More on Turkish reforms

Author: Emre Deliveli

Loyal readers would know that I love doing addenda to my Daily News columns, especially since I have to adhere to a strict character limits and usually have to leave out quite a bit of important stuff.

But this is probably the first time I am writing an addendum to two columns: Last week’s and the coming week’s, which will be published, as usual, on Monday. As I refer to the government’s reform agenda in both columns, I should summarize what the government has in mind.

My friend Ozlem Derici of Erste Securities was kind enough to send me quite a few links, all recent news about the government’s upcoming reform agenda- she is much more organized than I am, so I guess she was saving the links. I will summarize the government’s reform agenda by using the links she sent me. Unfortunately, all the links are in Turkish, but I am providing a brief summary on each “reform” for those who don’t speak (or at least read) Turkish.

So here are “rumors” of the government’s reform agenda, based on news of the last few months:

* Autos: The Automotive Industry Association (OSD, as it is known in Turkey) will present a report on domestic production to the government this month. The government will discuss support and subsidies with the sector after the report is submitted.

* Informal Sector: The economy team has prepared a 47-point action plant to combat the informal sector, which was discussed at the Economy Coordination Board meeting mid-August.

* Merging government expense monitoring: Similar to the recent merging in tax collection, monitoring of government spending is being merged under one roof as well.

* Encouraging domestic production: The government is considering using procurement to encourage domestic production, especially in pharmaceuticals as well as “intelligent boards” and tablets (the government is planning distributing tablets to all students). Science, Technology and Industry (he must be one busy fellow, right) Minister Nihat Ergun notes that the existing law allows the government to prefer domestically-produced goods even if they are 15 percent more expensive.

* Developing Industrial Zones: Free land is being handed out at Industrial Zones (OSBs in Turkish) with a law that was enacted just a few days ago. The only requirement is that the buyers should start production within three years and employ at least ten people.

* IDUS & GITES: OK, I need to explain these. The first is “strategy for export-oriented production” and the second is “input supply strategy”. I made the acronyms up for the first, but GITES is the official acronym for the second. I don’t know the details of IDUS, at least anything more than what the name implies:), but the second is supposed to identify and encourage inputs that Turkey has an “advantage” in. There is supposed to be a background study for the project by Harvard and MIT professors. I am planning to comment in detail on that after I get a hold of that report, but here are some links back from March, when the admiral disclosed the plan, if you are interested.

* Labor Reforms: According to the papers, the labor reform package will involve, among other things, regional minimum wages and temporary employment, both of which, are very good ideas, as I was arguing last week.

* Istanbul Finance Center: The government is planning a large Omnibus Law for October-November, which is supposed to take care of most of the remaining 62 items in the government’s Strategy and Action Plan, or SAP, to make a financial center out of Istanbul, which was introduced, with great fanfare, during the 2009 IMF-World Bank meetings. FYI, the SAP has 71 items, so only 9 have been completed so far! Anyway, I was recently commissioned to write a brief article about Istanbul’s financial center prospects, to appear in a book to be handed out at the G-20 meetings in Istanbul in November. Being a true patriotic Turk, I wanted to write about this Omnibus Law as well, but I could not learn anything at all. I am not sure if that was because government officials are very tight-lipped about it, or simply that there is nothing in it:)

On a general note, many economists are very skeptical of the reform agenda precisely for the very same reason: With so many items, we will either get the most ambitious agenda after Ataturk’s reforms in the 20s, or just an empty package, which will involve lots of talk, but no deeds…

via EconoMonitor : EconoMonitor » More on Turkish reforms.