09 Ocak 2024,Minister Bolat: Global demand will accelerate in 2024, our exports will increase, Elevator Vizyon Magazine, All What You Are Looking For is On This Site

Minister Bolat: Global demand will accelerate in 2024, our exports will increase

Trade Minister Prof. Dr. Ömer Bolat stated that Turkey is doing quite well in the export of goods and services, noting that global demand will accelerate in mid-2024.

Stating that the strong dollar negatively affects foreign trade due to the dollar weight in imports, Bolat said that the Euro / dollar parity at 1.10 is a good level for Turkey's trade. Stating that the contraction in Europe has stopped demand to a great extent, Bolat said, "But we are hopeful. Economies never go bad all the time. There is a horizontal course, then it changes direction. I think global demand will accelerate in mid-2024, which will have a positive impact on exports."

I do not expect full membership negotiations to start in the near term

Explaining that Turkey's process with the European Union has been over 60 years and that many promises were made and agreements were made during this process, Minister Bolat said that the EU side has not fulfilled any of its promises. Bolat said the following: "If there was political will in the EU, these things would have been achieved. There is a very balanced structure in EU-Turkey trade and we are their 7th foreign trade partner. We are not a country that can be ignored. We explained all this in our meeting in Brussels. After the recent elections, we see that there is a desire from the EU side to improve economic and trade relations with Turkey. They stated that they have started to work on facilitating the visa problem. They made recommendations for problematic countries on transportation limits. We see the will to soften relations with Turkey. If the justified reaction of the Islamic world to what happened in Gaza and their callous double-standard policies do not lead to new political tensions, relations with the EU have started to work on the political and economic level. But we want the problems of the Customs Union to be solved. We want the service sector to be paved the way. I don't expect that full membership negotiations will be accelerated or start in the near term. The Swedish protocol will make a positive contribution, but we will see how much."

Intention to sign FTA with Saudi Arabia

Minister Bolat said that they are following the targets and strategies set during the period of his predecessor ministers in exports, and stated that efforts are continuing towards distant countries, Africa and Islamic countries. Stating that the United Arab Emirates agreement has entered into force within the scope of the recent free trade agreements with Islamic countries, Bolat emphasized that the FTA with Qatar will be put into effect if the Parliament approves it by the end of the year, and that Saudi Arabia intends to make an FTA. Minister Bolat noted that they also have plans with Far Eastern countries, but that they are cautious. Noting that they have taken very important steps to increase e-exports and that they aim to increase its share in total exports to 10 percent by the end of 2028, Minister Bolat said, "We will hold the Turkey e-export Summit on November 8. The summit is organized by the Ministry of Trade. We have also prepared Turkey e-export platform. We are in talks with two umbrella organizations of the private sector and with the establishment of a joint company, we will activate the platform and be a guide. We have also included e-Turquality in the supports."

We pursue our right to visa exemption to the end

Minister Bolat stated that developed countries prevent developing countries from grabbing a share of the market with customs barriers or technical barriers, and that visas come into play when they cannot, and continued as follows: "There is another reality. In the Western world, after the fall of communism in 1990, Islamophobia was spread by politicians and media under the name of fighting fundamentalism. Visa barriers are mostly imposed on citizens of Islamic countries. If the EU is a rule of law, as it claims to be, and within the framework of international rules, we should have been granted visa liberalization on December 1, 1986. In 2016, the Migration and Visa Protocol was signed, and if the criteria were met, visa liberalization would be granted. They did not comply with this either. Turkey bore the burden of migration from Syria and other African countries, and they broke their promises there too. We started the green passport application for exporters. 36 thousand exporters have green passports. But we follow our rights, we have never given up our right to visa exemption, we pursue it to the end. We are also after the migration and visa protocol. We insistently raise this issue during the détente period with EU officials. On November 8, we are waiting for the enlargement report. At the summit in December, EU leaders will decide what kind of a road map they will follow with Turkey according to the information in the report."

Stating that it is not possible for trade not to be affected by the Israeli Hamas clashes, Bolat said: "It is too early to make an assessment now, it depends on how long the incident will last. As people, as a country with historical, religious and cultural ties, we are working with all our strength to stop the bloodshed as soon as possible. Our President is spending his time on this issue. The protection of Gaza under international protection is very important to protect the civilian population. As always, the Western world failed in this incident. They could not follow a policy in accordance with humanity and international law, and they are taking sides again. Our side is clear as a country and as a nation, we stand by the Palestinian cause. We will continue our policy to include Gaza and the West Bank with East Jerusalem as its capital. We are trying to unite all Islamic countries on this issue and to ensure the participation of other countries."

2024 budget to increase export subsidies by more than 100 percent

Minister Ömer Bolat said, "In the 2024 budget, export supports will be increased by more than 100 percent. This means that we will put more than 20 billion liras of export support at your disposal to increase our exports."

Stating that the Covid-19 pandemic process caused negative effects on the world economy and people's purchasing power decreased, Bolat said that the war between Russia and Ukraine, which is economically very important for Turkey, lasted for more than 1.5 years and caused changes in energy and food markets.

On February 6, Bolat also pointed to the impact of the earthquakes centered in Kahramanmaraş on the economy and said that despite all these negative conditions, the Turkish economy is growing and employment, industrial production and exports continue to increase.

Pointing out that the EU failed to grow in the first half of this year, Minister Bolat continued as follows: "About half of our exports go to the EU. Despite the contraction in demand, we achieved the highest figures of the last 100 years in our exports in July and August. In the January-August period, we reached 165 billion dollars in exports. This figure is more or less the same as last year. Here you can say 'there is no increase', but let's see that there is a decline of up to 2 percent in exports in the world. In the business world, you see the fall in commodity prices, you feel the contraction in world exports. Despite this, we maintained the same level."

Stating that Turkey is an open economy that can conduct foreign trade at two-thirds of its national income, and that it is successful not only in the export of goods but also in the export of services, Bolat said that they aim to take the positive commercial indicators even further in the coming period.

Minister Bolat reminded that the Medium Term Program (MTP), which sets out a 3-year roadmap for the economy, was announced and said:

"This roadmap includes due diligence, targets and reforms for every sector. The first goal of this program is to fight inflation and achieve permanent price stability. For this purpose, there are targets to ensure financial stability in monetary, foreign exchange and fiscal policies, prioritizing investment, employment, production and exports, and aiming to increase welfare and social justice for our people."

Pointing out that the MTP set an export target of 255 billion dollars by the end of 2023 and 302 billion dollars in 2026, Bolat said that they are making maximum efforts to expand financing opportunities.

He noted that export supports to exporters through Eximbank will be increased by more than 100 percent in the 2024 budget. Bolat said, "This means that, hopefully, we will make an export support of over 20 billion liras available to you to increase our exports. Our slogan this semester is, 'The only way is to export, to increase our foreign exchange revenues.'"

Bolat stated that they will create favorable conditions for producers and industrialists in imports on the other hand, and that they will prevent Turkey from becoming an import paradise, and said that they are implementing the same procedures as what the World Trade Organization rules stipulate and what other countries do.

Minister Bolat said, "We currently have measures against dumping and subsidized imports in 65 product groups. We have safeguard measures in 9 product groups and surveillance practices in 148 product groups. We also protect against the import of unsafe products at customs with the support of artificial intelligence with the TAREX system."

Stating that they will always continue to stand by the honest traders, tradesmen and craftsmen, Minister Bolat said the following:

"Unfortunately, we have been seeing market distorting or unfair trade practices in various sectors since the Covid-19 pandemic came. This has created an important negative impact on the increase in inflation. At this point, we, as the ministry, strive to prevent our citizens from being victimized through the unfair market regulation board. Especially in the automotive sector, we have corrected and recovered more than 90 percent of the market-distorting transactions that have been going on for 2.5 years with the measures we have taken decisively. Stocks started to appear and at this point, various speculative sales in the second-hand market came to an end. Today, with the figures of March, it has become possible to sell vehicles in the second-hand market. A drop of more than 10 percent in vehicle sales was achieved in the market. With the last amendment to the regulation, we announced that fake advertisements on advertisement sites for speculative price inflation will be prevented with sanctions. At this point, a very serious regression has been achieved. On the other hand, we also conduct intensive inspections in the food and grocery sector."

Bolat stated that they have increased the share of high and medium-high technology products in total exports to 36%, and aim to raise this to 50% by 2028, and also aim to increase the share of SMEs in exports from 26% to 40%.

"We are exporting 1.5 billion dollars a day" Speaking at the 2024 Export Vision and New Opportunities Panel, Ö. Volkan Ağar, Deputy Minister of the Ministry of Trade of Turkey, noted that there has been a tremendous leap in exports since 2002, saying, "While Turkey was a country that exported 1 billion dollars annually in 1973, and 1 billion dollars monthly in 1987, today it has become a very large economy that exports 1.5 billion dollars a day. Therefore, exports will continue to be one of the most important items for Turkey in 2024 and beyond, just as it was before."

The year-end target is 255 billion dollars

Ağar, noting that the world is going through a challenging period and that the shrinking demand in Europe and the expectation of a recession create a grey area for exports, said, "In general, the downward revisions in the global trade volume are creating a grey area. However, Turkey has always emerged from such grey areas by strengthening and creating opportunities. In this sense, we will continue this growth in 2024 by closely following the global economic situation and focusing on value-added, innovation, and R&D-based product and market diversification.

Export loss in earthquake-affected provinces is 6 billion dollars

Ağar, stating that the export figure, which was 254.2 billion dollars last year, is targeted to reach 255 billion dollars by the end of this year, said, "Despite all these negative developments in the world, Turkey did not experience a setback in exports. Moreover, we experienced a very large disaster, which happens once in a thousand years, covering 11 provinces of Turkey. This disaster significantly affected more than 10 million people and 11 provinces. These provinces were major exporters in the textile, chemical, and agricultural food products industries. We have determined that the export loss in these provinces between February and September was 6 billion dollars.

Foreign trade statistics will be announced based on activities

Continuing his words with a focus on Konya, Ağar said, "Konya, which reached an export volume of 3.3 billion dollars in 2022, has an export of 2.4 billion dollars in the January-September period this year. However, Konya is a city that generates a significant foreign trade surplus. At this point, the ratio of exports to imports in Konya is around 230%. Cities like Konya should also generate a foreign trade surplus, and Turkey should become a country with a foreign trade surplus. While there were 519 exporting companies in Konya in 2002, today this number has increased to 3,609; while exporting to 125 countries then, today it exports to 185 countries. Therefore, we extend our congratulations to Konya province in this direction.

Starting from January 1, 2024, foreign trade statistics will also begin to be announced on an activity basis," announced Ağar. He gave the example of the facilities in Konya, stating that while their exports are 3.3 billion dollars, when measured on an activity basis (exports of products produced in Konya), it reaches 3.9 billion dollars.

The export target for the year 2028 is 375.4 billion dollars

Continuing his speech, Ağar reminded that Turkey is also a significant exporter of services. He noted that in 2022, with service exports of 89 billion dollars, the country brought in 345 billion dollars in foreign currency and achieved an export surplus of 49.6 billion dollars. He continued his remarks:

Last month, the medium-term program targets were announced. At this point, Turkey set an export target of 255 billion dollars for 2023, 267 billion dollars for 2024, and 302.2 billion dollars for 2026. We have a target of 375.4 billion dollars in goods exports for 2028. We also aim to reach 200 billion dollars in service exports by 2028, God willing. Our country's share in world trade is 1.03%. We aim to increase this share to 1.3% by 2028 and to raise the share of SMEs in exports to 32%. On the other hand, we have very special works related to e-exports. God willing, we will launch a national e-export platform within the next year. We aim to increase the share of e-exports in total exports from the current 1.5% to 10% by 2028. We also want to raise the share of medium technology product exports to 50%. Two-thirds of Turkey's exports are to its close geography. Currently, with our identified distant countries strategy, we have special works aimed at 18 distant countries and within this framework, also for the 57 member countries of the Organization of Islamic Cooperation.

We are very hopeful for 2024

We are also working on the easy export platform we previously launched to inform our exporters about e-exports, now specifically for e-exports.

At this point, we will implement a platform that provides very important information with artificial intelligence algorithms for our exporters. Our expectations for 2024 are very hopeful. We know to which countries and with which products we will go. Despite this negative global economic climate, 2024 will be better than 2023.

Access to Financing Increased

Volkan Ağar, pointing out that exporters' access to financing has increased, said: "The biggest desire of exporters is financing. However, the rate of inflation increase is slowing down. God willing, in the coming years, we will witness significant decreases in inflation. While these policies were being followed, the policy interest rate was continuously updated and raised by the Central Bank of the Republic of Turkey (CBRT). Before June, due to the low policy interest rates, banks were reluctant to lend. However, after June, with the increase in policy interest rates, exporters' access to finance increased as banks opened their credit taps a bit more. But then a new complaint arose; high interest rates. At this point, our Ministry, the Ministry of Treasury and Finance, and the Central Bank worked together to address the exporters' complaints about high interest rates. Now, financing can be obtained at levels around 31% through CBRT-sourced loans. Here, Eximbank is our exporters' biggest supporter. Nearly half of Turkey's export loans meet with exporters through Eximbank. Eximbank will reach a credit volume of 41 billion dollars. It is currently at 29.7 billion dollars. Last year it was 45 billion dollars. Eximbank's equity was recently increased by 6.8 billion TL, providing extra credit creation capacity. Therefore, Eximbank is signing very important works. Another issue; there is credit, but exporters lack the collateral to obtain it. Two years ago, we started to think about how a guarantor institution could be established. And İGE AŞ, which recently celebrated its second anniversary, has largely addressed this deficiency. Now, exporters have a guarantor institution that serves only exports. It is powered by exporters' unions and the Turkish Exporters Assembly, and has very strong equity. It's an organization with the potential to create 150 billion TL in guarantees. İGE AŞ has come a long way in two years. In 2023, it provided more than 40 billion TL in guarantees. With a serious IT infrastructure, it provided guarantees to over 10,000 firms. Thus, both credit and guarantee aspects are currently working in synergy. Additionally, the credit limits of SMEs have been increased.”

In 22 years, there's been a 30-fold increase

The 2024 Export Vision and New Opportunities panel continued with the words of Selçuk Öztürk, Chairman of the Konya Chamber of Commerce:

"In 2001, we were responsible for three-thousandths of Turkey's exports, but today we have started to make up 1.7% of it. From an outside perspective, the biggest assumption is that our exports are primarily in agriculture and food products. However, 32% of Konya's exports are in machinery and parts, and the second major item is automotive spare parts with 18%. In this context, we export to more than 180 countries. Belief in Anatolia and investing in it brought us to this point. In the coming years, Konya will continue to increase its exports. We will close 2024 with an increase in exports. I believe that if the country continues with this understanding and management, in the next 10-15 years, we will see an increase in exports surpassing that of Turkey. In the next 20 years, I believe we will achieve a greater increase in exports than Turkey.

Selçuk Öztürk, Chairman of the Konya Chamber of Commerce, said, "Our most important task is to increase exports. Being a country that has had a trade deficit for 200 years, and considering the fluctuations in the economy, experiencing currency-based economic fluctuations is a duty for all of us. With the support of our Ministry of Trade, we organize many events. As our Deputy Minister mentioned, Turkey's biggest exports are to nearby countries, but there are distant and strong markets as well. We are particularly working on the South American and North American markets. There are more interesting opportunities and reasonable prices in distant markets. We are evaluating all these. Tensions in the Middle East certainly affect our sector, but these crises in the world will never end, especially within a 4-hour radius of our geography. By the way, I condemn the massacre carried out by Israel and pray for mercy for those who have died. Of course, we are affected, but there are two ways to deal with negative incidents. Are we going to sit and cry? We are businessmen; we have to trade. Our duty is to bring back even if it is 1 dollar for this country, to achieve minimum imports and maximum export figures. Instead of talking about these effects, we try to overcome them by doing other works. I believe that in this new era, we will also achieve a trade surplus in e-exports.

We are business people;

We want rates to drop," said Selçuk Öztürk, Chairman of the Konya Chamber of Commerce. He mentioned that there is no problem for exporters to access financing but added, "As business people, we desire better rates, and as a chamber where businessmen meet, we must seek better for our members. Overall, we find the approaches very positive. I also thank you for the issue of guarantees, but I believe we need to expand it more in Konya."

At the panel, Mehmet Ali Kılıçkaya, Director-General of Export at the Ministry of Trade of Turkey, stated that they are responsible for the promotion and introduction of Turkish export products, and managing legislation is also among their duties. He highlighted that the easy export platform presents an AI-supported map to exporters, thus allowing them to see target markets and customers. Kılıçkaya mentioned that export support offices are conducted together with chambers and exchanges, and information is provided to exporters. He emphasized that foreign trade seminars are conducted in every province, benefiting at least 20,000 exporters and volunteers annually. Kılıçkaya stated they strive to guide and inform companies by mobilizing all resources and added that, beyond all these, there are cash grant supports for exporters.

17,000 companies benefited from supports

Kılıçkaya expressed that they provided these supports to 17,000 companies annually and detailed the support as follows: "We introduced new generation supports to exporters last year, and they have started to be extensively used this year. We offer supports step by step under the 'Step by Step Export' program. Firstly, companies register their brands, and we support that, then we assist during the market entry documentation process, and especially in the health sector, we have included licensing and clinical studies in the legislation. In this way, we support the preparation phase. Then, we step in during the market research phase. We provide support for fairs and accommodation. Annually, we give over 1500 supports in this area. We implement these supports on the field with exporters' unions. The next step is purchasing a company or brand abroad. We support legal and financial consultancy expenses and if the purchase is realized, we also support the credit interest. The following step is global supply chain competence support. The next step is to establish a permanent presence in the market, for which we provide support for opening offices and stores. We offer these supports in every country for at least 4 years. Of course, promotional support is also provided. Brand registration is also very important. Together with Eximbank, we have our SIR (Supplier's Credit Insurance Regime) support. We, as the ministry, support the difference between the existing interest rate and the lowest interest rate among OECD countries in Eximbank's buyer credits. Another support package with Eximbank is insurance arrangement support. We also have design and product development support. This is a ladder, and at the top, we have our brand and Turquality program, and we try to guide companies step by step in this direction. We support brands and companies that have reached a certain corporate structure and maturity with Turquality. There are 300 companies in this program, and we aim to place these companies among the world's leading firms."

The support package will be increased to 20 billion liras

Kılıçkaya, mentioning they made another expansion last year by easing the process for SMEs if they work with a suitable consulting firm, also stated that they provide strong support for exporters wishing to form consortia. He noted that all these are individual supports and they also offer supports like URGE (International Competitiveness Development) through collaborations. Kılıçkaya said that the e-export package specifically supports digital marketing, order fulfillment, logistics, and delivery processes, and emphasized that comprehensive guides have been prepared on these subjects. Finally, Kılıçkaya expressed their desire to enhance all these steps with pre-financing and mentioned that they implemented a program combining support with financing for companies facing financial difficulties, thanks to İGE and Eximbank. He stated that while the support package amount is 10 billion liras this year, it will increase to 20 billion liras next year, and about 17,000 companies benefited from these supports this year.

25 billion dollars of export receivables secured

Ali Güney, the General Manager of Türk Eximbank, stated that they are Turkey's sole official export support institution, providing support with cash credits and export receivables insurance, as well as buyer credits. He expressed their desire to contribute to solving the country's current account deficit issue by ensuring a steady increase in the export of goods and services from Turkey. Güney mentioned that they operate through 23 provinces, 11 contact offices, and 3 regional directorates. He provided the following information: "As Eximbank, our total export supports last year were 45 billion dollars. 20 billion dollars of this was cash credit support, and 25 billion dollars was export receivables insurance support. In cash credit supports, we handle nearly half of Turkey's export credits. Looking at the balance sheet size, within the bank's assets, the share of credit is 87%. We have offered all our funding possibilities for the support of exporters. This rate is around 55% in the banking sector. In terms of credit size, we are ranked 8th in the Turkish banking sector and have the largest credit volume as a development and investment bank. In the field of receivables insurance, we are by far the largest institution in Turkey. We have secured 25 billion dollars of term export receivables. Everyone talks about access to finance, but receivables insurance is a very important product for increasing exports and spreading to different markets. The recent geopolitical risks have shown how important receivables insurance is."

3 billion dollars of funding from UAE in the final stage

Güney stated that as of the end of September, they reached a support of 30 billion dollars, of which 13.3 billion dollars was cash credit support and 16.7 billion dollars was export receivables insurance support. He expressed their intention to close the year with more than 41 billion dollars in support. Güney also mentioned that the Central Bank of the Republic of Turkey (CBRT)'s decision to increase the daily limit of rediscount credits by tenfold next year indicates that cash credit support will be higher. He continued: "Our strategic goal is to reduce reliance on CBRT rediscount resources and diversify funding with our resources. We have been very successful in this area. Eximbank is the bank that brings the most funds from international capital markets to Turkey. We brought 9 billion dollars to Turkey and continue to renew it. There is also a bond issuance today. Next year, we have serious work regarding access to sustainability-themed funds. Around 1.5 billion dollars of sustainable-themed funding, 1 billion dollars from the EBRD and approximately 500 million dollars from the Asian Infrastructure and Development Bank and institutions in the Gulf region, are being negotiated to be brought to Turkey. Next year, we will use these resources to support exporters' investments in green transformation. We assess all credit applications over 10 billion dollars in the sustainability phase. We calculate the company's carbon and emission outputs and take into account the carbon tax at the border."

Güney, emphasizing that the negotiations with the United Arab Emirates are almost complete for a 3 billion dollar fund, which will come through Eximbank, expressed that the year 2024 will be a much better year for exporters' access to finance.

The goal is to increase the share of export credits to 18-20%

Kasım Akdeniz, General Manager of Export Development Inc. (İGE), highlighting the importance of exporting SMEs, stated: "Financing is a prerequisite for increasing exports. Growth depends on exports, and exports depend on financing. Are we adequately supporting exports? The contribution of exports to the GDP is 38%. The share of exports in the total credits of the banking sector is only 13%. Of this 13%, only 5-6% is facilitated by Eximbank. If we exclude Eximbank from the total credits, only 7-8% is used for financing exports. In credits with Treasury guarantees, the rate is 15%. The purpose of İGE is to change this picture and increase the share of export credits in the banking sector to 18-20%. We don’t provide credits; instead, we try to direct more funds towards exports in the banking sector by reducing risk through guarantees in favor of exporters. Additionally, increasing the share of exporting SMEs in export credits is our secondary goal. With guarantees, we aim to facilitate exporters' access to finance, reduce the cost, and make it sustainable. The process of utilizing credits with İGE guarantees is completely electronic. When an exporter wants to use credit with İGE guarantee, they need to apply to their bank. The bank first assesses the suitability of the application in terms of its credit policies. If it decides it's suitable, it forwards the application with a certain data set to İGE electronically. Using data from the Risk Center of TBB, Revenue Administration, and Ministry of Trade, İGE assigns a credit rating to the exporter and processes it through an automatic support system, making the guarantee decision in a few seconds. İGE then informs the bank of acceptance or rejection. If accepted, the bank disburses the credit to the exporter and notifies İGE. Records also include why an application was accepted or rejected."

A total of 45.6 billion liras in credits guaranteed

Akdeniz stated that they have very strong equity and produce guarantees with their own equity and also with Treasury resources, having nearly 150 billion in equity. He provided the following information: "We were established in November 2021. In March 2022, we issued our first guarantee and formed a collaboration with Eximbank, creating a credit potential of nearly 47 billion liras. 7567 firms applied to Eximbank for this package, with applications amounting to 35.8 billion liras. We guaranteed credits totaling 34.3 billion liras for 7219 firms. Of this, 30.1 billion liras have been actually disbursed, and we only encountered payment problems with 1 firm, which went into arrangement. In December 2022, we prepared a package with other banks, creating a total credit volume of 25 billion liras. 5278 firms applied for this package, 3700 applications were accepted, creating a credit volume of 11.2 billion liras. In total, as Eximbank and other banks, we have guaranteed credits worth 45.6 billion liras for 11,000 firms. 40 billion of this has been actually disbursed, with a 5 billion difference in the document preparation process. These are what we created with our own equity. In April 2023, as part of our agreement with the Treasury, we are creating a credit volume of 26 billion liras. In the last three weeks, applications from 563 firms for 2.3 billion liras have come from the Treasury, of which we accepted 1.4 billion liras for 363 firms. As banks' appetite for lending increases, we will see these numbers go up."

New packages will be announced for green transformation

Akdeniz mentioned that they are preparing new packages and noted that one of the biggest threats to exports currently is the green transformation. He said that they are working intensively in this area with banks and the sector in general, and that they have launched a package in this context with Akbank, with Yapı Kredi next in line. Akdeniz also mentioned that they have packages aimed at exporters in the earthquake-affected regions and emphasized their intention to meet exporters with the green transformation resource of Eximbank, backed by İGE's guarantee.