2012-11-29

Investment map highlights industry's role in development

A government study invites local and foreign businesses to invest in Turkey's economic assets.

By Menekse Tokyay for SES Türkiye in Istanbul -- 29/11/12

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The government's latest study of investment opportunities in the country's 81 provinces has ignited a debate on the role of industry in Turkey's economic development outlook.

The "investment map," released last week by the Industry Directorate General of Turkey's Science, Industry and Technology Ministry, summarised the state of industrial and production capabilities in every province to help business leaders make investment decisions.

While some critics assailed the map for focusing too much on industry without a coherent industrial strategy to accompany it, officials and business groups see potential in the document.

Sufyan Emiroglu, head of the ministerial division that completed the study, told SES Türkiye that the investment map focused on industry because strong growth in the sector will be central to the country's ability to meet many of its long-term economic goals.

"Our goal was to set the stage for an industrial transformation that will resolve the unemployment problem, create a qualified workforce, emphasize production of high-technology goods and benefit more from world exports by increasing the competitive power and productivity of Turkish industry," he said.

He added: "Turkey has to boost its industrial strength if it's to meet its target of becoming a [global] top 10 economy by 2023, to increase its national income per capita to $25,000, to boost its foreign trade volume to $1 trillion and to expand its export volume to $500 billion."

Deniz Gungen, an economist who works at the Istanbul-based Foreign Economic Relations Board of Turkey, a business group that advocates for Turkish investors, said the map will help both the government and the private sector make stronger investment decisions.

"It will definitely be an invaluable resource that can be utilized in formulating development policies," he told SES Türkiye.

For Istanbul, the investment map mainly covers industrial areas like heavy industry, wind power, nano-technology, biotechnology, textiles and advanced electronics. However, the province's economy centres heavily on the service sector, leading some critics to charge that the map's prescriptions are a weak fit.

Abdulmecit Karatas, general-secretary of the semi-official Istanbul Development Agency, told SES Türkiye that Istanbul is better off focusing on areas where it's already strong: services and finance.

"As of 2010, there are 43 public and private banks in Istanbul with 166 billion dollars of account and 126.8 billion dollars of credit volume. In 2010, the Istanbul Stock Exchange became the sixth most profitable stock exchange around the world," Karatas said.

But Emiroglu said critics need to look beyond Istanbul to see that industry is a sound long-term investment for the country's economy.

"Overall, the share of the manufactured industrial products among our total exports reached 94 percent in 2011. From the long-term view, the industry sector is prominent in tying us with the global economy," he said.

Karatas also highlighted the need to step back from the economy and look at the environmental consequences of industrialisation.

"The map selects heavy industry, metals, chemistry and plastic installations as promising investment areas that are bound to evaluate the potential," he said. "However, these sectors are polluting the environment and are not backed by the state."

Berk Cektir, an Istanbul-based attorney specialising in investment strategies and corporate practices, said the map's useful information about investment opportunities in the sectors it examined is undermined by policies that hinder growth in those areas.

"The study is based on the peculiarities of each province in specific sectors. However, the incentives the state gives to those sectors are not appealing yet," Cektir told SES Türkiye.

"For example, sectors such as wind energy, which is growing the most rapidly, is so tied up in bureaucracy and red tape that investors are losing interest because they have to wait years to start their projects."

According to Cektir, the map won't amount to anything unless Turkey initiates a new investment strategy which "makes fuel and energy cheaper, decreases labour costs, and resolves many other structural problems."

Gungen agreed.

"If the primary objective is to transform Turkey's capital intensive economy to one that is driven by technology and innovation, the report's contribution would be severely limited unless it is integrated into a more focused and coherent industrial strategy," he told SES Türkiye.

"The question of what's next remains to be answered."

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