Special remarks from Trade Minister Mr. Ömer Bolat to our TASCA BUSİNESS
Trade Minister Mr.Ömer Bolat: We keep producing, growing and increasing exports
Trade Minister Ömer Bolat stating that Turkey is located in a geopolitically important region, said: “We are in a geography where the world has major geopolitical tensions. We are right in the middle of this geography. We keep producing, growing, creating employment and exporting.”
We see the positive reflections of our strong program, which we have created with our priorities of production, employment, investment and exports.
For the first time in its history, our Gross Domestic Product exceeded 1 trillion dollars and our per capita income rose above 13 thousand dollars.
Stating that Turkey is located in a geopolitically important region, he said, “We are in a geography where the world has major geopolitical tensions. We are right in the middle of this geography. We continue to produce, grow, create employment and export.”
“Turkey is the country that most deserves the title of leading and guiding country in the global halal market with its advanced, qualified workforce and production infrastructure, experience in halal certification, incentive systems and commercial experience. Turkey is the right address to provide a solid vision to the world in this field…”
The World Halal Summit, which will be hosted by Turkey, will provide an important opportunity for the development of the global halal economy on the basis of common standards through presentations, information, fairs and possible cooperation agreements.”
In line with Turkey’s export-oriented growth target, one of our main policy priorities is to solve the financing problems of value-added and high-tech exporting companies and companies that want to diversify their markets to new export markets.
In this context, we have established a pre-financing model that will further facilitate our exporters’ access to financing to support exports of goods and services; and we are proactively implementing the “Export Development Strategy for Islamic Countries” and are working hard to improve our trade with these countries.
In 2023, we realized approximately 26% of our record exports of 255.5 billion dollars to Islamic countries and increased our exports to these countries by 3.2% in 2023 compared to the previous year.
I would like to say that Turkey is the country that most deserves the title of “leading and guiding country in the global halal market” in the halal economy that is developing day by day.
The visibility of Turkish industrialists and exporters in internationally recognized events such as Halal Expo and World Halal Summit is increasing. We will always continue to take steps that will enable Turkish companies to move forward in our country and in our export markets.
Our Trade Minister Mr. Ömer Bolat, is energetic, visionary…
Bolat, who immediately rolled up his sleeves to expand trade relations between Turkey and countries around the world as soon as he took office as minister, is achieving his goal both diplomatically and commercially thanks to his visits to these countries. Minister Bolat answered our questions and made important statements to our TABCA BUSİNESS.
Honorable Minister, as of the end of 2023, Turkey’s exports broke a record by reaching 255 billion 809 million dollars. With an export figure of 20.8 billion dollars, an important threshold was exceeded on a monthly basis. With these figures, the year-end OVP target was exceeded. How do you assess this picture?
Today, when geopolitical risks in our region are increasing day by day and global trade is decreasing, as the Ministry, we closely follow current developments and implement our policies and measures effectively and rapidly in this context. We clearly see the positive results of our efforts in our current macroeconomic indicators.
As a matter of fact, the Turkish economy grew by 4.5% in 2023, maintaining its uninterrupted growth performance for 14 quarters and ranked second among OECD countries in 2023. For the first time in its history, our Gross Domestic Product rose above 1 trillion dollars and our per capita income rose above 13 thousand dollars.
In exports, we see the positive reflections of our strong program, which we have created with our priorities of production, employment, investment and exports.
By the end of 2023, compared to 2002, our exports increased 7-fold to USD 255.5 billion, exceeding the MTP target. The ratio of exports to imports; increased by 0.8 percent points to 70.7%. With the increase in exports of goods and services, especially since the second half of 2023, the foreign trade deficit decreased by 3.2% compared to last year, while the current account deficit decreased by 65.2% to $2.1 billion in December 2023 and by 8% to $45.2 billion in 2023.
OUR EXPORTERS TURNED TO ALTERNATIVE MARKETS
In 2023, exports of more than 1 billion dollars were realized to 49 countries. The number of chapters with exports over $1 billion reached 54 in 2023, and 39 chapters recorded the highest exports in history. Our 30 provinces reached an export figure of more than USD 1 billion.
In the meantime, the share of medium-high and high-tech products in our exports, which rose to 40.3% in 2023, and our export unit value per kg, which reached 1.6 USD, are the result of the determination and effort put forth by the Turkish economy, which has determined a production strategy based on R&D and innovatio.
HIGH TECHNOLOGY EXPORTS SHOULD INCREASE
In 2024, as the Ministry of Trade, within an export-oriented producing and growing Turkey, we will continue to implement many efforts to increase added value in exports, to specialize in high-tech products, and to support this process with digitalization, R&D, innovation and branding activities, with a perspective focused on target markets and target sectors, in order to increase our share in global exports by ensuring sustainable export growth in the ” Turkey’s Century”.
ALL INCENTIVES ARE FOR MORE EXPORTS
Mr. Bolat, increasing exports is crucial for the Turkish economy. You have made statements from time to time that you will remove the obstacles in front of exporters. Would you please tell us about the work, measures, supports and incentives you have done or will do in this regard, including facilitating exporters’ access to financing?
In line with Turkey’s export-oriented growth target, one of our main policy priorities is to solve the financing problems of value-added and high-tech exporters, as well as those firms that want to diversify their markets to new export markets.
In this context, we have established a pre-financing model that will further facilitate exporters’ access to financing for export supports for exports of goods and services. As is well known, in order to benefit from our export supports, our companies first carry out their activities and make expenditures and then apply to the examining institution with the necessary documents within the framework of our relevant legislation. As a result of the examination and accrual of the application, support payments are made to our companies. However, we know that when the application, examination and accrual processes are included, a period of time elapses between the activity and the payment, and this creates a financial burden on our exporters.
In order to eliminate this burden and increase the credit capability of exporters, we developed a model for prefinancing and collateralization with the participation of Türk Eximbank and İGE A.Ş. under the coordination of our Ministry based on our “Decision on Export Supports”.
- Market Entry Project Preparation Support,
- Global Supply Chain (GCC) Competence Project Support,
- Design and Product Development Support,
- Trademark and TURQUALITY Support Programs
- Supports intended for companies granted Export and E-Export Consortium status
In the model we designed, we introduced prefinancing to our project, program and status-based supports we provide to exporters of goods and services. The “Prefinancing Model for Export Supports” is a brand new model that our exporters have been demanding for a long time. With this model, we aimed to increase the effectiveness of our supports. Every year, we matched the resources allocated from the budget for the supports with financing and offered them to our exporters with a multiplier effect. Our exporters, whose support applications are deemed appropriate by our Ministry, will apply for loans to Turk Eximbank and will be subject to priority evaluation within the framework of this prefinancing protocol.
As you may know, we launched İGE A.Ş. on March 1, 2022. Thus, İGE A.Ş. has made access to financing even easier for all our exporters, especially our SMEs, who are creditworthy but have collateral problems. By finding a solution to the surety problem, companies have accelerated their access to credit. As a matter of fact, within the scope of the Protocol I have just mentioned, İGE A.Ş., which is an important stakeholder with its strong capital structure, provides collateral support to our exporters whose prefinancing loans are approved by Türk Eximbank.
On the other hand, we have support programs that we are currently implementing together with Turk Eximbank, which are designed to make our export products more attractive with more suitable financing sources. Under Decree No. 5973 on Export Supports, within the framework of the “Support for the Difference Between the Interest Rate Applied by Eximbank and the CIRR and Eximbank Export Credit Insurance Compensation Support”, we provide foreign buyers with the opportunity to extend credit at Commercial Interest Reference Rates (CIRR) through Eximbank for their imports of investment/capital goods from Turkey. Hence, we are making our export products more attractive to foreign buyers.
Furthermore, in line with the relevant measures of the 12th Development Plan and the Presidency’s annual program, we aim to use the support we will provide through Turk Eximbank to finance high-tech and value-added exports. In this respect, we are establishing the “Interest and Dividend Support for Technology and New Market Oriented Export Credit Programs” together with Turk Eximbank in order to direct exports to value-added and high-tech sectors, diversify exported goods and services, bring new markets to export goods and increase the share of exporters in international trade.
Within the scope of the support, the Ministry will support a portion of the interest or profit share to be paid by exporter companies, which are positioned in 6 different groups according to criteria such as technology level, value-added exports and market diversification determined by Türk Eximbank and the Ministry, in the loans they will use for their high-tech and value-added additional export increases and their exports to distant and new markets, by obtaining their commitments.
In addition, another issue that we are meticulously following is the green transformation. In order to reduce the green transformation costs of our exporters in the Green Deal process implemented by the EU, which is one of our important trade partners, we currently support items such as “Support for Market Entry Documents” and “Decarbonization Roadmap” and “Carbon Footprint Calculation” within our TURQUALITY/Brand supports.
In addition, we have recently published a brand new support package to prepare for the green process. With our “Green Deal Compliance Project Support”, we aim to raise awareness, analyze the current situation, create a road map to improve the current situation, and facilitate access to national/international funds in order to enable our exporter companies to achieve corporate sustainability-oriented transformation within the scope of the Green Deal.
On the other hand, with the recent legal arrangements, the daily limit of rediscount credits has been increased 10-fold to TL 3 billion 50 million, of which TL 2 billion 50 million is offered to exporters by Turk Eximbank.
Moreover, a new formula was determined based on the policy interest rate for the calculation of rediscount credit interest rates, ensuring that the total interest cost of rediscount credits does not exceed the level of the Central Bank’s policy interest rate. Accordingly, the upper limit for the total interest cost of rediscount credits was fixed at 25.93%.
In another arrangement regarding rediscount credits, the obligation to sell at least 40% of the export value to the Central Bank in addition to the 30% additional export value sales obligation was abolished.
In addition to all these, a step was recently taken to facilitate access to rediscount credits by introducing flexibility in the scope of imports of products listed in the list of investment goods in the net exporter definition. As for SMEs, credit utilization limits for small and medium-sized enterprises were redefined in favor of exporters.
One of the most important problems that exporters face is the collateral required when they request financing. What would you tell us in this regard?
The Export Development Corporation (İGE A.Ş.), which was established in October 2021 with TİM and Eximbank’s own resources to provide guarantees exclusively for export credits in favor of real persons or legal entities and to be accessible only to exporters in order to contribute to the fulfillment of all kinds of financing needs of exporters of goods and services through credit guarantee and surety practices and to expand, support and facilitate their access to all kinds of financing, and whose capital structure was strengthened with the partnership of 61 Exporters Associations in December, started its operations in March 2022.
With İGE A.Ş., we aim to eliminate the problem of credit guarantees, which is the biggest problem of our exporters, and to ensure that exporters, who cannot benefit from various credit and support opportunities sufficiently due to insufficient collateral, have access to credit through guarantees, thereby reducing the cost of access to credit for our exporters and spreading our exports to the grassroots.
To this end, currently, we see that İGE A.Ş. has provided guarantees for a total of 67.6 billion TL worth of loans of our exporters.
On the other hand, by transferring certain deductions from export transactions made through the exporters’ unions to the capital of the company, we aim to provide additional income to İGE A.Ş. and to ensure that it maintains a strong financial structure and thus to provide continuous and effective service to our exporters by creating a self-renewing capital structure.
TARGET COUNTRY TARGET SECTOR
Honorable Minister, as you often emphasize, reaching new markets is of great importance. It is necessary to add new links to the export chain. EU countries and Germany, to which Turkey exports the most, are in a weak growth trend… There are unexplored markets in Asia, Africa and Latin America. As the Ministry of Trade, do you have any special efforts in this regard?
As the Ministry, we are carrying out studies to identify alternative markets to which our exporters can be directed, in addition to our traditional export markets, with regard to market access, which is becoming increasingly important for the realization of our growth target, which is frequently emphasized by our President and which is also included in our Medium Term Program (MTP) covering the years 2024-2026, in the perspective of investment, production, employment and exports.
For this purpose, we are proactively implementing the “Far Countries Strategy” and the “Islamic Countries Export Development Strategy” prepared to ensure market diversification and increase our exports by developing our trade with different countries, and we are in an intensive effort to develop our trade with these countries. In this context, with our Decree published in the Official Gazette dated February 23, 2024, we renewed the “Brand and TURQUALITY®” and unit rent support periods of our exporters operating in these countries in order to increase the impact of the Export Development Strategies for Far Countries and Islamic Countries.
In this context, with the “2028 Export Promotion and Marketing Vision”, which is a sector-based promotion and marketing strategy, we launched a promotion and marketing campaign for 41 different sectors and product groups in order to further strengthen the image of Turkish goods and services with a target country-target sector-oriented, regular and continuous approach. With our New Decision, in order to further strengthen this campaign, the Turkish Exporters Assembly, which is the supreme organization of our exporters’ associations, and exporters’ associations representing their sectors and regions on their own, were given the opportunity to be supported with higher limits.
With the innovations we have made in the TURQUALITY® promotion project support, which aims to promote our leading export sectors abroad, we will be able to put forward more projects in more countries; we will introduce all our export products from Turkish salmon to machinery, from defense industry to olive oil to the world in a more powerful way.
Moreover, we have also implemented the necessary legislative changes in our fair support, which is an important policy tool for market entry and market diversification. In addition, within the scope of our market entry efforts for exports of goods, we have identified the countries that will be prioritized in our exports in 2024, as we do every year, with the aim of reducing the effects of the possible contraction in our traditional markets on our exports and increasing our exports to alternative markets, taking into account the global political and economic conjuncture.
While identifying our target countries, we conducted detailed and objective analyses with a careful and scientific approach, taking into account our diplomatic relations, the macroeconomic dynamics that determine the structure of the market, such as the purchasing power, size and openness of the regional market, the advantage of the market’s proximity to our country and the recent positive political developments within the scope of bilateral and multilateral trade agreements.
THY FLIES TO 62 DESTINATIONS IN AFRICA
For example, the “African Countries Strategy” that we put into practice in 2003 played a critical role in the development of our trade and economic relations with Africa. In 2003, the share of Africa in our trade with the world was 4.9%, whereas in 2023 it was 5.94%. In 2002, we had embassies in only 12 African countries, but this number has increased to 44 today. The number of our Trade Counselorships will reach 31 in a short time. Turkish Airlines, our national flag carrier, currently flies to 62 destinations in Africa and plays an important role in the development of bilateral economic relations.
The Asia-Pacific region is expected to continue to be one of the important centers of concentration of the world economy in the future. Taking into account the increasing importance of the region, the Ministry has included 11 Asian countries in its Far Countries Strategy, and the actions determined within the framework of this strategy continue to be successfully implemented on the basis of target countries.
In order to increase its presence in the Asian market, our country actively participates in regional organizations. Efforts are underway to improve trade and economic relations with ASEAN, which joined the Regional Comprehensive Economic Partnership (RCEP) Agreement as a union and accounts for approximately 10% of Asia’s GDP. Moreover, under the leadership of Mr. President, our relations with Asian countries gained momentum in the aftermath of the pandemic. In addition to our active participation in multilateral organizations such as the Shanghai Cooperation Organization, the G-20 summit held under the Presidency of Indonesia, and the Organization of Turkic States Summit held in Uzbekistan, bilateral contacts with countries are increasing. These contacts are considered important for the development of our economic and trade relations with the countries in the region.
In addition, export support provided by the Ministry is given more weight within the framework of the targets set for leading Asian countries and priority countries. Australia, China, South Korea, Korea, Indonesia, Philippines, India, Japan, Malaysia, Thailand, Vietnam and Russia are among the 11 countries targeted in Asia, whereas the 5 priority countries are Bangladesh, Pakistan, Iran, Azerbaijan and Uzbekistan.
Following Africa and the Asia-Pacific region; Latin America and the Caribbean region is one of the most promising regions in terms of area and population, as well as being a large market with its economic developments in recent years.
Over the last years, Turkey has been pursuing a more active policy to develop cooperation with Latin America and the Caribbean region at both bilateral and multilateral levels.
As a result, our relations have developed rapidly on the basis of mutual benefit, respect, friendship and cooperation and this situation has positively reflected on trade.
In the context of developing our trade and economic relations, we will continue our efforts to strengthen our trade and investment ties with Latin American and Caribbean countries, which have significant potential.
In these studies, we also took into account the 18 countries covered by the Far Countries Strategy, which we are currently actively conducting, and the member countries of the Organization of Islamic Cooperation, which are examined within the scope of the Islamic Countries Export Development Strategy; and we have identified 56 “Target Countries” for exports in 2024. We support our exports to our target countries with additional rates within the framework of the “Decree No. 5973 on Export Supports” carried out by our Ministry.
OUR WEIGHT WILL ALSO INCREASE IN ASIAN MARKETS
MADE NEW REGULATIONS IN DOMESTIC TRADE
What measures are you taking to stimulate domestic trade?
The mandate of our Ministry is very broad and we have duties and responsibilities towards all 85 million citizens. Establishing a fair and competitive domestic market and a stable domestic trade environment is one of the most fundamental goals of our Ministry. We act with this awareness and work day and night for the benefit of each and every one of our citizens. As the Ministry, we carry out a wide range of operations from exorbitant price increases and stockpiling activities to motor vehicle trade, from real estate trade to real estate pledge transactions, from retail trade to electronic trade and agricultural products trade.
Within this scope, we have taken and continue to take necessary measures against behaviors that distort the market and mislead consumers. Within the scope of exorbitant price increases and stockpiling activities in various sectors, especially in the food sector, we carry out inspections by our Ministry inspectors and Provincial Directorates of Trade in 81 provinces and take the necessary administrative sanction decisions by the Unfair Price Evaluation Board.
On the other hand, as you know, we have implemented important regulations for the automotive sector such as 6 months and 6 thousand kilometers, restriction of advertisements, prohibition of activities that make it difficult to access the vehicle. Within the scope of these regulations, we carried out intensive inspection activities. Following these measures, firstly, second-hand prices started to decrease up to 20%. Then, when the stocks appeared and the balloon in sales disappeared, we saw that campaigns started, especially in the first hand. The market actually returned to normal; the bubble and foam disappeared.
In the real estate sector, we continue our work diligently to eliminate consumer victimization as a result of the recent unrealistic, speculative price increases and to re-establish a stable market structure.
In all these sectors, we closely monitor the market to protect our citizens, honest tradesmen and merchants. In this sense, I would like to express that additional measures, if necessary, will be taken decisively within the framework of the law with a sense of justice and fairness.
On the other hand, with the amendments made to the retail trade legislation, we defined and prohibited unfair commercial practices in the relations between producers, suppliers and retail businesses, such as reflecting campaign costs to the party that does not want to make campaign sales, charging premiums and fees when no service is provided that directly affects product demand. In addition, we shortened the maximum payment periods in commercial relations involving agricultural and food products. By making commercial relations in the supply chain more fair and transparent, we aim to protect all parties involved in the chain.
In the meantime, within the scope of the Ministry’s call to organize discount campaigns for the retail sector, more than 1,000 (1,047) businesses from various sectors ranging from food to textiles, furniture to electronics, building materials to white goods and cosmetics participated in the campaign with approximately 56 thousand branches (55,819).
Meanwhile, we continue to work on electronic commerce without slowing down. As you know, electronic commerce, which has grown steadily in recent years in our country as well as in the world, has become an indispensable element of our commercial life. Taking into account the problems and needs arising in e-commerce and the developments in the international arena, we have made important changes in the Electronic Commerce legislation in order to ensure the healthy growth of e-commerce. With these amendments, it is aimed to establish a multi-player market structure by preventing anti-competitive and restrictive activities and monopolization tendency in the e-commerce sector, to prevent the loss of welfare that may occur in consumers in the medium and long term, and to increase the contribution of our merchants and tradesmen to the national economy by facilitating their entry into the market.
In addition, we continue to expand the “Movable Pledge Application in Commercial Transactions”, which facilitates access to financing by businesses, especially SMEs, by pledging all movable assets of economic value as collateral. In this framework, the number of pledge agreements registered to date has reached 87 thousand and financing opportunities have been provided to our commercial actors in return for a collateral amount of TL 1.4 trillion, USD 144.6 billion and EUR 117.6 billion..
Furthermore, we are also carrying out our work within the scope of trade in agricultural products. In the licensed warehousing system, where the trade of products such as cereals, legumes, oilseeds, cotton, hazelnuts, olives, dried apricots and pistachios are recorded and the products are stored under healthy and modern conditions, 190 licensed warehouses in 45 provinces continue their activities with a total licensed storage capacity of 10.2 million tons. In the coming years, we will continue our efforts to increase the number and capacity of licensed warehouses in order to develop and expand the licensed warehousing system in our country and contribute to the development of storage and trade in agricultural products.