Assembly Members of Aegean Chamber of Industry Participated in ICI February Assembly Meeting as Guest

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Istanbul Chamber of Industry (ICI) February ordinary Assembly meeting was held on 26 February 2020 in Fazıl Zobu Assembly Hall with the main agenda of “A View Through our Economy and Industry in the New Year: Appearance, Risks, Opportunities and the Importance of Corporate Cooperation”. Salih Esen, the Assembly President of Aegean Region Chamber of Industry (EBSO), Ender Yorgancılar, the President of the Board of Directors of EBSO and EBSO Assembly Members participated in the meeting chaired by Zeynep Bodur Okyay

Zeynep Bodur Okyay as guests and presented their comments regarding the agenda. Can Fuat Gürlesel, ICI Consultant made a presentation on the economical appearance.

Drawing attention that coronavirus which is a multidimensional threat will wear out the global economy in ICI February Assembly speech, Erdal Bahçıvan, President of the Board of Directors of Istanbul Chamber of Industry said that: “We don’t approve to turn a epidemic which has created a significant concern environment in the whole world into an advantage through a short time approach. It is obvious that the virus will cause problems before importing intermediate goods and investment products for our sectors such as automotive, machinery, chemistry, plastics, iron and steel, electricity and electronics which have close bounds with China.”

Erdal Bahçıvan, ICI President
Erdal Bahçıvan, ICI President

Bahçıvan continued: “Istanbul and Izmir should not only focus on culture and tourism. Industry and production culture of both cities should be developed. Sustainable cooperation to be established between ICI and Aegean Region Chamber of Industry will not only strengthen the competitive capacity Istanbul and Izmir but also that of Turkey.”

ICI October ordinary Assembly meeting was opened by ICI Assembly President Zeynep Bodur Okyay. While launching the meeting, Okyay briefly mentioned that:

ICI Assembly PresidentZeynep Bodur Okyay
ICI Assembly President
Zeynep Bodur Okyay

The turbulence which we had experienced in the previous period wore all actors in the economy, especially our industry. Even though the refreshment activities will take longer time in some sectors such as construction after an extraordinary turbulence, we started off a new path in a controlled way. I think we need policies which will increase trust in the economy in this period.

On the other hand, when we look at the trends in the global economy, we can easily see the steps which we should take in the following period. We entered into a medium technological production structure by leaving behind a limited production structure in 1990s. However, we have started to see that global value chain is coming to the forefront in the high-technological products in today’s world.

The share of the high technological and medium technological products within the world trade is around 60 percent. Our advanced technological product production rate is only around 3.2 percent. We have a long way to go in order to take the desired share out of the growing market in this field and to prevent the industrial life trend to be frozen in the industrialization phase.

Anyone and any sector varying from decision takers to actors operating in all sectors have an important obligation in this new period. So to say, in a period when anything which is solid is evaporating, it is of great importance for us to take steps in line with the cooperation and to proceed towards the target.”

Okyay, Chairperson of ICI Assembly invited Erdal Bahçıvan, President of ICI Board of Directors to the rostrum to present his speech. Bahçıvan, ICI President said that the increase in Iran, Syria and Libya-based geopolitical tensions has overshadowed the positive environment in the global market since the beginning of the year.

Drawing attention that the Coronavirus outbreak which emerged in China and then has spread all over the world led the world into an ambiguity, Bahçıvan stated that the health problems and human dimension caused by the virus are very threatening. Expressing that it is very difficult to predict the possible impacts of the epidemic on the global economy since the how long the epidemic will exist or in which scope it will spread are not known yet, Bahçıvan expressed that the it is obvious that virus will wear the global economy. Bahçıvan underlined that Coronavirus is a multidimensional threat.

Providing the information that according to the prediction of JP Morgan, the growth in China which is 6,4 percent in the first quarter of 2019 is expected to decrease to 4,9 percent in the first quarter of the year because of the Coronavirus epidemic, Bahçıvan said that according to the predictions of S&P, the growth in China will be affected negatively for 1 point in 2020.

Pointing out that the epidemic in China which is the world’s second biggest economy and one of the most important actors of global trade has a scale to affect the whole economic system with the supply chains, e-trade, transportation and tourism, Bahçıvan expressed that the current predictions point out that the cost of epidemic might be for 0,2 points on the global growth.

Underlying that as the virus has shown, the global economy is much more affected by the factors which are not related with economy such as geopolitical developments, foreign policy, natural events, health issues, so on., Bahçıvan stated that this situation makes difficult to make predictions for public and private sectors and limits the range of motion of economy policies especially monetary policies. Bahçıvan stated that the potential pressure on the policy makers to take precaution upon the determination of the economic impacts of Coronavirus outbreak makes the situation more complicated.

Bahçıvan said that while low growth rates and distorted expectations, global inequalities, unfairness in income, discrimination, feeling of exclusion and similar dynamics have affected the trust of societies towards the future in a negative way, they pointed out to a problem of finding the way in terms of global economic policies. Expressing that according to the data of Central Bank, short time debt for 168 billion dollars in 2020 should be converted, Bahçıvan recorded that: 

“When we add a current deficit for 20 billion dollars inferentially to this number, we can say that we need a financing for 188 billion dollars. It means that we will continue to be open for the fluctuations in the global risk appetite. At this point, do I need to say that it is still of crucial importance to maintain financial stability in 2020 for all of us?

As we mentioned before for many times, Turkey needs sustainable and quality growth. And this is possible by both being adapted to high value added production structure and also improving the investment environment. There is a slight movement in the investments at this point where we are standing today. However, it is still important to reduce the ambiguities, make the trust and stability permanent and improve the investment environment without any delay to set a permanent refreshment.”

Drawing attention that the world is under the threat of coronavirus, Bahçıvan stated that the possible impacts of this situation on the Turkish economy have been discussed. Expressing that even though it has been said that Turkey might be positively affected by this situation, the risks cannot be ignored, Bahçıvan said that it is obvious that the problems experienced it the supply chain because of the virus might bear other problems in the importing of intermediate goods and investment products of sectors such as automotive, machinery, chemistry, plastics, iron and steel, electricity and electronics which have close bonds with China. Bahçıvan continued:

“Istanbul Chamber of Industry and Aegean Region Chamber of Industry might take mutual steps in this issue with an understanding which puts forward the production understanding of the new era along with an integrated vision through their deep-rooted knowledge and experience. I would like to express that we find this unity which we show here and today very meaningful. The long term cooperation between Aegean Region Chamber of Industry Association and Istanbul Chamber of Industry Association is a good example for this.

Neither Istanbul nor Izmir should be regarded as the cities which focus on only the culture and tourism. Both cities should protect and develop the industry and production culture. The cities which create the highest value today direct the competition among the countries. Then, the result-oriented and sustainable cooperation to be established among ICI and Aegean Region Chamber of Industry will not only strengthen the competition capacity of Istanbul and Izmir but also that of Turkey.”

Salih Esen, EBSO Assembly President who made a speech at the opening of the meeting said that they are very happy to be together in Istanbul, which served as a capital city for the most long lasting empires of the world and one of the leading cities of the world for centuries through its historical background, cultural richness and commercial activities.

EBSO Assembly President Salih Esen
EBSO Assembly President
Salih Esen

Mentioning about the historical background of EBSO in this speech, Esen said that they have continued their activities with the first and sole regional chamber of industry identity since 1954 as EBSO. Stating that they provide service for approximately 5.000 members from 64 sectors, Esen expressed that they try to work through a shared wisdom with 132 assembly members and 328 professional committee members.

Hoping that they have gone through all challenges which 2020 will bring out have been experienced in this two month’s period, Esen recorded that they would like to focus mostly on production and exporting of higher quality during the last 10 months. Pointing out that the threat has not been left behind yet for the economy which is trying to be refreshed, Esen stated that there is a refreshment indication in the domestic market; however, the current risks are at the alarm level still.

Emphasizing that the costs are still very high for the industrialists, Esen stated that: “Each of us individually experiences it. For example, energy costs have reached to a level which cannot be afforded by both industrialists and consumers. Reducing it to the reasonable level is of high importance for competitive capacity. In addition to the security issues and economic and political issues, earthquakes, climate change and epidemics come to the forefront on the agenda and negatively affect the trade. An agenda which hosts such different risk factors requires to be and stay strong. Therefore, our unity and cooperation is of much more significance than ever. Along with this understanding, our sole target should be to reach to the level of contemporary civilizations pointed out by Mustafa Kemal Ataturk, the Great Leader.”

Underlying that they have important responsibilities as the real sector in the path to the great target, Esen mentioned about that they are well aware of their responsibilities for the young population in addition to the members and citizens.

Pointing out that a strong education system means a strong society and strong economy, Esen said that they establish each cooperation, they create each awareness and they take each step for our beloved country. Underlying that they are very proud to host Istanbul as the Honor Guest Province in the last year through the 88-year-lifetime of Izmir International Fair, the trademark of Izmir, Esen added that they find these two cities which are of great importance for Turkey to operate the cooperation and coordination culture for the subjects concerning the industrialists more frequently is of high benefit.

Ender Yorgancılar, President of EBSO Board of Directors presented his speech at the rostrum. Reminding that they hosted Istanbul Chamber of Industry in Izmir on 30 May 2011 and organized a common Assembly meeting, Yorgancılar said that they mentioned about their expectations with a common press release following the Assembly meeting. Yorgancılar recorded that they unfortunately observe that the most of the points in the release have maintained their existence after nine years.

EBSO President Ender Yorgancılar
EBSO President Ender Yorgancılar

Stating that apart from the challenges experienced in national and international scale in the last few years, you face with much more challenges if you are manufacturer, Yorgancılar said that: “Who can understand us better apart from each other? We are the sole country which has hold 7 elections in the last 5 years. In which country, which industrialists can continue to manufacture with determination under such circumstances? The challenges before the real sectors are not ended. However, we are well aware that either we manufacture and we will be free or we consume and we will be obligated.”

Drawing attention that they have played an effective role in several laws regarding the industrialists, especially the law of TOBB no. 5174 and issuance of the important regulations thanks to the cooperation which they have set between Chambers of Industry with Erdal Bahçıvan during the previous periods when he served as president and in the current period when he has been serving as the Council President of Chambers of Industry, Yorgancılar stated that they continue to use the power of acting in cooperation in common issues.

Listing the first 10 risks of 2020 as economical conflicts, political polarizations, extreme climate events, the devastation of natural ecosystem, cyber attacks, protectionism in trade, populist protests, Internet frauds, recession in big countries and uncontrollable fires according to the feedbacks of the participants of Davos Summit which has been organized for 50th times in this year, Yorgancılar stated that 3 of 10 risks are grouped as environmental, two each of 6 risks are grouped as economic, social and technological and 1 is grouped as geopolitical risks. Yorgancılar stated that direct impact of each reflects on the economy.

Emphasizing that the macro plans of the countries show that the firms which combines the effort with the smart steps should be supported more effectively, Yorgancılar told that more effective and functional supports which will gain speed in Turkey should be provided. Reminding that excellent support packages have been announced in the last two years especially, Yorgancı mentioned that the future cannot be built through short term perspective and tax collection rate of 2019 has been realized in the lowest level since 1970. Yorgancılar said that the reason behind this situation is tax configurations and reduction of the collection due to amnesty, which negatively impact the resources which will be transferred by public to the industry.

Yorgancılar announced that the first three expectation of the members from the Government are normalization in the foreign policy, activation and increase of production and export supports and recution of exchange risk according to the Economic Assessment Survey which they realize for twice in a year.

Providing information about Izmir, Yorgancılar said that: “Izmir meet the 7 percent of the national industrial production, 32.4 percent of industrial employment and 35 percent of the Regional industry. It is a strong industrial city with is 5.000 members, 14 OIS, 4 technology development areas, 2 free zones and 91 R&D centers. The foreign capital culture in Izmir has come a long way and the share of the number of firms which realize direct foreign capital investment in Turkey is 4,7 percent. 18 of such firms are operating in manufacturing industry and Izmir ranks as the first with this rate. Izmir has totally 18.2 billion dollars of foreign trade volume of which 10.7 billion dollars belong to exporting and 7.5 billion dollars belong to importing. And İzmir among the first three biggest cities is the city with a net exporter status. It has ranked as the second closely following Bursa within 55 net exporter cities totally. İzmir which is known as the city of the retired has embraced brain drain in the last few years and it has ranked as the first in this sense according to the figures. 80 percent of the total migration have high education degree. And the city from which it has the highest migration rate is Istanbul in general total.”

Economist Dr. Can Fuat GÜrlesel
Economist Dr. Can Fuat Gürlesel

Then Dr. Can Fuat Gürlesel, ICI Consultant made a presentation on the world and Turkish economy. Gürlesel said that they started 2020 through positive expectations, and the commercial agreement between USA and China and removal of Brexit ambiguity have contributed such expectations. However, upon the outbreak of coronavirus and figuring out that it has much higher impact capacity compared to the previous SARS and MERS, such positive expectations could not be held anymore. Saying that China realizes the one fifth of the world production and is the most significant supplier of the world, Gürlesel expressed that this situation will have an impact of three group of country. Gürlesel stated that Asian and Pacific countries have been directly impacted by the situation; however, the developed countries such as USA and Germany which export to China, and the countries such as Russia, Iran and Australia which export energy and good to China will be affected.

Expressing that the countries started to close their boundaries to each other due to the impact of the virus, Gürlesel announced that two scenarios are discussed in this sense. If the virus is disappears in April and May, the global growth rate will decrease to 2.4 from 2,6; however, if it continues to spread throughout the year, the growth rate will decrease to 1 percent and everyone should be prepared for the second scenario. 

Reminding that USA, EU and China made announcements on monetary expansion at the beginning of the year, Gürlesel recorded that coronavirus strengthened such expectations. Mentioning about the potential of new interest discounts, Gürlesel said that the expectation for dollars to maintain its value will continue during the year. Adding that reductions are experienced in the petrol and good prices because of the coronavirus, Gürlesel expressed that this is caused by the decrease in the demand. However, pointing out to a upside movement in food prices because of the food safety, Gürlesel told that this situation might affect the inflation in Turkey. 

Notifying that EU is being prepared to the carbon tax and it will be applied starting on the date of 1 January 2021, Gürlesel expressed that he will demand carbon footprint documentation such as CE from the firms from which they realize importing activities. Gürlesel underlined that the exporters in Turkey should make the sustainability agenda urgent.

Assessing that according to the projections conducted, the shrinkage of China’s e4conomy means the growth of Turkey and this caused by that both countries use very similar production and exporting pattern, Gürlesel mentioned that the world will take lessons out of positioning China as the sole alternative supplier in the medium term and will support different suppliers in 2020.

Mentioning about the developments experienced in the Turkish economy, Gürlesel reminded that the government planned 2018 as discipline, 2018 as discipline and balancing and 2020 as transformation and growth. Mentioning about the growth target of 5 percent in this year, Gürlesel recorded that they aim to obtain a growth based on special consumption expenditures and private sector investment expenditures. Announcing that there is a single tool within the hands of economy management and that tool is the monetary policy of the Central Bank, Gürlesel mentioned that they aim to increase consumption rate and expand the investments by decreasing the interest rates; however, there are several limitations and restrictions in this sense.

Following the presentation of Dr. Can Fuat Gürlesel, ICI Assembly Members and EBSO Assembly Members who took the rostrum shared their opinions on the agenda with the participants.