Tag: Mehmet Simsek

Turkey wants to be in Arab trade bloc

Turkish Finance minister Mehmet Simsek delivers a speech during the Turkish Arab Economic Forum opening ceremony on April 4 2013.

DOHA: Turkey yesterday proposed to become part of a common market with the Arab world, as Qatar said there were more than 25 Turkish companies operating in its territory and the collective volume of their business had reached a staggering $20bn.

Speaking of the Arab world, Turkish Foreign Minister Ahmet Davutoglu told a key Turkish-Arab economic meet in Istanbul yesterday: “Today, we are rediscovering each other again”.

He said a common market comprising his country and the Arab world was the need of the hour. “We must remove all barriers that exit between our people and our countries,” said Davutoglu.

The Minister of State for Foreign Affairs, H E Dr Khalid Al Attiyah, represented Qatar at the Turkish-Arab Economic Summit. Addressing it, he said over 25 Turkish companies were based in Qatar and their total business volume had reached $20bn.

Al Attiyah said he was surprised that when Turkey was trying for membership of the European Union, some in the Arab world were critical and said the country was drifting away from the Arabs.

Now, when it is coming closer to the Arab world, it (Turkey) is being accused of trying to revive its Ottoman heritage, said Al Attiyah.

THE PENINSULA & AGENCIES

April 7, 2013
Turkish Minister Makes Economic Case for Peace With Kurds

By JOE PARKINSON

ISTANBUL—Turkey’s finance minister on Friday made the economic case for a rapprochement with Turkey’s Kurdish minority, saying it could free up billions in military spending and spur tax cuts for all Turks.

Mathias Depardon-The Wall Street Journal Türkiye

Finance Minister Mehmet Simsek said Turkey’s economy has started to pick up steam after a sharp slowdown in 2012.

Speaking with The Wall Street Journal in an interview conducted on social-networking site Twitter, Mehmet Simsek said that ending the three-decade conflict with the Kurdistan Workers’ Party, or PKK, would dramatically improve economic efficiency by closing loopholes in Turkey’s informal economy. It would also enrich Turkey’s middle classes, many of whom remain deeply skeptical about the monthslong peace process.

“Successful reconciliation means allocating $300 billion spent on fighting terrorism to education, infrastructure, R&D,” the minister tweeted in response to questions from Journal reporters, referring to one estimate of the total cost of the conflict to the economy. He said in a tweet that the reconciliation process would help efforts to fight money laundering and the shadow economy and may result in lower taxes.

Analysts said that the discussion of possible tax cuts signaled how Ankara was shifting its messaging on the dividends of peace to show wealthier Turkish voters they would also benefit significantly.

“This is the first time we get to hear about a reassessment of direct taxes. If there is a move to cut income taxes it would be a measure that would cater to the Turks,” said Sinan Ulgen, a former Turkish diplomat now at the Carnegie Endowment for International Peace.

“So far the government has been very hesitant in explaining what the economic impact of this settlement plan should be, but now they’re talking in more specific terms what that peace dividend would be and how that would improve economic conditions of Turks and Turkish businesses in particular,” he said.

Since the peace negotiations began at the turn of the year, Turkey has hoped a peace deal would alter the power dynamics in a region of the world being reshaped by uprisings and a reduced U.S. military presence, and further Ankara’s aspiration to be a model for nascent Muslim democracies emerging from the Arab Spring.

But the comments come as the jubilant mood which met Kurdish militants’ February call to lay down arms has in recent weeks been replaced by a more complex reality: an uncertainty over which party should take the next step in the peace process, and what that step should be.

The leadership of the militant Kurdistan Workers’ Party has demanded that Turkey’s parliament pass laws to ensure the safety of their fighters during withdrawal, and to avoid the recurrence of the bloodbath in 1999, when Turkish soldiers attacked PKK fighters as they emerged from hide-outs in Turkey to cross the Iraqi border after the capture of militant leader Abdullah Ocalan. Turkey’s Prime Minister Recep Tayyip Erdogan has thus far been reluctant to involve parliament in the process.

The finance minister, a former top banker at Merrill Lynch who returned to Turkey as a treasury minister in 2007, was born in Turkey’s predominantly Kurdish southeast and is well placed to understand how economic malaise has hampered the Kurdish regions over three decades of conflict and how economic potential could be unlocked by a settlement.

A 2009 per capita income survey estimated that annual income in the southeast is below $1,500—less than one-fifth of the $8,200 national figure. In the broader southeast, half the population live in poverty and 15% to 20% are unemployed, according to a report by the International Crisis Group. Young men are forced to go to western Turkey for seasonal jobs four to five months at a time, and Diyarbakir, the biggest city in the southeast, relies heavily on their remittances.

Businesses in the southeast—conscious of how a deal could offer a windfall in investment—have strongly backed the peace talks, but many Turkish businesses across other parts of the country have been more circumspect, after a series of previous bids have collapsed and sparked further violence.

Beyond the potential financial benefits of peace, Mr. Simsek stressed that Turkey’s economy in recent months has started to pick up steam after a sharp slowdown in growth in 2012 following two years of expansion which rivaled China. Turkey can expect a fourfold increase in privatization revenue 22 billion liras ($12.2 billion) this year after the payments for projects long slated for sale finally reach the exchequer, he said.

via Turkish Minister Makes Economic Case for Peace With Kurds – WSJ.com.

April 6, 2013
Turkey, Europe’s biggest in agriculture

Turkey, Europe’s biggest in agriculture

Turkish Finance Minister Mehmet Simsek said that Turkey ranked the first in Europe and seventh in the world in the aspect of agricultural growth.

Simsek said that total support reserved for agriculture was envisioned to be increased 17.8 percent from 11.1 billion Turkish lira to 13.1 billion TL in 2013. It had been only three billion TL in 2002, he added.

Agricultural gross domestic product, which had been 23.7 billion USD in 2002, increased to 61.8 billion USD in 2011, said Simsek.

March 18, 2013
Turkey enters new level and creates Turkeywood

Earlier this year, the Ministry of Economy of Turkey announced the economic areas that would be provided with government support. They include such industries as education, medical tourism, film and science. Turkey’s Economy Ministry announced that one of the priorities would be creation of an equivalent of Hollywood and Bollywood. The name of the new production company would be Turkeywood.

The government will provide financial support to studios producing Turkish films. In addition, the Turkish government promised to help those who represent the country’s film production at the international level. This initiative was discussed on numerous occasions, and in 2011 Economy Minister Zafer Caglayan met with representatives of the film industry of Turkey to speak about it.

According to the world’s analysts, the Turkish economy has reached a new level. This is evident from the country’s position in the world, growing volume of foreign investment, and reduction of unemployment. The dynamic private sector that recently received government support in the form of low interest rates and tax incentives for private entrepreneurs is also worth mentioning.
As noted by the current Minister of Economy Mehmet Simsek, a key element of the development of the Turkish economy is attracting foreign capital. According to him, last year, Turkey recorded the highest number of financial mergers that confirm financial inflows from abroad. The Minister believes it to be an indicator of a very effective year in terms of increasing amounts of foreign investment.

According to specialists of Ernst & Young, an international auditing and consultancy firm, in the past year alone there were over 180 mergers and acquisitions of local companies in Turkey, and over 130 of international ones. The total value of these companies, according to the Minister of the Economy, is approximately $23 billion dollars, but, according to experts from Ernst & Young, this number may exceed $30 billion, as many business owners refuse to disclose the cost of transactions.

For comparison, Mehmet Simsek cited data for 2009 and 2011. In 2009 the total value of transactions amounted to $3.9 billion, and in 2011 – $11 billion. The Minister argued that this sharp increase in foreign investment had a positive effect on the growth of the Turkish economy. Furthermore, many foreign investors are confident in the restoration of the Turkish economy after the financial crisis.

As noted by a corporate financial manager of the Turkish unit of Ernst & Young, the most attractive sectors for foreign entrepreneurs are considered to be light industry and energy.

One of the priority sectors that would be receiving government support, according to Minister Simsek, is medical tourism. Currently, some major countries are facing serious health challenges that would allow Turkey to provide substantial support to the economy through medical tourism.

Opportunities in the provision of health services were discussed in January of this year at the exhibition Istanbul Health Expo. According to the head of the Istanbul Medical Tourism Association, today many foreign nationals, for example, people from Russia or the United States, are dissatisfied with the quality of medical services at home and looking for suitable clinics abroad. At the moment Turkey is not as popular in this respect as other countries, and the government should change the situation as soon as possible.

In addition, it was stressed that Turkey should make an effort to announce the developments in the field of health care. Currently, this budget sector is estimated at $100 billion. This information was confirmed by a representative of an American medical consulting firm who noted that many U.S. citizens were dissatisfied with the quality of medical services and expertise of local doctors. Every year, over 1.5 million of U.S. citizens choose to be treated abroad and spend approximately $20 billion for services of foreign doctors each year.

Despite the improvement in the economic situation in the country, many analysts do not have an overly optimistic outlook, considering that the situation is still far from acceptable. According to the Minister of Economy Mehmet Simsek, Turkey’s GDP in 2012 was not high. In addition, in 2012 the budget of the country incurred costs in the amount of 360 million Turkish Liras, while revenues to the Treasury amounted to only 331 million.

However, analysts of the Ministry of the Economy noted that in the last months of 2012 there was a decline in inflation to five percent. According to the Minister of the Economy, this trend will continue in 2013. In addition, he noted that the government was making every effort to keep the inflation at that level.

Certain proposed laws will make the lives of ordinary citizens more difficult. For example, in January of 2013 the Turkish government approved a new tax rate on real estate purchases. If previously the tax rate was one percent of the purchase price, now it may reach 18 percent. The new law was met with criticism, but the government indicated that it would come into effect.

Analysts believe that the government is seriously engaged in supporting the economy. Only in 2013 over 1 million jobs will be created. As noted by Mehmet Simsek, the EU will create no more than 400,000 jobs this year.

In addition to film and medicine, the Turkish authorities turned to research activities. Last year, the Global Competitiveness Report for 2011-2012 ranked Turkey 59^th out of 142 countries. Interestingly, in terms of availability of engineering and scientific personnel the country is in 44^th place, while in terms of quality and effectiveness of research institutions it was ranked 89^th. This situation, according to the representatives of Turkey, deserves close attention of the government.

According to local media, the country has already implemented the “National Strategy for the development of science, technology and innovation for 2011-2016”, which provides for support to research organizations. In addition, the government plans to provide substantial support to the education sector. Currently, scientists working in Turkish universities represent the majority of Turkish scientists, over 65 percent. But, despite this, the country is experiencing an acute shortage of specialists in the field of computer science and mathematics.

Sergei Vasilenkov

Pravda.Ru

February 1, 2013
Turkey May Use 90% of State-Land Sale Proceeds in Rebuilding

Turkey May Use 90% of State-Land Sale Proceeds in Rebuilding

By Emre Peker

Turkey’s government will use as much as 90 percent of proceeds from state-land sales to rebuild disaster areas and reconstruct apartments to withstand earthquakes, Finance Minister Mehmet Simsek said.

Turkey may raise 14.8 billion liras ($8.3 billion) if all buyers pay the money upfront, qualifying for a 20 percent discount, Simsek said. The sale of former forest land will legalize buildings that were illegally constructed there.

via Turkey May Use 90% of State-Land Sale Proceeds in Rebuilding – Bloomberg.

May 11, 2012
Turkey Confident on Economy

By MARC CHAMPION

ISTANBUL—Turkey could get hit hard by the euro zone’s sovereign-debt troubles next year, but will bounce back strongly just as it did after the Lehman crisis, according to the country’s finance minister, Mehmet Simsek.

In an hourlong interview with The Wall Street Journal over the weekend, Mr. Simsek echoed a confidence among Turkish officials that led Europe Minister Egemen Bagis to say last week: “Look out Europe, Turkey is coming to the rescue!”

Turkey’s economy is forecast to grow between 7% and 8% this year, after a 9% expansion in 2010, with little sign yet of any rapid slowdown. While Turkey can’t decouple its economy from the European Union, its biggest export market and investor, fiscal headroom and strong fundamentals will allow it to respond, he said.

“Yes, through trade channels, through other channels our macroeconomic performance may come under pressure,” but Turkey won’t suffer any “permanent damage,” said Mr. Simsek. Fallout from Europe’s debt crisis for the world economy, including Turkey, could be “very significant,” he added.

He contrasted Turkey’s ability to make quick decisions as a single-party government that has its own currency with the euro zone’s need to reconcile 17 different governments, leaving them “behind the curve.”

He said he remains dedicated to Turkey joining the EU, despite its current woes. “Everywhere I go people ask me: ‘Why do you want to join the EU still?,’ ” but that loses sight of what Europe has achieved, he said. The euro, however, was different. “I think in retrospect that the U.K. was probably right” to stay out,” he said. “Unless there is near-perfect cohesion among such diverse nations, then I think it is like a straitjacket.”

During the Lehman crisis, Turkey’s central bank cut interest rates by 10 percentage points to stimulate lending, something euro-zone members couldn’t do. While the economy contracted 4.7% in 2009, it then roared back.

Mr. Simsek in many ways epitomizes a new, more prosperous Turkey that feels able to offer lessons on structural reform and fiscal prudence to richer neighbors in the EU. Turkey is negotiating to join the 27-nation economic and political union, but is being blocked by a number of countries, including France and Germany.

An ethnic Kurd and son of illiterate subsistence farmers, Mr. Simsek grew up in extreme poverty in the mainly Kurdish Batman region of eastern Turkey. At 44 years old, he is finance minister of an economy that has roughly tripled gross domestic product per capita since 2002 and is a member of the Group of 20 industrial and developing nations.

Mr. Simsek ticked off Turkey’s economic highlights: low public debt (42% in 2011, according to the International Monetary Fund estimates, compared to 120% in Italy and 99% in the U.S.); a budget deficit of 1%; a tightly regulated banking sector with average capital ratios above 16%, well above Western banks’; and falling unemployment.

The former Merrill Lynch banker said he recognizes that Turkey, a nation of some 75 million, still has large shortcomings, including in education, labor flexibility and a chronic dependency on energy imports. Nor has the government got everything right, he said. “We would accept that domestic demand has been a lot stronger than we have had ever anticipated,” Mr. Simsek said.

That in turn is boosting Turkey’s current-account deficit, as consumers devour imports and markets for Turkish exports in Europe and the Middle East shrink, leaving the country exposed to a potential funding crunch should external financing for the deficit suddenly pull out.

Economists argue, too, that the government and central bank have been too sanguine about inflation—which hit a year-on-year rate of 7.7% in September, smashing predictions—as they drive to maintain growth. Turkey’s central bank, which currently has a 5.5% inflation target, recently upped its 2011 year-end inflation forecast to 8.3% from 6.9%.

Mr. Simsek said the recent jump was partly due to tax increases. He predicted that headline inflation rates would soon fall and that a market perception that Turkey was running a relatively loose monetary policy was wrong. The central bank in October raised overnight borrowing rates and increased reserve ratios, but controversially, it has kept the bank’s policy rate at a record low of 5.75%.

The finance minister pulled out a presentation contrasting money creation by central banks in Turkey (which is trying to rein in demand), and in the U.S. and Europe (where they are trying to stimulate demand using large doses of quantitative easing). “These are uncharted territories globally…. This is risky stuff to do,” he said, pointing to the loose money policies elsewhere. “But we aren’t doing it.”

—Joe Parkinson contributed to this article.

Write to Marc Champion at marc.champion@wsj.com

via Turkey Confident on Economy – WSJ.com.

November 25, 2011