OBG talks to Mehmet Büyükekfli, Chairman, Turkish Exporters’ Assembly

 Mehmet Büyükekfli, Chairman, Turkish Exporters’ Assembly

Interview: Mehmet Büyükekfli

How was the government’s 2023 export strategy formulated, and what would you say to those who argue that its targets are unrealistic?

MEHMET BÜYÜKEKfiI: The global financial crisis of 2008 motivated Turkish policymakers to develop a long-term national strategy that could ensure sustainable export growth. In particular, we wanted to craft a plan that could continue to generate results even in the face of adverse external conditions. This plan is bearing fruit, as demonstrated by the fact that Turkey achieved an annual export growth rate of 18.5% in 2011 and 13.1% in 2012 despite the sovereign debt crisis in Europe, which stifled demand for Turkish products among many of our leading trading partners. To achieve the 2023 target – an export volume of $500bn and a national contribution to world trade of 1.5% – Turkey must maintain an average annual export growth rate of 13%.

The strategy itself was drafted by the assembly in close partnership with government ministries, central bank planners, private sector executives, business associations, non-governmental organisations and university researchers from around the globe. For example, we worked quite closely with Robert Kaplan from Harvard University, who helped us to apply his Balanced Scorecard organisational approach. In total, we solicited advice from over 1000 individuals and scheduled more than 100 meetings during the plan’s formulation. In addition, our research incorporated data and analysis from trustworthy international sources such as the World Bank and the International Monetary Fund.

In arriving at $500bn, we estimated how much each sector of the Turkish economy might contribute to the country’s annual export volume over the next 10 years. This allowed us to develop a fine-grained understanding of our national export potential, and set a number of industry-specific targets. For instance, we aim for the machinery sector to achieve an export volume of $100bn, followed by key industries such as automotive ($75bn), iron and steel ($55bn), confection ($52bn), and electronics ($45bn). Further, by 2023 we aim for Turkey to have more than 100,000 exporting businesses, up from 55,000 at present.

Finally, in drafting the plan we projected growth rates in population levels, import volumes, and GDP for all of Turkey’s leading trading partners. Ultimately, our calculations suggested that export growth totalling up to $545bn was achievable, which means the current target might in fact be too conservative.

How can Turkey begin to produce and export a higher volume of high-margin goods?

BÜYÜKEKfiI: When we conducted our research for the national strategy, we saw plainly that Turkey had not been exporting a sufficient quantity of high-technology products. Indeed, high-tech items still only account for approximately 4% of Turkish exports. In part, this state of affairs is the result of several decades’ worth of underinvestment in productive upgrading.

This is why Turkish policymakers have been actively promoting growth in high-margin industries such as the defence and aerospace sector, which recently established its first export union. Moving forward, other key value-added industries with great potential for growth in Turkey include nanotechnology, information and communications technology, pharmaceutical manufacturing, medical device manufacturing, food and beverage processing, and renewable energy.

We want these industries to be in the spotlight, and to drive the nation’s transition to a more value-added economy. In practice, this means a greater focus within our business community on design, branding and international marketing.

Moreover, this means greater investment in research and development (R&D). Currently, Turkey’s R&D expenditure is only 0.8% of GDP – a low number that the government hopes to increase to 3% by 2023. To achieve this target, new incentives have been established for businesses that engage in ambitious R&D programmes. For example, companies that hire more than 50 R&D workers will now receive generous tax exemptions.

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Mehmet Büyükekfli

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The Report: Turkey 2013

Industry & Retail chapter from The Report: Turkey 2013

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