YOUR COMPLIMENTARY COPY EXCLUSIVE INTERVIEW Ali Babacan, the Deputy Prime Minister of Turkey, assessed the decoupling of Turkey from the crisis in the EU and US for The Turkish Perspective

SEPTEMBER-OCTOBER 2011 ISSUE 6 ECONOMY BUSINESS FOREIGN TRADE ANALYSIS

FORREADY THE CHALLENGE While the US and Euro Zone struggle amid fi nancial turbulence and debt crisis, Turkey’s healthy g l o w c a r r i e s i t t o t h e p r e m i u m c l a s s of the emerging markets

BRIEFING International hotel chains look for more places in Turkish market SPECIAL REPORT Turkey is aiming to become a regional power in the manufacture of defensive products and technologies BRANDS Dreaming outside the box

The Turkish Perspective 01 Contents

05 FIRST 05 | Focus on Exports in Turkey’s Strategy 06 | Turkish Airlines Transports 12 PANORAMA Aid to Africa 07 | Fighting Hunger In Somalia NEW PRIORITIES IN A 08 | The “A” Team NEW ECONOMIC ERA 10 | Economic Coordination Turkey’s economy is entering a Council new era with the fairly signifi cant 11 | Growing More than Anyone advantages provided by the Else normalization and recovery it underwent over the past ten years

34 COVER READY FOR THE CHALLENGE While the US and eurozone struggle amid fi nancial turbulence and debt crises, Turkey’s healthy glow carries it to the premium class of the emerging 07 markets 14 BRIEFING 14 | WHEN THE PASSENGER IS BOSS... 25 | STEEL MANUFACTURING 14 Turkish Airlines earned the titles STRONG AS EVER 27 “Best Airline Europe,” “Best Airline Despite fears of a double-dip Southern Europe” and “Best Seats recession in the global economy, in Premium Economy Class” in the steel sector exhibited signifi cant Skytrax 2011 World Awards 27 | TURKEY FULL SPEED AHEAD 19 | BATTING WITH THE GLOBAL Maritime commerce is to be one GIANTS IN TOURISM of the greatest playing cards that On the rise with its growing Turkey, will have with regard to its economy, Turkey is a goals for the year 2023 mouthwatering prospect for 29 | ON THE INVESTMENT investors for its touristic potential OFFENSIVE 22 | CREATING WEALTH FROM THE A new but rapidly growing SOIL industry in Turkey is attracting 19 Turkey which ranks seventh among global interest while creating new the largest agricultural producers employment opportunities for the moves towards top fi ve young population 24 | SNIPS AND SNAILS: 31 | FOCUSING ON REGIONAL EXPORTING EXOTIC EDIBLES LEADERSHIP Entrepreneurs selling products not İnci Akü is building its vision typically consumed domestically entirely on being a leading player 29 02 Contents

40

MANAGEMENT PUBLISHER ON BEHALF OF TURKISH EXPORT- ERS ASSEMBLY/ PRESIDENT OF THE TURKISH EXPORTERS ASSEMBLY MEHMET BÜYÜKEKŞİ MANAGER IN CHARGE MUSTAFA MENTE PUBLICATION BOARD M. ILKER AYCI, BÜLENT AYMEN, İBRAHİM BURKAY, MUSTAFA ÇIKRIKÇIOĞLU PhD, ALİ NEDİM GÜRELİ, AHMET KELEŞ, 40 INDEPTH TEMEL KOTİL PhD, ŞAHİN OKTAY, 46| OVERCOMING A DEPENDENCY TAHSİN ÖZTİRYAKİ TO IMPORTED DEFENSE EQUIPMENT PUBLICATION MANAGEMENT Turkey is aiming to become PRESIDENT a regional power in the SERKAN ÜNAL manufacture of defensive GROUP COORDINATOR MEHMET MÜCAHİD DEMİR products and technologies COUPLING MEASURES DECOUPLING ECONOMY Deputy Prime Minister Ali Babacan evaluated the COORDINATOR | BAHA YILMAZ 50 STAMPING “MADE IN TURKEY” global turmoil arising from eurozone and the US World’s ready-to-wear clothing FINANCE COORDINATOR and told about how Turkey has been prepared for the SELİM KARA brands are produced inTurkey. challenges, for The Turkish Perspective EDITORIAL “Made in Turkey” badge EDITOR IN CHIEF constitutes a guarantee SERDAR TURAN EDITOR 54 BRANDS 52 CEYHAN AKSOY REPORTERS 54| DREAMING OUTSIDE THE BOX AYŞEGÜL SAKARYA, AYŞE M. KAMACI, A journey which began with F. EMRE YILMAZ, CİHAN DAĞ, GAMZE GÖREN, working in a TV channel turned NESRİN KOÇARSLAN, CAN GÜRSU, SİNAN KOPARAN, Dreambox into a prestigious MERVE KARA, TOLGAHAN ÖZKAN brand in the digital platform ENGLISH EDITOR 57 | DRAWING STRENGTH ALTAN ORHON FROM THE PAST DESIGN The diamond company Ariş GROUP DESIGN DIRECTOR Pırlanta is taking innovative N. EMRAH YÖRÜK steps to grow both in Turkey 46 DESIGN DIRECTOR ÖZKAN ORAL and in the world market 64 | A NEW HORIZON IN CULTURAL 68 AGENDA DEPUTY DESIGN DIRECTOR 59 | A TURKISH TOUCH IN THE TOURISM: THE ZEUGMA MUSEUM AHMET ÇELİK FAIRS, EXHIBITIONS, SUMMITS AND PHOTO EDITOR OFFICE With the Zeugma Museum, one of MEETINGS IN THE NEXT TWO MONTHS ŞEREF YILMAZ Having gained momentum the world’s largest mosaic museums, CONTRIBUTORS following industrialization in Gaziantep has opened its doors to 70 FIGURES CAN FUAT GÜRLESEL Turkey, the offi ce furniture sector millions of visitors. is expanding its share in the whole FOREIGN DIRECT INVESTMENTS IN PRINTING 66| A REAL ESTATE CONSULTING BİLNET MATBAACILIK BİLTUR BASIM YAYIN VE HİZMET A.Ş. and increasing its export fi gures THE FIRST HALF OF 2011 DUDULLU ORGANIZE SANAYİ BÖLGESİ 1.CADDE NO: 16, FIRM FAVORITE ESENKENT – ÜMRANİYE 34476 - İSTANBUL 62 | WELCOMING GUESTS Turkey’s allure for international TEL: (0216) 444 44 33 • www.bilnet.net.tr IN A MODERN-DAY PALACE real estate consulting fi rms is as Ela Quality Resort Hotel, captivating as ever which is considered one of the world’s top 99 hotels, presents CONTACT [email protected] historical tradition with www.infomagyayincilik.com modern day comforts Neither text nor photographs from this publication may be reproduced either in full or summary without acknowledging the source and without prior permission from the publisher.

SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 03 Editorial MEHMET BÜYÜKEKŞİ PRESIDENT (TIM)

toward exporters, facilitating a reduction in imports and an increase in exports. Turkey is now supporting exports and TURKEY: A STORY OF production more. Investments to be made to support the production of high value-added, cutting-edge products that DECOUPLING will be manufactured in Turkey for the As developed economies wrestle with serious debt fi rst time ever and investments that will problems, insuffi cient fi scal measures, and lack of produce critical raw materials will be growth, Turkey is heading toward a positive divergence incentivized specially with the “special investments incentives” arrangement with no discrimination between local HE GLOBAL ECONOMY IS trembling order to be affected less by the breeze of the and international investments. T in the face of the danger of a new crisis occurring in the rest of the world. Turkey is shifting its industries and ex- crisis. The effectiveness of the monetary Turkey’s exports grew 12% in 2010 to ports from low- and medium-technology and fi scal policies implemented after the reach 114 billion dollars. The rate of growth products to medium- and high-technol- 2008 crisis had been debated hotly at the in exports over the fi rst seven months of ogy sectors. time. Although economists who had com- 2011 exceeded 20%. We expect it to exceed These sectors are being incentiv- mented that the measures taken after the 135 billion dollars by the end of the year. ized actively and are supported via the crisis would be temporary were labeled as Following the measures taken by the incentive policies implemented by the being negative, the point we have reached Central Bank, in the case that develop- government. today proves how right they were. ments occurring in the currency exchange With the acceleration of this process, Unfortunately, the measures imple- rates remain permanent, they will refl ect Turkey will shift more toward value-add- mented were rather insuffi cient. Neither positively on Turkey’s exports while also ed production and exports, thus coming the USA’s nor the EU’s economy has grown balancing imports, thus providing an closer to the goals it set for 2023, which to desired levels. Signifi cant improvement opportunity to bring the current account are becoming the world’s tenth largest in employment rates has not occurred ei- defi cit problem under control. economy and realizing 500 billion dol- ther. Expectations are being concentrated The most recent results of the exporter lars’ worth of exports. in the direction of these two global poles tendency survey conducted by the Turk- Other than the economic agenda, in entering long-term stagnation. Likewise, ish Exporters Assembly on more than the political agenda we are following the the US Federal Reserve has announced 1,000 companies show that Turkish creation process of a new constitution. that it will keep interest rates at a low level exporters maintain their positive expec- Turkey, which is a source of inspiration until mid-2013, signifying the projected tations for the upcoming term. Accord- with the democratic culture it possesses, duration of this stagnation. ing to the results of the survey, 45% of now has before it the goal of creating a As developed economies wrestle with exporters expect their exports to increase new constitution. Having adopted for serious debt problems, insuffi cient fi scal in the third quarter of the year, while itself a vision of becoming the world’s measures, and lack of growth, we note 33% predict they will remain the same. tenth largest economy and a centrally that Turkey is heading toward a positive Turkey’s positive short-term appearance important country with regard to its divergence in this process. continues. Together with this, Turkey is goals for 2023, Turkey will reach the Turkey is not dealing with the prob- moving with a more mid- and long-term goals it has via the new steps it will take lems developed countries are facing and perspective in taking steps to accelerate in democracy and its brand new, con- struggling to solve. Turkey has no issue structural transformation in the economy. temporary constitution. with extreme debt, nor is it worried about Turkey is quickly escaping the status of a We, as TIM, have always emphasized speeding up a slowing economy. To the hot money paradise with the changes the that one of the most important priorities contrary, the Turkish economy entered Central Bank made to its policies. Because of Turkey, which is changing and moving a rapid process of recovery following the of this, currency exchange rates are reach- step by step toward becoming a global 2008 crisis. Growing 8.9% in 010, Turkey ing levels that are more competitive. country, is a new constitution. Therefore, achieved a record growth rate of 11% in the Competitive currency exchange we are ready to provide every kind of fi rst quarter of 2011. Now, Turkey is trying rates at levels that won’t constrict the support and advice required for this new to cool its economy with healthy steps in domestic market will direct industrialists constitutional process.

05 Content: Turkish Airlines Transports Aid To Africa P6 The Five Stars of Turkish Exports P6 Fighting Hunger In Somalia P7 Business Class Privilege At 12th Istanbul Biennial P7 Paper Industry To Create 35 Billion Euros in Value Added P7 Stronger in Africa P7 The New Cabinet P8 Editor: Ceyhan Aksoy

First PHILANTHROPHY, EXPORTS, TENDENCY SURVEY, GOVERNMENT, TOURISM, AVIATION...

TIM became the fi rst delegation Prime Minister Recep Tayyip Erdoğan accepted after the formation of the FOCUS ON EXPORTS IN new government TURKEY’S STRATEGY The primary outcomes of the 2023 Export Strategy that TIM began in all sectors are in the new government’s program

OLLOWING THE new government. TIM Turkey’s economy. outcomes of the 2023 domestic market in its F elections on June President Mehmet Emphasizing the sig- Export Strategy that meeting with Prime 12, Prime Minister Büyükekşi, who wished nifi cance of the newly TIM began in all sec- Minister Erdoğan, the Recep Tayyip Erdoğan success to the Prime established ministries tors in our new govern- TIM delegation also attended the Turkish Minister and the new and the Undersecre- ment’s program with discussed such matters Exporters Assembly government, pre- tariat for Foreign Trade pleasure.” as the ratifi cation of the (TIM) General Council sided over the visiting joining the Ministry of Highlighting the Eximbank Law and the meeting. TIM later delegation. The visit Economy in his speech, importance of a bank’s being moved to became the fi rst delega- was highly important Büyükekşi said, “We competitive currency Istanbul, having ex- tion he accepted after not only for TIM, but embrace the inclu- exchange rate that porters take advantage the formation of the also for the future of sion of the primary would not constrict the of the sources created 06 First

in the export of food which will encompass PHILANTHROPHY to Libya, and bringing the 2012-2014 period, fl exibility to employ- the economic admin- ment. Also discussed istration’s priorities are was the provision of listed as below: Turkish Airlines “special investment • Fiscal discipline will incentives” to investors be upheld and bolstered Transports for high value-added, in the upcoming term cutting-edge techno- • Action plans con- logical products that cerning the improve- Aid to Africa will be produced in ment of the investing Turkey for the fi rst environment will time ever as part of the continue being applied Input Supply Strategy • Employment- (GITES), which is be- increasing policies will ing coordinated by the be continued Ministry of Economy • The struggle with the aim of sup- against the shadow porting exports at the economy will continue manufacturing stage. and the privatization Büyükekşi expressed program will be applied the importance of decisively these matters with the • Work on the following: “We fi nd it Export-Oriented Man- extremely important in ufacturing Strategy, terms of the develop- Input Supply Strategy, ment of our country’s and Export Markets long-term competitive Diversifi cation Strategy URKISH AIRLINES is con- be distributed to people in the power for Turkey to will be completed T tinuing to take important Somalian capital, Mogadishu, move toward 2023 • Efforts for Istanbul steps as part of its commitment bringing smiles to the faces with a vision.” to become an interna- to social responsibility. On Mon- of 1,500 families. Among the A short while after tional fi nancial center day August 8 and Thursday Au- 115 tons of aid were baby food, this speech, it became will be expedited gust 11, the company transported powdered milk, baby crackers, understood once more • Steps geared toward close to 115 tons of Turkish Red chickpeas, lentils, rice, dried that Turkey is moving reducing foreign Crescent, Presidency of Religious beans, sugar, oil and salt as well with a vision toward dependencies in energy Affairs, and Turkish Cooperation as toys sent by concerned Turkish 2023 and has made will continue and Development Agency (TİKA) children for their counterparts in this issue a priority. The • Programs directed aid materials to the needy in Somalia. The company continues decisions taken by the toward developing Somalia on three Turkish Cargo to support efforts to bring aid to economic administra- R&D and innovation planes. Sent with Turkish Airlines the needy in Somalia via Turkish tion assembled under will be applied actively. support, these aid packages will Airlines and Turkish Cargo. the leadership of Prime Minister Erdoğan constitute the building blocks of the export- THE FIVE STARS OF TURKISH EXPORTS focused competitive Automotive led the pack of sectors making the most exports in the January–July 2011 period. It is followed economy. Considering by ready-to-wear clothing and textiles, chemical materials, steel, and electrical/electronic goods. the strong political Million Dollars 2010 2011 stability and strong 14,000 macroeconomic funda- 12,000 mentals it is based on, 10,000 developments occur- 8,000 ring in global econo- 6,000 mies are not expected to have lasting negative 4,000 effects on the country, 2,000 but Turkey remains 0 cautious. Detailed in AUTOMOTIVE READY-TO-WEAR CHEMICAL STEEL ELECTRICAL/ INDUSTRY CLOTHING AND TEXTILES MATERIALS ELECTRONIC GOODS the Medium Term Plan, Data: Turkish Exporters Assembly

SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 07

AVIATION SOCIAL RESPONSIBILITY AVIATION Fighting Hunger In Somalia TIM, which has pioneered several aid campaigns for disaster victims in various parts of the world, has made a call to battle hunger in Somalia STRONGER IN AFRICA BUSINESS The existing Free Sale CLASS Codeshare agree- PRIVILEGE AT ment between Turkish Airlines and Ethiopian 12TH ISTANBUL Airlines (ET) has been BIENNIAL expanded to allow ac- cess to eight points in Africa beyond Ethiopia. Ironically titled ‘Unti- Under the agreement, tled’, the 12th Istanbul tickets bearing the Biennial, which has TK fl ight code can been bringing leading now be sold to eight fgures in contemporary destinations in Africa to art to Turkey since which Turkish Airlines 1987, is taking place currently does not fl y this year at the Antrepo but have been added September 17 to No- through the agreement vember 13. But that’s via Addis Ababa, the HE ECONOMIC diffi culties campaigns it launched, and now, not all. Not content Ethiopian capital. T wreaking havoc on the en- it has begun an aid campaign with mere Transporta- tire world are not always limited to help hunger-ridden Somalia tion Sponsorship of the to fi nancial crises. In recent in kind and in cash. Explaining event, Turkish Airlines, FORESTRY PRODUCTS months, the US and Europe how the campaign emerged, TIM a major contributor have been trying to cope with President Mehmet Büyükekşi to sports and the arts, 35 BILLION fi nancial issues, but elsewhere in said, “Today, millions of people is giving its Business the world, there are people who in Africa, mostly children and Class passengers eager EUROS IN experience economic diffi culties especially in Somalia, are wrestling to witness the latest in on a gut level. The continent of with hunger caused by drought. contemporary art at VALUE ADDED Africa is again in global head- In these days in which we share the biennial — which BY 2023 lines with the hunger problem it the fecundity of the month of features fi ve joint was once closely associated with. Ramadan, we organized an aid exhibitions and 45 In Turkey, whose net The United Nations warned of campaign jointly with the Red solo presentations — a waste paper usage rate a “hunger epidemic” in Somalia, Crescent for Somalia.” TIM led the chance to visit the An- is 71.1%, the net rate of while in August, news emerged campaign, to which over 50,000 trepo free of charge. waste paper recycling is that 300,000 children came exporters were invited to join, with 41.8%. While amount of face to face with death due to a 500,000 TL contribution. This exported waste paper was starvation. invitation is not, of course, for ex- 73,500 tons in 2010, from Non-governmental organiza- porters alone: anyone who pleases January to February 2011 tions and professional associations can participate via SMS. Each alone, it totaled 27,200 in Turkey are, of course, well aware message sent from any operator tons. Erdal Sükan, Presi- of this situation. The Turkish to 2868 and containing the body dent of the Pulp and Paper Exporters Assembly had provided text “TIM” will provide 5 liras in Industry Foundation says great support to disaster victims support to the region, meeting the they will create an added of the tsunami in South Asia and dietary needs of one person for value of 35 billion euros. the fl ood in Pakistan with the one day. PHOTOGRAPH BY EPA (BOTTOM) BY EPA PHOTOGRAPH 08 First

GOVERNMENT Prime Minister RECEP TAYYİP ERDOĞAN THE “A” TEAM Erdoğan served as Prime Minister in the After the general elections held 59th and 60th Governments. In the 61st on June 12, Prime Minister Government, he began his third term of post as Prime Minister. Recep Tayyip Erdoğan formed the new cabinet that will carry Turkey to a higher league

Deputy Prime Minister ALİ BABACAN Deputy Prime Minister Deputy Prime Minister Deputy Prime Minister Babacan served as a State Minister in the 58th and BEKİR BOZDAĞ BÜLENT ARINÇ BEŞİR ATALAY 59th Governments. He was Bozdağ is named Deputy Arınç served as State Minister Atalay, who was a State named Chief Negotiator in the Prime Minister in the 61st and Deputy Prime Minister in Minister in the 58th and 59th negotiations conducted with Government. the 60th Government. He is Governments, was brought the European Union. In the named Deputy Prime Minister to the position of Minister of 60th Government, he served in the 61st Government. Internal Affairs in the 60th as Minister of Foreign Affairs. Government. In the 61st With the changes made to the Government, he is named government, he was brought to Deputy Prime Minister. the posts of State Minister and Deputy Prime Minister. In the 61st Government, he is named Deputy Prime Minister.

Minister of Family and Social Policies FATMA ŞAHİN Fatma Şahin was named Minister of Family and Social Policies in the 61st Government.

Minister of Justice Minister of Labor and Social SADULLAH ERGİN Security Ergin, who was the Minister FARUK ÇELİK of Justice in the 60th Çelik was named Minister Governments, continues of Labor and Social Security his duties in the 61st in the 60th Government. government. Minister of Science, Industry, and Minister of EU Aff airs With the changes made to Technology EGEMEN BAĞIŞ government, he undertook NİHAT ERGÜN State Minister and the role of State Minister. Ergün undertook the role of Chief Negotiator in In the 61st Government, Minister of Industry and the 60th Government, he returned to the post Commerce in the 60th Government. Egemen Bağış is named of Minister of Labor and In the 61st Government, he is Minister of European Social Security. named Minister of Science, Industry, Union Affairs in the 61st and Technology. Government.

SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 09

Minister of the Environment and Minister of Foreign Aff airs Minister of Economy Minister of Energy and Natural Urban Planning AHMET DAVUTOĞLU MEHMET ZAFER ÇAĞLAYAN Resources ERDOĞAN BAYRAKTAR Davutoğlu was named Minister Çağlayan served as Minister of TANER YILDIZ Bayraktar was previously of Foreign Affairs in the 60th Industry and Commerce in the Yıldız served as Minister of the President of the Public Government. He continues his 60th Government. With the Energy and Natural Resources Housing Administration duties in the 61st Government. changes made to government, in the 60th Government, a (TOKİ). In the 61st he was brought to the post role he continues in the 61st Government, he is serving as of State Minister. In the 61st Government. Minister of the Environment Government, he undertook the and Urban Planning. role of Minister of Economy.

Minister of Food, Agriculture, and Animal Husbandry MEHMET MEHDİ EKER Minister of Internal Aff airs Minister of Customs and Commerce Eker served as the Minister of İDRİS NAİM ŞAHİN Minister of Youth and Sports Agriculture and Village Affairs in HAYATİ YAZICI the 59th and 60th Governments. İdris Naim Şahin is named SUAT KILIÇ Yazıcı was a State Minister Minister of Internal Affairs in In the 61st Government, he is and Deputy Prime Minister in Kılıç is named Minister of the 61st Government. Youth and Sports in the 61st assigned the post of Minister of the 60th Government. In the Government. Food, Agriculture, and Animal 61st Government, he has been Husbandry. assigned the role of Minister of Customs and Trade.

Minister of Education Minister of Development Minister of Culture and Tourism ÖMER DİNÇER CEVDET YILMAZ ERTUĞRUL GÜNAY Minister of Finance Dinçer served as Minister of Cevdet Yılmaz served as a MEHMET ŞİMŞEK Labor and Social Security in Günay served as Minister of the 60th Government. He is State Minister in the 60th Culture and Tourism in the Şimşek, who was the Minister Government. In the 61st named Minister of Education 60th Government. In the 61st of Finance in the previous in the 61st Government. Government, he is named Government, he continues his government, continues his Minister of Development. role as Minister of Culture and duties in the 61st government. Tourism.

Minister of Transportation Minister of National Defense Minister of Forestry and Waterworks Minister of Health BİNALİ YILDIRIM İSMET YILMAZ VEYSEL EROĞLU Yıldırım, who was the İsmet Yılmaz is serving as Eroğlu served as Minister of the RECEP AKDAĞ Minister of Transportation Minister of National Defense Environment and Forestry in Akdağ, who was the Minister in the 58th, 59th, and 60th in the 61st Government. the 60th Government. In the of Health in the 58th, 59th, Governments, continues 61st Government, he is brought and 60th Governments, his duties in the 61st to the position of Minister of continues his duties in the 61st government. Forestry and Waterworks. government. 10 First

GOVERNMENT ECONOMIC COORDINATION COUNCIL The administration of Turkish economy is in the hands of the Economic Coordination Council, which is comprised of ministers who have signifi cant experiences in their fi eld COUNCIL MEMBERS

ZAFER ÇAĞLAYAN CEVDET YILMAZ Minister of Economy Minister of Development

MEHMET ŞİMŞEK NİHAT ERGÜN Minister of Finance Minister of Science, Industry and Technology

COUNCIL CHAIRMAN HAYATİ YAZICI FARUK ÇELİK ALI BABACAN Minister of Customs and Minister of Labor and Trade Social Security Deputy Prime Minister

HE ECONOMIC COORDINATION the private sector, and non-governmental and updating economic policies in such T Council (EKK) was formed to organizations to its meetings when areas as money, credit, fi nance, treasury, reduce the effects of the economic crisis necessary. Furthermore, the council also debt, and income, as well as plans and that emerged in 2009 and to facilitate has the authority to demand all kinds of programs. The council, which also carries coordination in the management of information and documents on the state out the task of following developments in the economy. The council is led by the of the economy from public institu- the global and national economy, evaluat- Deputy Prime Minister responsible for tions and foundations. The EKK, whose ing them, and conducting research when the economy. Its meetings are attended by primary mission is to follow and evaluate necessary, also assesses income-reducing ministers involved with the economy, as developments concerning economic or spending-increasing suggestions selected by the Prime Minister. The EKK stability, is also responsible for facilitat- and carries out effect analyses on those can invite participants from universities, ing coordination in developing, applying, deemed suitable.

SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 11

EXPORTER TENDENCY SURVEY • While 66.1% of raw the second quarter materials used by at rates of 35.5% and exporters in the second 30% respectively. It is GROWING MORE THAN quarter came from stated that in the third local sources, the rate quarter, these percent- of companies that ages will be 30% and ANYONE ELSE increased their electri- 27.5% domestically. According to the results of the tendency survey conducted cal consumption was • Exporters expect by TIM in Q2 2011, exporters’ expectations for the future 53.5%. the dollar and euro’s are quite positive. According to the results of the poll, • The top fi ve countries rates against the lira exporters will invest and support employment in Q3 as exporters plan to enter to fall to 1.66 and 2.34 they did in Q2. Those believing the economy will turn in the third quarter respectively by the end negative by the end of the year are only 13% were listed in order as of the year, for which Russia, Iran, the USA, they also expect growth Iraq, and Germany. of 9.13%. • Demand for external • Around 43% of com- TIM President continued to grow at SOME RESULTS FROM fi nancing increased by panies believe indus- Mehmet Büyükekşi high rates—namely THE POLL 7% between the fi rst trial prices will rise, and says, “In spite of the 40% to Germany, • For the third quarter, and second quarters around 48.4% believe negativities occurring 33% to the UK, 46% 43.8% of exporters to reach 39%. Private agricultural goods in the EU, our exports to Italy, and 53% to believe production banks were preferred prices will do so too. to the area in the fi rst Spain—over the fi rst 17 will grow and 45.4% most often. • Among the primary 17 days of August days of August. Stating believe exports will • Approximately 40% issues being faced by increased by 40%. We that the general exports grow. of companies state they exporters are energy will realize the general planned for 2012 will will request fi nancing costs, intermediary exports we planned be realized by the end in the third quarter of material and raw for 2012 in 2011.” of this year according the year. material prices, and Noting that the poll to these indicators, • An approximately tax costs. These have was conducted before Büyükekşi reminds 50% increase in com- come close to rivaling the occurrence of the that they planned the panies’ needs for skilled the biggest issue of all, negative developments 2023 exports target employees like master which is the currency in the EU and the according to a annual workmen and techni- exchange rate. reduction of the increase of 12% and Turkish cians was observed in • Only 6.8% of export- USA’s credit score, in four-year segments, exporters believe companies’ staffi ng ing companies are Büyükekşi says these adding, “We are that the economy requirements. publicly traded, and developments will growing more than will improve in • Exporters invested just 12.8% plan to issue not change the results anyone; this is a great the next quarter in modernization and IPOs within the next drastically. Exports opportunity.” of 2011 capacity increases in three years.

AVIATION

URKISH AIRLINES IS T continuing to strengthen CRISS-CROSSING its fl ight network. As part of this effort, the city of Dammam in THE WORLD Saudi Arabia become even closer to Istanbul when thrice-weekly WITH OUR fl ights are launched on December 17. Following its regular fl ights to Rome, Milan,Venice, Bolo- ROUTES gna, Genoa and Naples, Turkish New routes and fl ights Airlines has also started fl ying to strengthen Turkish Airlines’ a seventh city in Italy, Turin. The fl ight network fl ights,which got under way on August 2, are run on Tuesdays, Fridays, and Saturdays. 12 Panorama Panorama CAN FUAT GÜRLESEL NEW PRIORITIES IN A NEW ECONOMIC ERA Turkey’s economy is entering a new era with the fairly signifi cant advantages provided by the normalization and recovery it underwent over the past ten years

HE TURKISH ECONOMY HAS largely completed the new policies were put to practice in the past ten years were stage of recovery and normalization it entered with the public fi nancial discipline, the targeting of infl ation, and the reform process that began in 2001. Now, it is entering strengthening of the banking sector. Progress achieved in these a new era. Policy priorities and axes of development three sectors contributed greatly to Turkey’s exiting the global Twill differ in this new era as compared to the past. With the three- economic crisis with minimal harm. year medium-term program the government is preparing for, it Turkey’s economy is entering this new era with the fairly sig- will present its new goals and policy priorities soon. nifi cant advantages provided by the normalization and recovery The priorities of the ten-year policies applied following it underwent over the past ten years. Due to the economic harm the economic crisis of 2001 can be listed as price stability, the caused by the global crisis to developed and developing countries, establishment of public fi nancial discipline and making public its comparative position and the relative advantages it possesses debt manageable, the strengthening of the banking and fi nance are becoming more and more important for Turkey. system, and increasing effectiveness in the goods and services In this regard, the advantages that the Turkish economy has markets. The most radical policy changes occurring in this can be listed in three main groups. The fi rst is the strong indica- period were the declaration of the Central Bank’s independence, tors of public fi nance and the fi nancial system; the second is the the targeting of infl ation, and the initiation of a free currency rapidly developing domestic market; and the third is the presence exchange rate policy. The three most successful areas in which of an expansive industrial production base. All three advantages ILLUSTRATION BY SEDAT GİRGİN BY SEDAT ILLUSTRATION

SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 13

are in areas that received damage and became fragile during the of solving these structural problems, and there will be accordingly global crisis particularly in developed countries; it is in these three signifi cant changes in the policies that will be put to practice. areas that Turkey has come to possess relative superiority. The most important policy change in the new era will be in In light of its public budget and public debt indicators, Turkey monetary policy, which tops the list of priorities. The Central is among the most fi nancially credible countries in the world. The Bank is moving from targeting infl ation to targeting monetary fi scal discipline practices that secure this credibility will continue issues to ensure stability in prices. As lower interest rates are to be the most important policy tool in the new era as well. being targeted in parallel to this, a Turkish lira subject to higher The banking sector in Turkey is also relatively superior in terms currency exchange rates or losing in value is also on the horizon. of capital adequacy, profi tability, and the manageability of the The bank will continue reductions as it follows global conditions risks it faces. The active controlling and supervision strengthening in which interest rates have become imbalanced, and it will allow the banking sector will be continued in the new era too. the Turkish lira to lose value only up to the threshold of infl ation. The second signifi cant advantage Turkey takes with it to the Policies that will be applied in the new era to solve structural new era is its dynamic and rapidly growing domestic market, problems will be founded on a new monetary policy based on low which attracts asymmetrical interest to Turkey at a time when interest and high currency exchange rates. domestic demand and consumption in most developed countries Measures geared toward fi xing the structural problems in the have nearly come to a standstill. This economy will include shifting the manufac- asymmetrical interest is namely the interest turing base in industry toward areas with that enriches Turkey’s domestic market as higher added value and advanced technology, other countries’ domestic markets slow down. establishing production of capital goods and A healthy and sustainable buildup is intermediary goods not currently produced forming beneath the strong domestic market in Turkey, and boosting the competency of dynamics in Turkey. Turkey has entered a traditional industry sectors once more. period of opportunity in which its ratio of In relation to these goals, important people of working age to the total population improvements will be brought to R&D is at its highest. This demographic structure incentives and investment incentives will leads to signifi cant domestic demand. As be restructured to support diversity in areas urbanization in Turkey rapidly carries on, the crucial to the sectors. Alluring incentives with momentum of urban transformation is added A healthy and broader scope will be provided for investments to this too. The middle class is both expanding sustainable in mid- to high-tech industry sectors, while and increasing its purchasing power as a result improvements to the investing environment of the economic recovery and development buildup is forming will be expedited to draw foreign capital over the past ten years and the proliferation beneath the strong investments. of economic activities in Anatolian cities. The Another priority in the economy middle class has relatively low rates of debt and domestic market will be bringing fl exibility to the labor its access to fi nancial resources is increasing dynamics in market, thus reducing labor costs for quickly, while per-household consumption is the traditional sectors and accelerating also on the rise. Turkey growth in employment. Measures relating The third advantage the Turkish to improving the labor market will be economy has is its industrial structure announced together with the employment and manufacturing tradition, though it has faced increasing strategy document by fall at the latest. competitive pressure lately and is defi cient in many ways. The new monetary policy of the new era has been practiced However, the inclination to withdraw from heavy industry that for approximately the last two months. Lower interest rates and is present in many developed countries is not found in Turkey, higher currency exchange rates will fi nd their new balance in although Turkish industry has its own competitive problems. the fall after global uncertainties and risk-related fl uctuations As the Turkish economy enters a new era with these are resolved. New policies concerning structural priorities in advantages, it also has a number of signifi cant structural the economy, on the other hand, will be announced with the problems darkened additionally by the recurrence of worries medium-term program encompassing the 2012–2014 period. of stagnation coming with the global crisis. Among these The new program will likely be announced to the public in problems are the high current account defi cit, external October together with the budget plan for 2012. dependency in energy, the low-technology manufacturing In this new era, Turkey will manage to minimize the effects of practiced by industry, low domestic thriftiness, and the rigid both global fl uctuations and stagnation while maintaining stabil- structure of the labor market. ity in prices and fi nancial stability with the policies it prioritizes The economy’s priorities and axes of development in the new for solving its structural problems, moving on to a path of sustain- era are being formulated using existing advantages with the aim able growth. 14 The Turkish Perspective Content: Rediscovering the Hidden Wealth P17 Batting with the Global Giants in Tourism P19 Snips and Snails: Exporting Exotic Edibles P24 Steel Manufacturing Strong As Ever P25 Turkey Full Speed Ahead P27 On the Investment Offensive P29 Focusing on Regional Leadership P31 Fashion in September Is Something Else P32 Editor: Ceyhan Aksoy

Briefi ng AVIATION, AUTOMOTIVE, MARITIME, SERVICES, HAUTE COUTURE...

“The awards we receive show that we are on the right path,” AVIATION says Temel Kotil WHEN THE PASSENGER IS BOSS... Turkish Airlines CEO Temel Kotil told The Turkish Perspective about the company’s road to success, which has earned it the titles “Best Airline Europe,” “Best Seats in Premium Economy Class,” and “Best Airline Southern Europe” in Skytrax 2011 awards

BY CAN GÜRSU

HE MANCHESTER especially… One of Turkey’s who has a sizable fan base in a virtual Turkish Airlines T United - FC Barcelona biggest companies, Turkish Turkey—made some penalty tour de force. And noth- match played in the US on Airlines, was a sponsor of shots together with Turkish ing could have been more July 30 was a focus of inter- both teams, and Kobe Bry- journalists at half-time. In natural. Flying passengers est for soccer fans around ant—one of the company’s other words, more than a from all over the world the world, Turkish viewers trademark personalities tournament match, this was to their destinations with

SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 15

maximum comfort and con- Establishing its brand million passengers of differ- ing of 2009. We held on to venience, Turkish Airlines awareness with customers ent nationalities from 100 that title in 2010 and were was recently voted the best through the high-quality countries makes them espe- also deemed worthy of the airline in Europe, best airline services it offers, Turkish Air- cially important for Turkish award for third best airline in Southern Europe and lines has also captured global Airlines. We are a company in Europe. best premium economy class brand awareness through the engaged in the transportation We offer our passengers airline by Skytrax, one of many sponsorship and co- of passengers by air. Serving Turkish hospitality and the most respected research operation agreements it has passengers lies at the heart Turkey’s rich cuisine with and consulting fi rms in the signed with the likes of NBA of it. The passenger is our the catering on our planes. aviation fi eld. Given that star Kobe Bryant in basket- boss in that sense. And our We were also deemed worthy the votes of passengers are ball, Manchester United and boss’s demands, expectations, of a Skytrax award for our the main factor in Skytrax’s FC Barcelona in soccer, and satisfaction, and complaints meals, which are prepared by scoring system, this title is at others in fi elds from art and shape us. We strive to provide Turkish Do&Co, a part- the same time a key indica- culture to tennis. In other the best possible service to our nership between Turkish tor of customer satisfaction. words, for Turkish Airlines, passengers. The awards we re- Airlines and catering com- Known as the aviation Os- which is producing services ceive show that we are on the pany Do&Co. We were voted cars, the Skytrax 2011 World and earning awareness at the right path and motivate us. “Best in the World” for the Aviation Awards found their global level, the goal of being Turkish Airlines was also catering service we offered in recipients in a ranking real- best in the world could be named Best Airline Southern economyy class in 20102010.. And ized with the participation closer than you think. Turk- Europe in the Skytrax rank- in 2011, wewe earneearnedd thethe rankrank of 18.8 million passengers from 100 countries. Turkish Airlines’ success, acknowl- edged by some 20 million passengers, was not limited to a single area either. In ad- dition to earning the award for best airline in Europe, the airline was deemed worthy of other awards as well, among them three world seconds, including “Best Airline Ca- tering” in Business, Premium Economy, and Economy Class. Having already gar- nered the awards for “Best Airline in Southern Europe” and “Best Catering Service in Economy Class” in previous ish Airlines CEO Temel Kotil “It is very important of second in the world in years, Turkish Airlines’ target told The Turkish Perspective that our passengers three classes, Business Class, now is to be among the best about the airline’s rise and do not get bored while Comfort Class, and Economy in the world. its goals. they are in the air, Class. Expanding its fl eet and continuing to restructure Was the road to winning especially on long What were the decisive in line with global needs, Skytrax long and dif- fl ights” factors in your winning Turkish Airlines has further fi cult? Could you tell us the award in your view? strengthened its bid by briefl y? We put the customer at the developing a quality and We were deemed worthy of center of the business. We effective fl ight alternative the awards for “Best Airline assessed passenger demands, through the brand new, long- in Europe,”“Best Premium satisfaction, and complaints, haul aircraft it has added to Economy Class Seats” (for and we shaped all our activi- its fl eet. Making good use at our Comfort Class seats), and ties around that framework. the same time of Istanbul’s “Best Airline Southern Eu- That is the basis of the position as a natural hub, rope” by Skytrax, a fi rm that business. Turkish Airlines offers attrac- inspects and ranks airlines. tive deals for a broad user The fact that our worthi- How did you succeed in profi le through the connec- ness of the Skytrax awards satisfying customers of so tions and fl ight alternatives it was determined following many different profi les? provides. a ten-month survey of 18.8 There are some things that PHOTOGRAPH BY AAPHOTOGRAPH (LEFT) 16 Briefi ng

are the common expecta- Expanding its fl eet ish Airlines, and our prod- to 17 locations in Africa. tion of everyone—man and and continuing to ucts and services through We are going to start fl ying woman, young and old, and restructure in line our sponsorships. The two in Africa with the new Boeing Eastern and Western alike— with global needs, football clubs we sponsor, 737-900(ER) planes to be de- without distinction. We tried Turkish Airlines has FC Barcelona and Man- livered in the coming months. to meet those common expec- chester United, played in Despite being narrow-body tations in aviation as well. further strengthened the Champions League aircraft, they can fl y long-haul It is very important that its bid fi nal. You couldn’t plan it in thanks to fuel tank reinforce- our passengers do not get advance even if you tried, but ment. This will contribute bored while they are in the air, it happened. Barcelona won importantly to lowering fuel especially on long fl ights. For that match, and Manchester costs as well. The cabins on this we offer our passengers United won the US Tour tour- our 737-900(ER) planes have fl ying in all classes without up to now motivate us along nament match on July 30. also been specially designed. exception an individual the path to that goal. But But there was another winner We offer our passengers the monitor and a digital fi lm that’s not our only goal. as well: Turkish Airlines. Fans best service with wide seat and music archive in our new of those teams in different pitch and a next-generation cabins. Our award-winning What sort of return will countries have begun to in-fl ight entertainment catering is another cause for there be on the awards? choose us. We can monitor system. satisfaction. We have met People will want to fl y on an that from the passenger num- Human and commercial our passengers’ expectations airline that’s been voted “Best bers. Barcelona and Manches- relations between Turkey and by offering them a choice of in Europe” in a survey of ter United fans know that the Africa have increased im- white or red meat as well as 18.8 million people. When it teams they support choose mensely in recent years. Here vegetarian dishes. comes to catering, passengers Turkish Airlines. So they want at Turkish Airlines, we too are also going to take into to enjoy the same privilege are in a position to boost our Are you aiming to achieve account that we came in sec- and experience when they fl y investment in Africa follow- another fi rst by becom- ond in three classes, namely too. I believe that they also ing analyses of profi tability ing a fi ve-star airline or is Economy, Comfort, and Busi- feel more sympathy towards and passenger capacity in the hanging on to the awards ness. We are expecting those us because we support their region. you’ve already earned awards to contribute to sales. teams. your top priority? What are Turkish Air- Holding on to to our awards Did the advertising agree- Is Turkish Airlines aiming lines’ primary goals from is not among our goals. Pre- ments Turkish Airlines to expand its activity in here on out? serving the status quo would has signed with the world Africa through its new There is no doubt that being only take us backward. Our giants also have a hand in aircraft purchases? Turkey’s fl ag carrier and hav- goal is to be a fi ve-star airline. the awards? Africa is an important region ing the name Turkish Airlines The awards we have received We promote Turkey, Turk- for us. At the moment we fl y gives us certain advantages in the market. In that context, our goal is to raise our posi- tion from fourth to third in the European market as soon as possible and to become one of the world’s ten largest airlines by increasing our global market share to 2.5%. In terms of service quality, our target is to become a fi ve-star airline.

In addition to earning the award for best airline in Europe, Turkish Airlines was deemed worthy of other awards as well, among them three second place awards for “Best Airline Catering” in the Business, Premium Economy, and Economy Class PHOTOGRAPH BY AAPHOTOGRAPH SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 17

Africa, one of the globe’s new investment destinations, maintains its status of being an important market for Turkey

systems belonging to a petro- leum facility in Egypt. Oral Avcı points out that Piomak— which also conducts remote observation and maintenance of the facility in Uganda—has built many water purifi cation, potable water pumping, and wastewater purifi cation plants as well, including the con- struction work. He adds, “As the existing projects continue, new ones begin too.” Africa, one of the globe’s new investment destina- tions, maintains its status of being an important market for Turkey. According to data AFRICA from the Turkish Export- ers Assembly, exports to the continent in February 2011 increased by 24.19% over Rediscovering February 2010, totaling 10.164 billion dollars. The approximately 24% increase THE HIDDEN WEALTH in exports to North Africa shows that Turkish producers The overlooked continent turned into a land of opportunity for a continue to have an interest time, but this didn’t last very long. How are Turkish companies in the region in spite of the maintaining their investments here? chaotic atmosphere in Egypt, Libya, and Tunisia. “European fi rms’ high engineering and labor costs present signifi cant BY MERVE KARA advantages to us in terms of competitive ability,” says Avcı, IOMAK, an engineer- there. “The events occurring adding, “At the same time, we P ing and infrastructure in Somalia proved once again can offer the procurement of company from Turkey, just how valuable water is goods and equipment from was founded 20 years ago for the country,” says Piomak our country at much more to design automation and Board Chairman Oral Avcı. reasonable prices than many machinery systems for The company, which ranks of our rivals.” industrial facilities. Being in in the top fi ve in the fi eld of For Turkish companies, a country—and region—with automation on the continent, the increase in the region’s water problems, the company has taken its fi rst steps in the consumption potential is as specialized in the water and region with projects aiming much a draw as infrastruc- wastewater fi eld in recent to fi nd a solution for Africa’s tural investments are. In years. The improving busi- water issues. Among the recent months, Arçelik, one ness environment and the projects Piomak signed on of Europe’s largest produc- acceleration of infrastructural for are the electromechanical South Africa’s gross ers of household appliances, investments in Africa, a place infrastructure of a wastewater domestic product is bought the South African very familiar with drought, purifi cation plant in Uganda, estimated to rise 3.8% fi rm Defy, a local producer provided enough reason Sudan’s fi rst water automa- in 2011 and 4.1% in and a leading player in its for the company to expand tion system, and automation 2013 fi eld in Africa, and made a 18 Briefi ng

speedy entry into the market. “The events economic unpredictability occurring in This move once again drew Somalia proved coming from debt-ridden attention to the opportuni- once again just Europe and America, the how valuable ties in the region. Arçelik has water is for the chief sources of fi nancing country,” says established 11 production Piomak Chairman in Africa, are being felt in facilities in Romania, China, Oral Avcı the African market too. “As and Russia in addition to [companies] experience Turkey. In 2010, it earned 6.9 diffi culties fi nancing projects, billion Turkish Liras in sales. they can leave even water- Its expansion to Africa via related projects of vital im- South Africa is regarded as portance halfway through,” an additional cornerstone in says Oral Avcı. However, its growth strategy. Accord- this situation does not itself ing to analysts at research place a barrier before Turkish fi rm Frost & Sullivan, besides companies doing business. offering a diverse array of “We direct our investments products and services, Arçelik ing short-term debt market, Angola and Mozambique to Gulf Cooperation Council will increase its competitive the free trade agreements it offer signifi cant opportunities member countries where ability to expand to South signed, and the physical and in the region, too. Angola is hot money is circulated Africa and East Africa with telecommunication infra- growing with its mineral re- more, particularly Qatar,” he the momentum Defy’s distri- structure it laid, will become sources and the entry of direct says, adding that efforts by bution channels will provide. an alluring market for direct foreign investment capital, countries in the council to The purchase has attracted investors. Meanwhile, accord- while the rise in its household transform the income they attention not only to Arçelik’s ing to sector analyst Craig income is increasing demand receive from underground growth gambit, but also to Parker, personal consump- in general. Therefore, the resources into investments South Africa’s status as a tion expenses are expected to region harbors important and development are ongo- gateway for companies wish- grow by around 4.6% in 2011. opportunities for interna- ing and continually renewed. ing to expand to the conti- Frost & Sullivan also forecasts tional companies wishing to In the near future, Piomak nent. Frost & Sullivan analyst that South Africa’s gross use South African companies will be transferring its Afri- Jiaqi Sun indicates that domestic product fi gures will or South Africa as bases for can crews to the company it South Africa, having recently rise 3.8% in 2011 and 4.1% in expansion. established in Qatar. Even if entered the ranks of the BRIC 2013, predicting that the next Despite all the opportuni- conditions in Africa take a countries (Brazil, Russia, three years will pass by quite ties Africa offers, however, turn for the worse, business India, and China) thanks smoothly. some caution is advisable— and investments will carry on to its continually develop- Besides South Africa, the reverberations of the as usual.

GROWING OPPORTUNITY IN AFRICA’S MIDDLE CLASS With the need for fundamental necessities and growing middle class, investing in Africa provides a win-win situation for both investors and the African population

• African middle classes are dominated by the “fl oating class,” implying the constant risk of being plunged back into poverty POPULATION (MILLION) • Changing purchasing behavior: a pref- 380 erence for rice and wheat, the need for 320 housing and education, public or private 280 healthcare, and Internet access, to Per Day 240 name a few $2 < $ < $4 200 • Rural urban migration will drive domestic demand for household % of Middle Class in Africa 180 appliances Less than 25 % 120 Upper Middle Class ($10-$20) 80 20 % - 50% Lower Middle Class ($4-$10) 51 % - 75% 40 Floating Class ($2-$4)

Greater than 75% 0 Source: Frost & Sullivan - African 1980 1990 2000 2010 2020 Development Bank 2011 PHOFOGRAPH BY ŞEREF YILMAZ ŞEREF BY PHOFOGRAPH SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 19

There will be 28 international hotel chains in Istanbul alone by 2013

was built along the Mediter- ranean coastline—in Antalya most of all—and work on the required infrastructure was sped up. The ‘90s were still, however, an infertile time in terms of tourism invest- ments. From the 2000s onward, discussions began in the sector on what could be done to break free from the traditional touristic trio of sun, sea, and sand, and Turkey’s touristic model thus began to change. A picture of a Turkey integrated with its region and the world, effective in international decision-making processes, TOURISM and united with the world economy started appear- ing. This brought with it a great increase in the number BATTING WITH THE GLOBAL of visitors coming to the country and the hotels that would welcome them. Hav- GIANTS IN TOURISM ing begun in the ‘80s and matured in the 2000s, this On the rise with its growing economy, diversifying tourism, process allowed Turkey to and international culture, art, and sports events, Turkey is a rise to bat among the world’s mouthwatering prospect for investors for its touristic potential giants in tourism and earn a fair amount of money. Turkey, which “stretches BY CİHAN DAĞ from Asia to the Mediterra- nean like the head of a mare,” E PRESENT A some- investing in the country will becomes much clearer. Our in the words of famed Turk- W what radical pro- increase, and the number of proposal is backed up by ish poet Nazım Hikmet, had posal for those who seek to international meetings held the number of conferences a late start in tourism, but determine a country’s level there will increase in direct held in Turkey, increasing managed to catch up very of development solely using proportion to the strength of investments in hotels, and quickly. While the average economic indicators: con- its decision-making machin- the number of people visiting number of tourists coming to sider the number of hotels, ery. As a country gains more the country. Turkey in the mid-‘80s was 2 particularly city hotels, found recognition worldwide, its million annually, this fi gure in that country. The presence cultural and historic accu- IN THE TOURISM TOP TEN hit 5 million in the ‘90s and of city hotels indicates not mulation becomes the focus Although it is located at the 11 million in the early 2000s. only the touristic poten- of travelers, meaning the center at one of the world’s According to data provided tial in that country and its addition of more new hotels. touristic hotspots, until the by the Ministry of Tourism cities, but also its commer- If the country in question 1980s, the number of hotels and Culture, the number cial, fi nancial, and cultural is Turkey, which has shaped and beds in Turkey was of tourists visiting Turkey potential. As the country world history and is located extremely limited. Later, a annually reached 28.6 mil- becomes more integrated at the center of the planet’s different strategy was fol- lion in 2010, allowing the with the world, the number most fantastic geographical lowed under Prime Minister country to enter the ranks of of foreign parties trading and basin, then this potential Turgut Özal; hotel after hotel the top ten in this category 20 Briefi ng

worldwide. A similar trend with many countries; and international hotel chains can be observed in tourism the increase in international operating in Turkey, and it is revenues. Income from tour- cultural, artistic, and sports said that many luxury hotel ism, which was 11.9 billion events held in Istanbul. It is chains including Mandarin, dollars in 2002, exceeded mainly for these reasons that Jumeirah, Shangri-La, Wyn- 21 billion dollars in 2010 in international chain hotels are dh, and Raffl es are planning spite of the global fi nancial turning toward Turkey and investments too. According crisis. According to the Istanbul in particular. to a study conducted by the Ministry’s data, in the second Until 20 years ago, the Touristic Hotels and Inves- half of the ‘80s, Turkey had only international hotel chain tors Association of Turkey, an average bed capacity of in Turkey was the Hilton. there will be 28 international around 100,000. In 2010, Unlike then, Turkey is now hotel chains in Istanbul this fi gure was approximately a country to which interna- alone by 2013, resulting 650,000. tional chains are fl ocking in an increased capacity of According to Information en masse. According to data 15,000 beds spread between from the International Con- from the Directorate of Cul- 71 hotels. gress and Convention As- ture and Tourism of Istanbul Multinational chain hotels sociation, Istanbul, in which Province, there are of 100 haven’t just accelerated their just 23 congress were held in ongoing hotel investments in Investments in Istanbul, 1999, hosted 80 in 2009 and Istanbul alone. Investments but also those in other cities 109 in 2010. Istanbul thus in the 14 largest fi ve-starred like Ankara, İzmir, Bursa, leapt ten steps at once in hotels total 1.7 billion dollars. Gaziantep, Denizli, and world rankings, rising from There are currently over 20 Adana. Not to be upstaged by 17th place to seventh. In the foreign competition, local terms of attendance, Istanbul investors have sped up their welcomed 10,000 delegates VISITING TURKEY investments too: the likes of in 1999 compared to 46,000 There has been a signifi cant rise in the number of people visiting Turkey Dedeman, Rixos, and Limak in 2010. since 2000 have begun efforts to expand on a national and regional INVESTORS HAVE THEIR EYES ON Number of Foreign Visitors (Million) basis. Rixos, which has a TURKEY 25 total of 14 facilities located in Turkey has come a long way 20 Turkey and abroad and a bed since it initiated its tourism capacity of nearly 12,000, has gambit in the 1980s. The 15 decided to expand especially emergence of its potential in Turkey, the Middle East, refl ects on investments by 10 and the Southeast Mediterra- both local and foreign par- 5 nean. The Dedeman Group, ties. A number of factors 2000 2002 2004 2006 2008 2010 on the other hand, as one of infl uence Turkey’s preferred Anatolia’s best-established status, namely the increase and oldest chains, appears to in direct fl ights and destina- have set its eyes on countries tions thanks to local and TOURISM INCOME, 2000–2010 in the region. The Limak foreign airlines, Turkish With increasing domestic and foreign investments in tourism industry in Hotel Group, which grew Airlines most of all; the Turkey, total tourism income has increased 13.2% in the last ten years 35% over the past fi ve years, increase in cooperation and is in search of hotels abroad joint ventures between large 25 Tourism Income (billion $) as well. The road Turkey will corporations due to the follow in tourism is made 22 21,2 20,8 country being a center of at- 20 even clearer by the fact that traction for foreign investors; 18,2 19,5 the likes of such groups as 15,9 16,0 the increase in the number 15 Akfen, Doğuş, Sönmez, Koç, of international congresses 11,0 13,2 Kibar, and Bayraktar have and conventions being held 10 10,1 decided to invest in the hotel in Istanbul; the rise in the 7,6 fi eld. number of tourists due to 5 So which regions and cities such reasons as increasing stand out investmentwise? Is- integration with countries in 0 tanbul is the foremost choice the region, the popularity of 2000 2002 2004 2006 2008 2010 for investors. While the Bos- Turkish television series, and phorus and Pera regions stand the bilateral lifting of visas apart from the rest, the vicin-

SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 21

Bodrum’s in Our Sights Competition Means Quality Brand Value Is Increasing Hilton Speeds Up Investments LEVENT GÜRÇAY CAN GÖKTAŞ ÖMÜR YEKER MICHAEL COLLINI

Director of Marketing, Four Seasons Turkey and Bulgaria Regional Sales Executive Assistant Manager, Grand Vice President, Hilton Worldwide Director, Kempinski Hyatt Istanbul “Istanbul, which is at the very We believe that Turkey, as a east of the West and the very “There was a very clear increase “2010 was a year in which market with a key role among west of the East, promises great in the demand for Istanbul in positive results were achieved developing markets, offers potential in tourism… There 2010. There are many reasons in terms of the tourism sector. exciting opportunities in very is continually rising interest for this. The direct fl ights We observe increases in all diverse market segments from the Middle East. There is begun by many domestic segments in 2011 too. We expect ranging from the most also an increase in the number and foreign airlines, Turkish an increase particularly in the luxurious extreme of the sector of tourists coming from the Airlines most of all; the increase demand for meeting groups, to quality accommodation South America market. People in international congresses conferences, and larger events. in the economy segment. In come not just to see historic and meetings being held in I think this trend will continue spite of this, there are very few places but also to enjoy the the city; Istanbul’s central between 2012 and 2014. international brands that can city. They want to discover the position gaining great value Istanbul’s brand value is meet the demands of travelers fi elds of culture, art, design, economically; and the increase increasing. We expect new in Turkey’s regional centers and and gastronomy and become in social, cultural, and artistic investments with the occupancy resort towns. familiar with local values. And activities are a few of these… We rates in the city and the rise in Our growth strategy in investors have taken note of this expect demand to be high in the average price of the rooms Turkey is to develop hotel rising interest. 2011 too. However, other cities sold. For the Anatolian side, I projects in all the country’s In particular, the Bosphorus in the world that experienced think investments will increase important cities, regional area is Istanbul’s most valuable, such a rapid increase in demand particularly in the Ümraniye centers, and holiday resorts beautiful, and attention- must be taken as an example, region where business centers from the top down. While drawing location… In the and in order to ensure lasting are concentrated, as well as the continuing to value large cities coming future, I believe that improvement, quality must not regions stretching out to Gebze, like Istanbul in this context, we the areas of Harbiye and be compromised. İzmit, and Kocaeli. Investments also see signifi cant potential Nişantaşı can develop too. The We expect new players to in the Sabiha Gökçen Airport for our brand in regional Four Seasons has positioned come to the sector and support area have reached a certain level centers that have key roles. itself in the sector well. We are this, because as competition of saturation. With the identity There are 13 hotels that we are selective in investments and our increases, so does quality. change under way in the city, currently developing in Turkey. strategic plans do not include The city becomes seen and new areas like Moda , Nişantaşı, We predict that the number much expansion. We invest recognized more often in the Pera, Kasımpaşa, and Dolapdere of hotels we operate will be only in places we believe will be international arena. The vicinity are opening up for investment. approximately two times the successful. Although it is not of Ataturk Airport, the Levent- The fear of “how could you put a current fi gure within the next yet certain, the new destination Maslak area developing with hotel here” is being left behind. two years. In 2011, we plan to being considered is Bodrum.” a focus on business travel, and I also observe that there will be open 11 hotels, a record fi gure Pendik are Istanbul’s rising an increase in investments in the in our company’s history in YEAR ENTERING THE TURKISH MARKET areas. We are involved especially İkitelli, Yenibosna, and Basın Turkey. 1996 with city hotels. We have Ekspres areas.” Ankara and İzmir in our sights.” YEAR ENTERING THE TURKISH MARKET 1955 NUMBER OF HOTELS AND LOCATIONS IN YEAR ENTERING THE TURKISH MARKET 1993 TURKEY 2 (Istanbul) YEAR ENTERING THE TURKISH MARKET 1990 NUMBER OF HOTELS AND LOCATIONS IN NUMBER OF HOTELS AND LOCATIONS IN TURKEY 17 ROOM CAPACITY 235 NUMBER OF HOTELS AND LOCATIONS IN TURKEY 2 (Istanbul) AVERAGE OCCUPANCY RATE 2010 TURKEY 3 NUMBER OF HOTELS RUN BY HILTON TOTAL ROOM CAPACITY WORLDWIDE 11 80% - FOUR SEASONS HOTEL BOSPHORUS ROOM CAPACITY 708 360 - GRAND HYATT ISTANBUL 75% - FOUR SEASONS SULTANAHMET 90 - PARK HYATT ISTANBUL – MAÇKA PALAS AVERAGE OCCUPANCY RATE 2010 70% ity of Atatürk Airport, the Anatolia are also being sped Nikki Beach and luxury resort ment in Turkey, and it seems business travel oriented area up. Investments in cities with brand Viceroy are focusing on that interest in the country from Levent to Maslak, and populations of over 500,000, Bodrum. The Four Seasons will continue to rise with its Pendik are quickly gaining fa- Ankara and İzmir most of all, is also considering Bodrum, growing economy, rapidly vor. The districts of Nişantaşı, are noteworthy. Bodrum is though they have not yet continuing integration into Moda, and Üsküdar are also also on the chains’ radars; it is committed to an investment. the world, and the attention it attracting much attention. being said that The Address is Local and international has attracted for the interna- Although Istanbul is the most seeking a location in Bodrum hotel chains have developed tional cultural, arts, and sports popular city, investments in and that US-based beach club an exciting appetite for invest- events held in it. 22 Briefi ng

AGRICULTURE Creating Wealth From the Soil Turkey which ranks seventh among the largest agricultural producers moves towards top fi ve

BY CEYHAN AKSOY

CCORDING to the year with fi xed prices in the With comprehensive OECD’s fi gures, support giv- A OECD’s report titled fi rst three months of the year, efforts and en to farmers in Turkey was “Evaluation of Agricultural the agricultural GDP rose by concentrated support 35% of total farm income in Policy Reforms in Turkey,” 4.1%, and in terms of current from farmers, 2007–2009, higher than the which was released this prices, the increase in agri- agricultural exports OECD average of 22%. year on April 29, Turkey is culture was around 16.1%. The export of tobacco the world’s seventh larg- Indicating that Turkey’s now exceed 62 billion and tobacco products rose est agricultural producer. sound agricultural policy dollars alongside that of agricultural It is a top producer and will not be content to stay at goods in July. Increasing by exporter of crops ranging seventh place, Mehdi Eker, 33.8% over the same month from hazelnuts and chest- Turkey’s Minister of Agricul- last year, tobacco and tobacco nuts to apricots, cherries, ture, says the goal is to have products accounted for 57.5 fi gs, olives, tobacco, and Turkey enter the ranks of the million dollars in exports. tea. The agriculture sector, world’s top fi ve countries in which occupies an impor- the fi eld. The aim is to raise tant position in exports and Turkey’s gross agricultural domestic employment for sales to 150 billion dollars USING THE POTENTIAL the above reasons, continues in 2023. In light of the Between 2002 and 2011, the agricultural output has increased by four to to contribute positively to momentum achieved, this fi ve times in volume the economy in 2011 too. can be said to be a realistic Million Dollars According to the export target. Turkey’s agricultural 17 fi gures announced in July sales totaled 23 billion dol- 14 by the Turkish Exporters lars eight years ago. With 11 Assembly, the export of agri- comprehensive efforts and 9 cultural goods increased by concentrated support from 6 24.4% over last July, totaling farmers, exports now exceed 3 approximately 1,365 million 62 billion dollars. This year, 0 2002 2003 2004 2005 2006 2007 20082009 2010 2011 dollars. Despite the gross farmers were given 6.5 billion First 7 Months domestic product growing liras as support in the form Data: Turkish Exporters’ Assembly by 11% over the previous of cash. According to the

THE REAL SOURCE OF FOOD Analysis and statistics show that Turkey is one of the main suppliers of agricultural products especially fresh vegetables and fruit 6.6 7.4 4.5 3.2 30,000 Turkey’s share in Turkey’s Turkey’s share in Turkey’s share in hectars of greenhouse total global tomato share in total total global water total global onion makes Turkey Europe’s production global paprika melon production production second largest production greenhouse owner

SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 23 36.5 INCREASE IN ORNAMENTAL PLANTS EXPORTS IN JANUARY- JULY 2011 28.7 INCREASE IN CEREALS PU EXPORTS IN JANUARY- MLN) LSES, LEG JULY 2011 NTS ( UMES L PLA , OIL NTA -BE ME ARI NA NG R SE O ED 2 S ,018 ,982,4 9 3 S 6 E 4 IV T F A 2,3 R V 09 16 E I ,9 ,8 1 S R 5 7 , H E 3 0 3 P D 8 3 R & O O 5 0 D 1 U C , , C ,8 3 2 6 C A 51 2 1 E 3 6. 8. 7 B 4 3 3 73 3 O , ,2 T 7 2 8 9 0

0 3 2 .6 .3 0 3 8

6

1

4

8

5 .

4 6

4

.

2 8

1

4

F

1

0 R - 0

0

U

,

6

0

6

I ,

2

6

T

1

1 0

6 . . 7

8

4 ,

7 & 2

3

2

2

1

V 1

L

1

I

0 E

,

O

G G

8

E E E E E E 7

T V

I

A

0

L

5 B

1

4 O

9

L

8

7

E

& , 6 9 ,

1

6

P

9

5 S

6

R

E

O V

I

U

6 L

C

O

6

T

S

9

6

,

1 0

1 , 3

8 3

5 8

D

R

I

E

D S

E

F

V R

I

U

T

I

A

T

V

I

&

R

D

E

E

D

R

&

I

V

S A

T T U I V N E S

MILLION8.1 DOLLARS WALNUT EXPORTS IN THOUSAND93 TONS JULY 2011 OF HAZELNUTS WERE EXPORTED IN JANUARY-MAY 2011 EXPORTS IN JANUARY-JULY 2011 EXPORTS IN JANUARY-JULY 2010 CHANGE (%) 24 Briefi ng

AQUATIC & ANIMAL PRODUCTS Kızıltan, Chairman of the Aquatic and Animal Products Snips and Snails: Sector Board in the Turkish Exporters Assembly (TIM), says, “When we set an exports target of 1 billion dollars EXPORTING EXOTIC EDIBLES by the end of the year 2010 Entrepreneurs selling products not typically consumed five years ago, many people saw it as being impossible to domestically, in international markets are contributing to achieve. In spite of the global exports crisis, we managed to exceed the 1 billion dollar export target two months behind BY AYŞEGÜL SAKARYA BY ŞEREF YILMAZ schedule. As of July 31, our yearly exports have reached Group Sagun is one of the 1.241 billion dollars.” important exporters of frogs The export of aquatic and sea snails. The company products alone has increased exports 180 to 250 tons of sixfold over the past ten years, frogs and 300 to 400 tons of reaching a volume of 352 sea snails on average yearly. million dollars in 2010. “In “We plan to raise our export the first six months of 2011, of frogs to France, Italy, our exports reached 219.991 Switzerland, Greece, Leba- million dollars. Considering non, and Belgium by 80% in this figure was 173 million 2011. And for sea snails, we dollars in the first six months wish to raise them by 50%,” of last year, a growth of says Group Sagun Board around 30% is expected by Chairman Tuncay Sagun. He the end of 2011,” says Melih adds, “Turkey is a country İşliel, Board Chairman of the surrounded on three sides Aquatic Products Promotion by water and possessing rich Group and Vice President of inland water resources. It the Animal Products Export- also has a high catching and ers’ Union. Close to half of the production capacity in this export of aquatic products—a area. With the correct use of 152 million dollar share—is the resources and the placing made up of fresh and chilled of even more importance on fish like sea bass, tuna, and marketing activities abroad, sea bream. The export of the potential for exports will URKEY’S EXPORTS ex- surely rise.” Sagun states T ceeded 77 billion dollars that the export of these in the first seven months of products, which occupy an 2011. Exporters wish to raise important position in the this figure to over 132 billion country’s economy, must be dollars by the end of the incentivized. year, and they will do all that The upsurge in the animal it takes to achieve this. By products sector’s exports MELİH İŞLİEL exporting such exotic goods has had a great effect in the Board Chairman, Aquatic Products Promotion Group as grasshoppers, seaweed, increase in exports of such chicken feet, snails, and frog products as snails and frogs. “By participating in international fairs in countries legs, exporters are making In July, the sector increased The export of aquatic we determine each year, a name for themselves in products alone has its exports by 53% over the we as the Aquatic Products markets abroad. There are previous year, achieving a Promotion Group clear the almost no consumers for increased sixfold over 120.99 million dollar figure. way for new markets. In our these products domestically, the past ten years, Additionally, its exports grew sights for the coming future reaching a volume of are countries like Hong Kong, but interest for them is very fastest out of all sectors in the the People’s Republic of high in a number of markets 352 million dollars in January–July period and over China, Ukraine, and Iraq.” abroad. 2010 the last twelve months. Sinan

SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 25

in international fairs held STEEL in countries determined as targets every year and also to expand their volume of business in existing markets. So far, in 2011, it partici- pated in fairs held in Russia, SİNAN KIZILTAN the United Arab Emirates, Sector Board Chairman, Turkish Belgium, Azerbaijan, and Exporters Assembly and Animal Iran. Plans are being made to Products Exporters’ Unions. find new markets in coun- “While reduced production tries like Hong Kong, China, in Greece and Italy increased Turkish exporters’ strength Ukraine, and Iraq in the near in the European market, future. “At the moment, 25% the increase of demand of Europe’s demand for sea in the Middle East and bass and sea bream is met by Russia markets resulted the Turkish aquatic products in the increase of country and product diversity. The sector. Our aim for the year Ministry of Food, Agriculture, 2023 is to attain 2.5 billion and Animal Husbandry’s dollars in exports,” says Sinan support for modern packaging Kızıltan. and processing plants has also cleared the way for exporters.” A similar leap forward has also occurred in the export of animal-based products. STEEL filleted fish and frozen fish is Between January 1 and July also quite significant. Finally, 31, 2011, 197.771 million the export of mollusks like dollars’ worth of fowl meat MANUFACTURING octopus and mussels had a was exported. In 2010, 38 volume of 22 million dollars million dollars’ worth of in 2010, equaling 6% of all chicken feet was exported to aquatic product exports. Vietnam, Hong Kong, China, STRONG AS EVER The Aquatic Products and Thailand. Steadfastly de- Despite fears of a double-dip recession Promotion Group’s activities termined to raise the volume in the global economy, the steel sector have influenced this growth of goods sent from Turkey to exhibited signifi cant growth performance too. The group works to the rest of the world, export- promote their goods in new ers continue researching new in the fi rst half of the year markets by participating possibilities. BY GAMZE GÖREN

EXTRAORDINARY EXPORT T IS THE MOST funda- red to the fi rst seven months Turkish exporters have discovered goldmine destinations for products I mental element in the of last year, the Turkish steel not consumed in the local market architecture and aesthetics sector exhibited an 8.64% TONS of construction. It appears in increase in the volume and a 100 the most ordinary of items 31.06% increase in the value Poultry, Meat, and Off al Exports and in the most exclusive of its product, respectively Chicken Feet Exports 80 design objects and products. reaching 10.7 million tons and We are talking about steel, the 9 billion dollars’ worth of ex- manufacturing of which will ports. A growth of 21.3% also 60 increase by 4.5% per annum occurred in the production of 2010 through 2012 to reach crude steel. Turkey has thus 2.58 billion tons according to become the country to increa- 40 the World Steel Association. se its output the most among At a time in which debates on the world’s 15 largest crude 20 a double-dip recession in the steel producers. Mustafa global crisis have reignited, Çıkrıkçıoğlu, Chairman of the the steel sector ranks high Turkish Exporters Assembly 0 among sectors that are spra- Iron and Steel Sector Board, 20002001 2002 2003 2004 2005 2006 2007 2008 2009 2010 ying the fl ames burning in the says, “The Turkish steel Data: Undersecretariat for Foreign Trade markets with hope. Compa- sector is suffi ciently strong to PHOTOGRAPH BY AAPHOTOGRAPH (RIGHT) 26 Briefi ng

position itself against external million tons, and Çolakoğlu developments. Due to both Metallurgy as 110th with 2.1 our production capacity rising million tons of crude steel year by year with increased production. Increases in the product diversity and our number of Turkish compa- fl exible market and manu- nies appearing in the list and facturing conditions, I don’t the increase in rank of those MUSTAFA ÇIKRIKÇIOĞLU BÜLENT DEMİRCİOĞLU think there will be a regression already on the list are within Iron and Steel Sector Board Chairman, CEO, Borusan Mannesmann Boru in exports in the second half Turkish Exporters Assembly Sectors the realm of expectation for of the year either,” assessing Council the years to come. the growth in the steel sector. Working to be a net exporter Big players contribute to Prices for products like growth The emphasis on the domestic “The ratio of exports to imports steel form on international market that came with 2009’s in fl at (steel) products, which “The emergence of big markets and depend on such was 25% until a few years ago, players with the process of economic crisis created a seri- consolidation happening in factors as raw material costs, ous competitive environment, has now gone up to the vicinity energy, currency exchange of 60%. I think this ratio will our sector in recent years and while the increase in exports increase every year, and within the growth in scales, increase rates, and the production is reestablishing balances in four or fi ve years, in terms of the in capacity, and serious technology used. Lately, the sector. Dr. Veysel Yayan, sector as a whole, we will become investments in technology are as with all traded goods, a net exporter, and we are what brought this success to General Secretary of the Tur- Turkey.” fl uctuation in the supply and kish Iron and Steel Producers working day and night for this to demand of steel has often happen.” Association, highlighting the been discussed. However, in benefi t of the competitive recent days, the sector was refl ex developing in the sector, cleared of rumors of price says, “The tough competitive increases, emerging with a conditions in our steel sector clean record from an inves- afford sector institutions to tigation conducted by the develop their competitive Turkish Competition Aut- ability in the international hority. The Turkish Iron and market. It is important for Steel Producers Association building contracting compa- emphasizes that fl uctuation nies to not overlook the com- in the prices of raw materials petitive structure of the sector and the fi nal product in the in order to make an objective steel sector are in accord with evaluation.” the global steel sector. Turkey has been—and will Meanwhile, with its “Input continue to be—discussed in Material Supply Strategy,” world markets often for the the government is aiming high performance it achie- to reduce the sector’s role in ved in steel manufacturing the budget defi cit. Mustafa over the past ten years. The AMONG THE LEADERS Çıkrıkçıoğlu notes that one 2010 edition of the “World’s Turkey is now among top ten steel manufacturers in the world and is of the causes for this is insuf- Biggest Steel Producers hosting the leading manufacturer companies fi cient scrap metal producti- List” prepared annually by TONNAGE on, one of the sector’s main Metal Bulletin proves how inputs to the budget defi cit. serious Turkey is in the steel 200 The strategy outlined in the sector. The list only features plan is aimed to supply more 2009 MILLION METRICS TONS CRUDE producers whose crude steel 2010 STEEL PRODUCTION raw materials to the compa- output in 2010 was at least nies for lower costs, thus pro- 2 million tons. Five com- viding savings in the vicinity panies from Turkey entered of 2.5 billion dollars against the ranks of the world’s top 100 the budget defi cit. Actors in steel producers. Erdemir the steel market have shut Group appeared 47th in the their ears to embellished glo- list with an output of 7.1 bal crisis scenarios and are million tons. It was followed going after lofty goals with 66.9 58.4 33.4 32.9 109.6 80.5 68.3 60.0 48.6 43.8 29.9 26.5 29.1 626.7 87.5 58.2 63.5 32.7 25.3 573.6 by Habaş as 72nd with 4.4 0 the desire to take Turkey to million tons, İçdaş as 76th the top ten with cooperati- CHINA JAPAN UNITED INDIA RUSSIA SOUTH UKRAINE BRAZIL TURKEY with 3.6 million tons, Diler STATES KOREA GERMANY on between the public and Data: World Steel Association Group as 108th with 2.3 private sectors. PHOTOGRAPH BY AAPHOTOGRAPH SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 27

With more than 100% growth in ten years, Turkey is rising in the fi eld of maritime shipping at a rate far above the global average

Logistics (YML) are just a few of the many global companies that have set up shop in Turkey. Mars Logistics Seaborne Ex- ports Director Ümit İsberk says, “The development of European routes and their rising signifi - cance have brought Turkey to a very good position,” adding, “All big fi rms except for one or two are operating in Turkey via their own agencies; they all assumed their positions previously. “ Today, UN Ro-Ro, which was established with the aim of bypassing problems in overland shipping in the Balkans that began with the breakup of Yu- goslavia via seaways, conducts its operations that started in 1994 with just two ships with MARITIME SHIPPING 13 ships and three routes. The company has a shipping capacity of 35 km in vehicle length. It was bought in 2007 TURKEY FULL SPEED AHEAD by Kohlberg Kravis & Roberts Maritime commerce is to be one of the greatest playing cards (KKR) and it continues to grow. With the Constanta, that Turkey, will have with regard to its goals for the year 2023 Romania harbor being made active, the company, for which the year 2011 appears to be BY CAN GÜRSU going very productively, will order two more ships. The E NEED TO BE in positioning of being a country the positive picture emerging company is set to achieve the “Wan effort to use the surrounded on three sides by appears not to have been highest number of voyages in marine potential we possess water, is preparing to play a key overlooked by foreign investors. its history with 650 voyages by in the most successful and role in this sector. According Mediterranean Shipping the end of the year, and it also productive way,” said Turkish to the latest research, Turkey’s Company (MSC), Maersk, aims to carry a record number Exporters Assembly President logistics sector had a size Mars Logistics, and Yang Ming of vehicles on one line this year, Mehmet Büyükekşi as he greater than 60 billion dollars more than 110,000. UN Ro-Ro began his speech at the meeting in 2010. Together with its CEO Sedat Gümüşoğlu says, held in the Çanakkale Chamber increasing foreign trade, “If there are diffi culties Turkey of Commerce and Industry, Turkey is rapidly starting to rise could encounter in its exports, where export fi gures for the in the maritime shipping sector we want to play a role in over- month of July were announced. despite being a latecomer to the Turkey is on the coming them.” The company Maritime shipping is one of game. The volume of shipping European Union’s has already begun formulating the most important sectors for going by sea in Turkey, which maritime shipping ten-year plans toward its 2023 Turkey, which aims for 500 was 118 million tons in 2000, whitelist, and it is goals to supply Turkey with the billion dollars in exports in has exceeded 246 million also carrying out a contributions it needs. the year 2023. Around 90% dollars according to the latest very welcome move by Europe—to which Turkey of all trade in the world—71% data. Having grown more than easing the process for sends 50% of its exports—has of which is covered by seas— 100% in ten years, this volume a signifi cant share in Turkey’s passes over sea. Turkey, with raised Turkey’s rank among ships transitioning to exports for the year 2023. For the advantage and strategic 30 countries to 15th place, and the Turkish fl ag this reason, ro-ro shipping is of 28 Briefi ng

special importance for Turkey, which is competitive globally with the size of its truck fl eet. UN Ro-Ro conducts 85% of its shipping via ro-ro vessels currently present in Turkey. Sedat Gümüşoğlu says ship- ping will increase by 100% in coming years and explains his reasoning as follows: “Because it is not possible to reach a foreign trade volume exceeding 1 trillion dollars by overland routes alone.” One of the factors helping maritime shipping grow quickly as an alternative le at most; but when you send least affected by the crisis, is to land-based transport is in- a ferryboat to Libya, you bring being infl uenced much less by ternational arrangements and back 2,500 people. Preparing this economic bottleneck in policies. For example, although to bolster its geographic posi- comparison to the rest of the Turkey is a member of the Cus- tion with investments in local world. Thus, the local players toms Union, the conveniences and foreign ports, Turkey can active in the sector in Turkey needed are not yet supplied cover great distances within a are at least as important as to it in overland journeys to short time.” Sedat Gümüşoğlu foreign investors are. Ümit Europe. For trucks, the ability indicates that Turkish Airlines İsberk of Mars Logistics says, to bypass numerous countries must be taken as an example “As Mars Logistics, we foresaw to go directly to the destination in this matter, asking, “Turkish the crisis in 2009 and invested country or close harbors known Airlines really turned Istanbul in countries that were affected as hub points is very important. into a hub in recent years; why little, and we were thus affec- Additionally, Turkey is on shouldn’t the same thing be ted less by the crisis and closed the European Union’s mariti- possible in maritime shipping the year with fi gures above our me shipping whitelist, and it is too?” Many investors both lo- targets.” While Mars Logistics also carrying out a very welco- cal and foreign have come to expects general growth of aro- me move by easing the process the country for investments. und 22% by the end of 2011, for ships transitioning to the The presence of many big its growth target for maritime Turkish fl ag. Many ships that “Turkish Airlines players among these inves- shipping is 32%. used to fl y foreign colors are really turned tors draws attention. The Du- Turkey has gained strength now moving over to the Tur- Istanbul into bai Ports Authority bought with the investments pre- kish fl ag. “All of our ships have land on the Gulf of İzmit with sent, and together with this Turkish fl ags; there is no dif- a hub in recent a capacity for 800,000 contai- potential, maritime shipping fi culty in transitioning to the years; same thing ners. The Afken and PSA Gro- will be one of its greatest Turkish fl ag,” says Sedat Gü- can happen in up partnership is continuing playing cards with regard to müşoğlu. All of UN Ro-Ro’s 13 maritime shipping its work to expand the Mersin its goals for the year 2023. ships fl y the Turkish fl ag. harbor. MSC has begun efforts Turkey, which mostly prefers For Turkey, which mainta- too” says Sedat to construct one of Turkey’s overland transport due to high ins its goal of becoming a re- Gümüşoğlu biggest container harbors in energy prices, also has a fairly gional power, the importan- Tekirdağ. Terminal de Con- high energy bill. The routing ce of maritime shipping was tenidors de Barcelona (TSC) of land-based traffi c to the proved once again by a num- is continuing to buıld a con- seas is important in terms ber of events happening re- taıner loadıng and unloadıng of both costs and the load it cently. Turkish Maritime As- spot in Aliağa, İzmir. Having will take off the roads. It is of sembly Chairman Erol Yü- collected strength with the in- vital importance that these cel states that the importan- vestment in its ports, Turkey is investments and moves in the ce of maritime shipping stood preparing to take a giant leap private sector will be suppor- out once again with the evacu- in its short-term plan. ted by parallel policies to be ation of Turkish citizens from The sector took a massive enacted by the government. Egypt and Libya during the blow globally after 2009’s cri- It is possible that we will see turmoil in the Middle East, sa- sis, and it is still occupied with Turkey emerge as a signifi cant ying, “Even if you send a big licking its wounds. The sector player in maritime commerce plane, you can carry 250 peop- in Turkey, one of the countries within the next ten years.

SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 29

Call centers are trending toward rapid growth, provi- ding employment to 17,500 people in 2003, 35,000 in 2008, and 40,000 by the end of 2010

average sector rates,” says Adil Zenbat, General Manager of Assistt which is one of the leading call center companies in Turkey and a subsidiary of Türk Telekom.

MARKET GROWS TO 1.4 MILLION TL Bahadır Pekkan, Chairman of the Board of the Call Cent- ers Association, says that the sector has been investing heavily in Turkey and provid- ing employment for the last 15 years. There are 300 large call centers and more than 1,000 mid-size call centers active in Turkey. At the end of 2010, it employed 40,000 people at 35,000 call desks. While the world call center market CALL CENTERS reached a size of 340 billion dollars at the end of 2010, Turkey’s market grew to around 1.4 billion TL. The total size of the investment made in the ON THE INVESTMENT OFFENSIVE sector over the past fi ve years A new but rapidly growing industry in Turkey is attracting has reached 200 million TL. Pekkan states that investments global interest while creating new employment opportunities in Anatolia have increased in for the young population recent years, adding that the growing sector’s investments in many provinces in Anatolia BY F. EMRE YILMAZ BY GÜRCAN ÖZTÜRK besides Istanbul, Ankara, and İzmir are continuing to rise. He ALL CENTERS WERE telecommunications and notes that the sector is trending Cdiscovered as a tool for fi nance were the driving forces toward rapid growth, providing communicating requests and behind the growth of call employment to 17,500 people complaints in the late 1960s. centers in Turkey. The rise in in 2003, 35,000 in 2008, and Toll-free phone numbers were privatizations of public institu- 40,000 by the end of 2010. presented by many compa- tions, efforts geared toward Pekkan predicts the sector’s nies as a service in that era. professionalization with regard employment potential by the Later, at the start of the 1970s, to EU compliance, and the end of 2015 to be 85,000 at Continental Airlines started increasing importance given an average growth rate of 16% using the fi rst Automatic Call by the public to call center per year. Distributor. Today, call centers Investments made in services refl ect positively are essential to most busi- upon the sector. All of these GROWTH POTENTIAL nesses and occupy a signifi - the past fi ve years in elements combine to increase In countries where the call cant position internationally. the call center sector in the call center sector’s volume center sector is developed, there Developing sectors also had a Turkey, which has a and whet the appetite of is one customer representative notable infl uence on call cent- volume of 1.4 million investors for the area. “Turkey’s for every 100 to 400 people, ers gaining strength. TL, has exceeded 200 call center sector has a higher whereas there is one for every As in the rest of the world, million Turkish Liras development graphic than 2,000 people. Based on this 30 Briefi ng

Although Adil Zenbat from Assistt says he doesn’t believe in government incentives under normal circumstances, and thinks they are temporary solutions which will eventually burst, government incentives to be supplied in places where call ADİL ZENBAT CEMAL AKAR centers will be built, means for technical infrastructure suited General Manager General Manager to building call centers, the ASSISTT Call Center Tempo Call Center sizable young population suited “With a perspective based to employment, and whether on using modern technology “The sector should produce there is an airport in the region productively, we reevaluate its own dynamics and metric, which bears potential our investments every day for ease of access are among the form its own competitive for growth, Pekkan states that and renew them quickly criteria that investors look for environment. Call centers it can be said that the sector if need be. We are also when selecting a site. There has have a signifi cant role in changing our methods will grow by a minimum of this matter. Germany has been a noteworthy increase in of doing business in line four or fi ve times. The sector no considerable investment services provided to customers with new inclinations. in call centers. We export is trend toward growth ignites New business models abroad from Turkey too. Tur- call center services to investors’ appetites. The study have emerged with the key’s cultural and geographical Germany. Turkey is at the development of technology that the Call Centers Associa- point of exporting services. proximity to Europe, young especially with the spread of tion conducted in December And another crucial issue and dynamic demographic the Internet. For instance, in service export is foreign 2010 declared that the size of the business model we call structure, high-quality human language. We have solved the market was 1.4 billion dol- ‘Home Agent’ will become resources, and technological this issue with Germany with lars, 45% of which comes from widespread within the infrastructure provide it with the Turkish citizens living in next ten years. Interest in abroad. Tempo Call Center the area.” an advantage in becoming General Manager Cemal Akar, outsourced call centers will a regional center among the grow.” who says that new business international competition and models have emerged with drawing foreign investment the development of technol- to the area. Pekkan says, “We ogy especially with the spread see that large international of the Internet, highlights the companies that have realized rising popularity in the sector this potential are expediting of outsourcing , and continues, their investments in Turkey.” “The business model we call That investments made in the ‘Home Agent’ will become past fi ve years have reached widespread within the next ten 200 million TL is an indicator years. Interest in outsourced that the sector’s potential has call centers will grow.” been realized.

CALL CENTER SECTOR EMPLOYMENT INVESTMENT POTENTIAL IN THE 2010–2015 Turkey-Wide Employment Potential 3RD AND 4TH REGIONS EMPLOYMENT 3rd and 4th Region Investments 100.000 Turkey-Wide 90.000 The number employed by the sector is expected to grow 113% by 2015 to reach 85,000. 80.000 INVESTMENT COST (MILLION TL) In the 3rd and 4th Regions, The predicted yearly growth rate is 16%. 250 70.000 200 million TL investment goal the call center sector: Has 110 million TL+ invested 90 million TL over 60.000 200 Investment Potential the past fi ve years 50.000 150 Is expected to have an 40.000 investment potential of 200 100 30.000 million TL in these regions in 20.000 50 the next fi ve years. 10.000 0 - 2010 2011 2012 2013 2014 2015 2005-2010 2011-2015 Source: Call Centers Association Source: Call Centers Association

SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 31

AUTOMOTIVE pany serves a broad customer profi le in 67 countries on four continents via the distributor Focusing on İncitaş with 90 primary de- alerships, nearly 3,500 reta- il points of sale, and 180 ser- vice stations domestically; the REGIONAL LEADERSHIP İnci Akü, EAS Akü, and Hu- İnci Akü is building its vision entirely on the basis of being a gel Akü brands for the repla- cement market; and 90 distri- leading player in the regional market butors with the İnci Akü, EAS, Hugel, and Blizzaro brands BY F. EMRE YILMAZ abroad.

ON THE WAY TO BECOMING A REGIONAL LEADER İnci Akü’s export channels and international investments con- tain hints as to how far the au- tomotive auxiliary industry has come in exports. The in- dustry is putting in the effort to be an effective player in foreign markets by itself, and it is co- vering signifi cant distances in this area. Paker states that the- re is a market for a total of 4 million battery units in Turkey, of which 3 million are used in the aftermarket and 1.2 million in the principal industry. Pa- ker says, “As İnci Akü, we pro- duced 2,840,000 batteries in 2010. Also in 2010, we as İnci HE MOST IMPORTANT One of the most important production in the year’s fi nal Akü supplied 60% of Turkey’s T supporter of the auto- players in this fi eld in Tur- quarter. He adds that a facility battery exports. In short, we motive sector, a chief driving key is İnci Akü. After the suc- was put on-line in Romania are now building our visi- force behind the Turkish eco- cess Cevdet İnci achieved in in 2010 as well and that they on entirely on the basis of be- nomy, is the automotive parts the production of rims, he de- have begun seeing returns on ing a leading player in the re- and components industry. cided invested in battery ma- their investment. Besides pos- gional market.” İnci Akü has The performance achieved by nufacturing and founded the sessing manufacturing faciliti- started reaping the rewards of this industry in the automo- company in the Manisa Orga- es located both in Turkey and the steps it has taken with its tive sector, whose exports nized Industrial Zone in 1984. abroad, the brand has an ex- export channels as well. The totaled 17.3 billion dollars in Today, it carries out its ope- pansive distribution network. brand gained the right to enter 2010, is quite noteworthy. rations with facilities in Uk- Paker explains that the com- the TURQUALITY program According to data from the raine, Romania, and Manisa, as the second company to do Uludağ and Central Anatolia with two locations in the lat- so in the automotive auxiliary Exporters’ Unions, auxiliary ter. As of late 2010, it has been industry in Turkey—and as the industry exports totaled 4.9 manufacturing in a facility fi rst in its own sector—through billion dollars in 2009, a with a capacity of 4.5 million its ongoing efforts to develop fi gure that rose to 5.3 billion in Manisa and another in Kiev, exports. Increasing the auxili- dollars in 2010. To break it Ukraine with a capacity of ary industry’s competitive abi- down specifi cally, the export 300,000. İnci Akü CEO Gök- lity, meanwhile, is possible via of parts and components sel Paker explains that the fi rst Accounting for 60% innovative approaches. It is in- reached 4.3 billion dollars, stage in the construction of of Turkey’s battery dicated in the Automotive Ma- inner tubes and tires 958 the new factory being built in exports, İnci Akü nufacturers Association’s Auto- million dollars, car batteries the Manisa Organized Indust- manufactured motive Industry 2010 Annu- 78 million dollars, and safety rial Zone has been comple- 2,840,000 batteries al Evaluation Report that the glass 50 million dollars. ted and that it will begin mass in 2010 R&D initiatives of companies 32 Briefi ng

For İnci Akü, R&D efforts are of vital importance. CEO Paker believes that R&D is the most important factor be- hind the power they have at- tained in both Turkey and fo- reign markets. He notes that they have set aside 3% of the- ir revenues for R&D activiti- es and adds, “We possess the sector’s fi rst registered R&D center. With the work we carry out here, we expand our port- CEO Göksel Paker: folio according to expectati- “We will be ready for electrical vehicles when the principal is ready” ons in both the automotive sec- tor and others that have energy storage requirements.” The fru- in the supply chain gained sig- its of İnci Akü’s R&D activities nifi cant momentum in 2009 include products developed for and 2010 despite the global telecommunications, renewab- economic crisis. According to le energy, and electric vehicles, the report, at the end of 2010, for which Paker says, “Although R&D centers established wit- it is not fully clear exactly when hin the scope of the R&D Sta- the principal industry in auto- tute 5746 No. 87. In additi- motive will move over to ma- on, it states that the number nufacturing electrical automo- APPAREL of R&D centers in the auxili- biles, with the work we have ary industry sector reached a begun, we too will be ready total of 37, with 16 belonging when the principal industry is Fashion in September to suppliers that manufacture ready.” İnci Akü’s defi nition of parts and components and 11 electric vehicles is much broa- to companies producing motor der than just land vehicles; it is vehicles. The number of people engaged in activities in various IS SOMETHING employed at the R&D centers fi elds including industrial and rose to 4,000. seafaring vehicles. Having already taken steps to- ELSE ward the future, İnci Akü also stands out for the performance Now in its fi fth year, Istanbul Fashion 4 it has achieved in markets both Week will be donning the city in the latest MILLION BATTERIES in Turkey and abroad. The and most fashionable clothing once again TURKEY’S TOTAL company ended the year 2010 BATTERY MARKET with a growth of approxima- tely 26% over the previous year, BY GAMZE GÖREN and in 2011, it plans to grow by around 20%. Paker says that OLORFUL, FLYING fab- will spread to the world out 2.84 they will reach their end-of- C rics, stilettos instilling of Istanbul. Over the past 20 MILLION year targets in light of the data a fear of heights in people, years, Turkey has solidifi ed İNCİ AKÜ’S TOTAL on hand. Though the automo- a diverse range of acces- its position in the European BATTERY PRODUCTION tive auxiliary industry does not sories that appear to have fashion industry with its IN 2010 possess supernatural powers little connection at fi rst but high production capacity. by any means, the sector can appear admirably harmoni- Textiles and fashion items be said to have attained a note- ous when seen, new designs account for one fourth of ex- % worthy synergy in recent years. being awaited excitedly, and ported goods. This fruitful- 60 Automotive’s energy and the celebrity shows that will ness refl ects upon all actors İNCI AKÜ ACCOUNTED FOR 60% OF TURKEY’S synergy attained by the auxili- add even more fl air to these in the sector. BATTERY EXPORTS IN ary industry could be regarded designs—these are the things There is a new fashion 2010 as a potential triggering force that turn an ordinary event hub for fashionistas who for the latter to develop signifi - into a fashion festival. This immediately think of New Source: Company Reports cantly in its own right. time, the magic of fashion York, Milan, and Paris on PHOTOGRAPH BY AAPHOTOGRAPH SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 33

is preparing to welcome been set as 1 million euros fashion lovers once again this year. MORE BRANDS with the fi fth Istanbul MORE DESIGNERS Fashion Week, which is to A CELEBRITY PARADE be held September 7–10. IN ISTANBUL The CEO of Orka Group, Catwalk rumors have it that Süleyman Orakçıoğlu, Istanbul Fashion Week, which who is also Chairman of has so far welcomed the likes WEDNESDAY, SEPTEMBER 7 the Istanbul Fashion Week of globally famous celebrities 4:00 p.m. - Karma 1 Consulting Council, says, like Anna Kournikova, (Jale Hürdoğan, Aslı Güler, İpek “What makes this year’s Meg Ryan, and Burlesque Arnas) fashion fair more special performer Dita von Teese, than the ones before is not will again become a celebrity 5:30 p.m. - Argande so much the attendance to parade this fall. Brand and 7:00 p.m. - Atıl Kutoğlu the event, but rather that it design collaborations will is in a place refl ecting the continue this year too; 9:00 p.m. - Tween soul of the city.” As visitors new collaborations are wander amid fashion shows expected to be added to the THURSDAY, SEPTEMBER 8 scattered around Beyoğlu, Hakan Yıldırım and Koton the heart of Istanbul, they partnership of last fashion 1:00 p.m.- Niyazi Erdoğan will simultaneously be week, which drew much 2:30 p.m. - Simay Bülbül discovering the city. The interest and admiration. (Presentation) fashion week, which is the Hikmek Tanrıverdi states that largest event ever organized designs will be emphasized at 4:00 p.m. - Özlem Kaya by the Istanbul Textile this year’s IFW with the aim 5:30 p.m. - Nejla Güvenç mention of fashion weeks: and Apparel Exporters’ of showing off the fashion Istanbul. That Istanbul has Association (İTKİB), has unique to the country to the 7:00 p.m. - Stüdyo Kaprol been and is home to various managed to put Turkey on rest of the world. Although (Gülcan Ardıç, Beliz Mısırlı, Tolga cultures and has become a the calendar of professional designs are what excite Turan, Ali Bayramoğlu) great center of commerce fashion within a short time. fashionistas the most out of 9:00 p.m. - Koton for both Europe and Central The bar is raised higher all things at the event, brands Asia play a large part in every day at the event. İTKİB will be presenting them with the city’s development as President Hikmet Tanrıverdi surprises throughout the FRIDAY, SEPTEMBER 9 a fashion center. Istanbul states that its budget has week too. 1:00 p.m. - Karma 2 (Şafak Tokur, Seda Zoroğlu, Çiğdem Akın) CREATING A CITY OF FASHION 2:30 p.m. - Özgür Masur 4:00 p.m. - Hatice Gökçe • Bahar Korçan, Designer: Hakan Yıldırım: Designer: “In the changing order of the “A large number of foreign 5:30 p.m. - Lug von Siga (Gül world, I believe the old state journalists and buyers are coming Ağış) (Historic Galatasaray Bath of centralization has changed to our country by means of the House) too. Istanbul Fashion Week will event. Many opportunities can 7:00 p.m. - Özlem Süer undertake a signifi cant role in this emerge for designers who stand transformation. Our fi rst job is to do out in the eyes of the people who 8:30 p.m. - adL by Cengiz our work well in order to be more visit. And, of course, with the Abazoğlu recognized in the world. Afterward, support of the country’s investors, 9:30 p.m. - Mehtap Elaidi it’s also important for this to be they can expand abroad too.” sustainable.” SATURDAY, SEPTEMBER 10 Özgür Masur, Designer: • Gamze Saraçoğlu, Designer: “I’m very happy with the event; 13:00 p.m. - Deniz Kaprol Local and foreign press interest “ the stage, lights, and seating 14:30 p.m. - Rana-Berna Canok is an indicator that we produce arrangement are fantastic. Tents interesting work. In a cultural and have been used as they are 16:00 p.m. - Tuvana Büyükçınar artistic sense, Istanbul is very abroad; it’s very nice. I am very 17:30 p.m. - Gamze Saraçoğlu rich. This infrastructure is a very happy to be part of Turkey’s offi cial signifi cant advantage on the way fashion week.” 19:00 p.m. - Giovane Gentile toward becoming a city of fashion.” 21:00 p.m. - Twist 34 Cover / Ready For The Challenge

SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 35

READY FOR THE CHALLENGE While the US and eurozone struggle amid fi nancial turbulence and debt crisis, Turkey’s healthy glow carries it to the premium class of the emerging markets

BY SİNAN KOPARAN

he warning issued by Deputy shocks and is followed by tsunami, T Prime Minister Ali Babacan, a serious tremor to occur in Europe one of the key figures in Turkey’s would be felt in Turkey too.” Coincid- economy, set the main agenda, coming ing with credit rating agency Fitch’s at a time when negative news from warning on the current account deficit, abroad arrived in rapid succession. this announcement brought with it Babacan pointed out that all indicators sudden rumors of a crisis. Immedi- of risk related to Europe had risen to ately after Babacan’s statement, the record levels and said, “If a powerful stormy waters were calmed down by earthquake were to occur right next to Prime Minister Recep Tayyip Erdoğan, us, Turkey would of course be affected who announced that it “wouldn’t even by it. Just as one feels an earthquake graze” Turkey, and Central Bank Gov- happening far away even if only a little, ernor Erdem Başçı, who said, “The and just as an earthquake has after- situation in Turkey is very good.” 36 Cover / Ready For The Challenge

crisis currently under way will last much longer. What people do see amid all the dust and debris of this turmoil, however, is the glowing performance of develop- ing countries that are increasing their ef- fectiveness in the world economy, Turkey most of all. With its healthy and solidly grounded economy, Turkey is sure that it will emerge from this process unharmed. According to results of the Second Quar- ter Exporter Tendency Survey conducted by the Turkish Exporters Assembly, 41.4% of exporting companies in Turkey expect their sectors to be in better states by the end of the year. Furthermore, a proportion as large as 42.7% believes that the Turkish economy will improve. However, Turkish exporters are not so optimistic when it comes to Europe. Around 53.8% of the exporting compa- nies participating in the survey predict that the EU economy will become even The warning issued by Deputy Prime Minister Ali The world is indeed going through one worse. Emphasizing that all economic Babacan, was considered of the toughest times it has experienced indicators in the country are positive, as a ‘verbal intervention’ by the markets economically. Credit rating agency Stan- TIM President Mehmet Büyükekşi dard & Poor’s recent downgrading of the says, “The atmosphere of crisis and US’s score to AA+ can be considered a panic discussed in public is incorrect, sign that things are not going so well on and the results of the survey prove this.” the other side of the pond. Meanwhile, Büyükekşi adds that such negative devel- Europe appears to have entered an even opments as those happening in the EU greater impasse. and the reduction of the US credit rating Those with dim expectations for would not change the results of the Greece are now making room beside it survey signifi cantly. for Portugal and Italy. A sword dangles So why did one of the most important above France, too, due to its banks that fi gures at the helm of the economy feel supply the aforementioned countries the need to make such an announce- with credit. The most important news ment? Was a crisis really on the way? for the region, however, comes from HSBC Bank Chief Economist Fatih What people do Germany. Although the country is Keresteci interprets the warning as a considered the primary engine that keeps “verbal intervention.” He says, “The main see amid all the Europe up and running, its economy purpose of the measures that the CBRT grew only 0.1% between the fi rst and sec- (Central Bank of the Republic of Turkey) dust and debris of ond quarters of the year, contributing to and BRSA (Banking Regulation and the global turmoil an ever-darkening mood in the eurozone Supervision Agency) took was to slow due to being below expectations. What down internal demand. This had to be is the glowing people do see amid all the dust and de- supported, and the part we call the ‘verbal performance bris of this turmoil, however, is Turkey’s intervention’ constituted one of the legs of healthy glow. Turkey feels the tremors, this support. It was for this purpose that of developing but it escapes harm’s way. As the most the names at the top of the economy said, countries that are important consumer in the world, the US ‘There’s a risk of a crisis; let’s be careful could have overcome the economic crisis and economize’.” He adds, “Only bankers increasing their it entered. However, the fact that Europe were following the CBRT’s decisions effectiveness in the is experiencing signifi cant tremors in its relating to added returns, but even the balances alongside the US leads to the average villager became aware of this an-

world economy entrenchment of the idea that the global nouncement and started spending less.” BY AAPHOFOGRAPH

SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 37

GENERAL GOVERNMENT CONSOLIDATED GROSS DEBT The truth is that for Turkey to spend (% OF GDP, 2010) less, from its villagers to its city-dwellers, is an important step to extinguish the 200 searing fl ames of the current account 180 defi cit. Prime Minister Recep Tayyip 160 Erdoğan highlights this matter in 140 Trend line: moving average particular, saying, “Recognizing the 120 month of Ramadan as an opportunity, 100 Maastricht Criterion: 60% let us please avoid extravagant spend- 80 ing. Let us not engage in spending on 60 cars and houses that could be considered 40 20 luxurious,” adding, “I’m not saying ‘don’t 0 spend,’ but avoid extravagance.” With the USA ITALY SPAIN MALTA JAPAN LATVIA GREECE TURKEY FRANCE CANADA POLAND ESTONIA

efforts of the CBRT and the economic AUSTRIA SWEDEN IRELAND FINLAND BELGIUM ROMANIA SLOVAKIA HUNGARY SLOVENIA GERMANY BULGARIA DENMARK PORTUGAL LITHUANIA

administration, the fl ames in the current NETHERLAND LUXEMBOURG SOUTH CYPRUS CZECH REPUBLIC account defi cit are expected to die out in UNITED KINGDOM the second half of the year. Economist Source: Eurostat Undersecretariat of Treasury for USA, Japan, Canada: IMF World Economic Outlook Seyfettin Gürsel says, “A move to correct the current account defi cit has arrived. that while it will use the same tools in What is important is to control this,” and struggling against the problems it faces, continues, “If the current account defi cit it will use different methods to do so. fell to 5% right now, nobody would say The markets, however, seem to that there is a problem.” think that the CBRT acted too hastily Turkey’s economy is starting to cool, in slashing interest rates. Garanti Bank The euro crisis that and from 2011’s fi nal quarter onward, Economic Research Director Ali İhsan peaked with the debt crisis the fl ames of the current account defi cit Gelberi says, “The economic data on the of Greece caused great reactions in the continent are expected to die down somewhat. growth coming from the US and EU is Zafer Çağlayan, the Minister of Econ- not good. But the fi gures do not show omy, said, “The current account defi cit that the economy is headed toward a broke its record with 9.7 billion dollars second dip. I think the CBRT acted a the month of March. We will probably little early. The difference in perspectives not see the defi cit exceed this in the may lead to the exit of capital or a reduc- months to follow. From the summer tion in the infl ow of capital.” The CBRT’s months onward, we expect stability in sensitivity and jarring speed to take such the current account defi cit, and after fall, measures can be regarded as the sign of a we expect it to recede.” new era. The bank feels the need to take The CBRT’s measures, though seen as “experimental,” seem as if they will prove the Minister of Economy’s point. The measures aimed to lower the domestic demand for credit that were put into practice since late 2010, which is when the risks of the current account defi cit fi rst started being discussed loudly, are slowly starting to bear fruit today. The CBRT has meanwhile kept a close eye on negative global developments, slashing policy interest by 50 points in the fi rst days of August to 5.75% and raising overnight debt interest rates from 1.5% to 5%. The CBRT’s move showed that it didn’t regard the defi cit as a particularly serious risk and served to emphasize the bank’s true priority—growth. This series

PHOFOGRAPH BY EPA BY EPA PHOFOGRAPH of decisions taken by the CBRT showed 36 Cover / Ready For The Challenge

fallen with the cooling in the economy, and although Turkey has passed the test of resilience, the economic administra- tion is standing by its measures. And it is very right to do so. Fatih Keresteci says, “If capital now retreats to safe harbors as the world undergoes a crisis, it could become problematic for us to fi nance our current account defi cit. We have this risk. The current account defi - cit’s ratio to the GDP is around 6.5%. If suitable measures are not taken or if things do not slow down, it is possible for it to exceed 10%.” When taking precautions, of course, the economy administration considers the incredibly sensitive balances in play, The series of decisions action without causing a crisis by follow- because every step taken has various ef- taken by the CBRT showed that while it will use the ing a more proactive approach in dealing fects. For example, considering how far same tools in struggling with growth, which it regards as a risk, Turkey has come lately in terms of ex- against the problems it faces, it will use different than in the past. ports, enacting stiff measures to combat methods to do so In light of all this, it can be said that the current acccount defi cit that would Turkey is in quite a good position when slow down production could backfi re compared to the rest of the world today. completely. In reality, the increase in Many countries are facing the risk of not exports, particularly in that of value- being able to service their debt. Turkey, on added products, has had a positive the other hand, has a debt-to-GDP ratio effect on the reduction of the current of 45%. The number of countries that account defi cit. Despite the economic enjoy such relatively favorable conditions diffi culties in Europe and the political may well be counted on one hand. tension in the Middle East and North Resilience is now gaining more Africa, Turkey continues increasing its importance. Although expectations re- exports performance. According to an garding the current account defi cit have announcement made by the Turkish

COMPARISON OF EUROPE AND TURKEY: REAL GDP GROWTH (2001=100)

170

160

150

140

130

120

110 Turkey is 100 90

constantly Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 2001 Q1 2010 Q1 2010 Q1 growing more than 2000 Q1 2002 Q1 2003 Q1 2004 Q1 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 the EU average Turkey Hungary Poland Spain Portugal Italy Euro Arena Source: OECD, 2010

since 2002 BY AAPHOFOGRAPH

SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 37

Exporters Assembly (TIM), exports lira is overvalued. There is absolutely grew by 23.02% from July 2010 to July no pressure on the Turkish Lira for 2011, totaling 11.538 billion dollars; and additional valuation. We think that in the fi rst seven months of the year, the Lira is contributing as much as it they grew by 20.05% to total 77.17 bil- can to the current account defi cit.” The lion dollars. Considered over a one-year latest interest rate decision taken by the EXPORTERS ARE OPTIMISTIC period, exports grew by 15.61% to total CBRT also accelerates the valuation of ABOUT TURKEY’S ECONOMY BUT 126.771 billion dollars. The automo- the exchange rate somewhat. NOT ABOUT THE EUROZONE tive industry sector accounted for the It can be thought that the deprecia- most exports in July with 1.910 billion tion in the Turkish Lira might affect dollars, with the ready-to-wear clothing infl ation negatively; however, the CBRT and apparel sector coming second with realizes the instruments it possesses % 1.625 billion dollars and the chemical here and has so far been successful in 42.7 substances and products sector coming curbing infl ation. For instance, the CPI EXPORTERS WHO BELIEVE THE TURKISH ECONOMY third with 1.36 billion dollars. TIM exceeded expectations in July, falling WILL IMPROVE IN THE President Mehmet Büyükekşi says, “It by just 0.41%. Core infl ation indicators SECOND HALF OF 2011 has been understood that we cannot continue rising but are slowing down. solve the high current account defi cit— In any case, as the world economy starts the only element constituting a risk of tending toward a slowdown and as crisis for the economy of Turkey—by stock prices are expected to fall, infl a- constricting the credit market. Instead tion might not be among the CBRT’s of this, a new economic model that top priorities. % boosts production and added value Today, the priority of the CBRT and must be proposed.” economic administration is to curb the 53.8 EXPORTERS WHO As recent developments in the overheating in the economy and to estab- BELIEVE EUROPEAN currency exchange rates fuel increases lish balance in foreign trade. Although the ECONOMY WILL WORSEN IN THE SECOND HALF in exports, they also strengthen the progress achieved so far has come slowly, OF 2011 CBRT’s hand. Although the economic incoming data shows that the right path administration is not particularly fond is being followed. The CBRT is progress- Source: Exporters Tendency Survey of turbulence in the exchange rate, it is ing slowly and calmly. For a longer-term having a slowing effect on consump- solution, the structural reforms realized tion. CBRT Governor Erdem Başçı by the economic administration are says, “Nobody can claim the Turkish picked up speed, on the other hand.

ZAFER ÇAĞLAYAN FATİH KERESTECİ ALİ İHSAN GELBERİ SEYFETTİN GÜRSEL Minister of Economy Chief Economist, Economic Research Economist HSBC Bank Director, Garanti Bank “The current account defi cit “If the curent account defi cit broke its record with 9.7 “Only bankers were following “The economic data on the fell to 5% right now, nobody billion dollars the month of the CBRT’s decisions relating growth coming from the US would say that there is a March. We will probably not to added returns, but even the and EU is not good. But the problem. However, we still see the defi cit exceed this in average villager became aware fi gures do not show that the don’t know the answer to this the months to follow.” of this announcement and economy is headed toward question: how much should started spending less.” a second dip. I think the growth fall for the current CBRT acted a little early. The account defi cit to fall to the difference in perspectives may level of 4–5%?” lead to the exit of capital or a reduction in the infl ow of capital.” 40 In Depth / Interview with Deputy Prime Minister Ali Babacan

SEPTEMBER-OCTOBER 2011 ISSUE 6 TheThe TurkishTurkish PerspectivePerspective 41

COUPLING MEASURES DECOUPLING ECONOMY Deputy Prime Minister Ali Babacan evaluated the global turmoil arising from eurozone and the US and told about how Turkey has been preparing for the challenges, to The Turkish Perspective

BY CEYHAN AKSOY BY CEVAHİR BUĞU

“GLOBAL UNCERTAINTIES How do you think the Turkish Lira’s WILL LESSEN SOMEWHAT IN depreciation will affect infl ation? THE MONTH OF SEPTEMBER,” There is still a slack in the Turkish Deputy Prime Minister Ali Babacan economy which will limit the pass- said during a televised interview through from commodity prices to the conducted with him in August, adding, prices of core goods and services. Also, “Of course, we are prepared for every rise in the global commodity prices will kind of scenario.” At a time in which ultimately lose its pace. Consequently, global tremors lead to fl uctuations in the recent depreciation of Turkish Lira the fi nance and stock markets, Turkey’s will have a limited effect on the infl ation strong stance is the result fo the prepa- and increase in the infl ation will be rations Babacan speaks of. Ali Babacan, temporary. who also currently presides over the As the glimmers of strength in the Economic Coordination Council, has global economy are fading away and been one of the leading players in how some major economies are on the verge the needle of Turkey’s economy has of recession, in my view the main source been rising since he came to power four of concern is the global economic slow- governments ago. down rather than the infl ation threat. 42 In Depth / Interview with Deputy Prime Minister Ali Babacan

Could the credit limitations placed on banks be considered for 2012 as well? After displaying a solid growth of 33.6 percent in 2010, banks have been called on to limit their credit growth to 25 per- cent, a level that is in accordance with domestic and external macroeconomic balances. Main culprit behind this cap was to mitigate the macro-fi nancial risks and balance the growth dynamics in the sense that domestic consumption was fuelled by bank loans which eventu- ally brought about growing current account imbalances. Recently, interest rates on deposits and credits have started to climb. In addition, we are observing shifts in the balance sheet compositions of banks indicating that banks have become more responsive to their liquidity positions and increasing dependence on central bank fi nancing. All in all, these developments suggest that we will witness further slowdown in credit growth and domestic demand in the upcoming months.

Does growth have to slow down for the current account defi cit in IN ADDITION TO THE STRONG was set up in order to develop strategies Turkey to reach modest levels? to increase the in-house production of The measures we have implemented so FISCAL POSITION, TURKISH intermediate goods. far narrowed the divergence in foreign BANKING SYSTEM IS RANKED and domestic demand by controlling How do you assess the Central the credit growth – hence, keeping the AMONG THE BEST PERFORMING Bank’s measures and policies current account defi cit in check. COUNTRIES IN EUROPE. PROBABLY particularly in the face of develop- We are giving utmost importance to ments occurring in Europe? structural solutions for decreasing the THE ESSENTIAL FACTOR ENSURING The deteriorating growth outlook in current account defi cit. In this regard, POSITIVE DECOUPLING IS THE our major trade partners will have an we have applied structural and medium adverse impact on our external demand, term policies for reducing the depend- POLITICAL STABILITY IN TURKEY whereas domestic demand is expected ency of intermediate goods imports. to moderate as well due to rising global Energy sector reform program including uncertainty. Central Bank of Turkey issues such as nuclear energy, renewable has taken a number of timely and pre- energy, energy effi ciency and privati- emptive measures in order to contain zation of distribution and generating the repercussions of global uncertainty companies have been carried out since on our economy. In this regard, Central 2003. A new investment incentive sys- Bank recently reduced its policy rate tem and R&D and Innovation Support by 0.5 point to 5.75 and cut the foreign Program were put in to practice aiming exchange required reserve ratios by 0.5 to increase the competitive power and point for all maturities. This monetary increase longer term capital infl ows to policy reaction also together with its ac- the country. The Assessment Council on curate forecast performance once again Export-Oriented Production Strategy enhanced Central Bank’s credibility.

SEPTEMBER-OCTOBER 2011 ISSUE 6 TheThe TurkishTurkish PerspectivePerspective 43

Could the Tobin Tax or similar There are some who think that practices constrict the current ac- Turkey will decouple positively in count defi cit? the face of developments in Europe. Effi cient fi nancial intermediation and a What are your views on this? dynamic fi nancial sector are essential for the Turkey is one of the most dynamic proper functioning of a market economy but emerging economies which have it is also important to ensure that excessive rapidly recovered from the global capital infl ows do not disrupt economy’s financial crisis. The prominent macro fundamentals via distorting fi nancial and structural indicators in the post- stability and creating fragility. That is why crisis period suggests that our economy several emerging market economies have will experience a positive decoupling in implemented measures so as to restrict the forthcoming period thanks to the capital infl ows and ease the appreciation strong fiscal and financial system. pressure on their currencies. In this regard, While the European economies policymakers gave Tobin tax the benefi t of struggle against debt problems, Turkey doubt. However, in a global setting of ample has a very strong fiscal structure. In liquidity, interest rates hovering around nil in addition to the strong fiscal position, the developed markets and widening growth Turkish banking system is ranked gap between the emerging and developed among the best performing countries economies, this popular means has not in Europe. Probably the essential factor been an effi cient instrument to deter capital ensuring positive decoupling is the infl ows or limit the appreciation pressure. political stability in Turkey. Confidence Bearing in mind all the shortcomings of producers, consumers and investors and other countries’ experience with the depends on political stability which Tobin Tax, the odds are high that this is lacking in many countries leading sort of tax would not be the appropriate to delays in the decision-making solution to fi x our external imbalances processes. Do you think there is a need for the problem. Furthermore, as the government, Consequently, although both the government to take certain fi scal we do not want to deviate from 3 frees, worsening outlook for global economic measures to put the brakes on the namely, free capital fl ows, free trade and activity and rapidly increasing rapidly developing credit volume and free fl oating exchange rate. Hence, we are concerns on the debt sustainability increasing current account defi cit? of the view that it’s wise to fi nd alternative in Europe has increased the risk of Recent indicators show that credit growth and more robust ways such as struc- a renewed slowdown in the global is diminishing which will have positive tural reforms which will provide gradual economy, the negative impacts of refl ections on our external balances. The improvements in current account balance these developments on our economy government and the authorities are closely instead of consulting to indirect ways. is expected to be limited on account of monitoring the developments and taking required actions when needed. In the face of widening current account defi cit, increasing domestic savings is crucial and economic policy framework has been drawn within this context. We consider reducing the dependence on external sources for fi nancing the growth as a matter of pri- ority. For this purpose, we give utmost importance to policies for increasing domestic savings, particularly public “Global savings. That is why, as the govern- uncertainties will lessen somewhat ment, we are determined to imp-rove in the month of public savings through sustained fi scal September” says the Deputy Prime discipline. Minister 44 In Depth / Interview with Deputy Prime Minister Ali Babacan

In 2008, US Foreign Minister Condoleezza Rice had congratulated then-Foreign Minister Ali Babacan for the role Turkey played in the rapprochement between Syria and Israel

As Foreign Minister, Ali Babacan accompanied US President Barack Obama on his visit to Istanbul in 2009

The success he exhibited in the previous three Ali Babacan who was born in governments propelled Ali 1967, was the youngest minister Babacan to post of Deputy in Turkey during the 58th Prime Minister in the 61st Government which he was attended Government, which was as the State Minister in Charge of formed after the June 12, 2011 Economy elections

In 2010, Ali Babacan was selected as a member for the “Global Undertaking the role Sustainability of Minister Responsible High-Level Working for the Economy in May Group” formed by 2005, Ali Babacan put his United Nations signature on the beginning (UN) General of a new era in EU-Turkey Secretary Ban Ki relations Moon.

SEPTEMBER-OCTOBER 2011 ISSUE 6 TheThe TurkishTurkish PerspectivePerspective 45

strong macroeconomic fundamentals as Erdoğan defi nes the next four years as “a well as timely implemented fi scal and period of mastership”. monetary measures. One of the priority areas, in this respect, is a brand-new constitution How do you consider the warnings in line with EU standards which will of overheating directed toward improve the democratic nature of our Turkey? Do you believe we are country and introduce more liberties. In about to face such a risk? the meantime, we will implement active With the latest grim outlook in the global employment policies so as to increase economy, I think the overheating debate employment and enhance the qual- “The Assessment Council on is out of context now. The measures that Export-Oriented Production ity of labor, which will bring effi ciency we have taken so far were particularly Strategy was set up in order to gains and increase the sustainability develop strategies to increase focused on “over-borrowing” not “over- the in-house production of of growth. Energy investments will be intermediate goods” says heating”. Latest data releases also confi rm Ali Babacan given priority. We target both ensuring that credit growth has been losing steam, reliable supply of energy needed in the vindicating the effectiveness of the policy growth process and also lowering energy measures taken so far. Furthermore, dependency and energy bill which con- macroeconomic indicators signal a stitutes the bulk of our current account moderation in the economic activity. On defi cit. Structural reform process in the the supply side, industrial production, health and education is continuing in an capacity utilization rates and business accelerating pace, which is signifi cantly confi dence indices increased moderately refl ected on the budget appropriations. starting with the second quarter of 2011. Big transportation infrastructure invest- On the demand side, modest increase ments are underway and new projects in domestic durable goods-sales and the are on our agenda. Legislative reforms weakening of consumer confi dence give to follow developments in international signs of a deceleration in the consump- % law regimes as well as to harmonize tion growth in the forthcoming period. 4.5 with EU legislation are also in process. Similarly, macroeconomic gauges such Our determination towards creating as imports and production of investment a stable economy has lured investors goods and sales of commercial vehicles GDP growth rate projection for 2011 and Turkey will maintain its position as also point out to a slowdown in the a safe haven and attractive investment Data: Ministry of Development, Medium Term Economic investment expenditures. All these imply Programme 2011-2013, October 2010 venue offering high growth potential, that growth likely slowed down in the stability and access to a wide geography. second half and year-end growth fi gure will be modest compared to last year.

Are there any messages you wish to convey to foreign investors? Structural reforms implemented in the last decade are one of the main factors be- hind the favorable economic performance and remarkable recovery of the Turkish economy from the recent global crisis. Our government is committed to enhance the effectiveness of all these reforms, to urgently implement the required comple- mentary legal provisions and consolidate the successes we have achieved so far. We are determined to institutionalize what we have done to date on the economic front. That is why Prime Minister Mr. 46 In Depth / Defense Industry

SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 47

Local Shield: OVERCOMING A DEPENDENCY TO IMPORTED DEFENSE EQUIPMENT Turkey is aiming to become a regional power in the manufacture of defensive products and technologies

BY TOLGAHAN ÖZKAN

ORLD WAR II had come to an end. The ish Armed Forces (TAF) increased rapidly. US W US, having emerged as the guardian tanks, ships, and planes provided an intoxicat- of the free world, had begun its search for new ing boost to the TAF’s abilities. However, the allies in an attempt to counterbalance the negative aftereffects of this sweet drug would Soviet Union and its respective allies. With soon become clear. the foreign aid supplied within the scope The donation of surplus defense items to of the Truman Doctrine and Marshall Plan allied countries started hindering the domestic and NATO, which was created right after the production of such items. As a result, skills fi rst two, the world had undergone a de facto acquired painstakingly and with great sacrifi ce division into two sides. Shaken by the Soviet in the 1920s and 1930s nearly vanished over Union’s demand for land, Turkey preferred time. When the situation in Cyprus turned vio- to ally with NATO. The defensive products lent in the late 1960s, Turkey wanted to make manufactured by the US during the war were a military landing on the island. Its NATO no longer needed in such quantity; they were allies, however, did not want them to use the thus declared surplus production and distrib- donated equipment. The majority of defensive uted to NATO member countries. Among the equipment was being supplied by the US, and countries benefi ting from these handouts was Turkey, having shut its shipyards, arrived at the Turkey. Having been equipped with US arma- painful realization that it didn’t even have ships ments, the fi repower and mobility of the Turk- with which it could ferry its soldiers to Cyprus.

PHOTOGRAPH BY AA /CEM OZDEL 48 In Depth / Defense Industry

Turkey has sped up its investments in the defense industry, and it is focusing on fulfi lling more than half of its needs via domestic manufacturing

Northern Iraq in 1990s. Today, Turkey has sped up its investments in the defense industry, and it is focusing on fulfi lling more than half of its needs via domestic manufac- turing. In a speech he delivered in July titled “Call to the Na- tion,” Prime Minister Recep Tayyip Erdoğan said, “We have made very signifi cant progress in the defense industry,” and continued, “With the projects we are running, we will be- come a country that designs, produces, and exports its own rifl es, cannons, tanks, helicop- ORLD WAR II had become clear. ters, planes, unmanned aerial W come to an end. The THE SIGNIFICANT The donation of surplus vehicles, and satellites.” US, having emerged as the defense items to allied coun- At the start of the 2000s, guardian of the free world, PROGRESS tries started hindering the Turkey set a long-term vision had begun its search for new domestic production of such for its defense industry. With allies in an attempt to coun- Turkey now aims to be a designer, items. As a result, skills ac- the various projects currently terbalance the Soviet Union producer and exporter country in de- quired painstakingly and with under way, nearly 50% of and its respective allies. With fense industry great sacrifi ce in the 1920s TAF’s arms and equipment the foreign aid supplied with- and 1930s nearly vanished needs are being supplied do- in the scope of the Truman over time. When the situation mestically. The sector realized Doctrine and Marshall Plan in Cyprus turned violent in approximately 1 billion dollars and NATO, which was cre- the late 1960s, Turkey wanted of exports in 2010, collecting ated right after the fi rst two, to make a military landing on 2.7 billion dollars in revenues. 800MILLION DOLLARS the world had undergone a de the island. Its NATO allies, In 2002, the sector’s revenues facto division into two sides. TOTAL REVENUE OF however, did not want them were around 800 million dol- TURKISH DEFENSE Shaken by the Soviet Union’s INDUSTRY IN 2002 to use the donated equipment. lars; in 2007, exports had risen demand for land, Turkey pre- The majority of defensive to 420 million dollars and ferred to ally with NATO. The equipment was being supplied total revenues were nearing 2 defensive products manufac- by the US, and Turkey, having billion dollars. tured by the US during the shut its shipyards, arrived at The fundamental reasons war were no longer needed in the painful realization that it behind this increase in the BILLION2.7 DOLLARS such quantity; they were thus didn’t even have ships with sector’s output were the de- declared surplus production TOTAL REVENUE OF which it could ferry its soldiers velopment of next-generation TURKISH DEFENSE and distributed to NATO INDUSTRY IN 2010 to Cyprus. weapon technologies and the member countries. Among Much later, starting in the priority granted to local com- the countries benefi ting from 1970s, Turkey turned toward panies by TAF in purchasing these handouts was Turkey. domestic arms production the equipment it required. Having been equipped with once again. However, technol- A step very critical for the US armaments, the fi repower ogy was developing rapidly and Turkish defense industry was and mobility of the Turk- With the contributi- Turkey had diffi culty catching taken in June 2009 with the ish Armed Forces (TAF) up. The critical importance signing of the agreements for increased rapidly. US tanks, ons of the private sec- of manufacturing the tanks, the ATAK project in which ships, and planes provided tor, Turkey is now pre- planes, missiles, and computer Turkey will begin manu- an intoxicating boost to the paring to produce its systems that the military was facturing T-129 helicopters TAF’s abilities. However, own Unmanned Air importing would be under- possessing superior charac- the negative aftereffects of Vehichles stood with the tension that teristics. This exciting project this sweet drug would soon emerged in the Aegean and has brought a new dimen- PHOTOGRAPH BY CEVAHİR BUĞU BY CEVAHİR PHOTOGRAPH SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 49

LOCAL PROJECTS WHEN ONGOING PROJECTS ARE COMPLETED, LOCAL MANUFACTURERS WILL SUPPLY 80% OF THE TURKISH MILITARY’S EQUIPMENT NEEDS

Aselsan Atılgan-Zıpkın Aselsan Naval Ships (?) LCAC LASER PROJECTS AND Land SHORAD Air Surveillance, Fire Control PRODUCTS Defense System Radars 8 LCT Target or Obstacle Aselsan-Roketsan Naval Satellite SAR Radars 1 LPD/LHD ship Detection and Guidance Laser Systems (LADAR), VL Low Altitude Air 1 RATSHIP Defense Missiles Multi-Function Phased Array Radars (APAR Lasers for Detection of ANTI-TANK PROJECTS AND 1 MOSHIP Chemical and Biological PRODUCTS Aselsan-Roketsan Naval Radars) (TF-2000) VL Medium Altitude Air MRTP-40 Weapons (Spy) (LIDAR) Umtas LR Defense Missiles Aircrafts AESA Radars Laser Beam Guidance MRTP-44 Technologies Omtas MR UAV SAR Radars MRTP-20 SAT DIRCM Omtas Single Soldier Countermeasure MRTP-22 Kangal Cirit Systems 4 RMK S&R vessel Laser-Guided Tank 120 mm Tank- Munitions Launchable Missiles 16 YTKB Dearsan MANNED AIRCRAFT PROJECTS Naval Training Vessel AND PRODUCTS LAND VEHICLES I All Types of Fast Attack TAI-Aselsan- Otokar Altay MBT AgustaWestland T-129 Boats Attack Helicopter Otokar Cobra Light AKYA- Heavy- TAI-ITU Light Civilian Otokar Kaya Medium Lightweight Torpedo Utility Helicopter UNMANNED AERIAL VEHICLE Otokar Kale Heavy Atmaca- Anti-Ship PROJECTS AND PRODUCTS TAI Light-Medium MRAP Missile AIRBORNE MUNITIONS PROJECTS AND PRODUCTS Tiha Male Block-A Military Utility Helicopter Otokar 6x6 and New 8x8 Wheel Vehicles HGSS (JDAM) Bombs Tiha HALE Block-B 2000-500 lb Armed (Umtas-Cirit) TAI Hurkus Turboprop Trainer Aircraft Nurol 4x4, 6x6, 8x8 HGSS Wing-Mounted Vestel Karayel Tactical Wheel Vehicles TAI Turbojet Trainer Bombs 2000-500 lb Kale Çaldıran Tactical Aircraft FNSS PARS 6x6, 8x8 Bunker Busting Bombs Wheel Vehicles ROCKET PLATFORMS (TÜBİTAK-MKE) Kale Mini UAV FNSS Samur Roketsan T-105 Rockets IR-Guided Precision TAI Turna-G Targeting SATELLITES Amphibious Assault Guided Missile Bridge Roketsan T-122 Rockets Drone Göktürk-1 E/O(Italy- “Demet” Cluster Bomb Turkey) TAI Gözcü Tactical UAV FNSS Amphibious Work Roketsan T-302 Rockets Laser-Guided A-G Mechine Vehicle TAI Imek Jet Targeting Göktürk-2 E/O(Turkey) Yıldırım Block I Bombs drone FNSS ACV-S Tracked Göktürk-3 E/O(Turkey) Yıldırım Block II National IR-Guided Vehicles AA Missiles (Roketsan- Anti-Radiation Radar Tusat-1 Communication TÜBİTAK) Hunter UAVs (Turkey) FNSS 35 Ton New- Type IFV (similar to National Anti-Ship Tusat-2 Communication Germany’s Puma ) Missile (Aselsan- (Turkey) Roketsan) BMC 2.5, 5, 10 Ton Cargo SAR Satellites (Turkey) Carriages National Torpedo Family (Meteksan-Tubitak- National Satellite FIREARM PROJECTS AND Aselsan-Roketsan) Launching Rockets (by PRODUCTS 2015)... AIR DEFENSEDEFENSE PRPROJECTSOJECTS AND 5.56 mm National PRODUCTSPRODUCTS Infantry Rifl e, Kale- SONAR PROJECTS AND MKEK PRODUCTS Aselsan-RoketsanAselsan-Roketsan TowedTowed VLVL LLowow Altitude Air 7.62 mm National Towed Array Sonars DefenseDefense Missile SSystemystem SEABORNE PLATFORMS Infantry Rifl e, Kale- Multi-Bim Sonars MKEK AAselsan-Roketsanselsan-Roketsan 12 Milgem ASuW Mine Protection Sonars Otonom VL Low Altitude 7.62 mm National AAirir DeDefensefense missile RADAR 6 U-214TN Machine Gun, Kale- Side Array Sonars SSystemystem MKEK Aselsan Land Watch 4 TF-2000 AAW Passive Distance Finder AAselsan-Roketsanselsan-Roketsan Radars Destroyer Bora-12 Sniper Rifl e, Sonars MeMediumdium VL AltituAltitudede Air MKEK Defense Missile System Aselsan-Meteksan Sea (6-8) Estimating Sonars Watch Radars KNT 7.62 and 12.7 mm AAselsanselsan SpaaG LoLoww (6-8 ?) Depth Charge Sonars Aselsan Air Defense Sniper Rifl es, Kale AAltitudeltitude 35 mm Gun Air 4 LCM Defense SSystemystem Early Warning radars National Grenade Sounding Log 27 AAV Launcher SoDoLOG AAselsanselsan Bora Naval Aselsan Air Defense Fire Control Radars SHORAD Air Defense 2 LCV-P Mounted Sonars System Aselsan Naval Ship Torpedo Seeking Sonar Watch Radars 2 LST 50 In Depth / Textile

SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 51

STAMPING “MADE IN TURKEY” on World Fashion Hugo Boss, Adidas, H&M, Zara, Massimo Dutti, Gap, Banana Republic, and Old Navy are just a few of the world’s ready-to-wear clothing brands that are produced in Turkey. Today, the “Made in Turkey” badge constitutes a global guarantee

BY ŞEREF YILMAZ BY MERVE KARA

Özak Tekstil, a Turkish brand that is one of the biggest denim producers in the Mediterranean basin, has been active in the fi eld for 24 years. With the know-how it accumulated over time and its renewal efforts that began as of the ‘90s, Özak became a main producer for dozens of global brands, including the likes of Dolce Gabbana, Frankie Morello, Armani, Zara, Hugo Boss, and Fornarina. The company made no concessions of its tight production rhythm this year, whether in its headquarters in İkitelli, Istanbul or its facilities in Çatalca and Malatya. Like its 130-person design team, which currently is brainstorming for 2012 winter collections, all Özak departments are prepar- ing their sails to be propelled by the winds of fashion that will start blowing next year, an especially impressive feat in a year in which denim markets worldwide have slowed down. 52 In Depth / Textile

It can be said that the Geographical source of Özak’s outstand- proximity to main ing performance is due to its markets, short profi ciency at producing high logistics period, value quality, stylish blue jeans for added products and the entire world. Likewise, General Manager Ahmet in return reasonable Akbalık explains the formula prices made Turkey that allows the production- attractıve as a focused company to break manufacturer for away from the pricing fashion brands competition that puts many during the recession of its rivals out of the game. Akbalık says, “By leaving a fi eld in which there was very intense competition, produc- ing value, and adopting this to the very end, a point productivity as a principle, we highlighted by the fact that made our business sustain- Akbalık claims the company able.” The transition Akbalık is not planning to focus on speaks of begins with the branding or shifting to the re- company focusing more on tail side of the business. The design activities from the experienced manager says, ‘90s onward and continues “We are decisive about stay- with the company renewing ing on the production side.” itself constantly to this day. Özak Tekstil exports to mar- total exports of quality denim He states that the company, kets that include the world’s ranges from 15% to 20%, and which entered the year 2000 largest buyers of textiles, from Özak is one of the biggest with a solid build up of R&D, Spain to France, the US, and players in the Mediterranean is indispensable for the Scandinavian countries. The Basin, which is known to be numerous global brands it is company’s share in Turkey’s highly competitive. “If you a supplier to, for this reason. are involved in the denim Özak today provides style WHO MADE WHAT? business in Europe today, you ideas to such brands as Ar- Turkish suppliers that produce for global brands and the brands that absolutely must know of us,” mani, Boss, and Gap, which carry ‘Made in Turkey’ badge: says Akbalık. Özak’s success can be diffi cult pricing-wise crosses paths with the stories on the production side, and of companies that know how SUPPLIER BRANDS PRODUCED even covers their inadequa- to use the advantages Turkey NIKE, ZARA, PULL&BEAR, MASSIMO DUTTI, ESPRIT, HUGO BOSS, cies according to the trends it YEŞİM TEKSTIL TCHIBO, SCHLAFGUT, GAP, BANANA REPUBLIC, OLD NAVY has in the global textiles notices. The hard part of the market well. Figures relating BAKON GİYİM ZARA, BERCHKA, LEE, WRANGLER, TRUSSARDI business becomes obvious on to the textile sector, which MARC O’POLO, DAKS, FALKE, PUCKO, GANT, ARMANI, ERMENEGILDO consideration of the hardy KAZOVA TRİKO ZEGNA is said to have returned to competition involving the BANDOLERA, GAP, NEXT, MEXX, KOOKAI, OASIS, MARC O’POLO, its brighter days as of last dozens of brands for which ÜNLÜ TEKSTİL MORE&MORE, ZARA year, appear quite promising it engages in production. ESPRIT, TOM TAILOR, DEBENHAMS, S. OLIVER, ZARA, BERSHKA, too. According to the export HEY TEKSTİL MASSIMO DUTTI, H&M, ONLY, VERO MODA, TOP SHOP, EVANS, MORGAN, Özak needs to make sure ETAM fi gures for July, announced that the designs it produces by the Turkish Exporters As- GENCE TEKSTİL O’NEILL, ESPRIT, S.OLIVER, TOM TAILOR, INTERSPORT, CAMPIONE, for different brands must COLVETA GROUP, MELTIN POT sembly, the export of apparel absolutely not resemble one ADIDAS, CARLI GRY, CHAMPION, DKNY, FERRE, LACOSTE, NEXT, PUMA, and textiles increased by 19% BIESSSECI TEKSTİL RBK, TIMBERLAND, TRUSSARDI, UNITED COLORS OF BENETTON another and that its crews are over the same period last year, FRANK WALDER, HUCKE, BRUNO MANETTI, OTTO, MARLY’S, MARC secretive about everything, PAMEKS TEKSTİL AUREL, JOOP, AUST, BRAX, JEAN PAUL, HELDMANN, APRIORI exceeding 1.6 billion dollars. including the techniques they H&M, ESPRIT, DECATHLON, MANGO, ZARA, ALDI, TCHIBO, GAP, TARGET, The fi gures of the Interna- use, until new collections are ÖRMA TEKSTİL C&A tional Textile Manufacturers’ exhibited. “This is a very seri- APS TEKSTİL MARKS&SPENCER, ESPRIT, REISS, MASSIMO DUTTI, WAREHOUSE, Federation also show that ous business,” says Akbalık. MONSOON there was a signifi cant rise in BRAX, WILLY BOGNER, GOLLEHAUG, W. OLSEN, APRIORI, Brands entrust their styles ÖRSAN TEKSTİL BURLINGTON, ANN TAYLOR, LILLY PULITZER, THALIAN, BISON, RIE Turkey’s textile industry at established over decades to DESIGN, H&M, REISS, BURBERRY, BARBOUR, ZEGNA SPORT the level of modernization. Özak, which in turn appears AKKANAT HOLDING ADIDAS, PUMA, NEW YORKER, TOPAZ Turkey ranks second world- to remain completely loyal to wide with the investment it

SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 53

exporting companies were ‘Made in Turkey’ has become able to work at full capac- the symbol of this intense ity from the start of the year labor; in fact, even imitations until November. The fi rst of of it are being produced” the opportunities providing Among the customers of Hey for this came as European Tekstil, which has recently exporters, who shifted toward opened design offi ces in Paris working without stock due AHMET AKBALIK and Milan, are such brands as to the economic stagnation, CEO, Özak Tekstil Converse, Stefanel, Benetton, redirected orders made to “We are focused on the basis of and Kookai Celio. the Far East to Turkey. The productivity and adding value second reason for the boom to our business. We have been Özak Tekstil is also a good in orders was that Portuguese the sole supplier in Turkey of example of how Turkey many brands for which we are a and Spanish rivals were hit supplier; this proves how suited produces value with regard to seriously by the crisis. Turkish the service we provide is.” its position, even during times producers kicked into gear of crisis. The company, which after the economic diffi cul- has begun deliveries of what ties in these countries forced they had produced in recent many companies to shut years, provides logistical serv- down, and they took to the ices upon request too. A jean helm of unfi nished projects. produced by Özak in Turkey Turkey’s proximity to Europe can thus be transported to helped improve relations AYNUR BEKTAŞ any store in the Netherlands, between European producers Germany, or Los Angeles. The CEO, Hey Tekstil and Turkish producers whose world is starting to prefer Tur- made for machinery for long fast delivery advantage they “The ‘Made in Turkey’ badge key as a production base for fi bers (wool) over the past ten intended to utilize. Germany has become a symbol of this reasons ranging from the im- years, with a total of 289,848 ranked fi rst among Euro- intense labor; in fact, even provement in production qual- imitations are being made of it.” spindles. It maintains second pean countries increasing ity, fast delivery of goods, and place in open-end thread their purchases from Turkey; good cost analyses. Meanwhile, machines with 385,348 ro- Hey Tekstil, one of Turkey’s many textile brands from Tur- tors. With 2,853,108 spindles biggest textile producers, key are earning nearly as much in short fi bers, Turkey ranks increased its orders from revenue as holding companies fi fth in that category, whereas this country in such a hard as they establish new routes to in investments for shuttleless time by around 10%. Aynur increase capacity. The aware- looms, it ranks fourth with Bektaş, the CEO of Hey ness of creating value known 21,508 such devices. Tekstil, which employs more by suppliers in the Turkish than 2,000 people, ascribes apparel industry provides for Despite such challenges as the success achieved by Turk- visible growth on the produc- raw material prices, which ish apparel producers to their tion side. However, it is worth have put the world textile intense efforts in the areas adding that the sector’s growth industry in dire straits, and of quality and design. “The is not just about Europe and the reduction in consumer Africa: while Turkish textile demand with the crisis, investments spread rapidly in it can be said that textile the Middle East and in Africa, companies use certain they also target such markets unique advantages present as China and India nowadays. in Turkey during the period “A great foreign trade gambit is of constriction quite well. beginning. These markets are Nedim Örün, President of the not rivals any longer; they are Federation of Fashion and all markets to us,” says Halit Apparel of Turkey, had said, Narin, Chairman of the Board “We see clearly that demand of the Union of Textile Indus- has increased in the period try Employers of Turkey. we go through after New Years’,” stating that apparel The success achieved by brands were beginning to Turkish apparel producers produce more and more comes from their intense efforts in the areas of quality wares in Turkey. In 2010, and design 54 Content: Drawing Strength from the Past P57 A Turkish Touch in the Offi ce P59 Welcoming Guests in A Modern-Day Palace P62 A New Horizon in Cultural Tou- rism: The Zeugma Museum P64 A Real Estate Consulting Firm Favourite P66 Editor: Ceyhan Aksoy

Brands JEWELRY, TOURISM, MUSEUMS, REAL ESTATE...

question they had in their minds when founding Dre- DREAMING OUTSIDE THE BOX ambox, which offers all sorts of content services concern- A journey which began with working in a TV channel ing television channels, was turned Dreambox into a prestigious brand in the “Could we do it too?” The digital platform reason they decided to found a company, he adds, was to answer this question. The company that emerged was BY CAN GÜRSU BY ŞEREF YILMAZ actually the outcome of the experience and knowledge “ WHAT WE REALLY SELL working lives, Öztoksoy gets fi eld of television and, in a Öztoksoy accumulated after ARE DREAMS; FIRST YOU to experience the pleasure of sense, to transform television working for a national TV CREATE YOUR DREAM, YOUR being one of the lucky minor- channels into brands. “In station for seven years. FANTASY, THEN YOU DRAW A ity that does. Thanks to the 2002, television was a sector The company started PRELIMINARY SKETCH OF IT digital branding agency he developing rapidly in Turkey; working with numerous AND TIE TO REAL TARGETS, founded in 2001, Dreambox, but one of the most impor- national channels from the AND YOU THUS CREATE A he now uses his own dreams tant elements for television moment it was founded. For BRAND.” This is how Dre- and imagination to express channels to become brands, Dreambox, designing the ta- ambox founder and creative the goals of big brands. “The their visual image, was very ble at which the presenter sits director Çağrı Öztoksoy likes brand’s name is Dreambox, defi cient, and we couldn’t go or the news studio, creating to explain his company’s because for us, everything is beyond looking at foreign the credits for the newscast, fi eld of operations. While few about imagination.” television channels and aping or designing the entire chan- people fi nd the time to dream Dreambox’s raison d’être them,” says Öztoksoy. He nel are like fruits in a basket. amid the bustle of their is to provide services in the states that the fundamental Öztoksoy says, “When a com-

SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 55

pany comes to us, they might company gained the chance is fl exibility in many areas. want the whole basket just as to exhibit its power in this Today, screens have broken they might request a single area too when television and free of the boundaries of fruit.” Among the stations web later became intertwined bezels, whether projected on Dreambox works with are some time later. Dreambox’s a surface or appearing as a many national heavyweights web department continues hologram. “In every part of like ATV, TRT, D Spor, Kanal its mission of building brand our lives, there is an ongo- D, and Kanal 1. The company and corporate identities ing process that will turn a has also worked on many that the company began in person into a king; when projects for international television, and analogously I wake up in the morning, stations, including a credits to its work in television, it I can now see my news, reel for the UEFA Champions has produced the websites of Facebook conversations, or League that was shot to be many companies both foreign my schedule at the moment broadcast in the entire Mid- and local, among them those in the mirror,” says Öztoksoy. dle East for Al Jazeera Sports. of Whiskas, Koç Holding, He adds, “These are actually Fusing the message TV Toyota, and Türk Telekom. all screens; their founda- channels wish to convey and Indicating that their success tions are all based on visual the goals they wish to achieve in creating television brands with their imagination, was a point of reference in Dreambox has also gained designing corporate websites, acceptance in the interna- Öztoksoy says, “A television tional arena with the awards channel has more than 150 it has received. The company pieces of visual work; and was deemed worthy of eight when you can put these in international awards so far, order without problems, you including such prestigious are entitled to your certifi cate sector awards like the Pro- of profi ciency and have suc- maxBDA, Interactive Media ceeded in gaining accept- Wards (IMA), Digital Signage ance for your brand anyway.” Expo Awards (DSE), and IF Dreambox has also brought Design. Dreambox isn’t just an award from the Interac- the fi rst Turkish company to tive Media Awards, one of win the PromaxBDA award— the most prestigious Internet it has actually won this award awards, to Turkey for Istan- design.” Every visual element “When I see something fi ve times, another fi rst. bul Sapphire’s website. we see on screen in television, new, my eyes sparkle Besides bestowing an inter- Although the web and the Internet, and applica- with joy. If that new national reputation upon the television may not seem so tions are part of what are thing is moving or company, these awards are similar at fi rst glance, they called user interfaces, and making sounds, that’s also an indicator of just how have much in common, user interfaces require design. even beter” effective it is in the web and the most important being Dreambox, which started out technology fi elds. creativity. But beyond merely in television, thus carries on Dreambox shifted toward creativity, the way to realizing by reinvents itself according the web fi eld when the World what is being envisioned goes to the changing place and Wide Web fully entered through software. “When signifi cance of screens in our mainstream use in 2003, you can’t control the software lives. which brought with it a well, no matter how good Öztoksoy says the company stream of demand relating your imagination is, you can’t is still in the growth stage. to the area. “TV and the web correctly bring what you After the company fi nishes were the same for us; one is imagine to life,” says Öztok- its development, he says, they a television and the other is soy, emphasizing the critical aim to split the company into a computer, after all; both importance of software. three, namely television, web, DYNAMISM COMES FROM have screens,” says Öztoksoy, Besides allowing it to create and software, underneath explaining why they shifted a difference in the areas of the Dreambox umbrella. The THE MULTINATIONAL toward this fi eld, and adds, television and the web, the company is currently working STAFF “And we said ‘Yes, we too company’s technological at full capacity and avoids need to be on the Internet’.” profi ciency allows it to set sail uncontrolled growth. A part- Although the Internet boom toward other areas too. nership seems unlikely before Number130 of inhouse and was somewhat taxing for Another benefi t provided the company completes its freelancer employees of the department initially, the by technological profi ciency institutionalization. However, Dreambox 56 Brands /Digital Design

Dreambox won IF Communication Design Award with Sabah-New York Times Commercial in Digital Media Animation Category

Champions League Show Opening Generic made by Dreambox for Al Jaazera Sports

once the institutional struc- are both a local Turkish com- ture is in place, the company’s pany and an international fi rst choice will be a Turkish company,” says Öztoksoy, and partner. Underlying Dream- summarizes the characteris- box’s success is a dynamic, tics of being a multinational sturdy base. In addition to its company with the following: more than 30 in-house em- “By adjusting the tone of our ployees, Dreambox has a crew voice according the message of more than 100 freelance the company wants to convey, designers, software develop- we can ensure the transmis- ers, hardware engineers, sion of the message without graphic designers, directors, harming the brand identity designers, and architects. “We because we are competent in fi rst look at the project and many markets both domestic select the people we will work and foreign.” with according to what the The dynamic structure of project will require,” says Öz- Turkey, which is expected toksoy, and adds, “Now that to rank fi rst among the the walls are lifted, we can countries with the youngest work with all sorts of people populations in 2025, parallels from around the world in an Dreambox’s dynamism. The effective manner.” Dreambox’s company aims to use the in-house crew is a multi- advantages it possesses as a cultural medley including Turkish brand as fruitfully as people from a diverse set of possible. Taking sure steps places ranging from Chile to toward becoming a global Thailand. The crew works re- player, Dreambox is certain motely on small projects, but to raise the bar sky-high with for large projects, people from its young crew and innovative all over the world assemble ideas. under one roof, which is how Öztoksoy met Alvaro Rego Today, screens have Pallas, one of the company’s broken free of the partners. As a partner in boundaries of bezels, whether projected on a Dreambox, Pallas opened its surface or appearing as Barcelona offi ce in 2005. “We a hologram

SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 57

est in diamond products to rise. “Many people who used to see diamonds as unattain- able now express their feelings by buying a diamond product, even if small,” says Ariş Pırlanta CEO Kerim Güzeliş. Diamond companies highly value the branding process in order to increase their share of the currently growing pie. In a mode of consumption based on a foundation of trust, brand names are very signifi cant. Naim Gençoğlu, the CEO of Jival, another important player in the sector, says, “Although jewelry craft- ing is a traditional fi eld, it has started adapting to the global market economy especially in recent times. And this situa- tion requires fi rms that have scope of the export strategies come to a certain place in the Drawing Strength for the year 2023, in the 100th sector to engage in branding. year of the Republic, we aim Firms wishing to exist in the to reach 12 billion dollars in market are now shifting all FROM THE PAST exports.” their communication strate- The growth of the market is gies and market-oriented The diamond company Ariş is being supported by develop- efforts toward branding.” ments in the domestic market Ariş Pırlanta’s product line taking innovative steps to grow too: while markets abroad runs the gamut from the high both in Turkey and in the world account for 65% of the fi gures end to the more reasonably market. The cornerstone of the achieved, the remaining 35% priced. In order to bring all comes from the domestic these items to consumers, company’s growth, however, is its market. The brands operating the company needs to have a experience in the sector have, of course, retail network stretching all contributed signifi cantly to over Turkey. At the moment, this growth. Having put an Ariş Pırlanta has 20 stores BY SİNAN KOPARAN BY CEVAHİR BUĞU end to an era in which it dis- domestically; by 2015, it aims tanced itself from retail, Ariş to reach 50 dealerships and URKEY, LOCATED in the Pırlanta, one of the foremost 100 small retail locations T world’s most important companies in the sector, is by 2015. “We want there to geographical area for bringing growing simultaneously with be one of our stores in all of natural gems and miner- the rest of the sector with its Turkey’s corners,” says Güzeliş, als to life by turning them new positioning. and continues, “But we do this into works of art, is gaining The growth of the sector, without hurrying.” prominent stature in the though coming mainly from At one time, Ariş Pırlanta world market by increasing abroad, was supported signifi - had slowed down its domestic its exports in this fi eld. The cantly in Turkey especially by retail strategy to concentrate size of diamond jewelry export the increase in buying power on international markets. market, which was estimated brought by rising incomes However, the company gave to be 500 million dollars eight and an expanding middle up the latter approach and years ago, has now reached class. Today, with a per capita once again sped up work 1 billion dollars. Can Özkök, Ariş Pırlanta’s product income that has exceeded on developing its domestic Vice President of the General line runs the gamut 10,000 dollars, diamond retail network. Of course, Secretariat of the Istanbul from the high end to the sales are on the rise too. The this doesn’t mean that Ariş Mineral and Metals Exporters’ more reasonably priced emergence of more reasonably Pırlanta has completely Association, says, “Within the priced items has caused inter- forfeited its international 58 Brands /Jewelry

aspirations. The company have led to Ariş Pırlanta follow on manual craftsmanship. aims to become a world brand a more cautious approach to The company regards mass by 2015 and it is progressing growth, as is the case for many production in the creation toward this goal with sure other companies. of diamond jewelry coldly, steps. It is closely following In preparing to become a instead wishing for the efforts new business partnerships signifi cant brand abroad, Ariş of its master artisans to be especially in Europe, America, Pırlanta is fi rst planning to felt in its products, allowing and Japan, and it has also ensure an extremely strong for extensive personalization. opened a location in Bul- foothold in its own country, From custom items bear- garia. The most alluring of the which it will use to support ing a person’s fi ngerprint or aforementioned markets is, of broader strides abroad. Wish- inscribed with a family seal course, the US—with a 50% ing to take full advantage of or symbol for each member share, the US is the world’s the international market, the of the family, Ariş turns out most important buyer. “How- company places much im- work that satisfi es custom- ever, due to the crisis, we know portance on the relationship ers’ expectations. This is not that our colleagues there are between quality and price. really a new practice for Ariş not very happy,” says Kerim Active in the jewelry fi eld Pırlanta either—in the 1900s, Güzeliş. Because of this, the ARİŞ WILL GROW BOTH for four generations, Ariş Abdülkerim Usta, the fam- company has delayed its LOCALLY AND GLOBALLY Pırlanta is among the com- ily’s grandfather, produced plans concerning the US for panies in the sector that insist customized items according to some time. For now, Europe special requests and personal appears to be a much more designs. attractive market for Ariş 150 Besides personalized Number of selling points Pırlanta, and the company’s (including dealships and designs, Ariş Pırlanta creates connections in the region small stores) Ariş aims to its own collections as well. For have until 2015 Ariş which is among have the effect of increasing its the companies in the example, by drying natural effectiveness in the market. By leaves using highly special- the end of 2012, Ariş Pırlanta sector that insist on ized methods and produc- aims to have fi ve retail loca- manual craftsmanship ing molds from them, the tions abroad. The company’s 5 is now feeling the need company makes the “Leaf Number of retail to patent some of its goals in this area were actually locations that Ariş aims Collection.” Interest in this much loftier, but develop- to open abroad in 2010 genuine designs collection, which contains ments occurring worldwide some of Ariş Pırlanta’s most popular products, is so high that the company feels the need to patent it worldwide. Having achieved the growth it desired in spite of the global slowdown both abroad and domestically, Ariş Pırlanta is now expanding its goals. To achieve them, the company is quickly taking successive steps to develop its branding, strengthen its distribution network, and diversify its product range. The corner- stone of its growth, however, comes from the land in which it was born and the pains- taking efforts of its master artisans.

Kerim Güzeliş represents the fourth generation of the family in the jewelry sector

SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 59

Offi ce furnitures account for 30 % of total furniture production in Turkey

Businessmen Association’s Turkish Offi ce Furniture A Turkish Touch Sector Report, there are an estimated 29,000 producers in the sector, operating in a number of cities and employ- ing more than 250,000 IN THE OFFICE people. Having gained momentum following industrialization in Turkey, the offi ce TAKING ON THE LOAD OF THE FURNITURE SECTOR furniture sector is expanding its share in the Although the true size of the furniture sector as a whole and increasing its sector is hard to tell because export fi gures of the many dynamics in play, it is estimated that the total worth of the Turkish furni- BY NESRİN KOÇASLAN ture sector’s production is 7.5 billion dollars. Offi ce furni- OGETHER WITH Turkey’s ing offi ce furniture too, but ture accounts for approxi- T transition to a free-mar- it did not make a name for mately 30% of this fi gure. It ket economy in 1980 came a itself in that fi eld for some appears that the sizable share speedy transformation in the time. The most signifi cant held by offi ce furniture will world of business. The new developments in the sector grow even more with the con- enterprises, new companies, occurred in 1998 and 1999. tinuing development of Tur- and rapid entrance of foreign By exhibiting growth of nearly key’s economy and the rising investors in the market, 400% over these two years, number of foreign investors besides bearing a number the furniture sector proved in Turkey. While the growth of more obvious results for that it could compete globally of Turkey’s economy results in Turkey, also played a role in in offi ce furniture too. Today, an expansion of the volume BILLION1.5 DOLLARS creating a sector that stayed Turkey is considered one of of business in the country, the relatively dormant until not Europe’s most important 2010 furniture rising importance of offi ce long ago. Turkey, which had producers of offi ce furni- exports projects within the con- been strong in the furniture ture. According to the Offi ce Source: IGEME (Export Promotion struction sector contributes sector, started manufactur- Furniture Industrialists and Center of Turkey) heavily toward the growth of 60 Brands /Offi ce Furniture

the segment. The acceleration coordination between mem- Ercan Atak says, “We wish to of growth and burgeoning bers and public institutions as make Gaziantep the exports potential is making the pro- our mission.” He adds, “The base of the offi ce furniture duction of offi ce furniture one number of members in our sector, establishing export ties of Turkey’s most important association is exhibiting an with the Middle East via this sectors. One clear sign of this increase parallel to the devel- enterprising city. We are aim- is that although the sector is opment of the sector.” ing for an employment- and only a branch of the general exports-based approach from furniture sector, it has its own POSITIONING GAZIANTEP AS A BASE which both our sector and association, the Association of As is the case for the furniture Gaziantep will have much to Offi ce Furniture Industrial- sector at large, the offi ce gain.” ists and Businessmen, which furniture sector’s heart still Why is Gaziantep so houses many members under beats in Kayseri, but Konya important? The answer to its proverbial roof. OMSIAD has lately been among the this question is hidden in the President Ercan Atak says, cities to house important companies’ export strate- “With the aim of expanding brands. Besides Konya, which gies—nearly all of the big the market, we take estab- Turkish furniture sec- has produced numerous exporters of offi ce furniture in lishing harmony among our important brands, the sector Turkey export to the Middle members; ensuring the fi rm tor occupies a solid po- has another goal—to “posi- East, and Gaziantep can be rule of professional ethics in sition globally, ran- tion Gaziantep as a base.” considered the shortest path the sector; supporting high king second after Ger- OMSIAD has rolled up its that can be used to reach service and environmental many and produces sleeves for a number of efforts countries in this region. standards, production quality, 2% of the global offi ce geared toward accomplish- Considering the formidable and design; and facilitating furniture production ing this. OMSIAD President competition in Europe, this

BRANDS GROW IN THE OFFICE Offi ce furniture manufacturers in Turkey has accomblished to gain reputation especially in the Middle East, Europe and Gulf countries

HALİL ÇİFTÇİ GÜRAN GÖKYAY İSA KIZILÖZ HÜSEYİN TOSUNOĞLU Member of the Board and Sales and Deputy Board Chairman and Marketing and Trade Manager, Board Chairman, Tosunoğulları Marketing Manager, Ofi sset General Manager, Nurus Flekssit Our brand is the sector’s We currently have a monthly We are experiencing the joy Our company, which began pioneering and big brand, and output of 8,500 items. We of being the only Turkish exports with agreements with its present facilities it sell 30% of this outside the brand preferred in a broad signed with Saudi Arabia ranks as the largest producer in country. Among the countries geographic area stretching in 1992, today waves our Turkey. With a daily production we work in are countries like from Belgium to India. Nurus country’s fl ag in approximately capacity of 1,500 units of Iraq, Jordan, Dubai, Romania, has been completing very 32 countries. Flekssit, which furniture and 750 armchairs, it and Turkmenistan. Abroad, big projects in Europe’s most has additionally established is able to satisfy domestic orders particularly in neighboring important locations and, for its own regional headquarters within 72 hours. Bürotime countries, the image of Turkey 12 years, in the countries of in Dubai, Russia, and provides employment to a is very good; when goods are the Persian Gulf. Coming after Turkmenistan, offers its staff of 400. Bürotime offers known to be the product of our giant showroom in India services as a solutions partner its services in Turkey with 70 Turkey, especially in furniture, and our offi ce in Mumbai, to its distributorships as well concept distributorships and they are considered high this year we are bringing to as international companies also in more than 35 countries quality. Just as in every sector, life our monobrand stores in Europe, the Middle East, abroad. It exports 35% of in this sector Chinese goods project in dozens of countries. North Africa, and the Turkic its production. The markets see favor particularly in the Our continually increasing Republics, and because of in which our exports have a Arab world and in Africa for power in Egypt and our new these successes, it is the only signifi cant share are above their cheap prices, but because connections with Ireland and Turkish brand in its sector that all in the Middle East, as well Turkish goods are perceived Scotland are also among the has been deemed worthy of the as in Africa, Europe, and the to be high quality, they stand a developments that give great European Gold Quality Award Turkic Republics. Meanwhile, better chance in the long run. pride to the Nurus brand. We in Rome. Bürotime, has been taking part aim for 80 million dollars of in the TURQUALITY brand revenue in 2011. support program since 2009.

SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 61

the diffi culties of creating a international companies in global-scale brand. European, Middle Eastern, Because developed coun- and North African countries, tries are attaining impressive and in the Turkic Republics. export fi gures in the global Yet another brand, Bürotime, furniture sector, exports are a Tosunoğulları Mobilya very important to the offi ce brand, exports 35% of its furniture sector too. It is output. Working primarily in estimated that the worldwide the Middle East, as well as in consumption of furniture, Africa, Europe, and the Tur- which is valued at 300 billion kic Republics, Bürotime has dollars currently, will reach 1 taken part in the Turquality trillion euros in 2050. brand support program since Brands in Turkey are also 2009. highly active in exports. The majority of brands say they TARGETING 2023 export some 30% of their The Turkish Exporters As- production, and the foremost sembly’s 500 billion dollar objective in the upcoming exports target for the centen- term is to increase this per- nial of the Turkish Republic centage. Güran Gökyay, the has also enticed sectors to set Deputy Board Chairman and targets of their own. strategy could create alterna- The industry represen- General Manager of Nurus, According to OMSIAD’s tive markets for Turkey and tatives aim to increase which exports to 30 coun- Turkish Offi ce Furniture put it one step ahead. the size of the furnitu- tries, indicates that they ex- Sector Report, sector repre- re sector in the domes- port 30% of their production. sentatives aim to increase the CATCHING UP TO THE COMPETITION tic market to 15 billion Another company saying it size of the furniture sector Etem Özçelik, Chairman of exports 30% of its production in the domestic market to the Board of Modoko, says dollars and raise the is Ofi sset. Ofi sset manufac- 15 billion dollars and raise the sector occupies a solid share of exports to 3.5 tures 8,500 items monthly the share of exports to 3.5 position globally, ranking billion dollars by 2023 and is engaged in exports to billion dollars by 2023. second after Germany. He Iraq, Jordan, Dubai, Roma- Thus, there is some work to notes that 2% of worldwide nia, and Turkmenistan. Fle- be done to increase the share offi ce furniture production kssit, yet another company, the sector will take in the takes place in Turkey. Turkey’s began exports in 1992 after proposed 500 billion dollar chief rivals include Germany, signing agreements in Saudi export target for Turkey in the number one producer Arabia; today, it exports to 32 2023 from 1.5% to 2%. The worldwide, and Italy and countries. Flekssit has also branding efforts of compa- Spain, which are also strong established its own regional nies in the sector and their players. headquarters in Dubai, Rus- search for new markets seem Özçelik emphasizes that sia, and Turkmenistan. The as if they will continue in design is very important in company offers its services as the meantime, banking on a getting ahead in the global a solutions partner to its dis- total of 18.5 billion dollars in race. Brands must both focus tributorships as well as many revenues. on design and understand the value of specialization. But this is not such an easy proc- ess: “Because contemporary international standards in the fi eld are very unforgiving and strict, selling offi ce furniture to the world is quite a tough job,” says Güran Gökyay, Deputy Board Chairman and General Manager of Nursan. Gökyay adds, “In order to Contemporary international standards become a brand on a global in the fi eld and tough scale, you must meet all these competition force manufacturers to focus on

PHOFOGRAPH BY AAPHOFOGRAPH (BOTTOM) standards fully,” highlighting design 62 Brands /Tourism

The foundations of the Welcoming Guests Ottoman-themed hotel, which offers customers the comforts of home together with luxury and splendor fi t IN A MODERN-DAY PALACE for royalty, were laid years ago Ela Quality Resort Hotel, which is considered one of the when Akbalık realized there world’s top 99 hotels, presents historical tradition with were no holiday facilities suit- ing a family concept. He trav- modern day comforts eled often in those years and frequently had to chase after BY AYŞE MERVE KAMACI his children when vacationing amid a bustling work sched- HE BRIEF NOTE explain- of foreign vacationers since it ule, causing him to imagine T ing Ela Quality Resort was discovered in 1984 with a hotel in which kids and Hotel’s fundamental philoso- its pine forests, facilities with family members in different phy starts with the words, “If noteworthy golf courses, deep age groups could spend the you can imagine it, you can do blue sea, and long coastline day independently engaged in it; remember that everything with beaches of fi ne sand, this various activities. Thus began started with a mouse.” Para- modern day palace is owned the story of Ela Quality Resort phrased from Walt Disney, by Ahmet Akbalık, Deputy Hotel. In a poll conducted this line fi ts perfectly with the Chairman of the Turkish by online holiday and travel hotel’s philosophy and mis- Exporters Assembly and CEO Accommodation opti- portal HolidayCheck, which sion. The motto of progress of Özak Global Holding. Hav- ons in Ela Quality Re- features comments by holiday through imagination has been ing fi rst pictured a hotel suited goers from all around the quite popular lately, and at Ela to families, he now enjoys the sort, range from rooms world and is the number one Quality Resort, it is fused with pleasure of welcoming guests in the main hotel block reference for people wishing quality to become a reality. in one of the world’s top 99 to lake houses, villas, to go on vacation, Ela Quality Located in Belek, a favorite hotels. and suites Resort entered the ranks of

SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 63

A two-ton chandelier made of blown glass greets visitors in the hotel’s entrance

the world’s 99 and Turkey’s 10 to various world cuisines. For with gold, silver, and bronze best hotels. the sake of being original, we medals. Accommodation This success was not researched the Ottoman kitch- options range from rooms achieved by chance. “We need- en of the 1400s and 1500s per- in the main hotel block to ed to be different, a structure sonally and took direct notes. lake houses, villas, and suites. that adopts its culture as its Our chefs traveled the four Those opting for the villas own,” says Akbalık, explaining corners of Turkey, observing are able to relax and listen to the principle in his mind when particularly the regional foods AN ACADEMY TO TRAIN chirping birds amid greenery conceptualizing the hotel. of the Black Sea, Aegean, and ITS OWN STAFF and enjoy an uninterrupted Based on this approach, when Mediterranean regions in their vacation in a unit with fi t- the hotel was still being built, a places of origin,” says Akbalık, ness, spa, Turkish bath, and school named Academy Q was and adds that they develop massage rooms, outdoor and founded with an investment their own original concepts in 800 indoor swimming pools, and of around 500,000 dollars. such undertakings instead of Number of people cooking facilities. trained in Academy Q Tourism graduates from all copying others. of Ela Quality Resort Ela Quality Resort Hotel around Turkey receiving train- Staff quality is one of Ela pushes ever forward with ing and certifi cations ant the Quality Resort Hotel’s most new innovations and ideas to school. Approximately 800 distinguished characteristics, satisfy the considerably high people were trained and the but another is its aim to pres- 400 expectations of its customer Number of people hotel employed around 400 ent activities and services with employed after training base. Finding out that TUI, of them. Knowing that staff which family members in all in Academy Q Europe’s largest tourism quality is the cornerstone of age groups can spend time companies group, has been maximum customer satisfac- pleasurably. The hotel’s spa is observing them for two years, tion, the hotel management the fi rst certifi ed spa in Turkey. Ahmet Akbalık says, “They was also aware that the way World-famous entertainment 500 saw what we do right; due to customers’ hearts passes shows are brought specially THOUSAND to our working style being through their stomachs. “We to the hotel from abroad. Its DOLLARS fully concordant with their Investment for have a restaurant that serves chefs return from internation- the academy aims, they came to us with a Ottoman cuisine in addition al gastronomic competitions proposal to collaborate.” As the 64 Brands /Tourism

result of a franchise agree- sia, and ex-members of the ment signed in May, the fi rst Soviet Bloc; generally, only location of TUI’s new hotel 6–7% of their customers are concept Puravida thus came local. Akbalık says their lack to life in Belek. Meaning “Pure of heavy focus on market- Life” in Spanish, the Puravida ing efforts has played a role concept signifi es a holiday that in this, emphasizing that includes relaxation alongside a they gained customer loyalty full list of entertainments and through word of mouth, with activities. When announcing customers coming once the agreement to the press, Ela choosing to return year after Quality Resort Hotel General year and recommending it to Coordinator Vadi Karatopraklı people they know. In the win- said, “Puravida Resort is an ter season, occupancy rates international hotel concept remain high with golfi ng targeted at vacationers who events, which have essentially are highly educated and lead come to symbolize Belek, luxurious lifestyles. The new soccer camps, health services, hotel brand appeals equally congresses, weddings (the and offers the best service to daughter of Moscow’s mayor vacationers in all age and sex got married here), and inter- groups, from those who aim national corporate confer- for a holiday focused on vaca- ences. For tourists wishing tion on sports to customers to escape the cold weather of who expect healing and relax- Europe, Belek, Antalya is an ation. With our new model, attractive destination with its we will provide great contribu- mild climate. tions to our country too.” As Akbalık lists the hotel’s For their part of the agree- distinguishing features, he ment, TUI has also provided notes that an important Ela Quality Resort Hotel a detail is that the hotel’s name, A New Horizon in guarantee to help sell half architecture, logo, color of the hotel’s capacity. The concept, restaurant menu, Cultural Tourism: hotel primarily draws tourists and activity selection were from countries like Belgium, arranged deliberately so as to THE ZEUGMA MUSEUM Germany, the Netherlands, make up the parts of a whole. France, the UK, Austria, Rus- A two-ton chandelier made With the Zeugma Museum, one of of blown glass greets visi- tors in the hotel’s entrance. the world’s largest mosaic museums, Akbalık says they selected Gaziantep has opened its doors to the chandelier to support the millions of visitors survival of this art, a part of Turkish culture that faces being forgotten. There is BY MERVE KARA BY ERKAN YEYREK also a fossil on display in the hotel; once a tree, the fossil in RCHEOLOGICAL excava- saic museum from Tunisia’s time turned into marble, and Ations that began in the Bardo National Museum. it was discovered in Turkey ‘90s and months of prepara- Housing a total of 2,500 approximately two thousand tion and restorations have fi - square meters of mosaics, years later. Ahmet Akbalık nally been completed a short the Zeugma Museum is also In a poll conducted states that while such details while ago. With the efforts of leaving the Bardo in the dust by online holiday appear unconnected when various parties ranging from with the breadth of its collec- and travel portal, examined independently, they the Gaziantep Chamber of tion. The Zeugma Museum, were considered as a whole Commerce, the Ministry of which is also the largest mu- HolidayCheck, Ela and serve a unifi ed purpose: Culture and Tourism, and seum in Turkey’s history with Quality Resort entered presenting Turkish traditions, hundreds of archaeologists its size of 30,000 square the ranks of the world’s architecture, foods, habits, and historians, the Zeugma meters, contains items and 99 and Turkey’s 10 and values to guests at their Museum is seizing the title remains dating back to 100 best hotel most splendid. of the world’s largest mo- BC. Mosaics unearthed and

SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 65

THE FIGURES FOLD sites in 2008 numbered EACH YEAR around 23 million, this fi gure rose to 26 million last year. “We are taking charge of our museums and ruin sites, 25.8 and we are trying to raise our MILLION standards. Our income in Number of visitors to museums and ruin 2007 was around 70 million sites in 2010 liras. By the end of 2010, it had reached 170 million TL. We have an expectation for over 200 million liras in in- come this year,” said Ertuğrul 45 Günay, Minister of Culture Number of museums and ruin and Tourism, in an interview sites transferred to he granted to The Turkish TURSAB in 2010 Perspective, expressing the value given to museums as follows: “We are opening the region’s and actually the world’s largest mosaic mu- seum in Gaziantep. We are converting İçkale, Diyarbakır to a museum site in its entirety. In Haleplibahçe in Urfa, we opened a 40,000 square meter area, and we are arranging it as an open- air and indoor museum area. placed under conservation Anatolia, after all, is one have been conducted for the We have a museum initiative following excavations ongo- of the world’s richest areas past four years to develop in Hatay too. “ ing in the district of Nizip culturally, with its millennia close to 140 museums and Together with Zeugma’s on the shores of Gaziantep’s of history, in which it was ruin sites are bearing fruit restoration and conversion Birecik Dam Lake include home to numerous differ- too: while visitors to the to the world’s largest mosaic some of the most impressive ent civilizations. Efforts that country’s museums and ruin museum, one of the efforts artworks of the age of the Roman Empire. Zeugma, one of Turkey’s numerous hidden treasures, is expected to draw mil- lions of visitors. Zeugma’s rebirth can be regarded as a signifi cant element of the Turkish Ministry of Culture and Tourism’s sustainable tourism strategy. Practiced since 2007, the strategy is based not just on the mass tourism approach that emphasizes such natural beauties as the sea, sun, and sand, it also includes The extraordinary collection of mosaics includes a signifi cant component of depictions of Poseidon, god of the oceans and cultural tourism. New trends second only to Zeus in power, along with Oceanus and Theys, who, according to legend, had 6,000 sons in tourism are shifting away and daughters that became the spirits of the earth’s from the popular and more rivers, springs and streams. Demeter, the goddess of agriculture, is also present, as is Achelous, who gave toward the authentic, and Heracles what the world now knows as the “horn of this strategy is turning these plenty,” or “cornu copiae.” The famous warrior Achilles is also a mosaic subject into an advantage for Turkey. 66 Brands /Zeugma

Tordiemo licomni rivirmis in siliam, omacess ultiem, A REALcon publi, sendacta, ESTATE CONSULTING FIRM FAVORITE Drawing in the likes of Remax, Century 21, Arthur & Miller, Coldwell Banker, Realty World, and Sotheby’s International Realty, Turkey’s allure for international real estate consulting fi rms is as captivating as ever

the Ministry of Culture One of the most and Tourism conducted to popular and visually BY AYŞEGÜL SAKARYA increase interest in museums striking mosaics and ruin sites was the call for depicts what is simply N THE LAST TEN YEARS, and Realty World—have bids it announced for operat- I a signifi cant transforma- set up shop beside neigh- ing the booths at museums called the “Gypsy Girl,” tion has been witnessed in borhood side-street realty and ruin sites, which was a beautiful portrait the real estate sector in Tur- agents. Although many of won by the MTM-TÜRSAB of a young face with key. The global giants of real these global giants already partnership. The operation striking eyes that some estate consulting—including have a presence in Turkey, of 45 museum and ruin sites experts believe may Remax, Century 21, Arthur international real estate was transferred to TÜRSAB represent Gaea, the & Miller, Coldwell Banker, companies’ interest in Turkey last year with the purposes of goddess of the earth increasing income and visi- tor numbers, attaining a high representative power, and improving guest services to bolster its perception. With this collaboration, Turkey is expected to outperform the transforming Zeugma into previous year in 2011 too. the world’s biggest mosaic The efforts begun during museum. Not only is this the discovery of the ruins of success encouraging for Tur- Zeugma during the con- key’s cultural tourism vision, struction of the Birecik Dam it also shows that Turkey’s Lake in 1996 have given dream to become one of the Gaziantep the chance to world’s most visited cultural welcome millions of visitors, centers can be realized.

SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 67

is not yet over, as exemplifi ed front page for ten days. This expansion occurred in con- by luxury real estate consult- shows how much they value struction spending coming ing company Sotheby’s Inter- Istanbul—meaning how from the private sector. This national Realty’s initiation of much they value Turkey.” rapid growth continued to- operations in Turkey around The fi gures being posted gether with the continuation six months ago. by the real estate sector of projects begun long ago,” “Representatives from So- are enough to understand says Işık Gökkaya, President theby’s International Realty’s why these companies are so of GYODER. headquarters came to their interested in Turkey: 2011 Soyak Holding CEO Emre offi ce in Istanbul and did not has so far been a very lively Çamlıbel says that growth conceal their astonishment year for the construction in the market will continue, before our portfolio. They sector, which grew 18% in emphasizing the upturn in were very impressed when 2010. According to a report sector activity in 2011. While they saw the museum-like titled “The Real Estate real estate sales to foreigners mansions by the Bosphorus, Sector in Turkey and the Arman Özver says that fell from close to 3 billion left from the 1800s. Stories World First Quarter – 2011,” broadcasting a mansion dollars in 2006–2008 to in Istanbul in Sotheby’s about some of our properties published by GYODER (the main internet page shows 1.8 billion in 2009, they appeared in such publica- Association of Real Estate how much the company went back up to 2.5 billion values Turkey tions as the Financial Times,” Investment Companies), in 2010. In the “Emerging says Arman Özver, General the construction sector grew Trends in European Real Manager of Sotheby’s Inter- 14.8% in the fi rst quarter of Estate Markets Report national Realty Turkey. He 2011. “Double digit growth 2011” published by PwC adds, “One of the mansions in the construction sector in and Urban Land Institute in our portfolio stayed up Turkey continued through in February, Istanbul ranks on Sotheby’s main Internet the fi rst quarter. Rapid fi rst in real estate purchases. The fi gures leave little more to say—with its fl ourishing real estate sector, Turkey continues to be a real estate consulting fi rm favorite.

According to a report titled “The Real Estate Sector in Turkey and the World First Quarter – 2011,” published by GYODER (the Association of Real Estate Investment Companies), the construction sector grew 14.8% in the fi rst quarter of

2011 BY AHMET BİLAL ARSLANPHOFOGRAPH (BOTTOM) 68 The Turkish Perspective

Agenda FAIRS, EXHIBITIONS, SUMMITS, AND MEETINGS IN THE NEXT TWO MONTHS

SEP.17–NOV.13

Countdown to the Biennial The 12th Istanbul Biennial will be held by Institute for Contemporary Arts. The focal the Istanbul Culture and Arts Foundation point of the biennale consists of the works of with the sponsorship of Koç Holding Cuban-American artist Felix Gonzalez-Torres September 17 through November 13, 2011. (1957–1996), whose artistic production is one Five mixed exhibitions and around 45 personal of the best examples of such an approach to presentations will appear at the event. Every art. The event’s title this year, “Untitled (12th mixed exhibition will bring together the Istanbul Biennial), 2011,” repeats Gonzalez- works of numerous artists under a certain Torres’s tradition of naming his works. The theme. The curatorship of the Biennial has exhibitions to be held also refer to Gonzalez- been undertaken jointly by Adriana Perdrosa, Torres’s works with themes titled “Untitled” Director of Programma Independente de (Passport), “Untitled” (Ross), “Untitled” Escola São Paulo (PIESP), and Jens Hoffman, (Death by Firearm), “Untitled” (Abstraction), Director of the California College of Arts Wattis and “Untitled” (History).

SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 69

01 SEPTEMB02 ER CeBIT Bilişim Eurasia 7th LED and LED Lighting Exhibition TÜYAP Istanbul Fair and Convention Center 03 Istanbul World Trade Center / Yeşilköy OCTOBER 6–9, 2011 SEPTEMBER 29–OCTOBER 2 CeBIT Bilişim Eurasia, Europe’s 04 The LED Exhibition organized by Marmara Fair since 2007 number one information and is the only meeting point of the industry for Turkey, as well as communication technologies fair, 05 for southeast Europe, the Middle East, and Africa. The fair continues being the meeting point is important for spreading the use of LED technology, which of the ICT sector in 2011. ICT, a 06 has been a part of daily life for years but is not suffi ciently fundamental element of future business well known, proliferating it in sub-markets, setting up dealer strategies, provides for the creation of new areas of business 07 networks, and enhancing awareness of LED products. as well as growth in almost every sector. Having renewed its constitution to the sector’s needs and inclinations, CeBIT 08 Bilişim Eurasia 2011 will refl ect the sector’s rapid development and present solutions designed for companies’ needs today. 33. ISTANBUL JEWELRY SHOW 09 CNR Expo İstanbul OCTOBER 13–16, 2011 10 Brought to life by goldsmith masters and experienced 11 organizers with 26 years of success, the Istanbul Jewelry 12 Show is the number one jewelry event in a wide region 13 ranging from the Middle and Near East, Russia, CIS nations, 14 Eastern Europe, and northern Africa. 15

16 8th International Marble and Natural Stone Products and 17 Technologies Fair CNR Expo Istanbul 80th International İzmir Fair 18 OCTOBER 27–30, 2011 İzmir Kültürpark International Fair Center The 7th International SEPTEMBER 8–18, 2011 19 Marble and Natural Stone This year’s theme for the fair is “The Environment and Products and Technologies Environmental Technologies,” coming at a time when the 20 Fair held last year at the importance of a livable, sustainable world and environment is Istanbul CNR Expo Fair on the rise. Many international parties are set to attend the fair, 21 Center between November which is being held with Austria as a partner country. 25 and 28 had the effect of 22 cheering up the industry. The organization, at which International Security Automation 23 companies found the Fire Exhibition (ISAF) opportunity to engage in fruitful negotiations with buyers to Istanbul World Trade Center / 24 increase their exports, helped many companies double their Yeşilköy received orders compared to the previous year. In parallel with SEPTEMBER 22-25, 2011 25 the increasing dynamism of construction industries especially The rising global importance in Middle East and Northern Africa, international construction of safety and especially the 26 and natural stone companies heading for Turkish natural increase in forest fi res is stones and marbles preferred Istanbul for purchases this year. leading to the growth of such 27 sectors as security, fi re safety, and RFID. ISAF is the largest 28 fair for these sectors in the center of Eurasia, and with 29 the participation of many international producers, it is 30 ideally suited for following global developments. 31 OCTOBER 70

Figures FOREIGN DIRECT INVESTMENTS IN THE FIRST HALF OF 2011 TOP 5 SECTORS THAT ATTRACTED FDI IN JANUARY-JUNE 2011

TL

FINANCIAL ELECTRICITY, GAS AND MANUFACTURING* WHOLESALE AND RETAIL REAL ESTATE, RENTING, AND INTERMEDIATION WATER SUPPLY TRADE BUSINESS SERVICES 4,553 664 457 359 293 MILLION DOLLARS MILLION DOLLARS MILLION DOLLARS MILLION DOLLARS MILLION DOLLARS * (chemicals, chemical products and man-made fi bers:134 million dollars; food products, beverages and tobacco: 94 million dollars; electrical & optical equipment: 87 million dollars; basic metals & fabricated metal products coke: 54 million dollars; textiles & textile products: 34 million dollars; machinery & equipment n.e.c.: 22 million dollars) The healthcare business and social services sector has attracted investment of 157 million dollars in the fi rst half of 2011. This is a huge increase when compared to the 2 million dollars the sector drew in the same period of 2010.

COMPANY ESTABLISHMENT BREAKDOWN OF COMPANIES WITH 1,322 FOREIGN CAPITAL BY MODE OF 1,655 ESTABLISHMENT (2010 - 2011/June) PARTICIPATION 283 In the fi rst half of 2011, 1995 foreign 290 companies were established in Turkey BRANCH OFFICE JANUARY-MAY 37 2010 which represents an increase of 21,5% 50 2011 when compared to the same period in TOTAL 2010. 1655 of them were new companies 1,642 which shows an increase of 25,2% 1,995 when compared to 2010. Source: Republic of Turkey Ministry of Economy, 2011 provisional data

NATIONWIDE DISTRIBUTION OF COMPANIES WITH FOREIGN CAPITAL (TOP TEN CITIES)

NUMBER OF COMPANIES ISTANBUL KOCAELİ ANKARA (1954-2011/JUNE) 15,560 323 1,818 BURSA 557 OTHER CITIES 2,149 İZMİR Hosting 15,560 of 27,943 1,598 international companies Istanbul ranks fi rst among all cities. It is TOTAL followed by Antalya with 3,373 Ankara with 1,818 and İzmir with 27,943 1,598 international companies AYDIN 481

MUĞLA ADANA MERSİN 1,401 ANTALYA 202 Source: Republic of Turkey Ministry of Economy, 3,373 481 2011 provisional data

SEPTEMBER-OCTOBER 2011 ISSUE 6 The Turkish Perspective 71

REMARKABLE INCREASE IN THE FDI AMOUNT ATTRACTED According to the recent data released by the Central Bank of the Republic of Turkey, Turkey attracted $6.2 billion FDI in the fi rst half of 2011 (January-June), increasing by 92% when compared to the same period of 2010.

Investment Support and Promotion Agency of Turkey (ISPAT) President For instance, when our focus is on the automotive sector, we are not Mr. İlker Aycı says, “In the fi rst half of 2011, global investments to Turkey only trying to attract a global brand to Turkey, but also a variety of other increased 92% and reached 6.2 billion dollars as a consequence of companies which constitute the supply chain for the main brand, their global investors’ trust in Turkey.” technology and know-how. In return, we present them with various Aycı emphasizes that, “We aim to attract investments that will incentives, skilled labor, and ease of doing business.” advance the industrial know-how, increase employment, and minimize Aycı is also very positive about Turkey’s FDI (Foreign Direct Investment) imports and thus the account defi cit, as well. We are now working in outlook. Apart from expecting an annual increase in the coming years a sector-oriented approach by addressing each sector individually İLKER AYCI in terms of the total amount of FDI in Turkey, Aycı also emphasizes that and presenting Turkey as the proper and attractive destination for Investment Support Turkey is among the top destinations for global investment. “Nowadays, and Promotion investment for the upper level executives of global companies.” Agency of Turkey we are ending up at the top of the fi nal lists of investors. Very often, they ISPAT president Aycı continues “We are implementing a working (ISPAT) President make their fi nal decisions by choosing between Turkey and another strategy by focusing on supply chains, research and development country. This shows us that the global fi nancial crisis-resistant economy initiatives, production capacity, import-export balance, and job creation. of Turkey is acknowledged by global investors.”

TOP TEN INVESTORS BY AMOUNT OF EQUITY CAPITAL IN JANUARY-JUNE 2011

SPAIN 2,086 MILLION $ HONG KONG149 MILLION $

BELGIUM MILLION $ 1,439 LUXEMBOURG202 MILLION $

FRANCE MILLION $ 816 GERMANY 202 MILLION $

UNITED KINGDOM MILLION $ 464 AUSTRIA323 MILLION $

NETHERLANDS382 MILLION $ USA 370 MILLION $

Turkey off ers quite generous incentive packages for investors. For instance, an investor who is interested in Research and Development has a chance to benefi t from a specially tailored incentive package intended for the R&D and innovation activities. Investors have a wide range of options to realize their investments benefi tting from various incentive schemes. Source: CBRT

INVESTMENT PROJECTS OF COMPANIES WITH FOREIGN CAPITAL IN TURKEY (2006-2011/June) Projects granted investment incentive certifi cates in the fi rst half of 2011 now number 130. The total value of the certifi ed projects is 3.5 billion dollars

2006 2007 2008 2009 2010 2011 (JANUARY-JUNE) NUMBER OF CERTIFICATES 142 179 206 180 218 130 TOTAL INVESTMENTS * ($ MILLION) 1,715.9 3,578.2 5,358.7 9,455.3 5,301.7 3,706.3 TOTAL INVESTMENTS * (TRY MILLION) 2,508.6 4,731.5 7,106.5 14,525.3 7,961.4 5,807.0 FOREIGN INVESTORS’ SHARE 35.2 44.2 49.9 50.1 40.8 54.9

* The estimated value of investment incentive certifi cates for international companies Source: Republic of Turkey Ministry of Economy, 2011 provisional data 72 Figures

DISTRIBUTION OF FOREIGN DIRECT INVESTMENT BY COUNTRY 2011 EU COUNTRIES (MONTHLY) Jan. Feb. Mar. Apr. May June 339 310 4,315 408 310 374 Of the cash capital income in the January-June 2011 GERMANY 96 23 26 45 4 8 period, 87.7 % comes from the European Union countries FRANCE 70 80 565 1 2 98 NETHERLAND 76 97 66 73 37 33 UK 572317416590 ITALY 695557 OTHER EU CANADA COUNTRIES 86 94 3,630 110 97 138 Jan. Feb. Mar. Apr. May June 311222 OTHER COUNTRIES (EXCEPT EU COUNTRIES) MILLION DOLLARS Jan. Feb. Mar. Apr. May June 2414959151 MILLION DOLLARS

USA Jan. Feb. Mar. Apr. May June 21 164 26 54 75 30 MILLION DOLLARS

AFRICA MIDDLE-SOUTH AMERICA CARIBBEAN Jan. Feb. Mar. Apr. May June Jan. Feb. Mar. Apr. May June 000000 5400005 MILLION DOLLARS

ASIA OTHER COUNTRIES Jan. Feb. Mar. Apr. May June Jan. Feb. Mar. Apr. May June 111101 11 12 18 163 20 15 NEAR AND MIDDLE EAST MILLION DOLLARS COUNTRIES 10 9 16 13 16 12 GULF COUNTRIES 9 8 15 12 15 7 OTHER NEAR AND MIDDLE EAST COUNTRIES 00 0 004 TOTAL (MILLION DOLLARS) OTHER ASIAN COUNTRIES 13 215043 JANUARY FEBRUARY MARCH APRIL MAY JUNE MILLION DOLLARS

431 529 4,410 686 422 428 Data: CBRT

SEPTEMBER-OCTOBER 2011 ISSUE 6