The Chairman's Speech at the Assembly / 27 June 2007
Mr. Chairman, Esteemed members of the Assembly, and of the Press:
On behalf of the Board of Directors I would like to welcome all of you to our June
Assembly meeting.
We have a very important guest, or more correctly, important guests, with us today.
First of all, I would like to welcome Mr Ryfat Hisarcıklıoğlu, President of the
Union of Chambers and Stock Exchanges of Turkey (TOBB). Welcome, Mr. President!
It gives us great pleasure to have you with us at our Assembly. And, together with
Mr. Hisarcıklıoğlu, we would also like to welcome our esteemed guests, Mr. Güven
Sak, the Assistant Rector of TOBB University and Director of TEPAV, Mr. Süreyya
Serdengeçti, the former Chairman of the Central Bank of Turkey, Mr. Kenan Malatyaly,
Chairman of the Turkish Bureau of Standards, and Mr. Arif Parmaksyz, Chairman of
the Nev?ehir Chamber of Commerce and Industry and Deputy Chairman of the Turkish
Bureau of Standards. It gives us great pleasure to have you with us today, gentlemen.
Mr. Chairman,
Esteemed members of the Assembly,
Mr. President of TOBB,
Distinguished guests:
We are about to put the first half of 2007 behind us. At this month?s meeting we
will therefore be taking a look at developments in the first half of the year and
what needs to be done in the second half.
But I would like to keep my talk today brief, because the President of the Union
of Chambers and Stock Exchanges of Turkey is going to make a comprehensive assessment
of the situation with regard to the top item on our agenda. Meanwhile I, as Chairman
of the Istanbul Chamber of Industry, will attempt to outline our own approach to
the subject.
Esteemed members of the Assembly:
When we look at the first half of the year from the standpoint of the economy, we
see that the exchange rates have continued a downward trend under the floating exchange
regime, that interest rates have maintained their high level, and that funds are
continuing to flow into Turkey.
In an encouraging development, imports rose more slowly than exports for the first
time in a long time during the first four months of 2007. While exports were up
by 25.3% during that period, imports rose by 15.9%. In another encouraging development,
again in the first fourth months of the year, the current account deficit showed
a decline, albeit slight, of 3% on the same period in 2006. As for industrial production,
following growth rates of 14.9% in January and 7.3% in February, growth fell to
3.2% in March and 1.4% in April.
This decline in industrial production in the last two months is distressing. We
hope that it is only temporary.
In short, we see that the economy in the first half of 2007 exhibited a structure
little different from that of previous years. In other words, gains on the one hand,
combined with serious fragility and shortcomings on the other.
Esteemed members of the Assembly,
Distinguished guests:
As we have always said, it is indisputable that important gains have been made in
the sense of macro economic stability, mainly in budget performance, the volume
of public debt and the fight against inflation, in the last five years. However,
the micro dimension of the economy, the enterprises front, has received very little
attention, indeed has been virtually ignored. Nor has any distance been covered
towards solving the basic problems concerning Turkey?s competitiveness.
In the period ahead Turkey is therefore compelled to maintain fiscal discipline
and combat inflation, because, compared with the past, even if we have covered important
ground, Turkey still is the country with the highest rate of inflation in the entire
OECD.
It should not be forgotten, however, that while macro economic stability is a basic
condition for sustainable growth, in itself it is not sufficient. Growth cannot
be made sustainable without removing the micro-level obstacles.
Attention from now on should therefore be focused on the micro dimension as much
as on the macro dimensions of the economy. In the urgency that characterized the
post-2001 period, the existing economic program was designed in such a way as to
give priority to the monetary and fiscal aspects of the economy. The program did
its job and succeeded in bringing the fire under control. In our view the program
accomplished its mission. From here on out a new phase needs to start in the economy.
The program for the new period should focus on the areas that have been neglected
in the economy, without of course jeopardizing the existing macro economic gains.
The economic program in the new period should be based on investment, production,
exports, jobs and competitiveness. These are the areas to which priority should
be given.
In the last five years Turkey succeeded in growing uninterruptedly at an average
rate of 7.5% a year.
This is, of course, very impressive. But while the country was growing economically,
unfortunately not enough jobs were created, and there were serious problems regarding
competitiveness as well.
Therefore, in the period ahead, as well as in GNP, increases in investment, production,
exports, jobs and competitiveness should also be targeted. All these areas should
be considered in tandem. Economic policies should be designed and implemented in
such a way as not to pave the way to success in one area and loss in another. At
the same time, however, it is essential that the foreign trade deficit and the current
account deficit be brought down to more tolerable levels.
The moderate economic trend that has emerged under global liquidity conditions in
the past five years has ensured that the current account deficit was financed without
any problem. But balancing on the edge of a knife with your fate dependent on global
developments is not sustainable in the long run. To be able to solve our problems
we therefore have both to expand our production capacity and to produce in such
a way as to generate more value added and more funds!
We frequently bring to the agenda the fall in profitability that was revealed by
our survey of the top 500 industrial enterprises. In order to solve these problems,
we are compelled to expand our production capacity, as well as producing in such
a way as to generate more value added and more funds.
The candidates for political office are obligated to create an economic climate
conducive to the realization of this goal. One thing you can be sure of is that
a country that is unable to boost its competitiveness will be unable to generate
adequate savings, and therefore unable to create enough jobs! Unable to make investments!
Unable to solve its social problems!
Furthermore, it should not be forgotten that in a country that is unable to produce
adequately, democracy won?t be able to take root either, or to function in the full
sense! Nor will civil society be able to develop! In a country with limited production
power, the state will be unable to collect sufficient taxes! Turkey is compelled
to boost her investments, her production, her exports, her jobs and her competitiveness!
For Turkey is not a country rich in energy sources and mineral beds.
Turkey?s only chance of realizing the economic initiative she so badly needs is
to produce more, more and yet more! And, with its tradition of production, its youthful
population and its enterprising businessmen, our country does have the a strong
potential for production. Exploiting that potential is our historic responsibility!
The government that comes to power after the election must be aware of this and
pursue policies accordingly.
At the same time, however, globalization is an incontrovertible fact. It is unthinkable
now that a country could remain closed off to the world and still grow. Turkey too
is a part of the global system, integrated with the global economy. This integration,
however, should not be perceived as some sort of submission.
Assuming we can do nothing in the face of crushing global dynamics is an unacceptable
attitude to take. We must not fall prey to defeat, submission, or fanatical and
radical rejection.
Through cool-headed and rational policies, we can protect our interests by implementing
our own medium and long term programs. We can take advantage of the opportunities
offered by globalization and thereby reduce its threats. The problem is to be able
to see those opportunities! The post-election government will bear a great responsibility
in this sense.
Another important matter is Turkey-European Union relations, which, in the current
situation, appear to have entered into a difficult period. But Turkey must not lose
sight of its European Union perspective!
In order to continue supporting the process, however, there is a need to eliminate
the doubts and lack of confidence in the EU that characterize Turkish public opinion.
And for this it is essential that both sides make an effort! The government that
comes to power after the election must adopt a European Union perspective through
an approach and a program that give priority to eliminating the existing skepticism
and lack of confidence.
Esteemed members of the Assembly:
I have tried in a general sense to convey our message regarding the period ahead.
I am sure that the President of the Union of Chambers and Stock Exchanges of Turkey
is going to outline the views and expectations of the Turkish private sector in
the most open and detailed way possible, as is his wont. And we shall give him our
undivided attention and interest.
I would like to close now and salute you all once again on behalf of the Istanbul
Chamber of Industry.
C. Tanıl KÜÇÜK
Istanbul Chamber of Industry
Chairman of the Board of Directors