.

Foreign investors gave positive messages after they have seen the efforts of government. Most of them declared that they will continue their operations in Turkey and they have great confidence to the country and state. Also some of the companies said that they will taken an initiative to heal the wounds of economy.

Shell Turkey Chairman Ahmet Erdem referred to the company’s 93-year operations in Turkey, saying that they make investment decisions with a long-term perspective. Stressing that Shell will continue to invest in Turkey as before, Erdem said, “We will continue to produce and export mineral oil, contribute to the satisfaction of Turkey’s energy requirements and create added value for Turkish economy.”

DenizBank General Manager Hakan Ateş said they are properly meeting all requirements of their customers during this process and will do their best

to continue to do so. Ateş noted that DenizBank will increasingly maintain its support for strategic projects for the future of Turkey and its customers, continuing, “We believe that Turkish Republic will come out of this sad incident stronger, as it has from all crises.”

Energy companies will continue investments as it is seen from the statements made by them. So far, the situation is stabilized to the point that it will negatively influence investments or unduly impact normal daily life, Chief Executive of Zorlu Energy Group Sinan Ak.

Corporate Communications Director of BP Turkey Murat LeCompte stated that BP does not deem it necessary to change investment plans in Turkey in activities which include oil refinery, distribution, and marketing. “We will continue to expand in Turkey within the company’s strategy,” LeCompte said, adding that the country is a key and strategic place for BP on a global level.

As it is seen from the examples of global companies trust of investors, which operated in Turkey for decades are continuing without any, hesitate. Turkey is keeping up its form just it was before the failed coup attempt.

Foreign investors gave positive messages after they have seen the efforts of government.


japanese automotive giant toyota increased the percentage of domestic manufacturing of its automobile sales in Turkey uP To 78 PERCENT ovER THE FIRST FIvE MoNTHS oF THE YEAR, MANuFACTuRING 74 ouT oF 100 vEHICLES IT SoLD IN 2015 IN ADAPAZARI.

toyota BeCame the seCond Brand with the largest amount of domestic manufacturing in Turkey. Toyota aims to set the bar up to 81 percent with its first compact Suv model, C-HR, which will be manufactured in Adapazarı and put up for sale in Turkey in November. We talked the current situation in Turkey and future plans of Toyota in Turkey with Toyota’s Turkey CEo Hiroshi Kato who has been in Turkey since 2012.

What can you tell us about your adventure before you were assigned as toyota turkey’s ceo?In 1985, I joined Toyota Motor Corporation and started at overseas Production & Enginnering Division. I worked for TMMT (Toyotasa) Project in 1991. Therefore, I have Turkish friends since 1991. Mostly, I worked in overseas projects. In 1996 I was assigned to Toyota North America, in 2001 Toyota Motor

Manfacturing uK, in 2004 Toyota Motor Europe, headquarter in Brussels. In 2012 I was assigned as Lead Coordinating Executive and Advisor of President of Toyota Motor Manufacturing Turkey. Since the beginning of 2016, I have been working as President & CEo of Toyota Motor Manufacturing Turkey.

2015 Was a stellar year for automotive industry’s production and exports, domestic market sales. What is the story laying behind this success? And how was the performance of automotive sector in 2016 q1?First of all, I have to say that the automotive sector in Turkey developed very successfully and has increased competitiveness of the country. Today, Turkey recognized as a regional base of automotive and supplier industry with the high quality and value-added production.

Hiroshi Kato: “Turkey’s huge, dynamic and young population increases the attractiveness of the country. “



By F. KARACABOZGEyİK

Kato: “Turkey can be considered as a hub or gateway to the important markets. “

An extra-ordinary incident took place on july 15. how do you consider this terrorist attack? how did toyota react to this incident? And did this incident affect automotive industry?As far as Toyota’s manufacturing operations in Turkey are concerned, we announced last year a new investment of € 375 million at our Sakarya plant to introduce a new model, the Toyota C-HR, and preparations are on going to launch the vehicle towards the end of this year. There is no change to this plan. Also, the Turkish market is an important market for Toyota’s European sales.

What are your advices to the foreign investors who want to invest in turkey?Turkey’s huge, dynamic and young population increases the attractiveness of the country. Young, disciplined, capable and well educated human resources especially in engineering made Turkey an attractive place to invest for foreign investors. Geographical position is another advantage of Turkey which has a strategic position that offers proximity to many other markets such as Europe, Asia, Middle East, and Balkans. Turkey can be considered as a hub or gateway to the important markets. Location of the country, dynamic population, capable and well educated workforce especially in engineering and cost competitiveness are the major factors for investors.

280thousand

Production capacity

Toyota will reach after

the new investment

Let me briefly mention about last year’s performance and expectation of this year. 2015 was very brilliant year for Turkey’s automotive industry, the most important power of economy. Totally 1,360,000 vehicles were produced while 992,000 of them exported. 2015 was the record historical year in both production, exports and also in domestic market sales. This result is a further indication of the success of all automotive factories’ continued operations in Turkey. I have no doubt that in the coming years, by gaining even higher figures, new records will be reached.

Regarding to the year 2016 performance of the industry, in parallel with the continuing new projects and investments in capacity utilization and new projects, it is predicted that production and exports would increase in the year 2016 too. Thanks to the new projects which supported via incentives of the government, automotive industry will continue its export-driven growth in 2016 as it is performed in the first half of the year.

What are the targets and future plans of toyota in turkey?In the existing situation, we are producing verso and Corolla models in our plant in Sakarya with the highest quality standards and exporting our production to more than 50 countries. Alongside Corolla and verso, we will be starting to produce a new 3rd model , which is “Toyota C-HR” in the fourth quarter of this year. C-HR production assignment by TMC is a big honor for us. Not only quality, but also efficiency, safety, environment and other manufacturing parameters, all are comparably high level in our plant. We are proud of our manufacturing capabilities. With our skillful member’s continuous great efforts, with the big support of our Turkish and Pan-Eu suppliers and all our business partners, we were able to achieve this success.

For C-HR project, together with an additional in-vestment of €375 million, our total investment amount reached € 1.7 billion. These additional investment of new model production is mainly for equipment up-grade, new equipment and extension of buildings.

We are planning to produce around 150 thousand vehicle and our target for export is around 113 thousand in 2016. Therefore, our production & export will be increased by 30% compared to previous year. on the other hand, our capacity will be increased to 280 thousand from 150 thousand. However, this significant upturn will be realised in 2017 by fully utilisation of the capacity. We will also hire more than 1,000 new team members. Main factor under this growth is our 3rd new model, C-HR. This new model will be first crossover and first hybrid model to be produced in Turkey. Hybrid is part of Toyota’s DNA. C-HR has been developed following the Toyota New Global Architecture (TNGA). our plant will also be the first plant among overseas plants, outside Japan, to start producing a TNGA model.


56 Special Report / Closing The Ranks

closıng the ranks

Rome wasn’t built in a day. So, does existing structure of Turkish economy.



closıng the ranks

turkey is a very funny place if you do not live in, said one of our foreign friends.


Global terrorism have made every corner of the world unsecure but realistically living in a country like a social/political roller coaster is a big headache.

sometimes we really miss living in a calm place like arctic or moon maybe. majority of turks thought before 15 July that our main problems were economic fragilities and war in (iraq and) syria. for example, political tension was high because of 2.7 million registered syrian refugees in turkey as of 7/14/2016. however the agenda of turkey (and europe) dramatically changed in July 15, 2016. turkey experienced a failed coup in this date, or a terrorist attack as a better terminology.

in this opinion article we address why turkish financial markets were so strong despite such a terrorist attack and does it still make sense to buy more turkish assets? in fact, not only foreign investors but also domestic investors need to learn the answers of these questions.

such a terrorist attack and such a cool Financial Marketsas the member of nato and g-20 with about 80 million population, turkey is a big country placed geographically/culturally between east-west and christianity-islam in more than 1000 years. turkey has been strong ties with west historically. the latest well known example of these connections is eu full membership candidacy started in 1960’s. despite all problems, turkey is one of the leading modern countries in her region with established democratic institutions. for example, the history of constitutional movements in turkey went back to last quarter of 19th century and country has an active democracy since 1950’s in a crazy region.

erik meyersson suggests in his recent hbr article that internationally successful coups, where the military or state elites have unseated an incumbent leader, have occurred 232 times in 94 states since 1950. roughly a quarter of these overthrew democratically elected governments.1 however it is not good to learn we are not alone in the world coup history, turkey has a memory of coups since ottoman period. during modern republic era

after 1923, turks had experienced two big and real military coups in 1960 and 1980 with also some other attempts. comparing with others, the last attempt was also serious but remained very strange thanks to democratic reactions of all turks either supporter or opponent of existing political view. however it was so good to see turks re-united against such a terrorist attack, there was a remaining question out there. this question was what would be the reaction of the financial markets to this catastrophic risk factor?

01 02 03 04 05 06 07 08aprıl 2016

3,1

3,05

3

2,95

2,9

2,85

2,8

2,75

Daily ExChangE RaTE (USD SEllIng)

OvERnighT REpO RaTES (BoRSa ISTanBUl)

JaN

11’

JUl 1

1’

JaN

12’

JUl 1

2’

JaN

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JUl 1

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4’

JaN

15’

JUl 1

5’

JaN

16’

JUl 1

6’

14

12

10

8

6

4

Source: Central Bank of Turkey.


By PRof. DR. ali alP / DR. yEnER coşkUn

there is a merit in this concern taken into account turkey has a very colorful economic crisis history, specifically after 1980’s. For example, we observed that daily interest rates skyrocketed to over 1000 percent during 2000-2001 local banking crisis. however, the recent terrorist attack did not create immediate panic and persistent negative financial shocks on prices. this is mostly found “interesting” by the domestic/international investors. for example, below figure suggests that there were no large fall in usd exchange rate by the august 4, 2016 after a sharp reaction. even more interestingly, overnight

Source: Financial Times. (2016). Turkish lira, stocks and bonds continue to rebound

repo rate remained fixed with 8.5 % between July 16 and august 16. despite some declines in borsa istanbul bist-100 all share index -in below- and a sharp increase in turkey’s 5-year cds premium, these figures suggest that the markets did not buy the potential threats which might be arising from the terrorist attack.

Does the story of turkey Was over after Booming 2000’s?some economic periods are labeled with cool words in economic history. like roaring twenties or booming nineties in the us, we had booming 2000’s in turkey. however there were no noteworthy industrial/technological improvements or a productivity revolution, turkey has a very attractive economic story in post 2000’s. main determinative factors were declining inflation/interest rates, successfully managed public and current account deficits, booming portfolio/direct investments, and a better friendship with imf and world bank in the early 2000’s. changing political climate after banking crisis of 2000-2001 and global liquidity surplus had also helped turkey. then, quarterly basis consecutive growth performance of turkish economy reached 27th quarter in 2008/Q3.2 despite global financial crisis, such a growth performance was really impressive for all investors. booming gdp per capita and declining poverty were also the elements of this story, seen in below Figure. Turkey is classified as upper middle income country by world bank. However it seems difficult to pass middle income trap in coming years due to existing structural problems,

TuRkEy’S 5-yEaR CDS SpREaD afTER failED Cup

apr 29 MaY 9 MaY 16 MaY 23 MaY 31 JUN8 JUN 15 JUN 22 JUN 30 JUl 8 JUl 15 JUl 22

2016

TUrKEY 5-YEar CDS (r1) 274.302 SOUTH aFrıCa (r1) 248.890 BraZıl (l1) 286.412 rUSSıa (r1) 228.678

360

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320

310

300

290

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274.302

286.412

228.678

248.890

turkey is a big country placed geographically/culturally between east-West and Christianity-islam in more than 1000 years.


forecasted gdp of world bank suggests that positive macroeconomic picture of turkey may continue in coming years.

All asset prices, specifically stock and real estate, have been increasing during booming period. as seen in below figure, while house price index of turkey (published by central bank of turkey) has showed dramatic increases, borsa istanbul bist-100 all share index has showed steady increases over the period of January 2011 and July 2016. so, despite fragilities of the economy and high domestic/regional political tension, it seems that turkey did a good job in asset markets in last decade. even, before the period of syrian war, economic/political achievements have made very positive impacts on the soft power of turkey in middle east and europe. but, the latest terrorist attack raised economic concerns. Obviously, the risk of short term capital outflow is hanging over the head of turkey like the sword of damocles. we should note that this risk was one of the reasons of the 1994 and 2000-2001 economic crisis in turkey. so, the critical question is whether short term investors will still stay in turkey?

let’s talk about homo economicusto understand the expected behaviors of short term financial investors after the terrorist attack, we may borrow some basic economic concepts. homo economicus refers in economics that humans are rational and self-interested economic agents. microeconomics theorizes the behavior and

decision-making of individuals and firms. In the world of micro economy, all economic agents pursue their goals in most rational way and focus on to maximize their utility. therefore, it would be good to buy if the existing situation provides a relative profit to an agent. This simple idea works in finance, too. foreign direct/portfolio investments into turkish assets will certainly continue in coming years due to a simple fact. That is investors will make good profit in turkey, like in the past. turkish economy needs to finance their deficits by utilizing foreign debts/investments and has to pay required rate of return. this simple rule works for turkey since crimean war, 1853-1856. as indicated recently in new york times3, government bonds in (brazil, south africa and) turkey that yielded around 10 percent began to look attractive -despite all economic/political shocks in these countries-. therefore, this very economic reality implies that like any economic agent all foreign investors have to be homo economicus and invest more to Turkish assets if they get sufficient

Source: World Bank. (http://data.worldbank.org/country/turkey)

Source: Central Bank of Turkey.

aCTual/fORECaSTED gDp, gni pER CapiTa, pOvERTy hEaDCOunT RaTiO Of TuRkEygDP (cURREnT US$)

Billion Thousand

PoVERTy HEaDcoUnT RaTIo aT naTIonal PoVERTy lInES (% of PoPUlaTIon)

gRoSS naTIonal IncoME PER caPITa (cURREnT US$)

foREcaSTED gDP of TURkEy

BORSa iSTanBul BiST-100 all ShaRE inDEx & hOuSE pRiCE inDEx Of TuRkEy (TkfE)

1960 1980 2000

1960 1980 2000

1960 1980 2000

2005 2010 2015

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70000

60000

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0

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1

012011 2013 20152012 2014 2016

0101 01 01 0104 0404 04 04 0407 0707 07 07 0710 1010 10 10

KEEP CALM

AND STAY IN




all in all, it might be good idea not to make over-simplification/speculation about turkey’s political/economic future. at least, this is what market did for the recent turbulence.

return. so, it might be very rational for foreign investors to focus on just risk and rate of return of their investments after recent surreal terrorist attack in turkey.

Global financial markets are witnessed negative interest rate period for some time due to structural imbalances in global economy and weak growth performances of EU, US and China. This is specifically typical in the policies of ecb and Japan (boJ).4 in parallel to this trend, below figure also suggests that there are near-or below-zero bond yields in major global markets. turkey 10-year bond yield is about 9.7 despite 8.8 % annual rate of CPI change as of July 2016.5 therefore, this spread suggests that turkey pays very acceptable positive risk premium to fixed-income asset holders. Zero-sum games, in game theory, suggest that one person’s gains result in losses for the other participants. this idea works in the case of risk spread of turkey. but it is also very obvious that Turkey has also satisfactory benefit in terms of low risk premium representing the trust of foreign investors. therefore, the message is very clear that existing yield of T-bonds provides sufficient positive return to stay in turkish assets.

rome Wasn’t Built in a Dayall in all, it might be good idea not to make over-simplification/speculation about Turkey’s political/economic future. at least, this is what market did for the recent turbulence. rome wasn’t built in a day. so, does existing structure of turkish economy. the latest terrorist attack has created a kind of social/political shock in Turkey, but not a financial shock. Turkey has still some very structural economic, social, and political problems. but it is very obvious that commitments of democracy of turks and very cool reactions of turkish financial markets against this massive terrorist attack have a joint message to foreign investors. that is: keep calm and stay in the game.

Bloomberg 6 & http://www.investing.com/rates-bonds/turkey-10-year-bond-yield

1 Meyersson, E. (2016). Turkey and the Economics of Coups. July 22. available at: https://hbr.org/2016/07/turkey-and-the-economics-of-coups (7/15/2016).

2 Banking regulation and Supervision agency (BrSa). (2008). Finansal piyasalar raporu. ıssue 12. available at: http://www.bddk.org. tr (7/15/2016).

3 Nytimes. (2016). A Coup, Terrorists and Inflation, Yet Investors Rush to Turkey. august 3. available at:http://www.nytimes.com/2016/08/04/business/dealbook/a-coup-terrorists-and-inflation-yet-investors-rush-to-turkey.html?_r=0 (7/16/2016).

4 available at: http://aswathdamodaran.blogspot.com.tr/2016/03/negative-interest-rates-unreal.html

5 TurkStat. (2016). Consumer price index numbers (2003=100). annual rate of change (%).

6 available at: http://www.advisorperspectives.com/commentaries/20160624-charles-schwab-global-bonds-a-world-without-yield?channel=ETF

TuRkEy 10-yEaR BOnD yiElD OvERviEw

5.0

4.0

3.0

2.0

1.0

0.0

9700

9600

9500

9400

9300

JUl 27 JUl 28 aUG 1 aUG 3 aUG4

pErCENT (%)

2008 2009 2010 2011 2012 2013 2014 2015 2016

US FraNCE GErMaNY JapaN


62

Agenda FAIRS, EXHIBITIONS, SUMMITS, AND MEETINGS IN THE NEXT MONTHS

SEPTEMBER

CNR Energy IstanbulIFM YeşilköySEPTEMBER 22-24, 2016CNR Energy Istanbul which is organised second will continue to keep the pulse of the industry with the participation of domestic-foreign companies and investors. Energy Generation Technologies, Energy Distribution, Transmission and Control Systems, Maintenance and Repair Services Productivity Systems, Environmental Technologies, Recycling, Systems, Consulting, Design, Construction such as the cornerstones of energy production will be informed and advertised at the fair.

Gas Turkey 2016IFM YeşilköySEPTEMBER 27-29, 2016Eighth International LPG&CNG&LNG Fair will be held at IFM Yeşilköy between the dates 27-29 September. The fair which automotive industry be closely interested in will be informed and advertised about Automotive LPG, LNG and CNG systems, LPG, LNG and CNG Vehicles and Equipment, Tanks-cylinder system, LPG Transport, Storage Tools and Equipment, Pumps and Measuring Instruments.

SEP. 22-24

IPACK 2016IFM YeşilköySEPTEMBER 01-04, 2016In the 31st Ipack

International the Packaging and Food Processing Systems Exhibition Fair; packaging machinery, packaging, labeling, packing, filling, stretch packaging, packaging machinery, glass packaging, plastic circles and equipment will be promoted.

SEP. 01-04

Real Estate & Invest EurasiaAntalya Expo CenterSEPTEMBER 23-25, 2016Incesteurasia that were prepared to take part in the prestigious exhibition organization will be bring together European and Middle Eastern countries. The trade aims to bring together professional real estate investors at Antalya that popular destination of Mediterranean. Infrastructural and upper structure projects, urban transformation projects, real estate investment trusts, municipal corporations, investors, project development experts, project appraisal consulting companies and financier will be introduced at the fair.

SEP. 23-25


Eurasia Boat ShowAtaköy Mega Yacht Marina

CNR Eurasia Boat Show-“International Marine Tools, Equipment and Accessories Fair” which is most prestigious

boat and yacht exhibition in the world will be held at Ataköy Mega Yacht Marina between the dates 27

September-02 October. The trade brings a new perspective to the exhibition industry with fifty brands, fifty thousand

visitors and 250 boats.

SEPTEMBER 27 - OCTOBER 02, 2016

Figures

63

Increase In chemIcal IndustryChemical exports which has increased on quantity by 4.21 % compared to July of

previous year has been 1 million 342 thousand tons.

crescent Is shInIngExport in automotive industry has

increased by 5% to 1 billion 727 million 574 thousand dollars in July. Share of

European countries has also increased by 10 %to 1.3 billion dolar.

housIng demand oF ForeIgners1044 houses were sold to foreigners in July 2016. Istanbul, Antalya, Aydın, Trabzon,

Bursa are most chosen five cities by foreigners for housing.

egypt

$79.6germany

$53Iraq

$48.8england

$38.1uea

$13.6

19,7 % 5 % 64 71 92 111 153share of the total export Increase in exports russia england saudi arabia Kuwait Iraq

data: Istanbul Chemical and Chemical Products Association (İKMİB)

Chemical exports to top 5 countries in July (Million Dollars)

Income

$97.4rise of quantity basis

4,21 %

$1.7Income in July

data: TIM

data: TURKSTAT

Million

Billion

Figures64

data: TIM

AlgeRIA

0.11

USA

0.42

ITAlY

0.51

NeTHeRlANDS

0.28BelgIUM

0.16

UK 0.56

FRANCe

0.41

exports to top 20 marKets by turKey In July 2016 (bIllIon $)Turkish exports to most prominent 20 markets in the globe enjoyed a favourable month in July 2016.

geRMANY

0.94

ISRAel

0.18

CHINA

0.15

RUSSIA

0.10

egYPT

0.20 UAe

0.19

SAUDI ARABIA

0.16

IRAN

0.22IRAq

0.40

SPAIN

0.35

ROMANIA

0.18BUlgARIA

0.17

POlAND

0.18


CIP LOUNGE 20x26cm ING.indd 1 29.02.2016 15:31

SKYTRAX 20x26cm ING.indd 1 29/07/16 16:04

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