Turkey is preparing to establish a “Silicon Valley” near Istanbul, according to Today’s Zaman. The valley will cover 1100 acres in Turkey’s most industrialized region between Kocaeli and Istanbul, said Minister of Industry and Trade Nihat Ergun.
When the Turkish equivalent of Silicon Valley is established, some of the 180 projects developed as part of state-sponsored technology initiatives are expected to completed and implemented there. One such initiative attracting much attention is a project that will enable consumers to purchase metro, bus, ferry and flight tickets directly from their cell phones. Ergun said most of the leading GSM companies are very interested in that project. bne.
The FINANCIAL — On November 6 thousands of fashionistas welcomed the opening of the first H&M store in Istanbul, Turkey. From now on the crowd of Istanbul can find a varied and extensive range of clothes and accessories. H&M has arrived with fashion and quality at the best price in a full concept store of 2,300 square metres on two floors. A second store will open in Istinye Park in December.
The grand opening of the first store began with a ribbon cut by CEO Karl-Johan Persson, Country Manager in Turkey Leif Spang and Store Manager Ahu Saner. “It is a great feeling that we are finally opening here in Turkey. Your country is a dynamic and exciting market for us and we see great potential for expansion. H&M looks forward to bringing style conscious shoppers in Istanbul the inspiration to make their own personal fashion statement”, says Karl-Johan Persson, CEO of H&M.
“The celebration of H&M coming to Turkey started already Thursday night with a great shopping party in the store. Mutlu Dinçkök, Ivana – Yurdal Sert, Deniz – Haluk Berdan, Eda Taşpınar – Bora Kozanoğlu, Bennu Gerede and her kids, Deniz Akkaya, Derin – Beliz Sarıyer, Nazlı Goldenberg, Süleyman Orakçıoğlu – Ahu Tanrıkulu, Ayşe Kucuroğlu, Kıvanç Kasabalı – Sedef Avcı, Naz Elmas, Atiye, Buse Terim, Ceylan Çapa – Gökhan Serter, Nazlı Mengi, Sina and Özge Özpirinçci were among the names attending the party together with more than 2,000 H&M lovers from the society life, fashion, art and business world of Istanbul. In addition to this, DJ Nazlı Var and Salih Saka set the inspirational atmosphere of the party,” H&M informed.
This first store of the awaited H&M brand is placed in the most central point of Forum Istanbul, one of the biggest malls in Istanbul. It carries everything from highest fashion to basics for women, men, teen and kids.
It’s all about personal style at H&M this autumn, with knitwear, tailoring, soft volume and playful accessories allowing individual choices to shine through. It’s the sharp cut of a blazer or some salt-and-pepper wool trousers that set the powerful new tone in fashion, which is then softened either by an angora cardigan, a lace top or the frills down the front of a blouse. For men, it’s all about updating and reworking the classics to present a whole new mood. The definite silhouette of a wool or coated-cotton coat make traditional pieces feel like new, as do the key components of tailoring: the suit, the blazer, the waistcoat and trousers.
Following the first store opening in Forum Istanbul, H&M will continue its expansion in Turkey. The second H&M store will open in İstinye Park in December. During spring 2011 H&M will open stores both in Sapphire Shopping Center and Forum Marmara Shopping Center.
As skyscrapers like the Burj Khalifa are built throughout the world to topple records and flex national and economic muscle, in the megacity of İstanbul such tall wonders are seen as necessities as its population and its finance sector grow to new heights.
The 181-meter-high İş Bankası building in İstanbul’s Levent district held the title of the tallest building in the 13-million-strong city until last year, when Sapphire of İstanbul, a 261-meter mammoth, also in Levent, clinched the title. In 2010, the $180 million 270-meter-high Diamond of İstanbul will be completed, narrowly taking the title of the tallest building in Turkey. All of these triumphant buildings, however, are tiny in comparison to the 828-meter Burj Khalifa in Dubai.
İstanbul continues to be the economic powerhouse of Turkey, populations looking for work are migrating to the city, making it difficult and expensive for developers to build horizontally and thus redirecting their view to the skies. Real Estate Investing Partners Association (GYODER) President Turgay Tanes, speaking to Today’s Zaman, stated that “an increasing population, a lack of land in cities and the high price of available land means that there is a vertical trend in building development.”
Tanes noted, however, that along with this trend in the vertical, there is also a trend toward sustainable and environmentally friendly buildings. Calling on architects, engineers and investors not to ignore the sustainability of such tall initiatives, he said Turkey is currently obtaining more knowledge about this vital issue. “Currently there are buildings that are green certified. Investors in the sector have mostly internalized the concept of sustainability for buildings,” said Tanes. He added that building vertically can have benefits in the field of environmental impact and sustainability, as demand for private transportation and the increasingly widespread nature of public transportation is making it a necessity to have more centralized buildings and workplaces.
According to research by the organizations behind the Leadership in Energy and Environmental Design (LEED) Green Building Rating System and the Building Research Establishment Environmental Assessment Method (BREEAM), environmentally friendly buildings can decrease the operating costs of a building by 8 to 10 percent, while also shrinking energy costs by 40 percent.
via Green Building&Energy in Turkey: İstanbul’s skyscraper race: a tale of necessities and sustainable heights.
Trading was mixed for the CEE region, as investors wait for the result of a two-day US Federal Reserve meeting tomorrow. Stocks on Moscow’s main index rallied despite an announcement from World Bank that it has cut its Russia growth forecast. Poland’s main WIG20 index rose to its highest point for nearly three weeks as higher-than-expected PMI data for October revealed output is growing at its fastest rate since 2004. In Istanbul, shares fell as BBVA bought a stake in one of the country’s largest banks.
Russia’s Micex index added 0.2 per cent to 1,537.27 as its commodity prices rose. KGHM, a copper and silver miner, jumped 2.6 per cent while petroleum company PKNO was up 2.2 per cent.
The World Bank cut its forecast for Russian economic growth in 2010 and cautioned that the amount of imports would continue rising, a factor that may continue to pressure the already weak ruble. Russia’s economic growth will be 4.2 per cent this year from a previous forecast of 4.5 per cent in June, the World Bank said in its latest Russia Economic Report.
Turkey’s ISE 100 shed 0.8 per cent to 552.12, as its financials lost out. Turkey’s treasury sold $5.1 billion of two-year benchmark and 10-year fixed-coupon bonds today, as yields rose from an auction last week.
The Spanish bank BBVA bought joint control of Turkish rival Garanti Bank in a $5.8bn deal.
Poland’s WIG20 was up 1.1 per cent to 2,679.22, its highest close for almost three weeks, as the country’s Purchasing Manager’s Index score for October rose to 55.6 points from 54.7 points in the previous month, its highest reading for six-and-half years.
The Czech Republic’s Prague exchange inclined 0.3 per cent to 1,160.80 while Romania’s Bucharest index shed 0.6 per cent to 5,233.26 with Banca Transilvania down 2.2 per cent.
Hungary’s benchmark index was flat as its PMI rose by 1.4 percentage points to 51.7 in October.
In currencies, at 16:45 BST, the Russian rouble was up 0.2 per cent against the dollar while the Turkish lira was up 1 per cent. The Hungarian forint was up 0.7 per cent while the Czech koruna was up 0.9 per cent. The Polish zloty gained 1.6 per cent.
One of the best ways to assess a government’s economic record is to give the most recent figures available. Numbers don’t lie, and for Turkey the markets are pointing to a robust economy.
Traders work at the Istanbul Stock Exchange building in this file photo. The ISE index has recently hit a record high of 70,000 points.
As of Friday, five-year credit default swaps, or CDSs, for Turkey’s sovereign debt were trading at a record low of 1.17 percentage points. The lower the CDS figure, the better for an economy, as it shows the level of investor confidence. And Friday’s figures were below those of nine EU member countries and Russia. Meanwhile, the benchmark bonds traded at an all-time low of 7.62 percent, showing that it is much easier for the Treasury to borrow, thus rolling over external and domestic debt.
There is more. As most of the world grapples with sovereign debt issues, Turkey’s ratio of public sector debt to gross domestic product is around 45 percent, and on the decline. External debt to GDP stands at around 60 percent, again low compared to many other economies. GDP growth is expected to near 8 percent this year, a figure that, as Timothy Ash of the Royal Bank of Scotland noted, outpaces the likes of Russia and Poland, probably reaching the highest rate of both real and nominal GDP growth in Europe this year.
The “only” problems seem to be unemployment hovering above 10 percent, an inflation rate that is still over 8 percent and a growing current account deficit that is poised to reach as high as 5 percent of GDP this year – a gap that increasingly needs “hot money” to close, thus becoming a potential source of economic instability.
Still, when one remembers that inflation hovered at nearly 100 percent while interest rates climbed up 4,000 percent during the 2001 economic crisis, it seems that what the Justice and Development Party, or AKP, has done since its resounding election win Nov. 3, 2002 is formidable. From there to here, through eight years of AKP rule, there is no doubt this government deserves credit – at least from the “markets” perspective.
Indeed, AKP has proved to be the most “market-friendly” government in modern Turkish history. Various incentives, including tax breaks, toward businesses, privatization of over $30 billion-worth in state assets, liberalization of regulations including labor laws and an uncompromising stance against labor unions – banning strikes, for example – have been only a few of the “economic principles” that have made the AKP a favorite not only among the business establishment in Turkey, but also abroad.
Insisting on valuable lira
“I’d give the AKP 7.5 points out of 10 in overall economy,” said Ertuğ Yaşar, an economy columnist, speaking to the Hürriyet Daily News & Economic Review. “In inflation, they deserve an 8 out of 10. In job creation, 4 out of 10. In increasing the competitiveness of Turkish industry, only 5.5. My score for Turkey’s integration into the global markets would be a 9 out of 10.”
Yaşar said he sees AKP rule as “the most successful period after 1950,” but objects to the government’s development model, which is “keeping the Turkish Lira valuable, thus encouraging foreign currencies to enter into Turkey.”
As of Friday, the U.S. dollar traded at below 1.4 liras, and exporters were increasingly feeling the pressure. “There is not a single country in the world that has prospered only by holding its currency valuable,” Yaşar said. “They either had their own resources, such as Russia or Saudi Arabia, or exported their way to prosperity. An overvalued lira means everything is done by imports.”
The economy columnist also noted that the AKP has not been successful in creating jobs: Before 2002, unemployment was down to about 8 percent, while today it is nearing 12 percent.
The picture painted by Simon Quijano-Evans, an emerging markets economist at CA Chevreux, is much brighter. Speaking to the Daily News, Quijano-Evans said the AKP has “strengthened the economy further, providing the tools with which to exit the global crisis as one of the strongest and fastest growing countries among peers.”
“Looking ahead, there are clearly numerous challenges, with a need to invest more in infrastructure, including railways, roads and alternative energy sources, as well as promoting the less-developed regions of the country,” he said. “Another challenge is dealing with an ever-growing young and dynamic population, especially as youth unemployment remains at high levels. But Turkey has beneficial situations such as a growing working age population, while others are struggling with an increasing pension burden, and an important geo-strategic position. These are enough arguments to boost foreign direct investment that will help overcome the challenges that lie ahead as Turkey and the EU move closer together.”
But there is another, darker side to the coin that argues that none of the “economic success” belongs to the AKP; it can only take credit for “not interrupting” the domestic austerity program put in place before the Nov. 3, 2002 elections and for being “lucky” enough to “be there” when all developing economies enjoyed a huge global liquidity wave – a wave that came crashing down with the near-collapse of the global financial system in 2008.
Indeed, this journalist has heard more than once from domestic economists and bankers – all speaking on condition of anonymity! – that the country’s economic success belongs to nobody but Kemal Derviş, Turkey’s former economy minister.
Derviş was brought to Turkey from the World Bank in the aftermath of the 2001 crisis, and the policies he adopted during the late Bülent Ecevit’s premiership were so painful that Ecevit’s party declined to 1.2 percent of all votes from 22 percent in Nov. 3, 2002. As the government toppled, Derviş’s job was also “finished.”
But in a twist of fate, the spoils of the vicious program he implemented were collected by the AKP, as they brought highly sought stability into the country’s battered finances. In a July 11, 2007 interview, this journalist asked the question to Derviş himself: “One perspective is that the Derviş program came to be the success of the AKP government. What do you think of this?”
The former minister said this was a “hard-to-answer” question. “Turkey made crucial decisions and these decisions opened up the way,” he only said.
Rampant poverty
The “other side of the coin” also involves the situation of Turkey’s laborers, the poor and the jobless, which took home barely a sliver of the robust economic growth under the AKP. “The hunger line is 799 liras in Turkey, but the minimum wage is 600 liras,” said Süleyman Çelebi, president of DİSK, one of Turkey’s three big labor confederations. “More than 12.4 million people live below the poverty line. Workers work over 13 hours per day.”
Çelebi told the Daily News that 83 percent of Turkey’s top 500 companies increased their profits during the global crisis. “Before the crisis, Turkey had 13 billionaires. Now there are 28,” he said. “The rich became richer, while the laborers paid the price.”
Though the right to unionize is embedded in the Constitution, a quarter of a million workers were laid off during the past eight years just because they wanted to organize, Çelebi claimed. “The AKP rule has been one that persecutes labor,” the union leader said. “The social security system has been changed for the worse. Flexible work was pushed. They still want a regional minimum wage, which would cut the minimum wage further. This government has always decided against the workers.”
“The AKP inherited a rehabilitated legacy [from the Derviş period,]” said economist Mustafa Sönmez. “Plus, they had the global conjecture. But the AKP rule has been against the interests of the lower and middle classes. As financial sector profits surged, small companies have been striving to remain afoot with small profits.”
According to Sönmez, the AKP government have favored foreign capital the most. “The ‘hot money’ transferred [back to its owners] the profits that came with high interest rates,” he told the Daily News. “Those who invest in Istanbul real estate profited. Those who bought Tüpraş – Turkey’s sole refiner – and Erdemir – the giant iron and steel producer – profited. The rest of society was affected negatively.”
Another criticism leveled against the AKP came from Ege Cansen, a Hürriyet columnist. In an article published Feb. 17 this year, Cansen named the AKP’s economic outlook as “Özalism without Özal,” after the late president Turgut Özal, known as a champion of liberalism and regarded as the “projection” of Thatcher and Reagan in Turkey.
“The preference to pull down the ratio of public debt to GDP results in a decrease in public investments and selling off existing ones,” Cansen said. “The idea that the private sector should also realize infrastructure investments is coming to the fore. The only way to solve this economic dilemma is ‘bringing in money from abroad.’ This is the essence of the economic perspective of the AKP.”
The lack of public infrastructure investments that Cansen pointed out could also be regarded as a reason why Turkey suffered so much during the recent global crisis. Indeed, even though Prime Minister Recep Tayyip Erdoğan said the crisis “barely affected” the Turkish economy, the nation suffered the highest rate of contraction last year, as gross domestic product shrank a whopping 14.7 percent in one quarter alone. It took a long time for Turkey to emerge from the crisis, but as union leader Çelebi and Sönmez point out, Turkey’s biggest companies and the finance sector doubled, even tripled their profits in that very same period. Thus, one can argue that especially in the past few years, AKP rule has meant a massive transfer of wealth from the lower classes to those at the top.
A precious item in the propaganda arsenal of the late Adnan Menderes, the Turkish premier who was sent to the gallows in 1961, was that he would “create a millionaire” on every street in Turkey. With the number of billionaires reaching 28 during the crisis period, the AKP can be regarded as being pretty close to that decades-old goal. The rest of the street does not seem to be a concern for anybody.
Nurdan Bozkurt from Istanbul contributed to this report.
Turkey’s prime minister Tayyip Erdogan said Friday that Turkey could be among the top ten economies in the world by 2023. Turkey would achieve this by investing in education and research and development. While no doubt these are good policies for increasing production Erdogan is being rather optimistic. According to rankings at this site Turkey is now 17th in the world. The site includes in the ranking the entire EU which is number one as well as individual countries in the union, otherwise the United States would be number one. Projections are made for several years into the future but from what I saw Turkey would remain at the same ranking. This is not because Turkey would not grow at a good pace but because other countries did as well. China would come much closer to the U.S. and India would increase its ranking.During a ceremony in Bogazici University in Istanbul Erdogan said:”We cannot achieve this goal by only monitoring or copying developments,” He also claimed that Turkey was in the third place among world economies in regard to growth, and the first in Europe.At present, the EU is the largest economy but the United States is largest for one country. After the U.S. come China, Japan, India, Germany, Russia, UK and France. At present Turkey is at 17 even behind Canada at 15th. It would seem Erdogan is being a bit optimistic about economic growth. But then what politician isn’t!
