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Turkey’s Economy Minister Zafer Çağlayan cited what he called “a weak interest” in domestically produced goods as one of the reasons behind a high rate of imports, calling on Turkish manufacturers to make the best of government incentives to upgrade their production quality, at a press conference on Tuesday in İstanbul.
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Observers argued the minister’s remarks indicated that the government is now speeding up an earlier announced strategy to encourage domestic production in certain sectors that are highly dependant on foreign goods as part of efforts to tame a widening current account deficit (CAD).
The government last year announced a plan to offer incentives and subsidies to increase production capacity and competitive power in six sectors -- namely machinery, iron and steel, automotive, chemicals, textiles, and food and agriculture. Studies in this regard have been under way since June. The government says its market research showed these six sectors were responsible for the country’s widening CAD more than others and that it expects an effective operation here could cut Turkey’s imports by as much as $30 billion a year.
Çağlayan was discussing 2011’s foreign trade indices along with the government’s plans to boost local production efficiency in the face of Turkey’s growing foreign trade imbalance due to relatively higher imports. Turkey imported goods worth $240 billion, while the value of products the country sold overseas reached $135 billion last year, generating a $105 billion deficit in foreign trade. Recalling that the export figures for 2011 were a historic record for Turkey, the minister, however, had some reservations. “We are uncomfortable for what happened on the import side. … The government is carrying out studies to reverse the foreign trade imbalance,” he explained, referring to government efforts to subsidize domestic production. Market experts argued this strategy should not be taken as a direct maneuver to shift from Turkey’s traditional export-led growth model to a domestic production-oriented system or as a protectionist move so long as Turkey observes World Trade Organization (WTO) rules. The core issue here is that a boom in domestic production could only be led by the private sector. Çağlayan said there were 65,323 import companies in Turkey in 2011, adding that 40 percent of Turkey’s imports were made by 59 large-size firms alone. Only two of these firms were state-owned. “This group of 59 firms imported 53 percent more products last year than they did in 2010. The minister attributed Turkish industry’s increasing dependency on imports to fast growth in companies, which boosted the demand for foreign intermediate goods in new investments. “An uncontrolled expansion in businesses along with a domestic market-oriented growth strategy was behind the surge in imports last year,” he explained.
Lashing out at criticism that the government had underestimated the growth in imports, Çağlayan recalled efforts since the second half of last year to encourage local production. Çağlayan said the government has also identified the first 10 countries sending the highest amount of products to Turkey and that they worked to find ways to minimize the imbalance in trade with these markets. “Russia, Germany, China, the US, Italy, Iran, France, India, South Korea and Spain were the countries from which Turkey received 58 percent of its total imports in 2011,” he said. Turkey expects to maintain a balance in trade with these countries via such channels as free trade agreements (FTAs). The latest such FTA is expected to be inked with South Korea in the near future. Noting that the Economy Ministry had studied procurements made by local administrations, Çağlayan said the government placed emphasis on meeting public demand from local resources. The minister recalled that a recently announced government project to upgrade technology infrastructure in public education -- FATİH -- envisaged procuring locally produced tablet PCs and smart boards. “I personally find importing a product that is already manufactured in Turkey wrong. … The government aims to concentrate on domestic production of products with high added value and technology.” The minister stressed, however, that the government had no intention of telling citizens which product to consume nor was it trying to take protectionist measures to limit imports. “We are concerned with increasing our producers’ competitive power in global markets,” he said, adding that the government could offer producers in specific sectors exemptions from social security premiums and certain taxes to reduce production and employment costs in these fields. |
Source : todayszaman.com
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