The Single-Window System Being Established Will Cut Down on Wasted

YOUR COMPLIMENTARY COPY EXCLUSIVE INTERVIEW Minister of Customs and Trade Hayati Yazıcı shared his views on new approaches to successful foreign trade policy

SEPTEMBER-OCTOBER 2012 ISSUE 12 ECONOMY BUSINESS FOREIGN TRADE ANALYSIS

The single-window system being established will cut down on wasted time and costs in customs TURKISH EXPORTERS ASSEMBLY IS WORKING TO REACH TURKEY’S 2023 EXPORT TARGET OF 500 BILLION DOLLARS The Turkish Perspective 01 Contents

44 IN DEPTH 05 | We Are Getting Ready For Innovation Week HOW DID THEY FAIL? 06 | Trade Deficit Shrinks Why are some nations rich and 07 | Unemployment Falls others poor, divided by wealth and 08 | Exporters Hopeful of Turkey’s poverty, health and sickness, food Economy and famine?” In their recent book: 09 | New Pilots on the Way “Why Nations Fail: The Origins 11 | Turkey in the Design of Power, Prosperity and Poverty” Spotlight Daron Acemoglu and James Robinson answers this question that has stumped the experts for centuries

32 COVER a sıngle wındow openıng up to the world Providing a system of integrated management between related institutions and organizations, the single-window system is being established to cut 05 down on wasted time and costs in customs

12 PANORAMA 14 BRIEFING

An Economy Transforming with 14 | Turkey Shifts into Higher 21 | Major League Steel 26 | Confirmed Success Disinflation Gear in Tourism In its steel exports, Turkey is Besides ranking third among Prof. Dr. Erhan Aslanoğlu of the Marmara University Department Bearing the traces of scores of utilizing the advantages of its European airlines in terms of of Economics analyzes the positive civilizations, Anatolia holds a great geographical location and acceding passengers carried, Turkish Airlines transformation of the Turkish advantage in tourism with its rich to its well-deserved spot in the big boasts certified success with three Economy with the process of leagues awards in this year’s Skytrax World disinflation cultural heritage Airline Awards 17 | A Rising Star in the Fishery 22 | Turkey’s Sweet Success in 28 | Turkey strengthens Market: Turkey the Fig and Cherry Industry Producing more than 43 million its global position as an The Turkish seafood and tons of fresh fruits and vegetables attractive FDI destination aquaculture industry’s exports in annually, Turkey is advancing Turkey became the 23rd FDI 2011, to a total of 75 countries, were confidently toward the export recipient in the world in 2011, worth $447 million target it has set for the year 2023 according to the World Investment Report, prepared by UNCTAD 19 | Innovative, Powerful, 24 | The Chemical Industry and High-Quality Opens News Doors 30 | ıCT Giant Focuses On Turkey The driving force behind The chemical industry continues The ICT giant Huawei is exporting industrialization, the machinery to grow with the foreign direct R&D to the world via the R&D industry will be drawing $40 investment it receives and center it opened in Turkey billion in investments with its increasing exports 12 innovative mission 2 Content

MANAGEMENT 48 ın depth Publisher on Behalf of Turkish Export- ers Assembly/ President of The Turkish 48 | Investors Bullish on the Exporters Assembly Istanbul Stock Exchange MEHMET BÜYÜKEKŞİ Will the Istanbul Stock Manager In Charge Exchange, the eighth-largest İSMET YALÇIN PhD stock exchange among PUBLICATION BOARD developing countries, climb even M. İlker aycı, BÜLENT AYMEN, higher? İBRAHİM BURKAY, MUSTAFA ÇIKRIKÇIOĞLU PhD, ALİ NEDİM GÜRELİ, AHMET KELEŞ, TEMEL KOTİL PhD, ŞAHİN OKTAY, 52 | ıSE Connects to East Asia TAHSİN ÖZTİRYAKİ Mr. Nihat Gümüş, advisor to PUBLICATION MANAGEMENT the chairman of the ISE, spoke 38 EXCLUSIVE Interview President to The Turkish Perspective Serkan Ünal magazine about the recent easıest and safest GROUP Coordinator performance of the exchange in Mehmet Mücahİd Demİr Turkey Hayati Yazıcı, the Minister of Customs and Trade, Finance Coordinator provided to The Turkish Perspective his assessment of Selİm Kara

54 Brands the successful foreign trade policy being followed by Edıtorıal Turkey during this time of global economic tumult and Editor In Chief 54 | Vakko: TURKEY’S STYLE the country’s practices to speed up customs procedures Serdar Turan WITNESS EditorS Aynur Şenol altun, Having witnessed the moder- merve kara, Can gÜrsu, nization of Turkey, aesthetic derya engİn kutlu, ALTAN ORHON changes in the Western lifestyle, 52 style, and luxury, Vakko is ven- Design turing out to the world with its Design Director ÖZKAN ORAL own labels DEPUTY Design Director 57 | A Taste of Turkey: Ülker AHMET ÇELİK PINAR GÜVEN Ülker, the cookie brand founded Photo Editor years ago by Sabri Ülker, today ŞEREF YILMAZ advances confidently toward becoming a global brand with its Contributors ERHAN ASLANOĞLU acquisition of such world-class 48 brands as Godiva PRıntıng 60 | Taking Accessories 64 | The Giants of ICT in Turkey 68 AGENDA BİLNET MATBAACILIK BİLTUR Basım Yayın VE HİZMET A.Ş. to the Next Level With regard to its goals for 2023, Dudullu Organİze Sanayİ Bölgesİ 1. Cadde No: 16, FAIRS, EXHIBITIONS, SUMMITS, Esenkent – Ümranİye 34476 - İstanbul Once an OEM contractor the ICT industry is expected to grow MEETINGS IN THE NEXT QUARTER Tel: (0216) 444 44 03 • www.bilnet.net.tr working behind the scenes, fourfold with successful brands like Trexta is growing into an Karel and AirTies 70 FIGURES internationally recognized brand for mobile device accessories 66 | From Adana to the World THE BASIC INDICATORS OF TURKEY IN THE FIRST HALF OF 2012 62 | BUILDING UP a Brand The journey Doğanay Food started in Adana continues Hakan Plastik, a pioneer in in 35 countries today the Turkish plastic industry, is quickly increasing the number of contact countries to which it exports its [email protected] products. www.infomagyayincilik.com 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 2012 ISSUE 12 The Turkish Perspective 03 Editorial Mehmet BüyükekŞi President (TIM)

Despite the Storm, Turkey Sails Straight Ahead Turkey’s exporters find refuge from the gusts of the global crisis in the safe harbor offered by new markets

he global crisis that has- Despite the stagnancy in world trade people of the incentives package especially T shaken the world’s economies and and the drop in our exports to the EU in provinces that suffer from deficiencies ever-tougher competition in foreign market, our exports increased by 10% in development, and we closely follow the markets continue to stir up world trade. over the first seven months of the year. investors who come from both Turkey As the shrinkage in Hungary’s economy Thanks to our employment-friendly, and abroad. With our economy minister points to a recession, Greece, Spain, Italy, dynamic exporters’ overtures in new and a crowded delegation of business- Spain, Cyprus, and Portugal are among markets, our export to the Middle East, men, we explained the new incentive the countries stricken with stagnation. North Africa, other Asian countries, and system to businessmen in Japan and The economies of Germany and France the Commonwealth of Independent Singapore on visits to those two countries. have entered a recovery, however little. States is continuing to exhibit a great We set up contacts to develop our com- In the second quarter of the year, growth increase. While Europe’s high share in merce reciprocally. We took yet another in Japan slowed due to negative effects the export of our leading export indus- new step with China, aiming for coopera- of the euro zone crisis upon exports and tries, like automotive and ready-to-wear tion in investment. With the Turkish-Chi- continued low domestic demand, while clothing, may drag down our general nese business forum hosted by TIM, we the US economy saw a growth rate of export performance, we are compensat- met numerous times with representative 1.5%—the lowest yet since after the ing for this drop through our overtures from more than 150 leading companies in crisis—and China reported 7.6%. in new export markets. Our exports to Guangzhou. We hope to finish the second half of the Middle East, North Africa, other Turkey continues to reap the fruits of the year before the stagnant climate Asian countries, the Commonwealth of success from its business forums and of the global economy takes hold over Independent States, and North America trade delegations, and the figures express Turkey’s economy. We believe the Turkish continue to exhibit significant growth. this very clearly. While Turkey ranked economy will surpass the 4% growth rate With the shrinkage in imports, the re- 23rd among 211 countries attracting the it is targeting for the end of the year. One covery especially in the current account most foreign direct investment in 2011, gladdening aspect of the increase in the deficit excepting energy is reducing the foreign capital inflow increased by 21% growth rate is taking place as unem- risk posed by the current account deficit. in the first half of relative to the same ployment rates continue to fall. Having We wish to underline once again the months last year, rising to $8.2 billion. dropped to 8.2% this past May, the point that the newly implemented incen- So long as Turkey attains the dynamic it unemployment rate went down as the tives code will be quite effective at reduc- desires and continues its export-focused lowest in the last 11 years. The Turkish ing our current account deficit. We are growth, we will be ever closer to the $500 economy’s reduction of unemployment much closer to our 2023 targets of $500 billion export target. to 8.2% despite unemployment rates billion dollars in exports, $1.1 trillion in Through focused innovation, R&D, increasing worldwide, particularly in the foreign trade volume, and ranking among skilled human capital, and information euro zone, is a great success. As exporters the world’s top ten biggest economies technologies, and the correction of for- announce continued increases in hiring thanks to the new, export-supporting eign trade-hindering political, social, and in coming terms, we believe these figures incentives system. Wandering Anato- economic instability, we will progress will be drawn even further below. lia step by step, we continue to inform much more quickly on this road. C M Y CM MY CY CMY K 5 Content: Trade Deficit ShrinksP6 Unemployment Falls P7 TRY 300 Million Fund for ICT P7 Exporters Hopeful of Turkey’s Economy P8 New Pilots on the Way P9 Incentives Encourage International Investors P10 Participation Banks Association and Eximbank Hand-in-Hand with Exporters P11 Editor: Can Gürsu

First EXPORTS, MEETINGS, AVIATION, AGRICULTURE, PHARMACEUTICAL, AWARDS...

TIM is preparing to expand its R&D project markets and design competitions to all 26 of its export industries

“WE ARE GETTING READY FOR INNOVATION WEEK” Indicating that dynamism in exports goes by R&D and innovation, Mehmet Büyükekşi is preparing to once again bring to the agenda the indispensability of innovation and design with the second Innovation Week Turkey, scheduled for December

T HAS BEEN FOUR ers are successfully crisis in Europe,” says design competitions in will once again bring I years since the practicing a process of Mehmet Büyükekşi. 24, TIM is preparing the indispensability of global crisis started in market diversification, Design and innovation to further expand its innovation and design 2008, yet the world by which losses caused are especially impor- reach by bringing these to the agenda with In- economy has still not by shrinking in one tant—it is necessary for to all 26 export indus- novation Week Turkey. returned to its normal market can be com- the structure of exports tries. Büyükekşi said Works that win awards programming. As the pensated in alternative, to change in the area of the innovation week in the R&D project general stagnancy in new markets. “And innovation, and efforts held last December, markets and design the global economy this helps our exports to do so have been sped which was attended competitions will be slows down world continue to increase up, says Büyükekşi. by President Abdullah on display for a week, trade, Turkey exhibits without slowing down Organizing R&D Gül, will have the air contributing to the outstanding perform- despite worldwide project markets in of a festival this year, spread of innovation ance. Turkey’s export- constriction and the seven industries and and he adds that they culture. 6 First

balance of trade agriculture Trade Deficit Shrinks Organic Agriculture Exporters predict that the foreign trade deficit will fall beneath $60 billion Flourishes Turkey’s export of organic produce has exceeded $15 million

he export of took the largest share T organic produce, with a value of $9.96 which began to devel- million, followed by op based on emerging France with $2.1 mil- export demand in the lion, Switzerland with 1980s with traditional $948,000, and Swe- products like grapes den with $387,000. and figs, is continu- The most popu- ing to flourish with lar organic export an expanded range products 2011 were of both products and hazelnuts and hazel- markets. Exporting nut-derived prod- organic produce to a ucts ($4.8 million), total of 13 countries, raisins ($3.7 million), notably to those in apricots and apricot- the EU, Turkey’s derived products export has exceeded ($1.8 million), figs $15 billion. and fig-derived prod- The 13 countries ucts ($1.8 million), to which Turkey lentils ($692,000), exported the most or- and cotton and textile ganic produce in the products ($421,000). year 2011 were Ger- In the domestic many, France, Iraq, market, there are 15 Denmark, Belgium, marketplaces that sell ccording to interim foreign trade data The trade deficit Switzerland, the UK, 100% organic prod- A for June 2012 compiled by TurkStat in fell from $10.255 Sweden, the United ucts. Located all over collaboration with the Ministry of Customs and billion to $7.176 Arab Emirates, Po- Turkey, seven of these Trade, exports increased 16.9% in that month million in June land, the US, Russia, marketplaces are set over June 2012 to $13.266 billion, while imports and Ghana. Of Tur- 2012 up in Istanbul, two fell 5.4% to $20.441 billion. The trade deficit key’s 3.37 ton organic in Ankara and İzmir, fell in this period from $10.255 billion to $7.176 produce exports in and the others in Bur- million. The coverage ratio of exports to imports 2011 worth $15.5 mil- sa, Antalya, Eskişehir, rose from 52.5% in June 2011 to 64.9% in June lion in total, Germany and Samsun. 2012. Minister of Economy Zafer Çağlayan stated that the foreign trade deficit has continued to drop, falling beneath $100 billion. “With the exception of energy, our foreign trade deficit is at 43.1 billion dollars, the best level in the past 17 months after January 2011. Although the energy deficit is increasing continually, the improvement to our foreign trade deficit is the result of our covering the world step by step with our importers, and making distant markets that have not reached

new markets closer. It is the success of the Turkish y AA b exporter’s transformation of the crisis in Europe into an opportunity,” he said. photograph SEPTEMBER-OCTOBER 2012 ISSUE 12 The Turkish Perspective 7

EMPLOYMENT AVIATIOn STATE FUNDING TRY 300 Best Again! Million Fund The excellecence of Turkish Airlines’ service is validated once again at the “Oscars of aviation” for ICT An R&D fund of up to TRY 300 million has been created to support the ICT industry. Binali Yıldırım, Minister of Transport, Maritime Affairs, and Communications, said the ministry has Unemploy- created an R&D fund ment Falls providing up to TRY 300 million annu- to 10.1% ally in support of the ICT industry and has in Cities, determined its code 4.5% in the of practice. “We have created an R&D fund Country exclusive to ICT. We Overall unemployment have determined the in Turkey dropped by code of practice. We 278,000 individuals have an R&D fund of to 2,272,000 people up to 300 million liras nationwide, with the a year. This fund is only unemployment rate for ICT,” said Yıldırım. falling by 1.2 points urkish Airlines has airport sector. Turkish Airlines T proved its quality to the was voted Best Airline in Europe to 8.2%. The unem- FDI ployment rate’s drop world by taking awards in this year as last in the Skytrax to 8.2% signifies its three categories, including Best awards, which are based on the Airline in Europe, in the Skytrax votes cast by close to 18 million lowest level in a long $8.2 Billion Aviation Awards, the “Oscars” air travelers from 100 differ- time. Data filtered Direct of the aviation sector, which ent countries. Turkish Airlines of seasonal effects rank airline product and service was also named Best Airline shows unemployment Investment standards through programs Southern Europe and earned as 9%. According to that compare service quality Best Premium Economy Seat or Inflow the Household Labor and reviews of the airline and its Comfort Class seats. Minister of Economy Force Survey for May Zafer Çağlayan an- 2012 by TurkStat, the nounced that the unemployment rate amount of FDI entering fell in urban areas by CONSUMER CONFIDENCE RISES Turkey in the first six 1.2 points to 10.1% The Consumer Confidence Index rose 1.1% over the previous month in July 2012 to re- months of the year and in rural areas by ach 92.8% increased 21% to reach 0.9 points to 4.5%. $8.2 billion. Foreign The 8.2% unemploy- direct investment in ment rate for May June will total $1.766 as the lowest in the billion, said Çağlayan. period post 2005, Between January and when TurkStat started 1.8 0.8 0.9 June, he said, the inflow using the new popula- BUYING POWER GENERAL ECONOMIC JOB AVAILABILITY y AA of FDI increased 21% b INCREASE SITUATION (6-MONTH PERIOD) tion projections in its (3-MONTH PERIOD) compared to the same calculations. period last year. photograph 068 First

AVIATION SURVEY Exporters Hopeful of Turkey’s Economy The Q2 2012 results for the Turkish Exporters Assembly’s Exporter Tendency Survey of the medium- and high-level managers of 508 exporting companies are hopeful

he Turkish companies as well. to Q2 2011 were T Exporters Based on polling reported in exports by Assembly released the medium- and 44.9% of companies the results of the high-level managers and in production by Q2 2012 Exporter of 508 exporting 42.2%. Companies Tendency Survey, companies in July, pointed out relative WE ARE CONTINUING TO GROW according to which the results, which stagnancy in Q3 Flying to 195 cities in Istanbul flights are exporters indicated were announced compared to the 161 countries on five getting under way that they expect the by TIM President same period last year, continents, Turkish on September 2. The relative stagnancy Mehmet Büyükekşi, and TIM President Airlines is continuing flights will be three to continue into the highlighted an Büyükekşi stated to expand its flight times a week on Tues- quarter ahead. The increase in input costs that the prevailing network. The airline’s days, Thursdays and survey showed that relative to Q2 2011 in view is that many Istanbul-SAW (Libya)- Sundays. the exporters in the the April-June period of the elements lower half of the this year. Increased affecting companies’ top 1,000 countries costs were reported by performance will not TRADE do better at market 64.5% of exporters, change in comparison diversification than while 45.7% noted to that period last those in the upper a drop in general year. The results of FTA with South half, and that the profitability and 47% the survey further 2023 export target set in export profits. prove that exporters by TIM has started to On the other hand, have fully adopted the Korea influence exporting increases relative 2023 goals. A free trade agreement has been signed between Turkey and South Korea WEB AWARDS earing the two countries, saying, B distinction of “Last year, 92 percent being the first FTA of the volume of trade signed by Turkey in between our countries East Asia, the Turkey- was comprised of im- South Korea Free ports. 6.3 billion dollars Trade Agreement will in imports in contrast not only facilitate free to 527.8 million dollars trade, but also initiate in exports took place. negotiations geared I hope we will increase toward investing and this to 10 billion dollars the services sector within two to three one year after coming years and make it as into effect. Following balanced as possible.” All For Our Passengers ratification procedures, Zafer Çağlayan also Turkish Airlines was www.turkishairlines. Airline category at the FTA will come into announced that the vol- deemed worthy of com website, in this the Interactive Media effect at the end of the ume of trade between two separate Golden year’s tenth annual Awards, which are year. Turkey and South Ko- Spiderweb awards Golden Spiderweb given by the Interac- Minister of Economy rea, which was around in the category of competition. Abroad, tive Media Council Zafer Çağlayan spoke at $7 billion in 2011, Tourism-Travel, as Turkish Airlines (IMC), one of the the signing ceremony would be increased to well as in the category was also voted best leading firms in the of the FTA between the $10 billion. e-Commerce for its website of 2012 in the industry.

SEPTEMBER-OCTOBER 2012 ISSUE 12 The Turkish Perspective 079

AWARDS FLIGHT TRAINING pharmaceutıcal We Can’t Get Enough New Pilots on the Prizes! Way Turkish Airlines Flight Academy offers young urkish aviators-to-be a path leading from single-props to T Airlines was the professionally piloting passenger jets recipient of a Vision Award in the League of America Commu- nications Profession- als (LACP) Annual Turkish Report Competition, in which some 5,500 Pharmaceuti- applications made by cal Industry 800 legal entities from more than 20 countries Doubles in were evaluated. Turkish Size over Airlines’ 2011 Annual Report was also singled Past Decade out for a Bronze Award Turkey’s pharmaceu- for meeting all the req- tical industry—an uisite criteria in terms important subindustry of content and visuals. within the chemical In the annual report industry—has grown point system based on double compared to 100, the airline earned a decade ago, reach- 29/30 for first impres- ing a market size of $15 billion. Istanbul sion, 9/10 in the catego- Chemicals and Chemi- ries of report writing, ounded in 2005 with joined the Turkish Airlines cal Products Exporters’ letters to partners, and F three flight instructors, flight staff with the rank of Association Chairman accessibility of informa- an administrative staff of one, copilot. In addition to its 118 (İKMİB) Murat Akyüz tion, and 10/10 for nar- and two single-prop planes, flight staff cadets, the academy said, “The pharmaceu- rative writing, financial the Turkish Airlines Flight operates today with 21 flight tical industry has made reporting, creativity and Academy graduated 38 stu- instructors and administrative serious progress over clarity of communica- dents in the last month. The personnel, ten single-prop and the past ten years,” and tions for a grand total of 118 cadets who have graduated two twin-prop aircraft, and he indicated that the 96 points. since the Academy’s inception two training jets. Association’s pharmaceutical exports have exhibited an increase of 58.6% over the past five years. Last year, Germany, Iraq, INDUSTRIES THAT MOST INCREASED THEIR EXPORTs and Switzerland were IN FIRST 6 MOnths of 2012 the top recipients of the pharmaceutical industry’s exports. Also among the top ten recipients were the UK, Northern Cyprus, 74.1 65.9 46.6 30.4 Slovenia, Belgium, Azerbaijan-Nakh- defense tobacco jewelry rugs ichevan, the US, and Algeria. 0610 First

FURNITURE AGRICULTURE MINING BASIN-BASED SUPPORT Mining Exports in FOR AGRICULTURE First Half of The best citrus cultivation areas are receiving government support 2012 Total $1.9 Billion urkey’s citrus said at the meeting that the ministry production The mining and natural has created a strategic road map T was examined in every aspect stones industry, which for citruses in order for this success at the Citrus Summit organized in as a leading industry in to continue at ever-greater levels. July by the Mediterranean Exporters’ economic development Stating that they are in preparations Unions. Stated at the festival was employs 750,000 to provide support for agricultural the fact that Turkey, which has risen people, is striding basins for the first time ever in to 7th place from 11th worldwide in confidently toward its Turkey, he said a basin-based model terms of agricultural economic size, 10% growth target for of support would be adopted in also rose from 10th place to seventh 2012. Over the first the citrus and fruit-and-vegetable in the citrus industry. As fresh fruit six months of the year, Turkish industry. The best locations to and vegetable production increased the export of mining cultivate citruses in Turkey’s 30 Furniture from 39 million tons to 44.5 million products reached a agricultural basins were determined tons over the past ten years, citrus value of $1.93 billion by Makers as part of the basin-based support production increased from 2.5 value, having increased model with the intent of increasing Maintain million tons to 3.7 million tons. 5.29% by value the current harvest period of three Deputy Permanent Undersecretary compared to the same Speed in to four months to six or seven Ferhat Şelli of the Ministry of Food, period last year. In June, months. Exports Agriculture, and Animal Husbandry Turkey’s mining exports broke the $400 million According to Q1 2012 INVESTMENT line for the first time export and sales figures ever, reaching $411.8 released by the Asso- million. Natural stone ciation of Turkish Fur- Incentives Encourage exports accounted for niture Manufacturers 44.3% of total mining (MOSDER), furniture International Investors exports, growing 11.29% exports increased 19% A study conducted by YASED shows that foreign investors by value over last year. over last year while fur- The export of mining niture imports fell 7%. have sped up their investment plans following the announcement of the incentives package in 2012. products to India Turkey, whose export contributed notably as is growing day by day, well, having increased is about to reach a very ccording to the results months of 2012. While 38% of mem- 63% in this period. high rank in the world A of the second International bers said they exceeded their revenue furniture industry. It Investors Association (YASED) Ba- targets, 44% said they largely accom- is predicted that fur- rometer Survey 2012, international plished their aims in profitability and niture exports, which investors who predicted a slowdown 64% in market share. have been growing in economic growth both worldwide International investors listed their 20% for the past two and in Turkey during the first survey predicted leading areas of investment years, will continue to of the year hold positive thoughts in Turkey as energy, financial serv- rise in the future, help- regarding Turkey. Sixty-five percent ices, and the automotive and auto ing to make Turkey of the participants expect economic parts & components industry. one of the world’s top growth in Turkey to maintain its Within the scope of the new incen- ten exporting coun- current levels or speed up. Fifty-three tive system, 40% of the interna- tries within five years. percent of the international investors tional investors planning to invest Should Turkey’s furni- in the survey expect $15–20 billion of stated that their planned investment ture exports rise from foreign direct investment in Turkey program is as of yet uncertain, while the level of $2 billion this year. 30% sad they could invest up to $50

to $3 billion, Turkey The survey indicates that YASED million within three years and an- y AA b will replace Canada as members accomplished to a great other 30% said they expect to invest seventh in exports. extent their aims for the first six more than $50 million. photograph SEPTEMBER-OCTOBER 2012 ISSUE 12 The Turkish Perspective 0711

FINANCE DESIGN Participation Banks Turkey in the Design Association and Eximbank Spotlight Turkey and Turkish designers ranked in Hand-in-Hand with the platinum at the A’Design Awards Architecture, design, first in points with its Exporters and engineering cumulative 163 points. The Turkish Exporters Assembly (TIM) welcomed agencies from all over Number one in Turkey the Participation Banks Association Board of the world find the was Hakan Gürsu, Directors and Eximbank executives. The exporters’ chance to compete at owner of the design firm joint request of the participation bank was to the annual A’Design Designnobis, with the reduce costs contest. Covering a wide 22 awards and 79 points range of categories and he gathered. Gürsu also focusing on innovation, earned first place out technology, design, and of the 223 designers at creativity, the contest the competition with presents the A’Awards the number of awards in a scale ranging from and points he won. iron to platinum. Earni Nine design firms from ng 40 awards from Turkey participated in 2010 to 2012 thanks the festival, with Vestel its successful designers, Id Team coming in sixth Turkey ranks second with its 25 points and in awards after the Bien Seramik as seventh US’s 43 awards, and with 22 points.

Current Aggregated World Design Rankings : Years 2010 - 2012 Rank 1 2 3 Country Turkey USA Hong-Kong peaking at the opening of provided a credit increase of over Score 163 158 115 S the meeting, TIM President 100% to credits following the Mehmet Büyükekşi criticized the transformation program they Awards 40 43 31 Central Bank’s attitude toward the did last year, and that they have valuable Turkish lira. “We believe surpassed last year’s figures with Turkey,winning 40 awards in total, ranked second the policy interest rate needs to be the figures as of the end of this reduced,” said Büyükekşi, and he past July. “This transformation Award Platinum Golden Silver Bronze Iron emphatically stated that exporters period came out not only in terms Turkey are under pressure from two ends of volume, but also on the point 5 14 8 5 8 with market loss in Europe and of new products that can meet falling currency exchange parity. our exporters’ needs,” said Kaplan. Ufuk Uyan, Chairman of the “We convened with our exporters Participation Banks Association and entered close dialogues with and General Manager of Kuveyt them, and we are continuing this. #1 Türk, said, “As per our financing With respect to participation Hakan GÜRSU OF DESIGNOBIS 84 POINTS, WITH 22 AWARD- model and system, we work banks offering more services to WINNING DESIGNS & 5 entirely with the real sector. our exporters, I would like to RUNNERS-UP And for exporters to have a very state that Eximbank is ready to significant share in the sector is expend every kind of effort,” he our desire—our wish— too.” said in conclusion. With support #6 #7 Also speaking at the event was from Eximbank and participation VESTEL ID TEAM BIEN SERAMIK 25 POINTS, WITH 5 AWARD- 22 POINTS, WITH 5 AWARD- Eximbank General Manager banks, exporters will continue WINNING DESIGNS WINNING DESIGNS Hayrettin Kaplan, who reported to make up the driving force of that the institution had stable growth. 12 Panorama Panorama By PROF. dr. Erhan Aslanoğlu

An Economy Transforming with Disinflation The economy of Turkey is undergoing a positive transformation together with the process of disinflation

o say disinflation is most important change ing environment improve, but also falling inflation and interest that has been occurring in the past ten years in the encourage investment, production, and employment. Increased Turkish economy wouldn’t be off the mark. The production means higher total and per-capita income. Looking economy, which experienced very high inflation in the at the economic indicators for the past ten years, we see that the T30 years previous, entered a period in which inflation rapidly fell economy of Turkey has started to experience the positive change after the 2001 crisis. This process brought an important change created by the disinflationary process. As inflation fell from to the economy of Turkey in every area, and it appears as if it will triple-digit to single-digit figures, growth speed rose from the continue to do so. level of around 4.5% to around 5.5%. Fixed capital investments, High inflation means high interest. High interest means low which were 3% in the ten years previous, have come to the level investment, low employment, and low production. Due to high of around 12% in the past ten years. Per-capita income, too, rose interest, production and investment are unable to be the primary from the level of $3,000 to $10,000 in the past ten years. point of focus for companies. Nonoperating income—that is to One of the most important factors in the rapid descent over say, interest income—drive companies outside their main areas of the past ten years of the inflation that could not be dropped for

operation. High inflation also means uncertainty and a cloud of years was the concentrated entry of extremely price-competitive N İ RG fog in the economy. It means the investing environment is poor. products from South and East Asia, most of all from China. İ G Producers are pushed away from investment because expendi- Starting with China’s membership in the World Trade Organi- T SEDA tures cannot be calculated well and easily. zation in 2001, this process created pressure to disinflate not BY Low inflation, on the other hand, bears positive results, only in Turkey, but also in many of the world’s countries. As ION T

contrary to the inflationist process. With reduced uncertainty, highly price-competitive products poured in from the countries RA T the investing environment improves. Not only does the invest- in question, local companies started to either enter a great com- ILLUS

SEPTEMBER-OCTOBER 2012 ISSUE 12 The Turkish Perspective 1313

petition by increasing productivity or shift their investments to being affected negatively. Therefore, it is harder for us to see in new industries in which the country could have high competi- raw material and food products the pricing pressure we see in tive ability. In the economy of Turkey, the province of Denizli many manufacturing industry products and the service sector. can be given as an example of this on a micro level. A leader in Agriculture and mining products, for which demand and prices textiles, Denizli was seriously shaken up in this industry due to have risen, are drawing the interest of investors as industries that the competition from Asia. But a while later, those who were have inadequacies in supply and promise profitability. As in the able to become brands and those who were successful in design example of the province of Denizli, Turkey as a whole is a candi- maintained their competitive power. More importantly is that date for drawing investments with its natural wealth in the fields capital owners in Denizli started shifting toward areas like tour- of agriculture and mining. The economy of Brazil, whose agricul- ism, mining, and agriculture. This is a natural reflex—finding ture and mining industries grew much bigger after inflation was a rational exit in order to survive. Denizli is an example; on the reduced, is also an important example for Turkey. macro level, this is exactly how what the economy of Turkey has We think there are two important points that economic poli- experienced and will continue to experience appears. cies vis-à-vis the continuation of the disinflation processes have This pressure on prices from Asian countries in particular, started to focus on but must be constantly developed. The first: in China most of all, looks like it will continue for quite a long pe- the disinflation process, companies unable to shift the burden to riod. In time, of course, costs and prices will rise in these regions prices and work with high profit margins as in the past are natu- as well, and pricing pressure on the economy of Turkey will be rally focusing on reducing costs and increasing productivity. For reduced. But in all likelihood, other regions in the world—Af- this reason, while the disinflation process does increase growth, it rica, for example—will take on the role of is unable to reduce unemployment adequately. the Asian countries and continue pricing In theory and in practice, unemployment is pressure on many manufactured products expected to fall to natural levels at the end of and services. a process of disinflation—that is to say, when The economy of Turkey appears to have inflation permanently reaches levels of around entered a hard-to-reverse process that will take 2–3%. These levels are the periods in which the disinflation pressure on it to the very limit. The economy of growth and investments shift into higher gear. Together with disinflation, a transformation in Macroeconomic policies that will speed up which units of production are moving in focus Turkey bears the disinflation process and support growth from nonoperating interest income toward investment and are of very high importance for the struggle operating incomes. A positive feedback loop is against unemployment, too. On a micro- being created that brings about increased de- growth potential in economic basis, policies like training to raise mand from production and income increases, many industries qualified employees or like unemployment which in turn goes back to support production benefits are of great importance. The second and income increases again. In this respect, the from agriculture point concerning the disinflation process is to economy of Turkey is in a process where new to automotive and emphasize structural reforms geared toward industries with high competitive ability are solving the current account deficit problem and will continue to emerge at the forefront. mining to finance in the economy of Turkey. The increasing Among the industries that immediately spring current account deficit carries with it the risk to mind are tourism, agriculture, mining, of both triggering inflation and slowing down finance, contracting services, and the production growth by creating financing and exchange of motor vehicles, ships, and yachts. Turkey is one of the leading rate risks. Microeconomic and macroeconomic structural countries in tourism and contracting services. It is among the reforms to combat the current account deficit must be continued world’s top ten countries in tourism, and it is one of the two coun- uninterruptedly. tries receiving the most work in contracting. Istanbul could be a To conclude, the economy of Turkey has transitioned from the new center in finance—it has the potential to, at the very least. high inflation it experienced in the 1972–2002 period to a process Producing automobiles in China and selling them is very difficult of disinflation, in which more production activities can be given in terms of expenses. A country like Slovakia, Hungary, or Turkey focus and which is accelerating the increase of income. Unable will be the new center in automobiles. If certain conditions and to focus on production and investment due to thigh inflation, supports are realized, it wouldn’t be surprising for Turkey to be the economy had entered a trap in which it could not increase an automotive center. On the other hand, growth and increasing its average income. Disinflation, on the other hand, has started a income means increased demand for energy, too. On this point, process that will lead to the convergence of the average income to the energy industry, too, looks like it will be and continue to be that of countries in the high-income group. High income means one of the hottest industries in Turkey. a growing market and decoupled demand. As we have tried to The rapid growth of China and other developing countries is summarize above, the economy of Turkey bears investment and increasing the demand for raw materials. Similarly, the increase growth potential in many industries from agriculture to automo- of these countries’ incomes is raising worldwide food demand tive and mining to finance. The speed of structural reforms will and prices. Furthermore, with global warming, food supply is determine the speed of this process, too. 14 The Turkish Perspective Content: Turkey Shifts into Higher Gear in Tourism P14 A Rising Star in the Fishery Market: Turkey P17 Innovative, Powerful, and High-Quality P19 Major League Steel 21 Turkey’s Sweet Success in the Fig and Cherry Industry P22 The Chemical Industry Opens News Doors P24 Confirmed SuccessP26 Turkey Strengthens Its Global Position as an Attractive FDI Destination P28 ICT Giant Focuses on Turkey P30 Editor: Can Gürsu

Briefing STEEL, AIRLINES, CHEMICALS, FISHERY, AGRICULTURE, MACHINERY, ELECTRONICS...

Turkey has the potential to be the world’s number-one spot for tourism with the cultural heritage it possesses

TOURISM Turkey Shifts into Higher Gear in Tourism Bearing the traces of scores of civilizations, Anatolia holds a great advantage in tourism with its rich cultural heritage

By Derya Engin kutlu

t is impossible for UNESCO World Heritage of the pie and raise the bar. for itself another objective: “Ia country like Turkey, List. “We are trying to com- One would do well when to put more of its heritage in where there are the footprints pensate for this,” he adds. mentioning such countries the UNESCO World Heri- of numerous civilizations, to In many countries, cultural not to forget Turkey, which tage List. According to Seçil remain content with a few heritage is seen as tourism’s has been shifting into higher Birkan, an expert archaeolo- accepted permanent heritage keystone. Countries closely gear as of late. Drawing high gist and historian, Turkey has sites,” says Minister of Culture bound to their heritage, like numbers of tourists in the the potential to be the world’s and Tourism Ertuğrul Günay France, Italy, and Spain, are summer with its seas, sun, and number-one spot for tourism on Anatolia’s position in the continuing to take their slice natural beauty, Turkey has set with the cultural heritage it

SEPTEMBER-OCTOBER 2012 ISSUE 12 The Turkish Perspective 15

possesses. The way things Great Mosque and Hospital The cultural heritage on the list. In a statement are progressing confirms of Divriği, the archaeologi- sites that enter the about the archaeological site this: in 2012, Turkey turned cal site of Troy, Hierapolis- UNESCO Tentative of Zeugma and the Yesemek over a new leaf in its world Pamukkale, and Göreme List facilitate the flow Quarry & Sculpture Workshop heritage venture, with 12 more National Park & Cappadocia. of funds to the region in Gaziantep, which entered historic spots in Anatolia—the Assessing Turkey’s ventures in the UNESCO World Heritage junction of many civiliza- this area, Ertuğrul Günay said, while also earning it Site Tentative List in 2012, tions—becoming candidates “This much is still not enough prestige Asım Güzelbey, Mayor of the for entry into the UNESCO for us; we want to add more Metropolitan Municipality of World Heritage List thanks to to this number every year,” Gaziantep, said, “We skipped the Turkish government’s suc- stating the ministry’s aim in an age.” Also entering the ten- cessful efforts. World Heritage this matter. tative list in 2012 is Mamure candidacy aside, two more Castle in Mersin, for which the important items of cultural THE GLOBAL VISION BROUGHT BY Young Businessmen Associa- heritage are now entering the UNESCO tion of Turkey (TÜGİAD) said protection of UNESCO: the The future is very bright for the decision was very pleasing Hittite Capital of Hattusha the cultural heritage sites that and that Mersin-Anamur (Boğazköy) and the Selimiye entered the UNESCO Tenta- would gain even more Mosque and Social Complex tive List. Besides facilitating prominence in international in Edirne. the flow of funds to the region, tourism. Other places in Turkey it is earning prestige for it, too. Also in 2012, the Selimiye that are on the list include Gaining increased worldwide Mosque and Social Complex, Istanbul’s historic areas, recognition for the region, which the legendary Otto- the city of Safranbolu, Mt. the UNESCO name comes to man architect Mimar Sinan Nemrut, Xanthos-Letoon, the signify change for the regions called his “most flawless work,”

UNESCO World Heritage Sites in Turkey Boasting a very rich range in its cultural heritage, Turkey continues at full throttle to add new candidates to this list.

Selimiye Historic Areas Hattusha: The Neolithic Site Mosque and of Istanbul Hittite Capital of Çatalhöyük Its Social Complex

Hierapolis- Pamukkale Great Mosque and Hospital of Divriği

City of Safranbolu

Mt. Nemrut Archaeological Site of Troy

Göreme National Park and the Rock Sites of Cappadocia Xanthos-Letoon 16 Briefing

gained World Heritage status. statement that an important “Every site Turkey loveliest proof of this is the Pointing out that this is a deficiency in the World Heri- adds to the World sites it has newly added to very important development, tage List has been filled in and Heritage List the tentative list. Especially of Gökhan Sözer, the governor that this constitutes an im- great importance is the rapid of Edirne, stated, “Edirne has portant development in terms means advertising inclusion in the list of Selimiye now become world city,” and of the list’s coverage of all the country in the Mosque and Social Complex added that they have gained eras of humankind. The good international arena and Çatalhöyük, which shines prestige, too. condition of Çatalhöyük—a without any spending a light on human history, The biggest World Heri- challenging site in terms of at all” through the government’s tage List entry for Turkey in preservation and suitability to successful effort. But I believe 2012, however, was that of the list’s criteria—is regarded more sites should enter.” Çatalhöyük, which shines a as an important criterion. Boasting a very rich range light on the ancient history of Lucienne Şenocak of Koç Uni- in its cultural heritage, Turkey civilization. Representing one versity’s Department of Arche- continues at full throttle to of the most important stages ology and History summarizes add new candidates to this list. in human history, Neolithic Turkey’s success as follows: As this happens, many more Çatalhöyük dates back to the “Turkey has been accomplish- sites of cultural heritage are 7400s BC. Turkey’s stature in ing lots of great work with the waiting in line with successful, the list is increasing day by day significant steps it took in the complete applications, and with Çatalhöyük’s new status. past ten years, and tourism, new ones are being added to UNESCO experts said in a too, is among these, and the these day by day.

Peribacaları, Nevşehir Assoc. Prof. Seçİl Bİrkan Lucienne Şenocak, PhD Expert Archaeologist & Historian Department of Archaeology and History, Koç University Turkey’s potential is such that Being on the UNESCO World the area has the potential Heritage List or on the tentative to be world’s number-one list wins big pluses for a coun- spot for tourism. I would try. The listing of a site by the like to express this as World Heritage Organization follows—possessing a very is a kind of international mark wide range, Turkey, with its of approval of “good practice” in historic, cultural, and natural terms of how heritage is valued beauties, is at a position that and preserved in a country. is advantageous in many Being on the World Heritage ways. Turkey’s realization List does not however, in and of Pamukkale, Denizli of this potential, which it itself, bring immediate financial did not use for years, has benefits as the World Heritage brought it gains in many Organization does not allocate areas of tourism. One of a significant amount of money these potentials is UNESCO. to support listed sites. But there While the monuments and are many statistics showing that historical texture put under the revenues from tourism and conservation by UNESCO in especially cultural tourism in- countries like Spain and Italy crease significantly when a site benefit from many resources, become a world heritage site. Turkey has started to see Cultural tourism is a growing these pluses just now. Because sector of that industry so this is each site Turkey adds to the important to try to attract that World Heritage List means type of tourist rather than the advertising the country in the mass tourism that can be quite international arena without destructive of natural and cul- any spending at all, this “plus” tural resources. A second very Divriği Ulu Cami needs to be utilized well. A big important aspect of becoming tourism boom was observed in a world heritage site is that you Safranbolu, one of the regions are part of an international in- that gained big pluses, once formation network of heritage the historic houses there were experts who have a great deal of placed under conservation. experience with different types For Turkey to come to a of heritage sites—and /or intan- position of leadership among gible heritage —and can advise the world’s countries for about the many challenges that tourism, it must further speed face world heritage sites. up such activities.

SEPTEMBER-OCTOBER 2012 ISSUE 12 The Turkish Perspective 17

Turkey is using its geopolitical advantage to great effect

fıshery to target markets, diversity of species, EU-norms-compliant A Rising Star in the Fishery production and processing capacity, with its high export potential the value-add it creates, are of great importance Market: Turkey for the economy of Turkey.” The Turkish seafood and aquaculture industry’s exports in 2011, The seafood products to a total of 75 countries, were worth $447 million. The industry exported most by Turkey are gilt-head bream, sea bass, aims to finish the year 2012 with even better figures tuna, and trout. Market- By Aynur Şenol altun specific production does take place, too—sea bream and urkey, which is sur- share the deliciousness of production in Turkey has like- bass for the European market, T rounded on three sides by Turkish fish and other seafood wise increased during this time. trout for the Turkic nations, sea, is presenting its potential with participants. In competi- Sagun emphasizes that Turkey and tuna for East Asia. Sea to the world. The rise of the tion with Greece until recently, is using its geopolitical advan- bream and bass are well seafood and aquaculture in- Turkey pulled ahead in this race tage to great effect and says the known in many countries, dustry in Turkey, which bene- as government incentives and Turkish fishery industry will according to Melih İşliel. fits from the ecological diversity subsidies in the crisis-stricken soon rise to the rank of world’s They can be found easily in in the Mediterranean, Black country were withdrawn. “De- largest producer and seller. markets and they appear Sea, Aegean, and Marmara Sea, mand for gilt-head bream and The chairman of the on restaurant menus. What continues. Industry represen- sea bass has shifted to Turkey,” Aegean Fishery and Animal isn’t so well known is that tatives are quite pleased with says Tuncay Sagun, chairman Products Exporters Associa- these are produced in Turkey. the interest they receive at the of the Istanbul Fishery and tion, Melih İşliel, says, “Tur- Trout—generally smoked—is numerous fairs they attend Animal Products Exporters key’s being surrounded on consumed widely in Eu- around the world, where they Association. He points out that three sides by sea, proximity rope. On this point, Turkey’s 18 Briefing

participation in fairs abroad The production of increases recognition of Turk- trout in the Keban ish fishery products. Dam and caviar Tuncay Sagun says in the province of producers in Europe have Adana contributes withdrawn from the market because of the crisis. Thanks significantly to to a strengthened Turkish the fisher products economy, Turkish producers industry’s exports have started searching for new markets, he adds. As this searching takes place, Turkish producers are also continuing to compete in the interna- today have been conducted tional arena. Sagun lists the mostly in İzmir, in other cities countries Turkey is up against are in progress,” says İşliel. He as follows: “We are compet- adds, “Additionally, efforts to ing with countries where the increase seafood consump- production ability of fishery is tion are taking place by way high, like Greece, Spain, and of speeches and press releases Norway.” after every event.” Tuncay Sagun is also the The export of fishery CEO of Group Sagun, where products has advanced he maintains the aforemen- greatly with the activities tioned stability. The company, run so far, says İşliel, but whose export revenue was he emphasizes that there is $135 million, provides jobs to potential to do much better. 1,000 people in its eight pro- According to him, the fishery duction facilities. Sagun says products industry is regarded new offices will be opened in as a prime export industry. Russia and the Turkic nations The promotional activities in the near future. being conducted are aimed to increase recognition of TURKEY AT INTERNATIONAL FAIRS Turkish fishery products in Turkey is demonstrating its foreign markets, strengthen strength at international the image of these products, fairs via its Seafood Promo- and increase the market share tion Group, of which Melih held by the companies mak- İşliel is the president. He ing them, thereby increasing says this demonstration is export value and diversifying an important step for their its markets. The market for promotional activities. fishery products—almost all Industry representatives from of which used to be exported Turkey are at work promot- to EU countries—is diversifying the country all around ing thanks to promotional the world, from America to activities. The export increase Russia, Belgium, and India. Melİh İşlİel Tuncay Saygun as observed at the end of 2011 As activities geared toward Chairman, Aegean Fishery and Chairman, Istanbul Fishery and is expected repeat in 2012. Animal Products Exporters’ Animal Products Exporters’ markets determined to have Association; President, Seafood Association Initially aiming to contribute potential continue, so do do- Promotion Group $3 billion to the $500 billion mestic efforts—especially for Gilt-head bream, sea bass, national export target by In 2011, fishery products the benefit of primary school tuna, and trout, which are 2023, the fishery products were exported to 75 countries. aquaculture products, are the students, the industry is hold- Our aim is, together with products Turkey exports most. industry revised its target to ing fish sandwich festivals, increasing our present exports, Other than these, market- $4 billion as a result of the highlighting the benefits of to take part in yet-unentered specific products are being success it obtained in recent markets. For this purpose, we bred, too. For example, sea fish, and distributing various are participating heavily in years. Should the industry

bream and bass are being bred AA promotional materials. “Our utilize its potential more ef- BY international fairs. for the European market, trout H efforts to hold the Fish Sand- for the Turkic nations, and tuna fectively, it could set its sights P wich Festivals, which until for East Asia. even higher. HOFOGRA P SEPTEMBER-OCTOBER 2012 ISSUE 12 The Turkish Perspective 19

machınery exports had a volume of $1.8 billion in 2002; last year, this figure reached $12 billion, and the industry is exhibiting success not only in terms of Innovative, Powerful, success, but also in areas like the capacity utilization rate, increased value added, and and High-Quality R&D investments. While the US, EU, and The driving force behind industrialization, the machinery indus- China exhibited growth try will be drawing $40 billion in investments with its innova- beneath expectations, the tive mission Turkish machinery industry has set for itself a goal of a By DERYA ENGİN kutlu $100 million export volume in 2023, with a targeted annual growth rate of 10%. The products exported most by this industry in 2012 are air conditioners, coolers, and freezers, with engines and their parts and components coming second. Third are machinery and parts for construction and mining.

TURKEY IN THE GLOBAL MARKET These figures bear meaning beyond the fact that Turk- ish machinery has started to be used worldwide. The still-ongoing global financial crisis, which transformed into a debt crisis in the countries of the European Union, which is Turkey’s largest export market, has seen developing countries shining brightly, and it caused inves- e love to produce which accounts for 0.5% of tors to shift their bearings “Wthings, but everyone world machinery exports, is toward Turkey. Investors are produces. What’s important expected to draw $40 billion cognizant of the glow of Tur- is how you do it and how worth of investment from key’s machinery industry. One you market it,” says Adnan Europe in the next five years. of these investors is French Dalgakıran, President of the Currently, it ranks 28th in giant Atlantic Group, which Central Anatolia Machinery world machinery exports. invested in Erensan, a maker and Accessories Exporters Advancing with confidence of furnaces and heating Union, explaining how the toward the vision of “Turkey, systems, at the end of 2011. push carried out by Turkish a country that is growing Active in the climate control machinery exporters in recent in stability, sharing more and heating industry, Atlantic years is actually rooted in the equitably, is globally competi- “We are aiming for Group, whose yearly revenue way of doing work and the tive, and has fully completed 100 billion dollars in is in excess of €840 million, excitement of promoting it. In her coherence with the is expanding its production the rankings of average export European Union,” as stated machinery exports chain with Erensan, buying a growth over the past dec- in the government’s Ninth for 2023, taking a 25% share to become a part- IMAGES

Y ade, he adds, Turkey placed Development Plan, is on a 20 percent share of ner in the company. Within TT GE fourth, after China, the Czech rapid rise in the machinery the total 500-billion- the scope of this partnership, BY

H P Republic, and Poland. The industry, as it is in many other dollar export target,” Atlantic has shifted produc- OGRA T Turkish machinery industry, industries. Turkish machinery says Dalgakıran tion of some of the furnaces HO P 20 Briefing

and heating systems in its tractors over the first half of The industry is following since the start of product range to Erensan’s this year, compared to 3,331 expecting $40 billion the financial crisis, has been factories in Istanbul and in the same period last year. in investments from at the center of the machinery Yozgat. Erensan Board Chair- East Asia and Europe industry’s primary policies man Ali Eren, speaking at GEARING UP FOR $100 BILLION in particular over the in this period, too. While it is the signing ceremony for the The manufacturers’ successes true that the industry, which partnership, characterized the are also causing expectations next five years exports to roughly 200 coun- partnership as a “venturing for the future of the machin- tries, sends 60% of its exports out to the oceans,” continuing ery industry to rise. Aiming to to EU countries and the US, with, “We have been receiving put Turkey, which is aiming by pursuing a strategy to partnership proposals from for $500 billion in exports reduce risk via market diver- numerous global brands for in 2023, among the ranks of sification—the foundation years. And we were looking the world’s largest machinery says Dalgakıran, once again of the cautiously optimistic for an international strate- exporters, the industry esti- underlining the industry’s approach—countries in the gic partner in line with our mates that it will reach $100 remarkable performance. The Middle East and Common- growth and export targets.” billion in exports itself in the machinery industry has al- wealth of Independent States Exporting to 72 countries centennial of the Republic of ready started to benefit from have also become important with 100% local production, Turkey. Significant steps are the new incentives package markets for Turkey. The top Erensan doubled its capacity being taken to achieve this. announced in April. The five recipients of exports in and hired 30% more employ- Adnan Dalgakıran empha- industry is expecting $40 bil- the first half of 2012 were ees to serve this partnership. sizes that Turkish machine lion in investments from East Germany, the UK, the US, Some, however, believe manufacturers rank beside Asia and Europe in particular France, and Iraq, with the they can progress with their the technological giants in over the next five years. highest increase of exports own financial resources and world exports and points out While the global crisis to countries in the top ten brand equity in spite of pro- the 10% growth of the ma- is expected to continue being claimed by the US with posals from foreign investors. chinery industry according to especially in Europe, even if 75%. This is significant not Türk Traktör, one of Turkey’s figures for the first six months it does with peaks and dips, only quantitatively, but also first tractor makers, increased of the year, relative to the expecting $40 billion worth qualitatively in a way that its unit exports by 138% and same period last year. “While of investment in the industry should not be overlooked— export income by 147% in the Turkey’s overall exports may seem too optimistic. that the top export recipients first half of 2012. Consider- increased by 3.4 percent, Turkey’s cautiously optimistic of the machinery industry, a ing the general export of we managed to triple that,” approach, which it has been technology-heavy industry, machinery and parts used are the US and countries in in agriculture and forestry the EU proves this. “Sixty increased by 56% in the first percent of our machinery half of 2012 relative to the exports are to countries like equivalent period in 2011, the US and those in the EU, Türk Traktör’s growth is quite which possess advanced tech- above average for its indus- nologies,” says Dalgakıran, try. Türk Traktör General highlighting this point, and Manager Marco Votta said in he states that by finding and his statement about the mat- Adnan Dalgakıran M. Naİl Türker opening up to new markets, ter that with the new models Chairman, Turkish Exporters’ General Secretary, Machinery the industry has managed to Union Board of Machinery and Exporters’ Union (MİB) they produced, the company’s Parts deflect some of the effects of sales to international markets Developed countries are the crisis. The increased al- Whether Turkey will achieve increased by record levels over focusing more on intellectual location of resources for R&D its $500 billion exports target, property-based and high- the first six months of 2012, too, is dependent on the tech products more so than and technology investments and he added, “The share of development of technology- physical manufacturing. They on the part of the approxi- export income in our total producing industries like are shifting the manufacture mately 20,000 machinery revenue rose from 15 percent the machinery industry. of medium/medium-high manufacturers in Turkey will The machinery industry is tech items for daily use to multiply their power in the to 30 percent in the first six the locomotive industry of developing countries. Our months of this year, while at developed countries around manufacturers are using this global competitive environ- the end of June, the revenue the world, and it is becoming opportunity to their advantage ment, indicates Dalgakıran, gained by our company from ever more important by proving their quality and and he adds, “Our industry, strategically in Turkey, too. sales abroad increased by 147 sustainability. The yearly which realized six billion There are as many companies average increase in machinery percent to reach 346 million in Turkey as half that in 15 EU exports between 2001 and dollars’ worth of exports in Turkish liras.” Türk Traktor, countries, showing how far the 2011 was approximately the first six months of 2012, whose revenue is roughly industry has progressed. 22.5%. has started to take on a more TRY 1.2 billion, sold 7,873 innovative role.”

SEPTEMBER-OCTOBER 2012 ISSUE 12 The Turkish Perspective 21

Turkey was the country to increase its production the most among the world’s top thirty steel-producing countries

shares in the total iron and steel product exports, which totaled approximately 18.54 million tons, were as follows: 38 percent to the Middle East and Persian Gulf countries, 20 percent to the European Union, and 10 percent to North Africa.” Mustafa Çıkrıkçıoğlu, as Deputy Chairman of the Istanbul Iron and Steel Exporters’ Union, emphasizes the importance of the trade and buying delegations created to increase exports steel by opening up new markets to companies. The focus is on regions with high buying potential but low import Major League Steel rates, indicates Çıkrıkçıoğlu, and he says, “Following In its steel exports, Turkey is utilizing the advantages of its studies covering more than geographical location and acceding to its well-deserved spot in 180 countries, we organized the big leagues steel trade delegation visits to Chile, Peru, and Colombia in By Derya Engin kutlu October 2011, to Pakistan and Bangladesh in March 2012, here now is a very producing countries. With this states, and countries in North and to Nigeria and Ghana in T powerful name in the rise in production, Turkey now Africa. Veysel Yayan says the July 2012.” Besides organizing steel industry, in which many ranks eighth in steel exports. share and weight of these re- such visits to countries in East world giants have invested and “We are the world leader in the gions in Turkey’s exports have Africa and Latin America, says gained value-added for their export of construction iron. been decoupled and shaped Çıkrıkçıoğlu, they are bring- economies: Turkey. According We market our high-quality within the context of political ing buying companies from to a report by the World Steel products to 160 countries and economic developments. abroad- to Turkey where they Association (WSA), Turkey with our competitive prices In summary of the current meet with the producing com- ranks second among Europe- and expertise,” says Mustafa situation, he says, “In 2011, 68 panies and see the production an countries in world raw steel Çıkrıkçıoğlu, Deputy Chair- percent of our total iron and facilities first-hand—so far, production. In a time when man for TIM. steel products exports were to they have brought important many world giants wrestled The reasons behind the the countries of the Middle companies from the Czech with the economic crisis and success obtained in the steel East and Persian Gulf, the EU Republic, Egypt, and Thailand stability issues, Turkey started industry, in which great 27, and North Africa. Regional to Turkey. to make its name heard quite developments have occurred, With its proximity to both often in steel exports. Veysel are clear: as a reflection of Asia and Europe, Turkey is Yayan, PhD, General Secretary increased total economic putting its great geographical of the Turkish Iron and Steel activity in the world and the location to good use, too. Add- Producers Association indi- growth of national economies, ing new brands to the world cates that Turkey strengthened demand for housing, cars, and steel industry every year, Tur- its position with its raw steel home appliances is increasing. key appears on the “World’s production in 2011 of 34.1 Thanks to the foreign policy Biggest Steel Producers” list million tons, and he under- pursued by Turkey, among the by the London-based Metal lines the fact that Turkey was countries to which the steel Turkey is planning Bulletin with the companies the country to increase its industry exports are those in to raise its share in Erdemir Group, Habaş, İçdaş, production the most among the Middle East and Persian world steel exports to Diler Group, and Çolakoğlu the world’s top thirty steel- Gulf, the 27 EU member 4.3% in 2023 Metallurgy. Specifically, on 22 Briefing

this list of 116 companies, on high value-added, qualified Erdemir Group ranked 47th structural and stainless steel with 7.1 million tons, Habaş products.” TIM Chairman 72nd with 4.4 million tons, Mehmet Büyükekşi also spoke Diler Group 108th with 2.3 on the matter: “The export million tons, and Çolakoğlu target in the steel industry Metallurgy 110th with 2.1 mil- in 2023 has risen to 100 billion tons. Turkish companies lion dollars,” said Büyükekşi. have been starting to draw The industry accounts for interest from foreign capital, 0.058% of world trade, and too—Arcelor Mittal, a giant Büyükekşi’s desire is to raise in the global steel industry, this to 2.63% and its share in joined a partnership with Turkish exports from 6.9% Erdemir by purchasing 18.7% to 18.34%. The volume of of its shares in order to make the worldwide trade in the use of its production capacity industry is $1.4 trillion, he in Turkey. stated. He estimates that this agrıculture Accounting for 1% of total figure will reach $3.8 trillion employment in the industrial in 2023. Mustafa Çıkrıkçıoğlu, Turkey’s Sweet Success in sector in Turkey and 10% who indicates that they are of the sector’s total exports aiming for $55 billion in steel with a $17 million volume exports within the scope of the 2023 targets, as led by the the Fig and in 2011, the steel industry in Turkey has set its sights high Ministry of Economy with for the future, as summarized the coordination of TIM, says, by Veysel Yayan: “Our steel “We are planning to raise our Cherry Industry industry aims to become the share in world steel imports to Producing more than 43 million tons seventh largest steel producer the level of 4.3 percent,” he an- of fresh fruits and vegetables annually, in the world, leaving Germany nounced. The progress Turkey behind as well, and to increase has exhibited in steel exports Turkey is advancing confidently toward its production volume by the shows that this goal is not so the export target it has set for the year year 215, while concentrating far off. 2023. Its production of cherries and black figs play a key role in the global fresh produce trade

By Can Gürsu

he dependence to a have multiplied its fresh fruit T large extent of agricultural and vegetable export by five in production on the whims of 2023, bringing it to a figure of Veysel Yayan Mustafa Çıkrıkçıoğlu nature and the long period $9.8 billion. The increase in PhD – General Secretary, Deputy Chairman, Istanbul Iron of production compared to cherry and black fig exports is Turkish Iron and Steel Producers and Steel Exporters’ Union, TIM artificial goods causes the contributing toward achieving Association The main factors that will industry to be characterized as this goal. Growing at a rate more than play a critical role in Turkey’s “difficult” for many countries. With its fecund, expansive double the world average, development in the coming In a world where nutritive agricultural fields suited for Turkey has increased its years will be changes in scrap steel production by 10.4% demand and prices, and new resources drop day by day as cultivation and the broad as of the first five months of investments to be made in the population increases con- ecological spectrum repre- 2012. Turkey now ranks as high value added products. stantly, the importance of the sented in its regions, Turkey the world’s eighth-biggest In the name of guiding and producer. New investments— agricultural industry, which is is one of the few countries supporting the industry in tasked with feeding the people where a great number of in flat steel products this area, we have started our especially—helped our steel efforts to develop the Turkish of the world, is becoming fruits and vegetables can be industry to achieve these. steel industry’s strategy for ever greater. With all of these grown to high quality in good A positive start to 2012 fueled 203. In the coming period, qualities, the agricultural conditions. The agricultural a gradual rising trend in we hope these efforts, which industry has started to rise industry is of key role to Tur- May and June, and over the are being done with global- first five-month period, the scale consulting firms, will to the position it deserves to key’s exports, accounting for AA industry grew by 6.1%. have in world trade and play a 13.1% share. The industry’s shine a light on the industry’s BY

H future. a significant role in Turkey’s export increased 11% by P OGRA foreign trade. Turkey aims to quantity and 7% by value in T HO P SEPTEMBER-OCTOBER 2012 ISSUE 12 The Turkish Perspective 23

2011, respectively reaching man of the Uludağ Fresh and export oriented. Having 3.2 million tons and $2.3 Fruit and Vegetable Export- attained a rising trend with billion, signifying a stable ers Union (UYMSİB), says, sound agricultural practices, increase. “Turkey ranks first in the world Turkey, the world’s seventh Turkey occupies an advanta- with its cherry production of biggest country in agriculture, geous position geographically 417,000 tons, and we export is presenting a positive out- not just in terms of cultiva- 50,000–60,000 tons of this.” look for the future, too, with tion, but also by virtue of the They are now aiming to bring its strategic planning. markets. A genetic center for the rank of exports in line with The fresh fruit and vegetable many fruits and vegetables, that of production—first place. industry of Turkey is advanc- Turkey ranks among the im- In overall exports of fresh ing toward the target it has portant players of the market fruit, vegetables, and citruses, designated for 2023 with with the advanced technology a growth took place of 19% “Turkey ranks first the confidence brought by used in recent years to preserve by quantity and 11% by value in the world in cherry its product diversity, too. The produce during and after har- took place in 2009 relative to production and third agriculture industry is of vest. Kemal Kaçmaz, Industry the previous year, and in 2010 in cherry exports” great importance with respect Council Chairman of the Fresh of 5% by quantity and 12% to meeting the necessary Fruit and Vegetable Exporters by value. The US ranks first nutritive needs of the country’s Unions, says, “Cherries and figs worldwide among cherry-ex- population, providing raw are among our most demand- porting countries, followed by in world fig exports with a material to industry, creating ed export products among Chile, Turkey, Spain, and Italy. sizeable share of 54%, worth demand for industrial prod- fresh fruit and vegetables,” and Turkey is continuing $180,800. Turkey is followed ucts, and the national income. adds, “Our country is in an im- the success it has achieved by Egypt, Algeria, Iran, and Making a positive contribution portant position for both their in cherry production and Morocco respectively. “Con- to employment, the fruit and production and the world in exports in the production of sidering Turkey’s fig export vegetable industry is among the two of these products.” The black figs, too. In line with in 2010 was 184,600 dollars, the most important fields in leading producer of cherries production, black figs have one sees that 72 percent of agriculture. As it maintains its and figs in the world, Turkey managed to maintain a ris- our production is exported,” rising trend, Turkey is aiming seems set to continue its leading trend in exports since says Kaçmaz, and he under- to rise ever higher in global ership by bringing to consum- 2007. Kemal Kaçmaz states lines the fact that produc- rankings. ers its quality, trustworthy that Turkey ranked first tion in Turkey is world class product for the best price. Processing for exports of cherries from gardens and fields as soon as they are picked is done under the watch of the representatives in Turkey of European auditing companies. The safety of Turkish cherries is proven by Kemal Kaçmaz SALİH ÇALI Yavuz TANER international certificates such Industry Council Chairman, Fresh Chairman, Uludağ Fresh Fruit and CEO, Alara Fidan Co. & Alanar Co Fruit and Vegetable Exporters’ Vegetable Exporters’ Union as HACCP, GLOBALGAP, and Unions Turkish cherries and the black ISO. Kemal Kaçmaz indicates Our country’s climate As a country, we are aiming fig of Bursa are among our that Turkey’s climate condi- conditions are very well suited to have multiplied our fresh champions in global quality. tions provide a great advantage for the production of fresh fruit and vegetable export by Having launched in the 1980s five, raising it to $9.8 billion. with regard to cherry cultiva- fruit and vegetables. Should with exports to the European Therefore, we will thus be countries, the export of tion, which he says is expected climate conditions be good, we expect our production to able to increase our share in cherries and black figs are to increase even more in future increase even more in the years world fresh fruit and vegetable today playing for leadership. years. Turkey is also exhibit- to come. Once the outcomes exports, which are expected Fruit producers re following to total $120 billion, to 8.2%. ing rapid progress in organic of our undertakings emerge, developments in cherry and Various strategic targets fig production, and they cherry cultivation geared to we expect cherries to occupy an important spot in the fresh required by the industry in are working in harmony satisfy demand for organic fruit and vegetable exports everywhere from production with exporters. It is time for produce, which is develop- of the year 2013. Our entire to marketing and sales, and Turkish cherry and Bursa ing in parallel with people’s strategy was prepared with the from product development black fig exports to “leap” and to human resources and laws, consciousness of human and aim of becoming number one “jump” in the market. in cherry exports globally. have also been set in the name environmental health. of overcoming the barriers Cherry production in Turkey before attaining the designated is increasing gradually every export target. year. Salih Çalı, PhD, Chair- 24 Briefing

While Turkey’s chemical exports ranked seventh ten years ago, today it ranks second in total exports

strategies to choose Turkey as a production base while they continue to employ their own brands and marketing. Akyüz attributes this prefer- ence for Turkey to quality, and he adds that the chief rivals in this area are Germany, France, and Italy. One of the global companies investing in Turkey is Henkel. It has been 50 years since Henkel, an important world brand in its industry, which has investments in many countries, chose to enter Turkey. While Henkel Turkey was founded in 1963, Henkel’s decision to enter Turkey dates back CHEMICALS to 1916 with Turyağ, a small oil-maker established to meet Turkey’s oil supply needs in The Chemical Industry the WWI era. Later, through partnerships and investments with Henkel of Germany, it Opens New Doors was the first spark of what is now a giant industry in The chemical industry continues to grow with the foreign direct Turkey. Today, Henkel Turkey is a investment it receives and increasing exports company headquartered in Istanbul, with three produc- BY Aynur Şenol Altun BY CEVAHİR BUĞU tion facilities in Ankara, Gebze, and Tuzla and a year- xpect highlysig- investment in the petrochem- While chemical exports end revenue of roughly €360 “Enificant investments ical field, which Turkey has ranked seventh ten years ago, million in 2011. Investments especially in the chemical imported close to $3 billion today it ranks second. That over just the past five years industry.” These words belong in, is the greatest indicator of they have grown from a vol- total €50 million. to Minister of Economy Mr. and the greatest good news ume of $2.5 billion in 2001 Zafer Çağlayan, commenting from this,” and he followed to $16.3 billion in 2011 shows THE ALLURE OF ALTERNATIVE on the signing of a partner- with the statement that the progress made by the MARKETS ship agreement between the significant investment is to industry. Istanbul Chemicals Having shifted focus to Advanced Petrochemical be made in Turkey, especially and Chemical Products Ex- alternative markets in the Company of Saudi Arabia from Europe. As Çağlayan porters’ Association (İKMİB) post-crisis period, Turkish and Bageyan of Turkey to says, the Turkish chemical Chairman Murat Akyüz says chemical exporters are now create a $1 billion polypro- industry is going through an this success is the outcome of reaping the rewards of this pylene factory in the Ceyhan, excellent period. The biggest the strategy being pursued. strategy. The share in exports İskenderun region. Çağlayan, exporting industry in Turkey Nothing that orders to Italy, accounted for by European who said the ministry has after automotive, the chemi- Spain, and Greece in par- countries, which were the been encouraging the pro- cal industry is bearing great ticular have shifted to Turkey greatest market for chemi- duction of goods that Turkey results especially for a non- after the slowdown and crisis cal exports five years ago, is currently depends on imports oil-producing country. Export in the EU, Akyüz says Euro- dropping constantly. Turkey for with the incentives pack- figures for the past ten years pean countries have aban- has determined the Middle age announced in April, said show the chemical industry’s doned production. European East and North Africa as of this news, “The $1 billion developments quite clearly. producers have retooled their prime export markets, and

SEPTEMBER-OCTOBER 2012 ISSUE 12 The Turkish Perspective 25

meanwhile it is also ventur- trade fairs held abroad and ing to explore new markets new markets play a large like South America, China, Reaching All Markets role in this success. Speaking and East Asia. Another of The Turkish chemical industry exports to many countries around the world. on this matter, Uysal said, the most important indica- The numbers attained in the past seven months confirm this “Uncertainty is dominating tors of this change is that the world economy. That we Egypt, Iraq, and the United are continuing our exports Arab Emirates are three top with increases in such an recipients of the exports of $ $ $ atmosphere is proof of our the chemical industry, whose 152.3 102.4 63.5 industry’s success.” export volume increased by MILLION MILLION MILLION In the January–June 2012 8% to $10 billion between period, plastics and plastic January and July. The 83% EGYPT IRAQ RUSSIA products accounted for a increase to $1.11 billion in Data:İKMİB 26.45% share of chemical exports to Egypt following the exports, equaling $2 .32 bil- Arab Spring makes that coun- lion. In light of the numbers try one of the most important plastics processor of plastics, and by the channel of export achieved by the industry in markets in the Middle East. one of these industries, and industries like automotive, 2012, it is predicted that it The other countries that it is aiming to reach second home appliances, and elec- will realize roughly $5 billion received the most of Turkey’s place by the end of 2012. trical/electronic goods,” says in direct exports by the end chemical exports from Janu- “Plastics have become an es- Plastics Industry Association of the year. The chemical ary to July are listed in order sential part of our lives. Their of Turkey Chairman Mehmet industry is also of consid- as Germany, Malta, Russia, use in many places, from Uysal. Direct exports rose erable importance to the Iran, the US, and China. packaging to the automotive to $4.8 billion in 2011, he national $500 billion export The bulk of the chemical industry, summarizes the de- says. The plastics and plastic target for 2023. The industry industry’s $1.3 billion exports gree of importance they have. products industry, which aims to contribute to this in July are accounted for by, Adding value to our economy, ranks second among the goal through $50 billion in again, Egypt, Iraq, and Rus- the Turkish plastics industry chemical export industries, chemical exports, which it sia. Exports to Russia totaled realizes close to 10 billion exports to more than 190 plans to achieve by further $63 million, while exports dollars in exports directly countries. Participation in diversifying its markets. to the US gained significant momentum, increasing 130% to $60 million, bringing the US to fourth place.

THE KEY: PROGRESS IN R&D AND SUBINDUSTRIES The chemical industry in Turkey is relatively young, Murat Akyüz Mehmet Uysal Hasan Alemdar but it is promising. Foremost Chairman, Istanbul Chemicals Chairman, Plastics Industry Executive Committee President, among the elements needed and Chemical Products Exporters Association of Turkey (PAGEV) Henkel Turkey to further strengthen the po- Association (İKMİB) “The subindustries have a Turkey Will Continue sition in the world market of “Our market search share in the success of the to Play an Active Role in the chemical industry—one continues” chemical industry, too” Henkel of the top export indus- We aim to reach an exports fıgure We can state that the industry has We attained our highest ever tries—are R&D investments. of $18 billion by the end of the reached a great point especially revenues as Henkel Turkey in According to Akyüz, every year. This means a 10% growth with developments in production 2011. All our business units compared to 2011. We believe quality and technological contributed to this success. Our step that Turkey takes in this we will achieve our targeted infrastructure in the past ten 2011 revenue increased 28% to area will add one more notch figure easily. Our market search years. The competitive power reach €360 million. Our success of success on the chemical continues. By analyzing in detail of the industry, which has is not limited to just 2011— industry’s belt. the markets we will newly enter, become the supplier of many in the past ten years, we grew we are setting a road map for our Comprised of a number of products abroad as well, has fivefold in cosmetics & personal exporters. We organized 17 fairs reached high levels. Several of the care and threefold in adhesive subindustries such as mineral last year. We are providing good subindustries have a share in the technologies. Henkel is aiming oils and fuels, plastics, rubber, participation especially in the success of the chemical industry, for 3–5% growth in the fiscal cosmetics, dyes, and phar- area of medical and medicinal too. Plastics and plastic products year 2012, and Turkey’s aim is to maceuticals, the chemical products. Work done in the also have a large share in chemical contribute to this growth. cosmetics and dye industry are exports. We are Europe’s third- industry is growing in parallel also quite noteworthy. largest plastics processor. We aim with many of these. Turkey to reach second place by the end is currently the third-largest of the year. 26 Briefing

AVIATION Confirmed Success Besides ranking third among European airlines in terms of passengers carried, Turkish Airlines boasts certified success with three awards in this year’s Skytrax World Airline Awards

BY CAN GÜRSU

ur aim is to be a big The industry is estimated O global player and to to have reached a size of hang on there,” says Temel $500 billion. The traffic from Kotil, General Manager of Europe to Asia accounts for Turkish Airlines, who con- more than $36 billion. Turk- tinues to state that Turkish ish Airlines flies to 84 loca- Airlines has risen to the upper tions in Europe from Istanbul levels in terms of both service alone, and by increasing quality and the number of this figure to 100, it aims to people it carries. Turkish take an even bigger share of has been presenting solid Airlines gained the title of the market. Having added proof of its high quality time third place among European Djibouti to its flight network, and again—Turkey’s flag car- airlines in terms of passen- Turkish Airlines will be flying rier received three accolades, gers carried, after Lufthansa to 200 locations worldwide including Best Airline in and the Air France-KLM once this destination comes Europe, in the Skytrax World partnership. into service. Airline Awards, considered Having left British Airways With aims to be one of the “Oscars” of the passenger behind, Turkish Airlines is the best airlines of not just airline business. Skytrax, an further notching up its trend Europe but also of the world, independent consulting firm, of success with a 47% increase Turkish Airlines is receiving provides auditing and service in the number of transit heavy demand from the Per- comparison programs to the passengers it carried—41 of sian Gulf region, too. Turkey passenger aviation industry every 100 passengers flying on is a leading touristic destina- and inspects the quality of the airline, which carried 38 tion among those chosen by products and services offered million passengers, are transit Arab travelers, and Turkish by institutions in the business. passengers. “Istanbul, together Airlines is the airline that The Skytrax Awards are with Turkey itself, is located carries them. “Reservations given based on surveys in the center of the world,” made from the Gulf region of passengers—this year, says Temel Kotil, and he adds increased by 30 percent over numbering close to 18 that the airline’s growth will last year,” said Kotil, and million—from 100 coun- further speed up with the con- he indicates that the well- tries. Turkish Airlines won struction of Istanbul’s third placed campaigns have been Best Airline in Europe in the airport. The share Turkish especially influential over this Turkish Airlines aims awards last year, too, as well as Airlines takes from the world increase. to expand its fleet to Best Premium Economy Seat aviation market, which is in As it climbs the steps to 200 aircraft by the with its Comfort Class offering a constant trend of growth, is becoming Europe’s greatest end of 2012 and 213 and Best Airline in Southern increasing every year. one by one, Turkish Airlines in 2013 Europe. With its repeated

SEPTEMBER-OCTOBER 2012 ISSUE 12 The Turkish Perspective 27

“We aren’t the biggest, but we proved that we’re the best,” said Kotil

the awards they have received today for Best Airline in Eu- rope and Best Airline South- ern Europe demonstrates their continued popularity amongst passengers.” Plaisted continued, “Turkish Airlines’ Premium Economy cabin product has proved increas- ingly popular and the award Turkish Airlines collected for the Best Premium Economy Class Airline Seat is a clear reflection of the success of this high quality product,” clearly showing the success Turkish Airlines has achieved with its well-chosen investments. Confirming its success with award success this year, Turk- the awards it receives every ish Airlines has proven that its Skytrax 2010 year, Turkish Airlines already accolades are no coincidence. Best Economy Class Catering shows signs of the successes Holding Skytrax’s 2010 title it will achieve in future years for World’s Best Economy Skytrax 2011 thanks to its sound strategy Class Catering and Skyscan- and customer satisfaction ner’s award for Best Catering, Best Airline Best Premium Economy Best Airline levels. Turkish Airlines is a leader in in Europe Class Airline Seat Southern Europe “We are a European carrier. cabin service and catering as The biggest airline in Europe, well, and it ranks among the Skytrax 2012 after Germany and France, pioneers in this area with its is the Turks’. We aren’t the Best Airline Best Premium Economy Best Airline exclusive “Flying Chef” cater- in Europe Class Airline Seat Southern Europe biggest, but we proved that ing for Business Class passen- we’re the best,” said Kotil, gers on long-haul flights. speaking on the topic of the The winners of the 2012 airline’s back-to-back Best in Skytrax Awards were an- Europe title. With a $7.8 bil- nounced at the Farnborough lion revenue target this year, International Airshow. Turkish Airlines might even Skytrax CEO Edward Plaisted surpass this figure as its fleet presented Turkish Airlines’ constantly grows as aircraft awards to General Manager deliveries continue to roll in. Assoc. Prof. Temel Kotil, PhD With aims to expand its fleet on July 12, 2012. In his speech to 200 aircraft by the end of at the award ceremony, the 2012 and 213 in 2013, Turk- Skytrax CEO said, Turkish ish Airlines stands as a worthy Airlines continues to consoli- challenger to its rivals with its date its position as one of the stable growth that makes no world’s leading airlines, and concession of its quality. 28 Briefing

Japanese giant The Bank of Tokyo-Mitsubishi UFJ Financial Group Inc. applies for a full-fledged banking license in Turkey as it joins Mizuho Financial Group Inc. in a bid to take advantage of Turkey’s robust economy

INVESTMENT Turkey strengthens its global position as an attractive FDI destination Turkey became the 23rd FDI recipient in the world in 2011, according to the World Investment Report, prepared by UNCTAD. The report also highlighted the new investment promotion strategy adopted by ISPAT

n early July 2012, the the 23rd FDI recipient in the towards a more sector-specific logy solutions for sustainable IUnited Nations Conference world in 2011, up from 29th approach, aiming directly at development in the energy on Trade and Development in 2010. Moreover, “Turkey high value-added, high-tech and environment sectors (UNCTAD), a UN agency stood out as an exception to and export-oriented projects. worldwide, and ISPAT jointly tracking foreign direct invest- regional trends, with inflows In this regard, the report announced that Befesa, a le- ment (FDI) trends worldwi- registering a 76 percent also highlighted the new ader in the recycling and tre- de, released its annual World increase to USD 16 billion, promotion policy adopted by atment of industrial residues Investment Report, which maintaining the country’s the Investment Support and operating under Abengoa, analyzes the global trend of position as the region’s second Promotion Agency of Turkey will set up two plants for steel FDI on a national and regio- largest FDI recipient and (ISPAT). dust recovery in the Turkish nal level, the direction of mar- increasing its share in the As part of this new strategy, provinces of Izmir and Adana ket movements, and the top region’s total from 16 to 33 ISPAT has recently facilitated at a cost of USD 120 million. countries preferred for inter- percent.” As the report finds, two new greenfield invest- Spanish Befesa’s investment national direct investments. this increase was mainly due ment projects. On July 17th, is highly significant as the According to the findings of to, inter alia, Turkey’s FDI Abengoa, a Spanish company facilities will help recover steel the report, Turkey became promotion policy shifting providing innovative techno- dust, a hazardous residue

SEPTEMBER-OCTOBER 2012 ISSUE 12 The Turkish Perspective 29

generated in production of ning population hamper Turkey attracted USD There are around 150 Ja- steel from electric arc furna- loan profitability at home. 16 billion of FDI in panese companies in Turkey. ces, with the safest and most Mizuho Corporate Bank Ltd., 2011 with a 76 percent They have been increasing environmentally-friendly a unit of Japan’s third-largest increase year-on- their investments in Turkey methods. Currently, Turkey is lender by market value, has in recent years. FDI inflow estimated to produce around also indicated its intention to year, well above the from Japan to Turkey was 500,000 mt of steel dust obtain a banking license in 16.5 percent global hovering below the level of annually. Thanks to Befesa’s Turkey or to acquire a stake FDI flow increase USD 25 million until very latest investment, approxima- in a Turkish lender. and maintained its recently, but as Turkey’s att- tely 45 percent of this amount The Bank of Tokyo- position as the region’s ractiveness as the preferred will be recovered. Commen- Mitsubishi UFJ Ltd. unit will second largest FDI destination for investments ting on the new investment, initially make a USD 300 recipient became more well-known Mr. İlker Aycı, President of million capital investment. in the later years, this level ISPAT, said Befesa and ISPAT The bank is expected to start increased to about USD 300 have been cooperating for the its operations in October million per year since around past 20 months, and added: 2013, and will be based in 2010. Key investments made “This investment is of great Istanbul. “We hope to triple during this period included significance not only in terms our exposure to Turkey to re- years. It may also offer credit the acquisition of a local of transferring technology, ach USD 5 billion in three to to “non-Japanese blue-chip insurance company Fiba creating employment and five years,” said Shoji Nakano, companies”. The bank will Sigorta by Sompo Japan in contributing to Turkey’s ex- the bank’s Head for Europe, provide funding for infrast- 2010 for USD 341 million, ports, but also of bringing in the Middle East and Africa, ructure projects, particularly and the acquisition of a local environmental benefits. Be- adding, “We may increase our in energy production, and air-conditioner manufactu- fesa has now included Turkey capital investment as our bu- also in the service and ma- rer Airfel by Daikin in 2011 in its list of operational hubs siness grows through the Is- nufacturing industries such for about USD 258 million. such as Germany, France, tanbul branch in Turkey over as automotive, electronics, In late 2011, Mitsui & Co. the UK, Spain and Sweden. the next three to five years”. medical equipment produc- announced that, together We are proud to attract this Bank of Tokyo-Mitsubishi tion and cosmetics. The bank with a Malaysian sovereign investment to our country.” aims to finance as much may also provide financing wealth fund, it bought the Meanwhile, Mr. Javier Molina as 85 percent of Japanese for the Turkish government’s majority shares in Acıbadem, Montes, Chairman of Befesa, companies in Turkey as their planned sale of power grids a Turkish hospital operation said, “We are glad to contri- number is expected to incre- later this year, should the company, for about USD 1.3 bute to Turkey’s sustainable ase threefold in five to seven projects prove feasible. billion. development in the field of recycling and recovery of industrial waste with this investment. I would like to thank Mr. İlker Aycı and his team for their efforts and contributions to this project from the very beginning in 2011.” Another important announcement came from the Bank of Tokyo-Mitsubishi UFJ Financial Group Inc., the largest bank in Japan, and the 8th largest bank in the world. The bank announced that it will apply for a full-fledged banking license in Turkey next month as it joins Mizuho Financial Group Inc. in a bid to take advantage of the country’s Spanish Befesa, a leader in the recycling and treatment of accelerating economy. Japan’s industrial residues operating biggest lenders are looking under Abengoa, will invest USD 120 million to set up two plants for abroad for growth as low steel dust recovery in Turkey interest rates and a decli- 30 Briefing

In 2008, Huawei’s Turkey office started serving as a management hub for nine more countries in the Central Asia and the Caucasus

Huawei Turkey serves to all operators such as; Avea, Voda- fone, Turkcell, Turk Telekom. In 2011, Huawei went through a restructuring process globally and decided to continue with new business opportunities and new product and solutions in addition to telecom sector by concentrating on 3 major business units; carrier, enterprise solutions and device solutions to serve operators, enterprise and consumers.

What contribution to the industry does the Huawei R&D center provide, in your opinion? Can you discuss the value added that will be created? Which countries r&d and regions does this center serve? The R&D Center Huawei Turkey set in operation in ICT Giant Focuses On Turkey Istanbul in 2009 is the second The ICT giant Huawei is exporting R&D to the world via the international R&D center the company operates outside R&D center it opened in Turkey China. Built with a total investment target of more than By CAN GÜRSU $50 million in the three year urkey is continuing to employed? What kind of as a management hub to nine period since its establishment Tgrow positively despite the operations take place here? countries in addition to Turkey in 2009, the Huawei Turkey difficulties under way in the Huawei established its op- in the Central Asia and Cauca- R&D Center now employs global economy. Solidifying erations in Turkey in an office sus (CA&C) Region. around 350 employees. its growth through the FDI opened in Ankara in 2002. Employing 770 people as of Combining Turkish engi- it is receiving, Turkey also Huawei continued growing by August 2012, Huawei Turkey neering and genius with Eu- hosts foreign companies. The opening offices and support makes a contribution to the ropean concepts and design tech giant Huawei placed its centers in İzmir, Diyarbakır Turkish IT industry and econ- as well as Asian platforms second R&D center outside and Trabzon in 2007 along- omy with an overall employ- and work processes, the R&D China in Turkey. Based on the side its local headquarters in ment figure of 5,000 including Center houses value-added united powers of Turkey and Istanbul. In 2008, Huawei the business partners and 60 services, pricing and billing, Huawei, the center today ex- Turkey’s office started serving suppliers in its ecosystem. call center, and customer ports technology to the whole world. Mr. Wu Congcheng, Huawei Turkey Milestones General Manager of Huawei Turkey, discussed the com- 2002 2003 2007 2008 2009 pany’s R&D center and future investments with The Turkish First office First FAS Istanbul office Huaweı Turkey Investments 3G contracts in Turkey agreement established. office becomes expanded in signed with Perspective. opened in signed Decision made the hub for 10 Turkey. The Avea, Turkcell, Ankara. with Türk to conduct countries. ITU-Huawei and Vodafone Telekom. Turkey New Generation Turkey. Can you discuss your R&D operations out Technologies of this office. Laboratory center in Turkey a bit? How established much did Huawei invest in jointly with the Istanbul Technical it? How many people are University.

SEPTEMBER-OCTOBER 2012 ISSUE 12 The Turkish Perspective 31

relations management. Other key’s economic growth. In Can you provide us with your operations the R&D Center is short, as what happened in a assessment of the investing engaged in include software number of developed coun- environment in Turkey, as a products, wireless technolo- tries, Turkey continues to foreign investor? gies (2G/3G/4G) and All-IP; prove how the ICT industry Huawei always considered fixed/mobile convergence; fuels GDP growth and social Turkey to be a very important analysis and planning for development. location in the region. As you next-generation networks, Huawei strongly believes know, 2013 is the Turkey Cul- product planning, optimiza- this remarkable growth and ture Year in China. We believe tion, performance develop- development will continue, that, the Turkish government, and market adaptation. and the ICT industry has ment will help more Chinese Signaling the emphasis an important role to play in enterprises to have a better Huawei places on Turkey, the that prosperity. According to understanding of Turkey, R&D Center also have opera- projections of 2023 Vision, including its 2023 Vision. We tions in Turkey, Europe and the ICT industry will contrib- are hopeful that the event will the Commonwealth of Inde- ute 8% to your GDP in just Huawei has been also help Turkey attract more pendent States. The R&D over a decade. The world and operating in the direct investment from China. Center also works on software Huawei behold a rapidly de- telecom technologies Huawei is a proud leader of development, providing veloping country and an ICT field in Turkey for a globalization among Chinese products and solutions, and industry that enjoys dramatic decade enterprises, and its develop- supporting Huawei’s R&D growth. ment and success in Turkey projects in the region. have received a lot of attention. Zafer Çağlayan, our We look forward to sharing What is your assessment of Economy Minister, often our practices and experience the IT industry in Turkey? emphasizes the significance with other Chinese enterprises Huawei has been operating of R&D for the development that will invest in Turkey. in Turkey for a decade and of technology-intensive benefits, enterprises must we have witnessed first-hand products in particular. How- commit to invest substantial Did you work with any local the increasing coverage of ever, some believe that R&D amounts in R&D over time. companies when investing in voice communications and investments do not produce In this respect, we hope that Turkey? What matters did continuous improvements the needed value added in the Turkish government can you pay special attention to in telecom technologies. countries whose GDPs are become a stable incubator when investing? Were you Whether we look at the below a certain threshold. that supports enterprises’ provided with the necessary increase of broadband users What are your views on this R&D by providing long-term conveniences during the from half a million in 2004 subject? and stable incentives (e.g. tax execution of the investment? to 12.5 million last year, Indeed, continuous invest- incentives) to R&D compa- Did you face any difficulties? or at the ICT sector which ment in R&D is the key to nies that choose to invest in Huawei is experienced in is increasing at an annual developing an innovative and Turkey’s future. This ensures global production. For Tur- compound growth rate of prosperous society. These that enterprises remain confi- key we would like to make 14%, the developments in investments are not only in dent that they can get returns local production. Huawei Turkey over the last decade the interests of the country, on their investments. Also we takes quality very seriously, have been remarkable. but also provide significant expect that the government and aims to find partner to And they have served as an long-term returns to the can treat local R&D and local be more efficient in local important enabler of social enterprises who undertake manufacturing equally, as operations however the services such as education, them. On the other hand, local R&D can create jobs main challenge is in taxing, business, and trade and as a these investments are not and improve intelligence and which affects the cost of the key driving force of Tur- short term. To achieve the technologies. product.

2010 2010 2011

Management Huawei’s Huawei Turkey Huawei Huawei shipped Huawei signed Operations The of Turkey second largest joined the YASAD Turkey started smartphones the contract with of R&D and Information and operations international (Software Industrialists Enterprise to the market. Savronik to provide Technical Communication shifted to the R&D center Association) and Solutions Ideos and X5 world’s fastest Support Technologies headquarters opened in the TUBISAD business models warmly data transmission Centers were Authority (BTK) building in February (IT Industrialists welcomed by (DWDM) systems approved by the announced the Ümraniye, 2010 with the Association of Turkey) the Turkish for Turkish Information and official results Istanbul. Minister of to enhance cooperation market. Railways’ high- Communication of 3G 1st year Transportation with nongovernmental speed train project Technologies inspections. in attendance at organizations. between Ankara and Authority the ceremony. Eskişehir. (BTK.) 32 Cover / A Single Window Opening Up to the World

SEPTEMBER-OCTOBER 2012 ISSUE 12 The Turkish Perspective 33

Providing a system of integrated management between related institutions and organizations, the single-window system is being established to reduce By MERVE KARA urkey is currently one of the wasted time and costs in customs world’s fastest-growing economies. This achievement is the result of a ten-year-long, rapid, and intense effort. Understood and felt by the country’s young population of 80 million, this situation shows how much has been accomplished in a short time when remembering snapshots of the recent past. Today, anyone who has a tax number in Turkey significant portion of whose economy is based on exports—is able to conduct exports. A good number of entrepreneurs tour foreign markets with briefcase in hand, observe the needs of the market, determine what they can sell, return to the country, and send goods as necessary. There are even entrepreneurs that do this in front of the computer… “Yet until 1996, you needed to have an exporters’ certificate to export,” says Niyazi Çömez, Tax Services Partner in Charge for Deloitte Turkey. The expert manager underlines the fact that Turkey has made incredible progress in foreign trade in the time that passed since, and he points out the interest in relaxed bureaucracies on part of Turkey’s international trade network, 34 Cover / A Single Window Opening Up to the World

Turkey, aims to increase the volume of its exports to $500 billion

which started to expand in the 2000s. Before examining how bureaucracies are relaxed, let’s have a look at Turkey’s progress in international trade since the early 2000s. In 2001, Turkey’s exports totaled $31 billion. By 2011, this figure reached $134 billion, representing growth of more than four fold over a decade. On the other hand, over this period, total imports increased by more than six fold, from $41 billion to $240 billion. The country owes this dramatic increase to its opening up to its neighbors, the African markets (which it did not know well before), and all markets to which it was a stranger in the 2000s. Thanks to this, Turkey’s total exports neared $145 billion in a one-year period from June 2011 to June 2012. The increase of the volume of exports was also the result of the diversification of its export markets. One of the most significant improvements in this respect for Turkey’s exports was realized in the countries The single-window system of the Near and will reduce import costs Middle East. While Turkey’s export figures totaled just $3 billion in 2001, in 2011 they approached $27 billion. This change has reflected upon import figures in a similar way. Turkey’s imports from African (particularly northern) countries used to be around $3 billion; in 2011, they hit $9 billion. Imports growth too has contributed to this Manager. Turkey recently signed free from Asian countries soared as well, change in Turkey’s international trade. trade agreements with 15 countries as rising from $4 billion to $53 billion. “The main reasons for that are the im- a result of these efforts: recently: Alba- Turkey’s share in world trade grew proved commercial relations with these nia, Bosnia & Herzegovina, Morocco, to 0.8% with the recent changes and countries and the free trade agreements Palestine, Georgia, Croatia, Israel, improvements to the structuring of its signed with these countries. Further- Montenegro, the Republic of Macedo- foreign trade. more, the effective communications nia, Egypt, Serbia, Syria, Chile, Tunisia, While manufacturers in Turkey have and relationships with these countries and Jordan. Additionally, the country their own undertakings to buy and positively affected the growth rate has set up close contact with economic sell goods from different countries in in international trade,” says Sercan cooperation and development organi- various continents, global economic Bahadır, Ernst & Young Turkey Senior zations such as the Economic Coopera-

SEPTEMBER-OCTOBER 2012 ISSUE 12 The Turkish Perspective 35

houses over Turkey’s past ten years of growth can be said to be among the leading factors in the progress achieved in foreign trade so far. Turkey, which aims to increase the volume of its exports to $500 billion with progressive targets, took a great step toward this goal in recent months, a step that will ensure major progress in customs—in June, the Turkish Exporters Assembly (TIM) and the Ministry of Customs and Trade signed a protocol of cooperation titled “The Single-Window System.” In essence, this protocol will bring losses of costs and time that take

the single-window The advantage of that digital applications systeM IS traditional will be used in lieuthereby of speeding up documentation, the document tracking and increasing reliability of documents

place in customs to minimal levels, and it presents many advantages that will serve to increase Turkey’s momentum in foreign trade. The value of a single entry point (single-window) for traders to gov- ernments so as to fulfill import- or export-related regulatory requirements has taken on increased importance in the new security environment and tion Organization and the G-8 group of customs operations with neighboring the emphasis on advance information countries. customs administrations have been and risk. The single-window system, It is important to note that along simplified mutually and gradually. In which is included under the Modern- with trade agreements, the proce- import and export transactions with ized Customs Code (accepted with EU dures and cost of customs transactions the aforementioned countries, the Council Regulation no. 450/2008), is have been of a significant importance customs duties have been mutually and intended to reduce transaction costs— for both importers and exporters. In gradually decreased or removed. De- such as port transactions, customs order to increase the growth rate of creasing the import costs and speeding transactions, technical controls, and international trade and to remove up import transactions directly affect licensing—to a more competitive level barriers to trade, the customs duties producers. In this respect, the reform- and to establish a system of integrated were either reduced or removed, while minded practices followed in customs management between related institu- 36 Cover / A Single Window Opening Up to the World

tions and organizations, thereby reduc- is designed to be easily audited, it will ing wasted time and money in customs. become easier to measure transaction In summary of the single-window performance and interfere accordingly. system, Emin Taylan, Tax Partner in According to a study conducted by the Turkey for the international research Ministry of Trade and Customs with and consulting firm Grant Thorton, regard to the issue, 330 different docu- says, “It is an enterprise formed on the ments are used in customs transactions principle that the person conducting and 309 of these documents are to be the trade should be able to present all collected from institutions/administra- the information and documentation tions other than the customs admin- needed to a single point of application istration. Considering these figures, using a standard format.” He adds, it is clear that other institutions have “This method will make the business goal, the single-window system will document involvements during import of people conducting trade faster and first bring speed to customs in Turkey, transactions. Once the single-window more problem-free, and it will increase states Çömez. And he adds, “And this is system is set up, the documents and in- the competitive power of producers what trade professionals want most in formation required for the goods sub- who are active in the export of import- terms of competition, anyway.” ject to foreign trade and transportation ed goods especially.” The single-window system is a hot can be submitted to a single point, with Niyazi Çömez’s opinion is that the topic for the advantages it provides not a standard form that is accepted inter- single-window concept should not be only to traders, but also to the public— nationally, by the parties subject to the considered independently from activi- the system is expected to establish a trade and transporters. The approv- ties to ease trade—the WTO-led efforts standard for transactions in the public als required within this context will to ease trade are primarily aimed to and to make easier the coordination be submitted to the same application bring into compliance and simplify bu- of public services offered by different point in electronic form, and the con- reaucratic procedures in the movement administrative units. Additionally, trols of the goods will be made by the of goods. Designed so as to suit this because the system that will emerge same institution or organization in the

S I N G L E WINDOW MADE SIMPLE In the single-window system, the obliged party digitally submits its declaration to a single place. All administrations conduct their operations on this declaration in the background. It therefore becomes easier to coordinate the numerous different administrations involved, based in the type of good subject to customs.

TRADER TRADER

TRANSPORT TRANSPORT

ELECTRONIC ELECTRONIC CUSTOMS CUSTOMS SINGLE WINDOW

AGRICULTURE AGRICULTURE IMAGES

Y TT GE

PAPER PAPER y B

H P

CURRENT SITUATION FOR GOVERMENT & TRADERS HEALTH DEPT A ‘SINGLE WINDOW’ ENVIRONMENT HEALTH DEPT HOFOGRA P

SEPTEMBER-OCTOBER 2012 ISSUE 12 The Turkish Perspective 37

The single-window system is to draw the cost targeted such as por of transactions t transactions, cust transactions, oms licensing technical controls, and WHAT ARE THE to a more competitive level. ADVANTAGES OF THE NEW SYSTEM?

BENEFITS FOR GOVERMENT • Correct revenue yields • Improved Trader Compliance • Enable the use of sophisticated ‘risk management’ techniques for control and enforcement purposes • More effective and efficient deployment of resources

commercial reliability, and prevent- and increase the reliability in docu- ing unfair competition,” says Sercan ments. Since each entity will upload its BENEFITS FOR TRADE Bahadır. As Bahadır says, approvals own document with regard to customs • Cutting costs through reducing delays and permissions of different institu- transaction to the system, there won’t • Faster clearance and release tions are required in import transac- be any actual document circulation. • Predictable application and tions. This practice, which represents a Therefore the possibility of document explanation of rules significant cost of time and money for misuse will also fall. “We are of the • More effective and efficient the party who performs the customs opinion that with the single-window deployment of resources transactions and the importer, will system, there will be acceleration in in- become simpler via the single-window ventory management and production system. The advantages of the single- planning of the companies as a result window practice in this particular of the acceleration of many transac- same time and place, within coordina- case are that digital applications will tions in customs transactions, the tion and cooperation. Sercan Bahadır be used between entities in lieu of companies will be indirectly affected emphasizes that important customs traditional documentation. This will positively and they will have competi- costs such as warehousing, demur- both hasten the document tracking tion advantage,” says Sercan Bahadır. rage, and loading-unloading expenses will be reduced via the single-window system. “Considering that this customs transactions expenditure brings an ad- Turkey’s foreign trade boom in the past decade ditional burden around the rate of 7-10 percent depending on the industry, it is 2001 2011 2001 2011 expected that single-window practice Export Import would reduce importation costs to 3-5 percent.” In can be said that the single-win- eu Amount (Billion $) Amount (Billion $) Amount (Billion $) Amount (Billion $) dow system was made necessary not only by the expansion of Turkey’s in- Share in export Share in export Share in export Share in export ternational trade network, but also by the shifting of the focus in world trade. “In recent years, one notices decreased Other Amount (Billion $) Amount (Billion $) Amount (Billion $) Amount (Billion $) tax levies in world trade and increased Countries focus on the public security and health Share in export Share in export Share in export Share in export of customs administrations or border controls, intellectual property rights, total 31 134 41 240 K STAT TUR Data: SEPTEMBER-OCTOBER 2012 ISSUE 12 TheThe TurkishTurkish PerspectivePerspective 35

Hayatİ Yazıcı, the Minister of Customs and Trade, provided to The Turkish Perspective his assessment of the successful foreign trade policy being followed by Turkey during this time of global economic tumult and the country’s practices to speed up customs procedures

By merve kara - Can gürsu

aking Turkey a country in While in 1996 exports were conducted To briefly mention our which trade is done in the easiest, to 180 countries and customs zones, projects: safest manner is one of our main this figure reached 228 in 2002. After goals,” said Hayati Yazıcı, Minister of Cus- this date, in line with our exports, which The Single-Window System toms and Trade, in the speech he delivered exhibited great increases, the number of The single-window system, which ranks at the opening of the Biga, Çanakkale countries and customs zones to which ex- foremost among the world’s modern Customs Administration, in which he ports were made increased, too, such that customs systems, will be one of our pointed out that the total value of Turkey’s in 2011, Turkey exported to 236 different ministry’s most important achieve- exports grew from $36 billion in 2002 to countries and customs zones. ments. “Single-Window” is a system that $135 billion. Since the start of the global The increasing volume of foreign trade makes it possible for the information and economic crisis, Turkey has become one of and market expansion has, as in the whole documents necessary for the goods being the world’s safest places to invest, and with world, increased the significance given in traded and transported internationally to its export-based growth strategy it is leav- our country to practices that ease trade. be presented to a single point of submis- ing many world giants in the dust. On this point, our ministry’s priority is to sion in a standard format that possesses make legal trade as easy as possible, be- international validity with the concerned Over the past ten years, Turkey has cause making legal trade easier will make parties and carriers of the trade in ques- developed commercial relationships it possible to fight more effectively against tion. The single-window system will with several countries with which it illegal trade by shifting existing resources facilitate the following: had no trade before. How did this to controls and auditing in risky areas, and • More effective and productive use of affect the activities of the Ministry of to minimize customs processing costs due resources Customs and Trade? Can you speak especially to the reduction of formalities • Faster procedures of your role as the ministry in this caused by customs operations. Mean- • Error-free (and usually increased) tax expansion and development? while, being able to conduct foreign trade gains Looking at Turkey’s foreign trade statis- for a lower cost will provide important • Increased compliance to the system on tics, we see that our foreign trade volume contributions to increasing our country’s part of merchants more than quadrupled from $88 billion in volume of foreign trade, elevating national • Increased security 2002 to $376 billion in 2011. In this same competitive power, and supporting its • Transparent, predictable processing period, our exports were multiplied by 3.7 economic growth. periods from $36 billion to reach $135 billion. • Fast, accurate confirmation of And when looking at the distribution of information exports by country groups, one sees that • Establishment of clearer, easier com- the share taken by EU countries, which Turkey’s foreign munication between the state and was 57 percent in 2002, fell to 46 percent merchants in 2011, while in our exports to other trade volume more • Reduced costs due to delays countries in this period, one observes a than quadrupled • More effective execution of administra- notable increase. For instance, while ex- tive auditing ports in 2002 to countries in the Near and from $88 billion • Increased international competitive Middle East accounted for a 10 percent power share in 2002, this reached the level of 21 in 2002 to $376 • A more productive business and invest- percent in 2011. billion in 2011 ing environment 36 Exclusive Interview/ Hayati Yazıcı, the Minister of Customs and Trade

Do you have any other new undertakings? We have some very comprehensive undertakings. And one of these is the Authorized Economic Operator (AEO) system. We are starting the AEO system so that customs processing can be done as easily and quickly as possible for trusted merchants and for the proactive determination of risky transactions. In the short term, the AEO system will benefit our exporters and overland transporters, and in the medium term our importers and other actors. Special privileges such as on-site customs and authorized senders, as well as relaxed controls, will be available for our trusted merchants. Another of our undertakings is the joint customs gates... With the purpose to support the recent increase in trade volume between our country and our neighbors, ease and speed up the operations of customs administrations and legal trade, and cooperation in the struggle against smuggling, the joint use of land border gates has been offered by Turkey for the evaluation of the authorities of neighboring countries. Aimed with the joint use of customs gates between two countries are How has the Ministry of Customs and billion transaction volume and a rate of 28 the prevention of repetition in customs Trade been responding to this? percent. transactions and the one-time execution of As you too have indicated, we are seeing Again in suit with our country’s general processes and data input. This project does an eastward shift in the world in both foreign political and trade policies, steps not bring any change to the borders of the production and trade. have been taken toward developing trade two states. We are also bringing to action The increased need for cheap labor, with our neighbors and efforts that can a system that makes it possible to conduct rich natural resources, and more eco- be done in the customs field to ease trade trade registry operations and access regis- nomical production costs due to global with all neighboring countries with which try records electronically. trade has contributed in the axis shift in we have relations, without exception, have Citizens will be able to complete trade from west to east. Eastern countries’ been accelerated. Regular meetings have company establishment operations, gradual departure in identity from being been held in this context with the customs including contract preparation, over the the ones to fulfill the West’s need for raw administrations of neighboring countries Internet with electronic signatures, trade material , and their acquisition of the at both the upper level and the technical registry records will be able to be stored in capability to produce technology-heavy level; problems have been determined a centralized fashion, and national-scale goods, too, is increasing the importance and ways to solve them have been found. unification will be facilitated in registry of the East in global trade. As regards this Again with the aim to expedite and ease operations. Information required on legal matter, Turkey has started negotiations for border crossings with our neighbors Geor- personalities will be accessible securely, a free trade agreement with South Korea. gia, Iran, and Syria, there have been proj- quickly, and easily, and integration will The agreement has been signed and ects conducted and agreements signed for be facilitated with the European trade internal approval procedures are ongoing. the joint use of land border gates via data registries network. Free trade agreement negotiations are exchange. Significant changes have and are continuing with Malaysia, and explor- Besides these, the Silk Road Customs continuing to occur during this time atory meetings have been conducted with Administrations Cooperation project in trade and customs practices in China. Looking at the distribution of our launched by our ministry’s initiative in

the world, too. A considerable part exports in the year 2011, our export to 2008 with the aim to revive the historic AA

of world trade has now shifted east. Asian countries and Middle Eastern coun- Silk Road is of great importance. Being H How has Turkey’s participation in tries has entered a stage of great progress targeted in this context are the improve- P world trade changed in this period? in countries in these territories, with a $40 ment of border gate infrastructure on one HOFOGRA P SEPTEMBER-OCTOBER 2012 ISSUE 12 TheThe TurkishTurkish PerspectivePerspective 37

an agreement between the Union of the Silk Road Chambers and Commodity Exchang- Customs es of Turkey (TOBB) and Customs & Tourism Enterprises Co. Inc. Can you Administrations discuss the highlights of this project Cooperation and similar activities? It is of great importance in terms of both project wıll revive for our national security and economic THE historic Silk and geopolitical concerns for the customs gates to be equipped with the modern Road means provided by technology and gain an infrastructure that is healthy in every respect. For this reason, hard work is being and are therefore continuing our under- done to modernize the facilities of customs takings toward the vision of “becoming administrations firstly on our borders the country in which trade is conducted in a way that can satisfy the conditions the fastest and most reliably.” In this of today and the increased trade volume context, the projects we have that directly while preventing illegal trade. Consider- affect customs procedures are as follows: ing that those who enter our country from authorized economic operators, paper-free abroad get their first impressions from the manifests, the computerization of permits, customs gates, it can clearly be seen that transitioning to the New Computerized improvements in these gates will contrib- Transit System (NCTS), and, of course, ute greatly to the economy and promotion the single-window system. of the country. On this point, the Built-Operate- In June, you signed a protocol of co- Transfer (BOT) model makes it possible operation with the Turkish Exporters within a very short time to create a healthy Assembly (TIM), titled “Single-Win- infrastructure, properly set up the flow of hand, and on the other the reduction of dow.” Can you discuss this system and customs operations, ease border cross- waiting times at border crossings by being the benefits it is expected to bring? ings with this suitably set up system, and party to fundamental international agree- Data sharing-oriented cooperation efforts therefore benefit merchants with the effect ments relating to the easing of trade and between our ministry and the Turkish of reduced costs. With this model, which border crossings, bringing border crossing Exporters Assembly started in 2003. constitutes an example of good practice to procedures into compliance, and develop- Data transfer is facilitated by the Proto- other countries, makes possible the execu- ing a common understanding in customs col Concerning the Exchange of Foreign tion of the joint gate initiative. Likewise, practices. Trade Data between the Undersecretariat Turkish customs gates that were renewed of Customs and TIM dated July 10, 2006. within the scope of BOT in the Silk Road The burden of customs procedures is Since this protocol was signed, changed Project, which is being conducted with one of the parameters of the Global export-related practices and the increased upon our ministry’s initiative, can be a Competiveness Index. How has need for cooperation bore the need to model for other countries on the Silk Road Turkey’s trade capability and customs update the existing protocol. path. procedures changed in this context? In parallel with our ministry’s prac- To summarize, expedience in opera- The presence of the “burden of customs tices to ease exports, such as authorized tions and reliable trade have started to be procedures” in the Global Competitiveness economic operators, on-site customs conducted with the BOT model. Index is important in how it shows the in exports, and authorized senders, this As the Ministry of Customs and relationship between efforts to ease trade protocol will make positive contributions Trade, we are structuring the customs and competitiveness. For customs proce- to our exports. This newly signed protocol facilities—the land customs gates most dures to be fast, transparent, and reliable will contribute to shortening export times, of all—with the BOT model. Toward this, makes import and export processes more and for our exporters, reducing bureaucra- within the scope of efforts that began in effective, and makes savings in terms of cy, bookkeeping, and also costs. Through 2001, the modernization of eight customs both time and cost possible. In this regard, this, our country’s export capacity and our gates (Gürbulak, İpsala, Habur, Cilvegözü, it is clear that the efforts being done in the exporters’ competitiveness will increase. Kapıkule, Sarp, Hamzabeyli, and Nusay- context of easing trade will contribute to bin) via the BOT model, with no burden increasing competitiveness. As the Ministry of Customs and on the budget, were completed, and seven As the ministry, we are bringing to life Trade, you recently launched efforts are in service. As for the Nusaybin Cus- our projects geared toward easing trade to modernize the customs gates with toms Gate, the investment in is complete, 38 Exclusive Interview/ Hayati Yazıcı, the Minister of Customs and Trade

but it has not yet been opened to service due to reasons originating in Syria. Additionally, an Implementation Agreement was signed between the Union of Chambers and Commodity Exchanges of Turkey and Customs & Tourism Enter- prises. Co. Inc., the contractor company, regarding the restructuring with the Built-Operate-Transfer (BOT) model of the building and infrastructural facilities needed by the Dilucu, Esendere, Çıldır/ Aktaş, and Kapıköy Customs Gates and the Halkalı Customs Administration. The approximate cost of these projects is 249,370,719 Turkish liras. The BOT model, which imposes no burden on the budget, was chosen to realize these projects, which increase our country’s esteem. The organization conducts its ef- Meanwhile, work on our High Plan- A customs forts via the Council, Policy Council, ning Council-approved projects to renew administration and various committees and work- the Akçakale, Karkamış, Öncüpınar, ing groups. Turkey’s joining the WCO Pazarkule, Yayladağı, Dereköy, Türkgözü, that implements Policy Commission is important when and Ali Rıza Efendi Customs Gates and fast, reliable assessed in terms of Turkey’s approach the Erenköy Customs Facilities. to be effective on international platforms customs within the scope of its vision, expressing In 2013, Turkey will be entering transactions will the policies set forth by our country, and the Policy Committee of the World turning these into decisions. Customs Organization. What kind be the BACKBONE of of responsibilities to the WCO and ad- the business world Turkey has been a World Trade vantages will this bring to Turkey? Organization (WTO) member since To facilitate and develop the effective, 1995. Can you talk about Turkey’s productive operation of customs adminis- changing role over the period that trations, the World Customs Organization, has passed since? Russia is joining which currently has 177 member coun- the WTO this month (August) fol- tries, has adopted the following duties: lowing years of negotiations. How • Facilitating the harmonization of will Russia’s membership affect its customs regimes and transactions ment, transparency, and honesty in cus- trade relations with Turkey? concerning international goods trade toms administrations, as well as efforts Our country joined the WTO as a and transnational human crossing by that will improve working methods and founding member in 1995, and as of simplifying them administrative matters January 1, 1996, it has been party to • Developing international instruments Turkey occupies an important place the Customs Union with the EU. In (agreements, recommendations, etc.) in the history of the World Customs connection with our Customs Union that will facilitate the application of Organization, which sets the international responsibilities, the diversity and quality customs regulations as specified standards for global trade. Besides being of the goods produced in compliance • Implementing measures to create an en- among the founding countries, Turkey with EU standards have increased, vironment of cooperation that will facili- pioneered several of the WCO’s projects. thanks to which competitive ability has tate effective practice of regulations and As the Ministry of Customs and Trade, been gained. When in this context it active combat against customs crimes we currently convene at least once a year comes to complying with the require- while simplifying customs transactions with our collocutors in the countries of ments of international trade and taking • Providing member countries with tech- the region to discuss the measures to take a share of this trade, great progress has nical support for adapting to changing in order to speed up customs operations been made in comparison to many conditions and regulations as much as possible. For example, we other WTO member countries. Simi-

• Engaging in efforts to develop coopera- are running a project to modernize the larly, while our country had just one AA

tion among member countries or other customs administrations of Tunisia and free trade agreement by the end of 1995, H international institutions Libya with the WCO, with the support of this figure has risen to 18 today. Once P • Supporting human resources manage- the Islamic Development Bank. three more FTAs, which are not yet in HOFOGRA P SEPTEMBER-OCTOBER 2012 ISSUE 12 TheThe TurkishTurkish PerspectivePerspective 39

effect, gain currency, our country will importance for the realization of the of Customs Administrations” has been have preferred trade arrangements with $500 billion export target [the national created to bring to customs administra- many countries in an expansive geography target for 2023]. A customs adminis- tions a standard appearance and method stretching from Chile to South Korea and tration that implements fast, reliable of operation. With this method, it will Iceland to Mauritius. customs transactions will be the funda- be possible to review the flow of transac- Russia, which is expected to become a mental element of the business world tions in our border, harbor, airport, and WTO member, is our country’s second- and, therefore, the national economy. internal customs; detect the problems largest trade partner with a total foreign we face; and determine which business trade volume of approximately $30 In addition to the processes are unnecessary. Through this, billion in 2011. Higher standards in all aforementioned processing times in customs administra- kinds of the country’s practices in foreign undertakings, we are: tions will be reduced, thereby speeding up trade are expected when Russia becomes bureaucracy; the effective and productive a WTO member, and our country will Computerizing permits use of personnel and all equipment will provide every kind of support to Russia Efforts to computerize internal processing be facilitated; all structure—including with its experience in this matter. Of this permits administered by customs admin- physical infrastructure—will be modern- membership, we expect much smoother istrations within the context of internal ized according to new business processes; completion of customs transactions processing regimes and digital tracking and customs auditing will be rendered for goods exported to Russia and easier of these are being conducted within the effective to facilitate reliable trade. execution of the flow of trade for the corpus of our ministry. country in question. Revising logistics Modernizing our customs admin- The most important infrastructural ele- Can you, as the ministry, talk about istrations with the Build-Operate- ment upon which foreign trade opera- your efforts to increase security at Transfer model tions rest is that of logistical processes. customs points? Among the works our ministry will do by For this reason, it is necessary for our With regard to our ministry’s battle 2023 is the restructuring of all our land capacity utilization in the logistics against smuggling, a separate depart- customs gates to the level of providing industry to reach a certain quantitative ment has been formed within the General modern service. The Kapıköy, Esend- and qualitative level to achieve our 2023 Directorate of Customs Security with the ere, Dilucu, and Çıldır/Aktaş Customs targets. In this respect, national-scale ef- purpose of preparing and implementing Gates and the Halkalı Customs Gate forts like the preparation of the Logistical projects to strengthen infrastructure and implementation agreements have been Centers and Logistics Master Plan are pursue developments in security technol- signed in this context, with the aim of being given special importance, closely ogies. Founded in 2002, this department structuring them with the BOT model. followed, and provided with contribu- has created and implemented numerous Additionally, by 2023, it is being aimed tions by our ministry. projects thus far. that the modernization will be completed The most important of these efforts is, of the Akçakale, Karkamış, Öncüpınar, Receiving the views of our partners without a doubt, the Scanning (X-Ray) Pazarkule, Yayladağı, Dereköy, Türkgözü, concerning our practices Systems, also known as “physical interven- and Ali Rıza Efendi Customs Gates and Whether with our intra-institutional tion-free detection technologies.” Various the Erenköy Customs Facilities and meetings or external partner workgroups types and models of scanning systems that Logistical Base. held with the participation of various can scan every kind of vehicle and load public institutions, private institutions, from cars to semitrailers and individual Standardizing customs nongovernmental organizations, and baggage to containers have been installed administrations press representatives, assessments have at land gates, seaports, and airports. An “Action Plan for the Standardization been conducted using participatory methods to determine our ministry’s How is the Ministry of Customs and mission and the purposes and aims of Tourism preparing for Turkey to its vision. In particular, we have tried to reach its export target for the year collect views and suggestions concerning 2023? What can you say about your Besides being reducing bureaucracy, easing transac- goals for the next ten years? tions, reducing costs, and thereby remov- In the heated environment of interna- among the founding ing barriers before and easing trade. tional trade today, the element of time countries, Turkey Additionally, with our polling activities, constitutes one of the most important the assessments of a wide segment have expenditures. For this reason, waits and pioneered several been taken note of. At the end of all these delays at customs are an important cost efforts, policies and priorities to contrib- element for traders. In this regard, the of the WCO’s ute to reaching the 2023 target will be Ministry of Customs and Trade is of key projects determined as well. 44 In Depth / Daron Acemoğlu of MIT

SEPTEMBER-OCTOBER 2012 ISSUE 12 TheThe TurkishTurkish PerspectivePerspective 45

HOW DID THEY FAIL? “Why are some nations rich and others poor, divided by wealth and poverty, health and sickness, food and famine?” In their recent book, “Why Nations Fail: The Origins of Power, Prosperity and Poverty,” Daron Acemoğlu and James Robinson answer this question that has puzzled experts for centuries. The authors suggest that economic success or failure is rooted in the health of political institutions. Their theory for world inequality shows how political and economic institutions interact in causing poverty and prosperity

By MERVE KARA

he coauthor of In “Why Nations Fail?,” which gives has nothing to do with climate, disease, Why Nations Fail, Professor a tour throughout the world and our environment, or soil quality condemning Daron Acemoğlu is cur- human history, you hypothesize a new the South to poverty. In fact, before Euro- rently the Elizabeth and James reasoning for economic development– peans colonized the Americas, the South KillianT Professor of Economics at the and hence global poverty and prosper- was generally more prosperous. It has Massachusetts Institute of Technology. He ity: the institutions as the determinant nothing to do with culture. Though the is among the ten most-cited economists in of the fate of nations by negating current Spaniards who colonized much of South the world according to IDEAS/RePEc. He theories. Can you explain how institu- America had a different culture than was awarded the John Bates Clark Medal tions can be key in development? the English who colonized much of the in 2005. The most popular theories emphasize north, the intentions and strategies that What about today’s changing global geographic factors, cultural factors, or a the English and the Spaniards used were economic order where some developed sort of enlightened leadership as the most remarkably similar. At the end, the differ- nations failed and many once failed na- important root causes of long-run pros- ences emerged because the civilizations tions became prosperous? Professor Daron perity. Our research shows that these per- that the colonizers encountered were very Acemoğlu answered the questions of The spectives are not very helpful for thinking different. In the South there were the Turkish Perspective magazine on current about large disparities we see around centralized densely populated civiliza- issues in global development. us. Look at the Americas. The South is tions such as the Aztecs and the Incas, much poorer than the North. But this has which enabled the Spaniards to create Can you give us more details about the nothing to do with geography—that is, it hierarchical, repressive and extractive making of “Why Nations Fail?”? How colonial societies, while the English, who long did the research process take? also wanted to do the same thing, were Why Nations Fail is the outgrowth of 16 left with the less desirable, less densely years of research that James Robinson and populated northern parts and couldn’t I have been engaged in. During this time, “We’ve seen the gap between do the same. It also has nothing to do we wrote several papers and another book. with enlightened leadership. In some We started working actively on “Why the rich and the poor in the sense, the Spanish conquistadors and Nations Fail” in 2009, but much of our world widen over the last 60 their leaders succeeded in what they want research before then was motivated by the to do, while the English failed. Instead, same questions and the book draws heav- years. But I think this will be it is related to different institutions that ily on that research. reversed in the next 50 years” colonizers setup in different parts of the 46 In Depth / Daron Acemoğlu of MIT

Americas, and these institutions matter because they shape incentives, both economic and political.

It is true that countries with inclusive institutions are more developed than the ones with extractive institutions. Today, however, we see developed countries facing problems related to unemployment and growth as the outcome of global financial crisis.D id the crisis bring out the question of whether even the developed nations can fail? If so, how? Yes of course, developed nations can also fail. First, their institutions are not always as strong and as inclusive as might first appear. Take Greece. From the outside you might think it has relatively good institutions---after all, it’s part of the Eu- ropean Community and it has a relatively high GDP per capita, and of course it has elections and parliaments and all. But when you look at the details, Greece has terrible institutions. And its growth so far has been despite its institutions---thanks tion (something that makes sense but in part to transfers from the outside. Of “Developed nations can also is not supported by any of the countries course it can fail. But more importantly, fail. First, their institutions other than Germany and perhaps a few inclusive institutions can revert back to are not always as strong and others such as Finland and the Nether- extractive institutions. If the European lands) or European Union has to admit Union was to collapse entirely, that could as inclusive as might first that monetary union does not mean fiscal not be ruled out. appear” guarantees and let several European coun- But more importantly, the world of tries (Greece, Portugal and perhaps Spain) course is not black and white it’s shades default on their loans. After all, the most of gray. So European institutions have successful monetary union, the United inclusive elements and some elements States, does not guarantee state debts. This that have been badly designed and are still solution is blocked at the moment because captured by special interest groups and French and German banks would lose a lot politicians (think of the role of French and of money if this happened. German banks for example). So it’s always the European institutional tapestry, and it a struggle about which aspects of institu- has played a major role in underpinning How do you view the Arab Spring in tions will triumph. stability, peace and economic growth in terms of its roots? Do you think the And finally, of course a society can have Europe. But it has been a political project, main reason is political or is economic? inclusive institutions and still go through and in the process, it did create some Your analysis of the Arab Spring in crises. The role of institutions is much economic distortions. The most important “Why Nations Fail?” draws a similar more important for medium and long-run one, in my opinion, lies in the implicit picture with the French Revolution as growth than for short run fluctuations. guarantees it implied for the sovereign it was a very strong reaction of public debt of all member countries. This came against the government. Do you think What do you think about the sover- unhinged and we are now seeing the it is possible to discuss the Arab Spring eign debt crisis in the euro zone? Is it a consequences of that. So in this sense, the on the same ground? If so what made system failure or is it another wave of problem is partly institutional, and the people create this awareness? Is it sim- creative destruction hitting the shores of solution has to be institutional also. The ply the Internet or social media effect, as a capitalized world? European monetary system and European some argue? It’s largely a system failure. The European Union have to be reorganized. They have I would say it’s both economic and Union has been a very important part of to choose either greater fiscal centraliza- political. Mostly it’s political. People did

SEPTEMBER-OCTOBER 2012 ISSUE 12 TheThe TurkishTurkish PerspectivePerspective 47

not want economic handouts or higher what we saw with the Soviet Union, for minimum wages or more food subsi- example. Of course, China can avert this dies. They wanted political change. But outcome by fundamentally reforming I think a lot of people weren’t satisfied its political institutions and then chang- with the political system because of its ing its economic structure. But given economic consequences. And yes, the the control of the Communist Party this parallel to the French Revolution is doesn’t seem to be on the cards. obvious. In both cases, you have an ex- If this perspective is right, then the end tractive, despotic government benefiting of Chinese growth will not come with a a small elite the expense of society bang, but with a whimper. Growth will Why now? That’s hard to answer. slow down gradually and this will distort I don’t think it’s just social media, political incentives, creating a downward though social media helps organize spiral. But as I said, it’s not unavoidable if people and gave them an excellent WHY NATIONS FAIL Chinese leaders have the courage to under- forum (but social media is not going to Daron Acemoğlu and James take political reform. get you a revolution in China). I think Robinson have crafted a new it was partly random. After all, no social theory of political economy that Turkey has undergone an extensive theory can explain why a street vendor has significant relevancy to many of transformation in the last decade. How decided to self-immolate at that point the important questions facing the do you assess the development of the in Tunisia and why this captured the world today in “Why Nations Fail: country? Can you evaluate the govern- public imagination there. But I think The Origins of Power, Prosperity, ment’s performance of distribution of the contagion of this event throughout and Poverty”. Here are excerpts wealth in the country? from some notable reviews of this North Africa and the Middle East have masterpiece I think it has been doing reasonably plenty to do with the fact that there was well economically. It’s no longer ruled a lot of pent-up dissatisfaction especial- by the military, the bureaucracy, and the ly with these aging elites still hanging “Should be required reading for politicians and few large companies that dominated on to power despite all the poverty and anyone concerned with economic development.” the country for the last 80 years. Only —Jared Diamond, New York Review of Books carnage that they were creating. a broad-based economy has the power “...bracing, garrulous, wildly ambitious and to move to the next stage of growth, You also mention that China’s growth ultimately hopeful. It may, in fact, be a bit of a which Turkey badly needs. But while will not last unless it fosters the degree masterpiece.”—Washington Post Turkey has made great strides towards of “creative destruction” that is so vital a healthier democracy and the military for innovation and higher incomes. And “For economics and political-science students, is finally out of politics, it is also impor- surely, but also for the general reader who will tant to recognize that if political power you make a bold projection: Chinese will appreciate how gracefully the authors wear their ultimately follow the Soviet trajectory. erudition.”—Kirkus Reviews becomes monopolized, economic inef- Can you shed more light on this argu- ficiency starts setting in. ment? How might the fastest-growing “Provocative stuff; backed by lots of brain country of the world come to fail? power.”—Library Journal How do you see the future of income China’s growth has been under extrac- inequality between countries? The gap tive institutions. Market forces are “This is an intellectually rich book that develops an between the poorest and the richest is important thesis with verve. It should be widely heavily curtailed and the power of the read.” —Financial Times widening, is it possible to reverse this Communist Party is close to absolute. within the free market economy? But the Communist Party has so far “A probing . . . look at the roots of political and We’ve seen the gap between the rich and encouraged investment, and China, economic success . . . large and ambitious new the poor in the world widen over the last starting from very very low levels of in- book.” —The Daily 60 years. But I think this will be reversed come, has managed to grow by import- in the next 50 years. Several countries are ing technology and becoming integrated “Why Nations Fail is a splendid piece of going through institutional transforma- scholarship and a showcase of economic rigor.” into the world economy. But this is not —The Wall Street Journal tions, such as India and Brazil and perhaps growth based on innovation or cre- Turkey. And several other countries, such ative destruction. Many countries have “Ranging from imperial Rome to modern as Rwanda, Ethiopia and China, are engaged in such growth, and as long as Botswana, this book will change the way people growing despite their extractive regimes, there are low hanging fruits, it contin- think about the wealth and poverty of nations...as and even if this is not as good as inclusive ues. Once it’s time for innovation-based ambitious as Jared Diamond’s Guns, Germs, and growth, it’s often better than stagnation Steel.”—Bloomberg BusinessWeek growth, there will be problems. That’s under extractive institutions. 48 In Depth / Stock Exchange

SEPTEMBER-OCTOBER 2012 ISSUE 12 The Turkish Perspective 49

Will the Istanbul Stock Exchange, the eighth-largest stock exchange among developing countries, climb even higher?

By merve kara

Since 2001, when Goldman Sachs Asset Management Chairman Jim O’Neil coined the term “BRICs” for the largest emerging markets, international mutual funds have pumped $70 billion of funds into Brazil, India, China, and Russia—the BRIC countries. These countries’ capital markets income in the Standard & Poor’s 500 Index roughly quadrupled over the past decade. O’Neill’s prediction that the BRIC economies would exhibit healthier growth than those of the G-7 countries seemed more or less confirmed until recently, when their performance fell below expectations, such that current reports by Goldman Sachs—the origina- tor of the term “BRIC”—say the golden age of BRIC is over. In a report published by Goldman Sachs last December, titled “The BRICs 10 Years On: Halfway through the Great Transformatıon,” it is stated that the peak potential growth rates for all of the BRIC economies have been left behind. Goldman Sachs economists updated their long-term growth projections in the report, according to which BRICs are still set to join the largest economies in the world but the N-11 and other EM should also become significant global players. 50 In Depth / Stock Exchange

This year, Jim O’Neill has been helping to popularize an acronym for a new group of nations that seem likely to replace BRIC for many investors: MIST, or Mexico, Indonesia, South Korea, and Turkey, the four biggest markets in the Goldman Sachs N-11 Equity Fund (GSYAX). Launched in February 2011, this fund has grown 12% this year, while Goldman Sachs’ BRIC fund gained just 1.5%. Of the four MIST countries, Turkey and Mexico are the most attractive at the moment, O’Neill was paraphrased as saying in a related article published August 6 by Bloomberg. Positive expectations for the economy of Turkey, one of the The ISE ranks 20th among Massachusetts-based research most promising members of world stock exchanges in terms firm EPFR Global supports MIST, reflected upon the stock of trading volume and 32nd in this viewpoint—according to market with an incredible terms of market value, accord- EPFR Global, investors added performance despite the heavy ing to the World Federation of a net $104 million this year to effects of the crisis still being Exchanges. The Market Trends funds focused on Turkey. felt in the global economy: Report prepared jointly by the “It can be easily said that since July, Turkey has been Investor Relations Associa- Turkey’s economy is remark- passing through a period in tion of Turkey (TÜYİD) and ably stable compared to its which records in the stock the Central Registry Agency neighbors in the euro zone market are being broken one (MKK) in June demonstrates and Middle East, which has after the other. the recent positive perform- been an important feature to Garnering a credit rat- ance of the stock market and attract foreign investors,” says ing upgrade on June 20 by foreign investors’ positive Philipp Reuter, Turkey Direc- Moody’s to Ba1, one level below contribution to market value. tor of international research investment grade, was impor- According to the report, a and consulting company Frost tant as it provides Turkey with performance increase of 8% on & Sullivan. The additional means for lower-cost inter- the Turkish lira and 11% on the costs imposed by the crisis national financing and loans. US dollar has been observed and instability in currency Measures implemented to over the first five months of exchange rates in neighbor- control Turkey’s more sensitive this year. While just 7,683 of parameters, such as its current the total 1.1 million investors account deficit, play a role in were foreign, they account for Rapid Growth over Eight Years the upgrade and are expected a 19% share of transaction Annual transaction volume increase for TurkDEX since its foundation in 2004. to bring in the long term more volume and 62% share in mar- TRANSACTION VOLUME sustainable growth and eco- ket value. TÜYİD President (TRY) nomic stability. It is important Funda Güngör Akpınar states 2005 3.029.588.946 to note that Turkish stocks that interest in the ISE has 2006 rallied after the government increased significantly espe- 17.876.421.234 cut its fiscal deficit to 1.3% of cially since June. Comparing 2007 118.035.442.771 GDP in 2011 from 3.6% in the ISE’s performance over the 2008 207.962.600.500 2010. The increase in direct first six months of the year to 2009 334.172.858.081 investment, an important global markets, Turkey exhibits instrument for the quality fi- relatively very good perform- 2010 431.681.986.516 nancing of the current account ance and its rate of growth on 2011 439.799.289.264 y aa

deficit, can especially increase the dollar since the New Year B

H from-scratch “greenfield” has surpassed 20%, she says. 2012 237.754.764.634 P Data: TURKDEX OGRA investments. Data from the Cambridge, T HO P SEPTEMBER-OCTOBER 2012 ISSUE 12 The Turkish Perspective 51

ing countries and beyond, as activities in global markets. the number of transactions In the ISE, where individual investors are emphasized by Reuter, incited “We are expecting the volume increased 16%, TurkDEX more than institutional investors, the total number of investors is increasing the private sector in Turkey— of M&A activities to increase maintained its position significantly every year. SMEs in particular—to adopt a in the following two years, among world derivative more active approach to public which will create a better exchanges. TurkDEX is ex- 11,000 13,200 offerings, another important awareness for the investment pected to grow 4% in 2012. source of financing. A total of society. So this will cause the Turkey’s high-trending mar- 27 initial public offerings took number of public offerings to kets continue to instill hope place in 2011, while over just increase more between 2013 in many investors. Thanks to the first months of 2012 there and 2016,” he adds. this victory of sound measures were 19. The increase in public Together with the ISE, like technology policy, Public offerings and higher transac- Turkey’s largest exchange, offerings, and product diver- tion volumes are expected to TurkDEX—the Turkish sification, Turkey seems likely 2010 2011 continue through the end of Derivative Exchange—is to continue to climb within No. of New the year, and they are quite exhibiting vibrant, buzzing MIST, the new favorites of the 6,600 Investors significant with respect to in- performance. The exchange world economy. creasing market players’ sense celebrated its eighth year this In the ISE, where individual of trust by deepening Turkey’s past February. The exchange’s investors are more than in- capital markets, reducing transaction volume of TRY stitutional investors, the total fluctuation, and therefore 423 billion in 2010 increased number of investors is increas- 2012 reducing risk premium. At- by 2% in 2011, but because ing significantly every year. (through July) Source: ISE tila Köksal, President of the Association of Capital Market Intermediary Institutions of Turkey, which launched a campaign to encourage public offerings by signing a protocol of cooperation in 2008 with TOBB, SPK, and the ISE to better inform companies about FUNDA GÜNGÖR AKPINAR Attila Köksal, CFA – President Philipp Reuter capital markets and public President, the Investor Association of Capital Market Director, Frost & Sullivan offerings, states that there are Relations Association of Intermediary Institutions of 13 companies that have applied Turkey (TÜYİD) Turkey (TSPAKB) Unlike the US or EU, Turkey to be listed on the market as of is very promising for inves- mid July, and he adds, “We can When this interest in the Turkey ıs a country that has ISE is examined in terms been under watch by global tors. Even if the expansion- expect the public offering trend of contribution to interna- capital for quite some time. ary policy of US central bank observed in the first half of the tional direct investment, it Especially in recent years, had a positive impact for a year to continue in the second can be said to be critical in Turkey has never had a hard while during 2010, fluctuation continued in 2011 and half. But the international terms of the expansion of the time drawing sources of investor base and therefore capital from abroad. On the still does. Additionally, the economic conjuncture will be Turkey’s recognition. The capital side, it is expect- uncertainty of Greece and the an important factor in public development of capital mar- ed that both strategic and falling ratings of Europe- offerings.” kets is a significant promo- portfolio investors (private an banks are strengthening tion tool for many countries equity funds especially) will Turkey’s position to receive Turkey is one of the coun- foreign investments. Hence, tries least affected by the crisis that will invest in Turkey. continue to be interested Several companies making in Turkey. Since the start of in Q1 2012, foreign investors in 2008 and 2009. portfolio investments can 2010, the number of stock purchased almost $1 billion Thanks to the past bitter also be active in private equi- market investors in Turkey in stock. The vast majority experiences of the ‘90s, Turkey ties. An international fund grew 9% to reach 1.1 million. of foreign investors are from the US, which accounts for has managed to develop better entering as a stock market Although there is no definite investor today could, with data that can measure the a 20% share, and we expect financial policies to regulate knowledge of the economy effect of public offerings on this number to increase the investment and bank- of Turkey and the opera- the number of investors, it alongside uncertainty in the ing environment, which also tion of its markets, bring its is known that the public of- European economy. Addi- direct investments to our ferings made recently have tionally, the venture capital gives birth to opportunities inflows have been affected via market liberalization. Ac- country, too. The ISE’s posi- gained new investors for the tive performance is another ISE. positively due to intense according to Philipp Reuter, this door opening on to Turkey tivities by the ISE depending current business environment for investors in this respect. on its offer of an additional drives the regional geographic exit option through public listing of a company.exit expansion plans for Turkish option through public listing companies which is likely to be of a company. expected to boost their M&A 52 In Depth / Nihat Gümüş

The public offering campaign that started in 2010 with the initiative of all actors in the capital market, our exchange and Capital Markets Board above all, started to show its effects from the first year onward. The shares of 23 of our companies were offered to the public in 2010, and of 27 in 2011. In the first half of 2012, this figure reached 19. As the outcome of these public offerings, we have provided our companies with TRY 420 million in resources. We will conduct three more public offerings before July is over. And in light of the existing applications, it is possible to say that this trend will continue to increase. Another matter we will be focusing on in relation to public offerings is to make public offerings widespread especially among Turkish companies that rank in the top 500 and 1,000 companies listed by ISO. We will be working intensely next year both to introduce large companies [in Turkey] to the exchange and to increase the public offerings of already listed large companies.

What kind of activity has the large number of public offerings created in the stock market? How will this draw small- and medium-scale investors? Since the public offering campaign began in 2010, the transaction volume of our stock exchange rose from $316 billion in the previous year to $425 By merve kara billion. The year 2011 ended with a transaction volume of roughly the same What do you think about the ISE’s of nonresident international inves- level. Looking at the first seven months performance over the past year, in tors in our exchange. Nonresidents’ of 2012, one sees that the volume has terms of the contribution made to net purchases in the stock market over maintained its levels. drawing international investors? the first six months of 2012 totaled As is known, approximately three- The market value of companies listed approximately $2.8 billion. These fourths of the total transaction volume on the ISE had increased by the end nonresidents’ share in total transaction on our exchange is accounted to of 2010 to more than three times the volume has shot back up to levels of individual investors. Therefore, another figure attained by the end of 2008, 18–19% in the first six months of 2012. indicator one must keep in sight is reaching approximately $307 billion. These figures indicate that the position the increase in the number of inves- Our market value fell in 2011 due to of nonresident international investors tors. The number of investors opening global liquidity conditions and obvious in the ISE has risen with their perfor- investing accounts and participating issues that emerged in Europe, but in mance over the past year. in public offerings for the first time has 2012 it recovered and again attained increased consistently since 2010. levels of $260 billion in the first seven 2012 has been a very fruitful year months. in terms of public offerings in the Do you expect the rise in the stock This performance, taking place in a stock market. What is your as- market that followed Turkey’s time when the North Atlantic crisis still sessment of this situation? Do you credit rating increase to continue? affects the world, reflects the behavior expect this trend to continue? International credit rating agencies’

SEPTEMBER-OCTOBER 2012 ISSUE 12 The Turkish Perspective 53

evaluations of countries, institutions, has been a rising trend for exchanges to create a technological platform on and financial products became one to turn into profit-focused corpora- which resident investors both local and of the most important topics on the tions with public offerings. Examin- international can buy and sell many agenda after the 2007 financial crisis. ing the examples of the exchanges of products over one trading and storage One of the most serious criticisms Stockholm, Italy, and Australia, and the account. Also in this scope, we are en- concerning these evaluations has been exchange s of Korea and Brazil, which gaged in an effort to establish regional that the models on which they are were incorporated in the second half of partnerships by making agreements based are built to an extremely large the 2000s, significant increases in their with exchanges in our region, many of degree upon historical data and do not market values were observed follow- which are members of the European reflect the future-facing potential and ing incorporation. If the new Capital Federation of Exchanges over which risks carried by an economy. Generally, Markets Code is fully ratified in the we currently preside anyway. With I agree with these assessments. The General Council of the Grand National memorandums of understanding and evaluations conducted by credit rating Assembly of Turkey is October, we protocols we signed with the exchanges agencies in time become built on top expect to complete this process by the of South Korea, Macedonia, Morocco, of an assumption of constancy and end of the year. Bosnia, and Egypt, we have started are unable to capture the structural projects to make it possible to mutu- transformations and breakdowns un- ally connect these exchanges. Also in dergone by an economy over time. For the coming term, we aim to make such this reason, the credit rating of Turkey, agreements with exchanges in our which should have long been raised to region and in East Asia. “investment worthy” by virtue of the country’s structural reforms, macro- Where do you predict the ISE will economic performance, and finance be among global markets for the sector strength over the past ten years, next five years?W hat data sup- only came to the stage before this level ports your predictions? in recent months. As another outcome As of 2011, our exchange ranked eighth of the extreme reliance of the models among World Federation of Exchanges- on historical data, the fact that the rat- member developing markets in terms ing of Italy, whose economic condition of stock market transaction volume is clearly dire, is still A- while Turkey’s with a figure of roughly $500 billion. is still at BB+ can be shown as an In terms of volume, and hence liquidity, example. But the markets are moving our exchange is a leader in the region. ahead of the rating agencies. While the But we must raise the market value of treasury of Turkey was able to secure our companies in the stock exchange. a 30-year loan with 5–6% interest, I think this is a viable—surpassable, in Italy’s loan rates are clear to see. fact—target under normal conditions. To return to your question, the The Turkish banking industry has increase in credit ratings can of course accomplished this, after all: growing be said to positively influence the There is no reason for our roughly fourfold over the past eight amount of investment in companies to ten years, our banking industry has listed on our exchange. But the truly exchange not to strengthen come to its level today. significant effect will be seen when its leadership in its region Macroeconomic indicators like the Turkey possesses an “investment and become one of the world’s structural reforms that took place after worthy” credit rating. My expectation distinguished exchanges 2002, the reduction of public pressure is that Turkey’s rating will rise to this on usable funds, our high performance level as of next year. in growth, low inflation, and our strong banking industry show that capital Can you provide some information markets are next line. With the needed about the ISE’s process of incor- technological policies and the expan- poration? How will this situation Can you discuss the work you have sion of public offerings and product contribute to the development of done to increase the ISE’s interna- diversity, and with activities to inform the exchange? tional competitiveness and depth? investors, the value of our exchange Historically, in many countries in the In order to survive and develop in this will rise to levels in proportion with our world, exchanges were established as competitive environment, we as the national income. There is no reason cooperative-like structures formed ISE believe that we must first secure for our exchange not to strengthen its generally with the participation of their vertical and horizontal consolidation leadership in its region and become one members. But since the 1990s, there internally. In this way, we are aiming of the world’s distinguished exchanges. 54 Content: A Taste of Turkey: Ülker P57 Taking Accessories to the Next Level P60 Building Up a Brand P62 The Giants of ICT in Turkey P64 From Adana to Turkey P66 Editor: Can Gürsu

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Since 2008, Vakko has been continuing its high-quality production in its 33,000-square- meter new building.

Vakko: TURKEY’S STYLE WITNESS

Having witnessed the modernization of Turkey, aesthetic changes in the Western lifestyle, style, and luxury, Vakko is venturing out to the world with its own labels

By derya engın kutlu

ut simply,we are a ideas and innovations came out as a pioneering brand not “Pfashion brand,” says to the country in rapid suc- just in dress, but also in the Vakko Group. “Fashion cession, Vakko reflects Tur- transformation of ideas,” says Is Vakko,” its unchanging key’s modernization after the Vitali Hakko, the founder of motto, defines its approach declaration of the republic, Vakko. Hakko’s story began to design. Vakko, which the aesthetic transformations in Şen Şapka, a small hat has maintained the level of in the Western approach to shop. In 1938, he started its aesthetics, design, and living, style, and luxury—in producing the latest-fashion stylishness perpetually, dates short, the history of fashion— scarves using Turkish silk, back to the Republican era. beautifully. “Throughout this cotton, and wool. Positive Born at a time when modern entire adventure, Vakko set reception of these scarves all

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over Turkey convinced Hak- ko to set his sights higher. A small silkscreen printing workshop was thus opened in Kurtuluş, Istanbul for the first-ever Turkish print fabrics, which Vakko continues to manufacture today with unmatched mastery. Later, when its ready-to- wear production launched and Vakko Beyoğlu store opened in 1962, Vakko laid the foundations of modern retail in Turkey. In 1968, the company founded one of Turkey’s first modern factories, boasting 29,000 square meters of space. Since 2008, it has been continuing its high-quality production in its 33,000-square-meter sign team, manufacturing Vakko, which uses the same new building. In 1982, facilities, and sound brand dyes as the world’s lead- Vakko founded Vakkorama, strategies. ing scarf companies, offers Turkey’s first youth clothing approximately 250 designs store. This isn’t the only sub- VITALI HAKKO’S GIFT: THE ART on average in just one of its sidiary brand Vakko found- OF PRINT FABRICS stores. Vakko’s designs are ed—together with Vakko and What makes Vakko “Vakko” made by experienced creators Vakkorama, Vakko is active is its possession of one of the “Maintaining in its design workshop. After in the Turkish market with world’s select print fabric and increasing being poured into molds in Vakko Home, Butik Vakko, workshops and its experi- competitiveness to the gravure department, the W Collection, Vakko Wed- enced artisans. Every season, obtain sustainable completed molds are used to ding, Vakko Outlet, and V2K more than 600 Turkish growth and sustainable shape silk, satin, and high- Designer. designs are brought to life profitability” quality decorative fabrics in in the Vakko Manufactur- order to make Vakko scarves, SOUND DESIGN, SOUND STRAT- ing Center by the company’s ready-to-wear items, or deco- EGY, SOUND MANUFACTURING expert print fabric makers. rative items. Since the day of Meltem Kazaz, Director of its founding, Vakko has been Corporate Communications creating marvels with its tal- for Vakko Group, states that ent in fabric printing, and it the brand has always proudly has maintained Vital Hakko’s wielded the energy given approach just as it was on the by being a Turkish brand. very first day. She also underlines the fact that they are a boutique VAKKO IN THE GLOBAL retail chain, saying, “From MARKET manufacturing to retail, Vakko’s first foray into the we follow a boutique ap- global market came as it proach.” Uniting many opened its first interna- concepts from chocolate tional store in Frankfurt. to perfume, wedding Since opening its second dresses, and menswear store in the Azerbaijani under one roof domesti- capital Baku in 2007, the cally, Vakko possesses an reach of Vakko’s high- understanding of retail quality creations has been and brand positioning like expanding with each day. few others in the world. In 2008, Vakko opened a This success is obtained store in Cairo, and in 2010 in thanks to its strong de- Girne (Northern Cyprus). 56 Brands / Textile

Vakko’s strategy for success here. Vakko’s stores abroad— Vakko’s medium-term goal in the international market is besides its Corner marque— is to become more active quite clear: “Maintaining and are increasing in number in China, India, and Brazil. increasing competitiveness every day. Meltem Kazaz Vakko Group summarizes to obtain sustainable growth indicates that demand from its efforts in these regions and sustainable profitability.” Azerbaijan and Iraq in par- as follows: “We are con- For 2012, Vakko set a growth ticular has multiplied. The ducting detailed analyses target of 15%. Vakko Group company has put its focus on for these regions, and we continues its investment in Lebanon, Qatar, Kuwait, Abu are meeting with compa- new stores, which it started in Dhabi, Dubai, and Russia as nies that represent brands. Director of Corporate Communications 2011, and with the stores and well, she says. In Australia These regions are markets corners it is opening, it ap- and Saudi Arabia, Vakko that must be studied very Meltem Kazaz pears that it will easily reach Home products created with well, whether in terms of The export and business the aforementioned goal. specially designed fabrics geography or consumption development departments Vakko has set its focus in draw heavy interest. The habits. And we are study- within Vakko assess international growth on the company has been opening ing hard for these regions. opportunities in the target markets constantly and with Middle East. In early 2009, Corners in these regions in Brazil especially stands out great detail. We are in close the brand concentrated first- which it has identified poten- among these. Both the state contact with commercial ly on countries in the Middle tial. Vakko Group, which is a of the economy and relations attachés on this point. We East, the Persian Gulf, and beneficiary of the Turquality between the two countries establish contact with the neighboring countries in its state brand support program, [Turkey and Brazil] have administration of shopping centers that have started to be international development believes that official recogni- gained much strength. In built in the markets we have plan. In 2010, following the tion of its global brand power this respect, our meetings targeted. Additionally, we also successful general elections is an important turning with Brazil are moving conduct fairly detailed efforts in Northern Iraq and the point in its progress abroad. forward quite fruitfully. And, concerning the investment request we receive and maintenance of stability “The fact that we have the in a surprising manner, it is investors. following the US withdrawal support of Turquality, which quite a promising market for the region, Vakko became is highly respected interna- even for the Vakko Scarf col- one of the first Turkish com- tionally, helps us advance lection alone.” panies to invest in the area. more quickly in markets Meltem Kazaz says that The greatest factor in the abroad. Foreigners look at Vakko Group has for the past region’s allure for investing a state-supported Turkish two years successfully reaped is the high demand for the brand very differently,” says the rewards of the profitable Vakko brand and products Vakko Group. growth model it set for itself.

Our strategy at Vakko doe success in the international market is quite clear: “Maintaining and increasing competitiveness to obtain sustainable growth and sustainable profitability”

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“We work to see the happiness in people’s faces”

Sabrİ Ülker

A Taste of Turkey: Ülker Ülker, the cookie brand founded years ago by Sabri Ülker, today advances confidently toward becoming a global brand with its acquisition of such world-class brands as Godiva

By Derya Engin kutlu

e work to see a giant brand whose value is forgot what cookies tasted “Wthe happiness in today expressed in millions like over the course of the people’s faces”—a sentence of dollars. war. That the Ülker family summarizing Ülker founder had operated a confectionery Sabri Ülker’s vision for the EVERYTHING STARTED WITH A shop for a while and that company. The story of Sabri DREAM the two brothers worked in Ülker, who set out to create a Sabri Ülker completed his a factory in their youth con- brand that would eventually higher education dur- tributed to a certain amount be found in every house and Yıldız Holding has a ing WWII, after which he of experience. Confident in conquer every child’s heart, total of 55 factories, decided to produce cookies this experience, the broth- is one that starts in a tiny nine abroad and 46 in with his older brother, Asım ers decided to establish their workshop and winds up with Turkey Ülker, for children who own cookie business at a 58 Brands / FMCG

from international activities grew from $1.6 billion in 2010 to $2.4 billion in 2011. Yıldız Holding, which has a total of 55 factories—nine of them internationally and 46 domestically—is engaged in the production of chocolate, cookies, and cake in eight of its factories abroad. The workshop in the No- company obtains 21% of hutçu Han building its income from exports. in Eminönü. The late Sabri Ülker—Yıldız Holding’s main Ülker said of those years, “In marque—and certain subsid- the year 1944, I arrived in iary brands like Biskrem and Nohutçu Han in Eminönü, the third is quality work. Yıldız Holding İçim possess market leader- which was Istanbul’s com- The goods produced must obtained TRY 1.6 ship in the region. Yıldız mercial nexus in those times. be good and answer the billion from exports Holding, which possesses I entered the workshop customer’s deeds—in other in 2010. In 2011, an expansive sales range, located on the third floor. words, it must be worth the follows an expert strategy as Examining the cauldrons, money charged for it. Fourth, this figure reached expressed by Karakaş here: ladles, molds, the furnace in promotion should be given approximately TRY “By making additions to our the back, and the other tools much importance.” “We have 2.4 billion existing export markets, we in the roughly 100-square- been advertising Ülker since aim to facilitate the con- meter area, I said to myself, 1950. Especially when adver- tinuance of income during ‘I must succeed in this.’” tising a quality product, the regional economic stag- The brothers bought result obtained is great,” said nancy, increase in number the workshop and set to Sabri Ülker about his compa- our manufacturing facilities work. First, they put the old ny, which valued advertising It utilized these companies’ abroad, and from there we machines through a trial— from its very first day. mastery and experiences, and plan to open out onto new being as old as they were, it it established its first hygiene regions.” was hard to find spare parts A PIONEERING BRAND department. In a speech he for those machines. Sabri Back in those days, Sabri once made, Sabri Ülker pro- GODIVA EXCELLENCE Ülker therefore also learned Ülker called what is now vided his assessment of that Yıldız Holding has gained to fix the old machines. The known as “vision” as “fore- era as follows: “We followed respect in Turkey and in two brothers produced 200 sight.” He discovered the all global developments and various countries around kilograms of cookies every business ideas Turkey was caught up with the pace of the world with the brands day in the first year. It is in introduced to in the 1990s the world. We invested in it has created. Beyond this, those years that the founda- quite some time before then expanding our capacity. W the conglomerate has been tions of Ülker—today one of and enacted them at Ülker. therefore started to produce adding world-famous brands Turkey’s foremost brands— These characteristics made new products that gained the to its corpus as well. Yıldız were laid. Ülker, which him one of the pioneering heart of our customers. Holding acquired Godiva, a continues to operate under entrepreneurs in Turkish giant in chocolate since the Yıldız Holding, Today, it is industry and the food indus- AN EXPORTS STAR early 1900s, in 2007. “As a deep-rooted brand with try in particular. In order to An adventure that started Yıldız Holding, we act with manufacturing in several be able to compete against in that tiny workshop has a vision to be an institution countries and exports to international brands, Ülker today become a giant brand that possesses brands first more than 80 countries. put its R&D departments to that exports to more than 80 in its own region and then the task in the ‘70s. In the countries around the world at the international level. SABRI ÜLKER’S FLAVOR SECRET ‘80s, it started competing and whose reach extends There are certain param- Sabri Ülker once explained with imported goods. Dur- from Australia to Canada. eters brought by being an the secret to his success as ing that time, Ülker became This is supported both by the international institution. To follows: “At the founda- the first cookie company in development exhibited by be an international institution of success is, first of Turkey to bring in experts the brand and its progress. tion requires possession of all, to work without grow- from abroad. Ülker estab- Cem Karakaş, PhD, CFO large companies that boast ing tired or bored. The lished partnerships with of Yıldız Holding, states advanced management, second is honest work, and many foreign companies. that the company’s income international-scale revenue,

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and world-class status in Cola Turka gained a decent position certain categories,” says Cem among cola brands Karakaş on Yıldız Holding’s within a short time, rising to the rank of goals. As Yıldız Holding, says second in the year Karakaş, they might buy new 2005 cookie and chocolate brands in Europe, the Middle East, and northern Africa in order to bolster their strength in those regions. He adds, “We will push our strategy to Cem Karakaş, PhD establish partnerships with Chief Financial Officer, companies that are experts Yıldız Holding in their fields and are among with an authentic, relatively Our strategy in exports the world’s respected com- low-sugar, aromatic flavor, can be summarized as panies for categories with Cola Turka is the product of facilitating sustained income during regional economic a promising future in the a year-long effort. Cola Turka stagnancies by adding new Turkish market.” gained a decent position markets to our existing export among cola brands within a markets and proliferating A LOCAL FAVORITE: COLA TURKA short time, rising to the rank our manufacturing facilities abroad, thereby opening out Ülker has also added a name of second in the year 2005. to new regions from those to the ranks of the cola mar- In 2006, with a new brand- areas. On this point, we are ket in Turkey, which has long ing campaign, Cola Turka continuing our efforts to been dominated by Ameri- continued along its path purchase new companies in can brands. Ülker released with the slogan, “All together the Eastern Europe, Middle East, and northern Africa Cola Turka in 2003 with the now.” Additionally, the brand markets in the future. slogan, “It’s cola as we know renewed its packaging with it, but Turka’s alla Turca.” a logo designed by Emrah Domestic consumer choice Yücel, who is known for his in the cola market, whose notable work for Hollywood. principal product is generally regarded as being American, tends to favor foreign brands. In such a time, Cola Turka presents a brand that caters to the local palate in a local way. Suited to Turkish taste,

Yıldız Holding acquired Godiva, a giant in chocolate since the early 1900s, in 2007 60 Brands / Mobile Accesories

Trexta to the market. Trexta Inc. was founded in Taking Accessories 1990 in San Francisco by At- tila Kutbay, a young Turkish entrepreneur who had just to the Next Level graduated with an MBA from National University in San Once an OEM contractor working behind the scenes, Trexta is Diego. The company’s corpo- growing into an internationally recognized brand for mobile rate headquarters remained accessories in San Francisco for some time, but manufacturing By altan orhon By abdulkadır demır took place in Turkey from the start. The company began by making leather accessories for Nokia phones. Trexta initially used subcontractors for its manufacturing. A major deal with Nokia in 1996 led them to set up their first factory in Çerkezköy outside Istanbul. Trexta enjoyed success for a very long time as an OEM- type manufacturer, directly supplying unbranded products to companies including Nokia, BlackBerry, Vertu, and Leica. Trexta’s OEM products are very well regarded—Leica once wrote to say that their patent leather case contributed to a growth of as much as 30% in the sales of a particular model of camera. very once in a These devices were relatively As a brand of its own, “E while, a revolution- expensive at the time of their however, Trexta made no real ary product comes along release, encouraging custom- attempts until the intro- that changes everything,” ers to purchase cases and duction of the iPhone. To said Steve Jobs, speaking at other protective items both to enter the iPhone market, the the Macworld Conference protect their investment and company needed to promote & Expo in San Francisco on to express a certain level of its own brand, as Apple had January 9, 2007. It was on personal style. Furthermore, little interest in OEMs. The that day that the late tech Apple’s model for cases and economic crisis that started visionary introduced the similar accessories differed in 2008 made the fast-grow- iPhone to the public. The from many other cellphone ing Apple market even more device would very soon take manufacturers in that instead attractive for Trexta—being the world by storm, changing of selling cases under its own so dependent on orders from the entire cellphone industry brand, it directly encour- other companies was a disad- almost single-handedly and aged a third-party market of vantage in that environment. introducing a new era in mo- products it would certify with Trexta brings 22 years Trexta launched its brand bile computing. More or less the “Made for iPhone” label of experience to the in January 2009 at the simultaneously, it also birthed and sell in its own stores. The market to create a line Consumer Electronics Show a demand for third-party ac- low number of form fac- of unique cases and in Las Vegas. Most of the cessories that today nourishes tors—at that time, one—for devices at its stand were a thriving multibillion-dollar Apple cellphones relative to snap-on covers with prototypes designed to get industry. Since the launch of their sales figures, too, made high-quality materials a feel for the market; these its iDevices line in 2007 with it easier to enter the market. and craftsmanship were presented to companies the iPhone, Apple sold 315 This massive, easy-to-access for Apple, BlackBerry, and potential customers for million such devices cumu- user base is precisely what Nokia, and Samsung feedback, revised, and relatively by January 2012. drew the Turkish company products leased for international sales

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in April. Even so, Trexta’s Apple’s model of maintain- leather,” says Aslıhan Şengül. early attempts attracted great ing some degree of control Turkey is indeed becoming interest and praise from those over accessories without a brand of its own in leather, who attended CES, with one being directly responsible with an estimated $3 billion blogger lauding the use of for them (yet still earning a export of leather—including “soft, buttery patent leather” share of their profits). As one tourist purchases—in 2011. of a quality rarely seen in of RIM’s OEM suppliers, “The factory in India was such accessories until then. Trexta had avoided compet- established because it’s easier “Even at the start, we man- ing with them. With the to find quality leather there aged to enter the race with a official sanction provided by than in China, but Turkey is decent advantage over other the new program, Trexta felt still far ahead,” notes Şengül, brands in the market in terms free to expand its own brand adding, “Because Turkey is of both quality and innova- to the BlackBerry market, too. so centrally located, we are tion,” says Aslıhan Şengül, Accessories for the Amazon in an excellent position to Trexta’s creative brand Kindle as well as Samsung’s distribute our wares to Arab manager. “In 2009, when we Galaxy line of phones and countries, Europe, and the first entered the market, we tablets are also part of Trexta’s “People want to express US. When we consider trans- had a product called ‘iHug,’ current product range. their individuality. ferring the production of a a case shaped like a person The company has recently The things we make product to China or India, who was embracing your started focusing on designing allow just that, adding the logistical costs often end iPhone. Sales weren’t so high, products targeted to specific value to existing up being excessive.” but we didn’t expect them to markets. Up until now, all of In three years, Trexta has be anyway—there are some its collections were designed products in the succeeded in transform- products we use as strategic with the global market in process” ing itself from a quiet OEM marketing tools alongside mind, catering to American company into an internation- the moneymakers that sell in and European tastes. Devel- ally recognized brand with great volume. This is often oping countries in the Middle products sold in more than the case in fashion, too,” she East and Asia have drawn used mostly for high-volume 65 countries. And although says. Trexta continued to Trexta’s interest as a growing OEM production for Nokia the OEM side is still an release product after product, middle class translates into a and RIM, especially the important part of the busi- expanding to the iPad too. Its huge potential market for its production of items included ness, the agility and inde- products have received much wares. Trexta’s international in the box with the device pendence Trexta discovered praise at trade shows and in reach is considerable—the itself, which imposes severe with its own brand caused it various publications—an un- company has offices focusing cost restrictions—with great to channel its energies in that released neoprene case called on trade, logistics, and design competition in the OEM direction. As the number of the Magic Back for iPad won in six countries, and a total of field for cellphones, and with unique form factors in devic- Best Product Design in the four manufacturing facili- most device manufactures continues to fall, with the “60 Seconds to Convince” ties, with two in Turkey and ing taking place in China, dozens of handsets released contest at DISTREE XXL one each in India and China. device manufacturers often yearly by certain manufactur- 2010 held in Moscow, and Trexta’s first factory, the one award contracts to the lowest ers being replaced by a small its iPhone case Sketch Up in Çerkezköy, is primarily bidder. set of smartphones simply was named Best of Show at used today for the manufac- Why, then, does Trexta to streamline production Macworld. The key feature of ture of their leather items and do most of its manufactur- processes, people will rely the Sketch Up, an innovative as a logistical center. They ing—especially for its own even more on accessories for case made entirely of recycled also have a plastics manufac- products—in Turkey? Access self expression. “People want paper and plastic, is that us- turing and molding facility to high-quality raw materi- to express their individuality. ers are able to draw on it with on the outskirts of Istanbul. als, a skilled workforce, and The things we make allow markers included in its box. Plastic skeletons for the cases Turkey’s unique geographical just that, adding value to This creative, eco-friendly are sent from the latter to position are the key advan- existing products in the pro- product serves as a testament the former, where they are tages Trexta finds in this cess,” says Şengül. It therefore to the kind of brand that subjected to Trexta’s patented country. “Incredible things stands to reason that the Trexta sought to build. in-mold covering applica- are being done in Turkey Trexta brand has nowhere In time, Trexta expanded its tion technique, resulting in when it comes to leather, and to go but up—and thanks to range of branded products to smooth, ridge-free cases with it really is no less outstanding its global reach, innovative accessories for other de- leather, fabric, wood, or paper than Italy in this area. Italy approach, fresh thinking, and vices. BlackBerry maker RIM exteriors. Trexta’s branded may indeed be one step ahead access to markets provided publicly unveiled its “Built products are mostly manu- in terms of color and pattern by its location, this Turkish for BlackBerry” program in factured in their Turkish fa- options, but there is no dif- company seems poised to do January 2011, which mirrors cilities. Its Asian factories are ference in the quality of the just that. 62 Brands /Piping

BUILDING UP a Brand Hakan Plastik, a pioneer in the Turkish plastic industry, is quickly increasing the number of countries to which it exports its products

By Aynur ŞENOL ALTUN

he plastics industry in 2011, proving in a sense T is growing. By field, its business volume. With its the 6,000-company-strong modern facilities built on a plastic industry breaks down 200,00-square-meter area into packaging with 27%, in the Çerkezköy Organized construction with 14%, Industrial Zone, experience textile with 11%, housewares in exports and logistics, and with 10%, automotive with solid technological infra- 9% and technical parts also structure, Hakan Plastik has with 9%. Another 20% is en- managed to become one of gaged in production destined the most important actors for other industries. Set- guiding the direction of the ting new records in exports, world plastic pipe industry, the industry aims to have which is valued at more than conducted roughly $5 billion $100 billion. worth of direct exports by the end of the year. Turkey is The Choice of Prestigious now Europe’s third-largest Projects producer of plastic, and the Hakan Plastik is active with numbers it has obtained so its brands in three funda- far confirm its claim to this mental fields of business, title. A leading area in the namely superstructural Turkish manufacturing in- engineering, infrastruc- dustry, the plastics industry ture, and agriculture. It possesses great potential represents itself in the first Zafer Karadeniz, Chair- tion made to the region’s and dynamism, and it has field with its Silenta silent man of Hakan Plastik, says economic development has exhibited an ability to adapt wastewater piping systems, the company has one of been rewarded. Bestowed quickly to new developments. the second with its Hakan- Europe’s most distinguished upon Hakan Plastik, this One of the foremost actors in drip irrigation systems, and plastic pipe manufacturing award, organized jointly by Turkey’s plastics industry is the third with its Duramax complexes. He emphasizes the Şanlıurfa Chamber of Hakan Plastik. Established PP corrugated infrastructure the fact that they produce Commerce and Industry in 1965, Hakan Plastik systems. Having entered superior-quality products and the Şanlıurfa Industry started producing indoor global markets with Silenta, with cutting-edge technol- Exchange, and with the pipe systems using extrusion which is still Turkey’s quiet- ogy. Planning to improve partnership of the Union of and injection-molding ma- est wastewater pipe, Hakan trade with Middle East- Chambers and Commod- chines it imported from Ger- Plastik is notably the only ern countries and expand ity Exchanges of Turkey, many. In 1992, it additionally Turkish brand used in its export volume via its showed how well placed and started production on PP-R Dubai’s Burj Khalifa-Dubai 106,000-square-meter correct our efforts are. Our hot and cold water pipe Mall project, which is the (25,000 square meters gladness will increase even systems, and as of 1997 it world’s tallest building. indoors) factory in Şanlıurfa, more due to the jobs that started to speed up its export Hakan Plastik products are Hakan Plastik ended up will be created in the region activities to serve its planned also chosen for prestigious winning an award for this our factory is built and the growth targets. Producing projects all over the world, investment, too. Karadeniz contribution we will provide solely in Turkey and only in such as Istanbul Trump expresses his gladness at to the economy of Turkey.” the plastic pipe systems field, Towers, Dubai Rolex Tower, receiving this medal as Aiming to increase the size Hakan Plastik ranked among Dubai Versace Hotel, Emir- follows: “It is a gladdening of its workforce in parallel the Top 500 Industrial En- ates Park Tower Hotel, and thing that our investment in with the growth of its busi- terprises listing of ISO 500 Latifa Tower. Şanlıurfa and the contribu- ness volume, Hakan Plastik

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Reinvesting in the Industry through Social Responsibility Projects In cooperation with the Hakan Plastik is quickly increasing the number Çerkezköy Vocational of countries to which it Training Center, Hakan exports by participating in Plastik last year opened international fairs the Hakan Akademi Apprenticeship Training Class to train individuals aged 15 and up and provide them with guaranteed jobs in the fields of plastics technologies and computer- aided manufacturing (CNC). “This project, which aims to provide a vocation to children who were unable to continue their education, makes both us and the families of the children participating in the intends to add 30% more training happy,” says Zafer employees once its Şanlıurfa Karadeniz. factory enters operation at the end of the year. Hakan Plastik ranked Turkmenistan, Ethiopia, in Turkey, too, as it does in Active in Mexico 443rd in the ISO 500 Iran, Azerbaijan, Russia, the rest of the world. Zafer Having diversified its export list wıth TRY 177.4 the United Arab Emirates, Karadeniz says, “What markets in 2011, Hakan Qatar, Nigeria, and all the we are emphasizing is the Plastik achieved significant million in sales from Balkan countries.” perception of quality that growth in this regard, too, production The Hakan Plastik chair- the Hakan brand creates in reaching the markets of 12 man says one problem people. By bringing this per- new countries to raise the faced by the entire plastic ception to the forefront in total number of countries to industry worldwide is the our country or in the many which it exports to 67. “One great amount of incorrect countries we export to, we of the markets we opened and incomplete information are moving forward with a up to this year is Mexico. We about plastic. He empha- lasting, sustainable approach also have the distinction of sizes that transparency and to commerce.” Hakan Plastik being the first pipe company declarations must be given is confident in building up to export to this company,” weight to eliminate the pub- its brand, aiming to achieve says Zafer Karadeniz. He lic conception that plastics this through the universality lists some of the countries negatively affect human of the products it makes, its Hakan Plastik exports to health. investments in technology, as follows: “Sweden, Spain, Hakan Plastik aims to ap- and its policy of constantly Poland, South Africa, Iraq, pear in prestigious projects improving its products. 64 Brands /ICT

holders. Deputy General Manager Osman Duman The Giants of ICT in Turkey indicates that there are more than 575,000 businesses in With regard to its goals for 2023, the ICT industry is expected Turkey alone and close to 10 to grow fourfold with successful brands like Karel and AirTies million users in the world, and that the company has By CAN GuRSU contributed $2.2 billion to the Turkish economy over he ICT industry is its private branch exchange the past 25 years. Products T one that is growing and (PBX) products to this that ease corporate users’ rising rapidly in Turkey and market, Karel was a pioneer lives and can be customized the world. The ICT indus- in Turkey’s transition from according to needs, together try in Turkey is expected to electromechanical to fully with good support and quadruple in size by 2023, electronic systems in com- service, has contributed to reaching a volume of $160 munications, and today this success, he says. “What’s billion. Possessing significant recognized as one of the truly meaningful is to have market potential and eco- world’s leading brands in the sustainable success,” says nomic dynamics, Turkey to- area. Besides being one of Duman. Karel, a market day ranks as the world’s 16th Europe’s top three makers of leader in Turkey for many largest economy. In terms of PBXs, it is among the first Leading Turkish years, constantly works and qualified human resources, 15 companies in the world in brands Karel and invests to maintain this Turkey ranks among the top this area. status. 15 countries in the world, Karel, which develops its AirTies rank among Karel, whose main field whether in the category of communication systems in the most successful of operations is telecommu- IT skills or that of qualified its own R&D department, is actors in their industry nications, produces private engineers. The incentiviza- Turkey’s largest communica- not only in Turkey, but branch exchanges using tion of production and R&D tion electronics institution also in international various technologies—VoIP and the direction of the gov- with no foreign share- markets most of all—and in every ernment’s buying power to domestic brands constitute a significant driving force for the industry in Turkey. With their power and experience behind them, Turkey is home to world brands in information and communication technologies. Among the foremost of these companies are Karel, which answers the communication needs of enterprises of every size and is one of Europe’s top three PBX makers, and AirTies, which is known for its home networking products and works closely with many telecommunications companies around the world.

$2.2 BILLION CONTRIBUTED IN 25 YEARS Founded in 1986 with 100% local capital, Karel today ranks as one of the first companies in the world to have entered the electronic telephone exchange business. By introducing

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capacity segment. Devel- its home wireless connec- Developing Mesh Networks amid a number of different oping and manufacturing tivity technologies, AirTies technology upon recogniz- cultures. Çelebi continued hundreds of kinds of various was founded by a Turk who ing the barrier occasion- to work with Silicon Valley peripheral systems ex- previously had risen to the ally imposed upon wireless after returning to Silicon changes for the convenience rank of CEO in global IT Internet connectivity by Valley, and in 2002, he was of companies’ communica- companies. AirTies develops the walls used in Turkish listed as one of the “Top tions are also among Karel’s products that wirelessly buildings, AirTies success- Ten Entrepreneurs” by Red activities. Duman indicates connect electronic devices to fully achieves much wider Herring. As he continued that the company has each other, the Internet, and reception of wireless signals his duties as CEO of a made a rapid entry into the people. In its product range with this solution custom- Silicon Valley firm in the video communications and are devices that provide made for Turkey. “Produc- US, despite having had such security solutions markets, broadband Internet access ing technology, creating a great success in his career, too. For this purpose, Karel (ADSL/VDSL), wireless world brand in this field, he never lost his desire to is expanding its activities in local area networking, Voice and exporting have always create a global company. video communications, se- over IP (VoIP), and Internet been an exciting subject of Çelebi decided to position curity, process management, Protocol Television (IPTV). discussion for all of us,” says the headquarters of the resource management, and Engaging in production AirTies CEO Bülent Çelebi, company he would establish customer management, in custom tailored to the and he adds, “And in truth, in this industry, in which he addition to audio commu- requirements of the country this is what we aimed.” had a great deal of experi- nication, intensifying its and region it is in, AirTies is After studying electronic ence, in Istanbul, Turkey. efforts geared toward these accomplishing a worldwide and computer engineer- “I put together my business fields. Karel is preparing to first in this field, too. ing at UC Berkeley, Bülent plan in my home’s backyard, enter not only new prod- AirTies started as its Çelebi had the opportunity and with a sudden decision uct markets, but also new founder fused know-how to gain work and industry I followed my dreams and national markets. and an engineering founda- experience in a great variety returned to Turkey,” says Karel today exports tion from Silicon Valley of countries, such as China, Çelebi in a recollection that products and technologies with entrepreneurship. Taiwan, Malaysia, and India, leads up to the founding to more than 30 countries. of AirTies, which is now a “Our aim is to bolster our solutions partner of many activity in markets where telecommunications compa- we are already present—like nies around the world. the Commonwealth of Focused on Western and Independent States (CIS) Northwestern Europe among countries, India, and the its foreign markets today, EMEA countries—with new AirTies exports to many products, solutions, and European countries includ- business models, and to en- Bülent Çelebİ OSMAN DUMAN ing Russia, Denmark, the ter in a focused fashion new CEO, AirTies Deputy General Manager, Karel Netherlands, France, and the markets such as countries in UK. “IPTV is one of our areas Turkey is a country and market that I must indicate that the America and East and Cen- is proceeding with incredible speed information and communication in which we are most confi- tral Europe,” says Duman. in the adoption of new technologies, technologies industry is of dent abroad,” says Çelebi, and At a time when lifestyles is open to innovation, and has high incredible strategic importance adds, “We developed Turkey’s and business processes are energy. We are a society that is open for Turkey to realize its growth first set top-box product and changing very rapidly along- to new technology and accepts it target. With the provision of the started exporting it. Working into life, learns, and practices it needed support, Turkey has the side technology, Karel is quickly. Technology is a sector that potential to become a regional with leading industry opera- setting ever-greater targets contains opportunities in every force especially in the Asia– tors in this field, we facilitate as it has constantly renewed one of its fields—it’s not important Middle East–Africa territory. For the transmission of IPTV itself since the day it was where you are. What matters is this, the production of policies broadcasts to thousands focusing on the correct product/ geared toward the industry’s founded. Through this, service in line with one’s expertise, development and the consistent of TV viewers in numer- Turkish brands are gaining never forgetting that R&D is the application of these policies ous countries.” An ongo- more and more recognition greatest investment, and satisfying become important. And for ing solutions partner with abroad. the needs of this. I believe sincerely this, it is of critical importance Danish triple-play operator that developments can occur much that production and R&D are WAOO and Icelandic IPTV faster with correct reading of the incentivized and that the state’s FROM TURKEY TO SILICON market and local feel in Turkey, and buying power is used as an and fiber operator Siminn, VALLEY by understanding the needs of the incentive along this road. AirTies has also been Another tech giant like Turkish consumer well, listening working on new projects in Karel is AirTies. Compet- to them, and speaking the same Andorra, the country that language with them. We practiced ing in the same arena this and succeeded. possesses the world’s fastest against world giants with Internet access. 66 Brands / FMCG

Doğanay Food also supplies large chains by contract manufacturing of its products

facturing space to 35,000 square meters. Doğanay Food now exports to roughly 35 countries. Among its export markets, European and Middle Eastern countries stand out the most. Doğanay Gıda, which possesses fairly high recognition in the market and by consumers, has been continuing to grow stably since 1997.

CAREFULLY SELECTED RAW MATERIALS Rafet Doğanay, speaking as board chairman of Doğanay Food, says they procure the raw materials for their From Adana to the World production—for which they boast an annual produc- The journey Doğanay Food started in Adana continues tion capacity of 290 mil- in 35 countries today lion liters—from carefully chosen regions. According By Aynur şenol altun to Doğanay, they cultivate purple carrots—the main fter finishing his tion and excitement. Şalgam ingredient in şalgam, which A studies in political wasn’t so widely recognized is known to have proper- science in Germany before in that era, and Doğanay is ties that aid digestion—on entering the food busi- still working toward his goal agricultural land in Ereğli, ness, his family profession, of elevating it from the status Konya and Ulukışla, Niğde, Rafet Doğanay entered the of a local to drink to that of a with Ministry of Agriculture- retail industry by opening national one. He started pro- subsidized “Good Agricul- a market, and afterward ducing the savory beverage ture” certification. The other expanded his vision to the in 1997, in a factory built on regions he lists as follows: global arena with “şalgam,” a a 1,300-square-meter plot of “The 100 percent natural pickled purple carrot-based land in the Adana Organized wine vinegar is made from drink that is Adana’s local Industrial Zone. The compa- carefully selected grapes in drink. Before entering this ny continued its investments the Gaziantep – İslahiye and industry, Doğanay toured up through 2012, and in time Nevşehir region, and the 100 all the manufacturers and it expanded its product range percent natural apple cider noticed the lack of a well- as well. With such products vinegar is made from fresh systematized manufacturing as 100% natural wine vine- select apples from the Medi- process. He therefore set a gar, 100% natural apple cider terranean, Konya, and Niğde goal of bringing increased vinegar, 100% natural lemon region. We use no artificial professionalism to the busi- juice, lemon sauce, lemonade, European and Middle flavors, dyes, or additives at ness, taking global beverage 100% concentration pome- all in our 100 percent natural giants as an example—he granate molasses, and 75% Eastern countries are wine vinegar, 100 percent followed their example in concentration pomegranate the top export markets natural apple cider vinegar, facilities and used similar molasses sauce, it became for Doğanay Food, and 100 percent natural systems in bottling lines. In a well-known brand in the which today exports balsamic vinegar. Addition- other words, he entered the market, and over time it to approximately ally, as a first in our country, industry with great motiva- expanded its indoor manu- 35 countries we bring the 100-percent-

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natural, unadulterated According to data re- lemon juice we produce to leased by the World Trade tables as-is by obtaining it Organization, says Rafet from select lemons from the Doğanay, global trade grew Mediterranean region, using by 177% between 2002 no additives, preservatives, or and 2011, from a volume of dyes, using an ultra-hygienic $13.2 trillion to $36.5 tril- production system. And the lion. He emphatically states pomegranate molasses is that this growth continues produced on fully auto- likewise in Turkey, too. After matic machines from select underlining the fact that southern and southeastern Doğanay Food continues pomegranates using tradi- manufacturing its present tional methods.” products to world standards Employing 200 people via its constant invest- at its factory in the Adana ments in new technology Organized Industrial Zone, and R&D efforts, Doğanay Doğanay Food also hires Rafet Doğanay, says they plan to export seasonal workers for its Doğanay Food Board various products to various agricultural plots in Ereğli, Chairman: “Doğanay countries. Opening sail to Konya and Ulukışla, Niğde. Food, which adopted new markets is among the Doğanay Food, which quality, honesty, company’s goals, too.” holds awards for the packag- hygiene, and service “While şalgam was a re- ing of several of its bottles, as its principles, has gional drink in our country, values appearance and become a brand known today it has become a na- marketing just as much as it and sought in all of tional drink. While it is not does for its product. And if so well-known in the world it decides that the product it Turkey” for now, recent scientific manufactures is unpalatable, studies concerning this bev- the product is not released to erage’s benefits for human market. health and the increase in conscious consumption give CONTRACT MANUFACTURING signs for the future that this FOR RETAIL CHAINS 3.5 product will become a world million TRY Doğanay Food also supplies beverage. In vinegar, while large chains by contract 2011 exports lower-weight products are manufacturing of its prod- consumed more often world- ucts. Among the companies wide, in our country one with which it has worked are can speak of consumption such brands as Bim, Migros, 2.75 in greater weight especially Tansaş, Carrefour, Metro, million TRY in the pickling season,” says Kipa, Real, and Kiler. The Exports in first six Doğanay, pointing out the company also possesses a months of 2012 size of the market in Turkey Turkey-wide distribution as he also lays bare his trust network. 60 in its future. million TRY Employing 200 people at its factory in the Adana 2012 revenue Organized Industrial Zone, target Doğanay Food also hires seasonal workers for its agricultural plots 68 The Turkish Perspective

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

September 06–09 9th international civil aviation and airports exhibition istanbul atatürk airport general aviation apron

AIREX 2012 Airex, the most prominent aviation exhibition of the region that extends from Eastern Europe to the Turkic republics of Central Asia and from northeast Africa to the Middle East, has now evolved into the “Istanbul Airshow,” a higher- stage global aviation platform. Airex Istanbul is the only show in the world where customers are taken to demonstration flights directly from their allocated stands. From operators to service providers and customers, Airex Istanbul is definitely the most effective business aviation convention point in the region.

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01 02 03 04 Bijoux Expo Turkey 4th International Bijouterie, Fashion, and Accessories Fair 05 Istanbul Expo Center September 13–16 06 Following the great success of the third occurrence of the fair, 07 in which 145 local and 10 foreign brands participated, the Bijoux Expo Turkey fair, drawing heavy attention from foreign 08 buyers and big companies that want to open turnkey locations in Turkey especially due to the great interest in Turkish and 09 Ottoman-inspired creations abroad, is preparing to welcome 1,500 foreign professional buyers from all over the world and 15,000 local professionals. Participants in Bijoux Expo Turkey Züchex 10 will promote their meticulously created 2012 collections of Tüyap, Istanbul jewelry and accessories to visitors via various shows. September 5–9 11 The 23rd ZÜCHEX Housewares, Gifts, and Electrical 12 Appliances Fair and the Ideal Home Fair not only increase Collection Première Istanbul domestic trade figures, but they also fuel growth Turkey’s 13 Istanbul Expo Center exports thanks to companies that have the opportunity to September 22-24 Eurocorr 2012 meet with and gain new international customers during the 14 Sheraton Istanbul Maslak fair, constituting an important value add for the country’s Collection Première Hotel economy. Glassware; steel kitchenware; plastic, porcelain, Istanbul (CPI), Turkey’s September 9–13 and ceramic items; various gift items; small home 15 largest ready-to-wear appliances; nonstick kitchen utensils; silver-coated gift clothing and fashion fair, Corrosion of all types as items and decorative products, and new technologies are 16 is being held with the well as all the problems presented in stunning variety to viewers at the fair. support of the Istanbul of the industry will 17 Textile and Apparel be discussed at the Exporters’ Association. EUROCORR Congress, World Food Istanbul 18 CPI will be bringing all held in Istanbul this year with the CNR Expo, Istanbul actors in the industry 19 from fashion brands to organization of the September 6–9 designers, big buying Turkish Corrosion WorldFood Istanbul, the biggest fair in Turkey in its field, will 20 delegations, and names Association. Corrosion bring together the industry’s giants and present to visiting from the international scientists, industrialists, professionals the developments, innovations, and opportunities 21 fashion scene together at engineers, and in the industry. The 20th Gida WorldFood Istanbul CNR Expo. researchers. International Food Products and Processing Technologies 22 Exhibition will be held September 6–9 at CNR Expo. 23 31st International Istanbul Boat Show Marinturk Istanbul City Port Paint Istanbul - Paint Industry and Auxiliary Materials Congress and Fair 24 September 29–October 7 CNR Expo, Istanbul The Istanbul Boat Show is featuring 300 companies and 650 September 13–15 25 globally famous brands on a 150,000-square-meter total area. Bridging the emerging markets of the Middle East, CIS, and 26 Presented by the show are boat brands being displayed for the Balkan countries with the highly industrialized and developed first time ever in Turkey, exceptional megayacht-sized designs, a countries of Western Europe, Turkey offers rich array of boat equipment and accessories, and water sports great opportunities for paint producers as 27 activities. well as raw material and service suppliers. The festival-like event is based on bringing 28 together the prominent representatives and decision makers of paint and ink, raw material 29 suppliers, researchers, universities and related academic institutes, equipment manufacturers, 30 packaging, and logistics and insurance companies on an international platform. 31 70

Figures EXPORTS

The Turkish Exporters Assembly completed its study on the 1,000 companies that export most. The top 1,000 exporting companies, 181 of which entered the list for the first time ever, accounted for 64.8% of total exports in 2011. TIM aims to encourage exports across Anatolia and increase the number of provinces that have surpassed the threshold of $1 billion in export value. Exports are of great importance for Turkey as part of a stable growth strategy

MONTHLY EXPORT FIGURES AND GROWTH RATES After its exports shot up to $135 billion in 2011, Turkey is again able to raise the bar this year thanks to its stable growth. Interim data for 2012, viewed in light of the corresponding period in 2011, presents a positive outlook MILLION $ 10.374 11.777 13.251 12.676 13.168 11.840 8.6% 17.1% 12.2% 6.8% 20.3% 3.6%

january FEBRuary MARCH APRIL MAY JUNE

9,482 10,060 11,851 11,873 10,943 11,430

2011 2012 GROWTH 2012

SHARE OF TOP 1,000 EXPORTERS IN TOTAL EXPORTS SHARE IN EXPORTS The top 1,000 exporters accounted for 64.8% by value of The top 500 exporters accounted total exports in 2011 for 85.6% of the top 1,000 exporters’ $87.2 billion total exports % 70.8 70 68.3 62.2 64.7 64.8 60 14.4% 50 40 30 $87.2 BILLION 20 10 85.6% 0 2007 2008 2009 2010 2011 UPPER 500 LOWER 500

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EXPORT DISTRIBUTION BY INDUSTRY R&D CENTER OWNERSHIP The vehicles and parts & components industry accounted for 20,3% of the RATES top 1,000 exporters’ exports, while steel had a share of 15% In 2011, 24.2% of the top 1,000 % exporter companies operated VEHICLES R&D centers STEEL CHEMICALS CLOTHING ELECTRICAL & ELECTRONIC 30.7% TEXTILES GRAIN FE. & NON-FE METALS HVAC MINERALS & METALS 60.3% OTHER 0 5 10 15 20 average no. of blue- and white-collar company employees UPPER 500 LOWER 500 In 2011, the average number of employees in the top 500 companies was 693. In companies with 500–999 employees, 687 were blue collar AVERAGE NO. of R&D and 163 were white collar WORKERS 2139 The average number of R&D 1000+ workers in the top 1,000 exporter 711 companies in 2011 was 55.4 500-999 687 163 UPPER 500 64 PEOPLE 200-249 499 90 PEOPLE LOWER 500 100-199 143 41.4 54 PEOPLE 39 blue collar 1-99 18 white collar COMPANIES 55.4

DISTRIBUTION OF TOP 1,000 EXPORTERS BY PROVINCE With 475 exporters, Istanbul was the most successful province this year. Istanbul was followed by İzmir, Gaziantep, Kocaeli, and Bursa 500 475

400 2009 2010 300 2011

200

100 66 63 62 48 45 23 17 17 14 0 ISTANBUL İZMİR GAZİANTEP KOCAELİ BURSA ANKARA DENİZLİ HATAY ADANA MANİSA Data: TIM 72 Figures

NETHERLANDS BELGIUM 1,852,685 1,352,421 FRANCE 3,641,427 uk 4,470,165 ITALY USA 3,732,278 3,272,585 SPAIN 2,190,098 The 20 countries

algerıa to which Turkey 1,048,241 exports the most (1000$)

RUSsıa 3,777,097

germany ROMANIA 7,661,763 AZERBAIjAN-Nakhichevan 1,439,449 1,439,577

china ıraq IRAN 1,546,895 5.927,406 1,832,520 saudı arabıa 2,486,652 LIBYA EGYPT 1,215,866 2,224,192 ISRAEL UAE 1,411,033 1,848,297

Data: Emerging Trends in Real Estate Europe 2011

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