Union of Chambers and Commodity Exchanges of Turkey

Hisarcıklıoğlu said, “We have a saying, ‘Prosperity and grace in unity; anguish in dissent,’ I’ve said this for years. The biggest problem faced by entrepreneurs in Turkey is the lack of capital. Forming partnerships instead of trying to do business by yourselves in the same sector will increase efficiency and allow you to compete with our rivals in the international markets. Our government has opened an important door for us. As the private sector, we must also do our part and leave the ‘keep it small, keep it yours’ mentality. Our companies must understand the value of playing big.”

The meeting which took place at the TOBB Union Center, Economy Minister Zafer Çağlayan informed the chamber and exchange president regarding the new incentives system. Chamber/exchange presidents shared their views and suggestions regarding the system.

Speaking at the opening of the meeting, TOBB President Hisarcıklıoğlu thanked the Minister Çağlayan for the support he has given the Turkish private sector and entrepreneurs.

Reminding that Turkey has achieved 8.5% growth after China in 2011, TOBB President Hisarcıklıoğlu said, “We were the third fastest growing country after China and Argentina. The Turkish private sector achieved this. The contribution of private and investment spending to growth was 9.5%. Public spending and investments was only 0.4%. The adverse effects of foreign trade to growth began to lessen. During the first 9 months of 2011, foreign trade stunted growth by 3.1% while the stunting effect backed down to 1.4% when the whole year is taken into account.

When the record levels of exports are taken into account in the first quarter of 2012, we expect foreign trade to positively impact growth in 2012. Our national income has reached its highest point to date with 772 billion Dollars with per capita income reaching 10,444 Dollars. During this process, our industrial sector grew by 9%, becoming the driving force of the industry.”

- How the success story was written

Hisarcıklıoğlu, stating that it should be noted how this success was achieved, pointed out that on one side there is an economic crisis in Europe, on the other, political upheaval and the pangs of reestablishing a new system.

Stating that Turkey is situated squarely in the middle of all this turmoil, TOBB President M. Rifat Hisarcıklıoğlu said, “Turkey’s private sector is producing, employing, growing and causing growth. I would like to thank the Turkish private sector, industrialists and companies. I present my gratitude to our employees and workers who spend so much effort. Know that it would not be amiss if we were to award each and every one of them with medals.”

- Make sure your provinces and counties benefit from the incentives

Emphasizing the importance of the incentives mechanism announced by Prime Minister Erdoğan, Hisarcıklıoğlu addressed the chamber and exchange presidents:

“This is the most concrete evidence that the efforts of the Turkish private sector are appreciated. This is a family council. Our dear Minister, who has always been a part of our community, will explain the details of the new incentives system to us. As you are the opinion leaders, visionaries of your provinces and counties make sure your provinces and counties benefit from the incentives.

I know that there is confusion regarding the zone classification of provinces. However, this incentives mechanism is very thorough and comprehensive. Our Minister will share all of the details with you in a moment, but first, I would like to stress the importance of three issues.

The first is that the views of the private sector have been taken into account ever since the beginning of the process. The Union of Chambers and Commodity Exchanges of Turkey, as the umbrella organization of the Turkish private sector, have contributed greatly to it. We met with you, the Chamber Presidents, on September 10th, 2011 and with the Sector Council Presidents on October 7th. We have compiled the demands of the private sector after these and other meetings and relayed them to the Minister.

What were those demands?

- The reclassification of regions to reflect the level of development between provinces,
- The increase of support tools in underdeveloped regions,
- Diversification of present incentive tools,
- Making the incentives for large investments more attractive,
- Reassignment of the supported sectors in provinces so as to increase the means of the provinces,
- The establishment of a mechanism which takes into account such criteria as employment, import and export substitution,
- The organization of tax incentives to reinforce investments and to provide financial support during the investment process.”

- The inclusion of horizontal sectors in incentives

Stating that massive improvements in all these fields have made them all very happy, Hisarcıklıoğlu went on:

“Another important point we’ve seen in the new incentives mechanism is the inclusion of horizontal sectors which have the potential to positively affect all sectors. It is very beneficial that horizontal fields such as education and transportation are strategically incentivized throughout all regions. This has provided the possibility for the private sector’s school investments to contribute to increasing education capacity and greatly to solving the skill deficiency in Turkey. Investments in the field of transportation have increased connectivity with provinces surrounding the region and international markets, lowering logistics costs.

The third important point of this incentives system is the reorganization of the tax reduction so as to provide financial support to companies. As you know, in order to benefit from the tax reduction incentive in the previous system, you had to complete the investment and start earning profits. In other words, the support only came when all the work was done. Now, the government will take apart this system. The tax reduction will not be only during the operational period but also during the investment process. You will be able to take tax exemptions not only from your investments but also from the profit your company makes outside the first region as well.

- Innovations to support the development of the private sector

Hisarcıklıoğlu stated that the new incentives system has many innovations to support the development of the private sector, among them are; privileges for OIZs in the incentives system; additional support to high technology, lowering minimum investment amounts.

Stating that the incentives system is an important and big step, the TOBB President said, “As the world struggles with its myriad of problems, trying to find solutions to get by, we –our government, private sector and nation- have turned our eyes to 2023. We have focused on the same target as state and people. On the centennial anniversary of the foundation of our Republic, we will be one of the ten largest economies in the world. We will have an exports volume of 500 billion Dollars. In order to achieve this, the costs of the private sector need to be lowered; it needs to be more competitive.

- Economy Minister Çağlayan: The incentives system will enter into effect as of January 1st, 2012

The Economy Minister Zafer Çağlayan stated that the incentives system will enter into effect as of January 1st, 2012.

Minister Çağlayan briefed the chamber and exchange presidents on the new Incentives System during the meeting hosted by TOBB President M. Rifat Hisarcıklıoğlu.

In his speech, Çağlayan said that there are some questions regarding the Incentives System and went on, “In this regard refer to what our Prime Minister has to say on the subject. The Incentives System will retroactively enter effect going back as far as 4 months.”

- Our government has been very generous to the 6th zone

Minister Çağlayan stated that when the Incentives System was announced, it was met with an approval rating of 80-85% and that the system is one born from the demands of the Turkish private sector. Explaining that the 81 provinces of Turkey are classified into zones on a scale of 1 to 6, with 1 being the most developed and 6 the least, Minister Çağlayan went on:

“This was done to offset the damage inflicted on those provinces suffering from years of terrorist attacks which destroy machinery and burn down factories. When this procedure was being written up our government was very generous to the 6th zone. There were incentives given to the 6th zone which were seen nowhere else in the other zones.

We do not bring any limitations to the investments made as par t of the incentives system; we will support different sectors in all 81 provinces.”

Çağlayan stated that OIZ will be benefiting from as if they were in a lower scale zone, one scale below the one they are located in and that investments in the largest 12 sectors will be supported strongly.

- We have received approximately 800 demands

Stating that the new Incentives System has been formed by going over approximately 800 demands from the private sector, Çağlayan said, “Next week, three changes to the Tax Law and another to the social security will be going through the TBMM. We will put the new Incentives System into effect by the end of the month.”
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