Bahçıvan: “Support of Eximbank Is Vital for the New Economic Story”
The April ordinary meeting of the Istanbul Chamber of Industry (ICI) Assembly was held with the main agenda of “the Role and Importance of Financing in a New, Export and Industry-Focused Economy”. Chaired by Zeynep Bodur Okyay, President of the ICI Assembly, the event was also attended by Hayrettin Kaplan, Eximbank General Manager. Delivering a speech at the event, Erdal Bahçıvan, ICI Chairman, noted the impracticality of achieving economic growth targets with fiscal policy tools alone. Bahçıvan singled out the placement structure in the balance sheet of companies brought about by external debt as the most critical issue for the real sector, and said, “As shown by the ‘Top 500’ and the ‘Second Top 500 Industrial Enterprises of Turkey’ surveys we published last year, more than half of the total income of the industrial enterprises in Turkey is spent on interests.”
Zeynep Bodur Okyay, President of the ICI Assembly, mentioned the appreciation of the US dollar and the ongoing critical period affecting the economy, saying, “With the support from Türk Eximbank, we are trying to get two times two to equal eight. We are striving to write a new story for the industry. At ICI, we believe that it is possible to achieve an industry-focused transformation, which necessitates revising existing resource policies. We seek to increase domestic contribution to export.” Stressing the importance of Türk Eximbank for exporters to overcome financing difficulties, Okyay added that it was possible to repeat the success story of the 2000s, even in today’s challenging conditions.
Addressing global economic developments as well as the problems faced by industrialists and exporters, Erdal Bahçıvan called for Türk Eximbank to develop solutions for the current problems through a collaborative approach, saying:
“The increase in the support provided by Türk Eximbank to exporters, particularly after 2012, is a promising development for all of us.”
“Türk Eximbank’s assurance on funds generated through overseas sales as part of the “Export Credit Insurance Programs” is a significant development in terms of assisting our exporters to move into new markets, and maintain their existing ones.
In this context, we are witnessing a great demand by exporters for new initiatives aimed at diversifying these insurance solutions and expanding their scope and scale. In the coming period, we expect to see an increase in mid- and long-term insured transactions, as well as an overall growth in high value-added exports.
A significant aspect of Eximbank’s increasing significance in supporting the economy and our exporters is the organization’s initiatives aimed at establishing closer links with exporters. In this regard, I would like to commend, on behalf of Istanbul industrialists, the visionary decision of Eximbank to move its headquarters to Istanbul, the export hub of Turkey, in 2013.
As we express our gratitude, we also appreciate the bank’s reduction in the interest rate of foreign currency loans in the past few weeks, particularly regarding loans granted to SMEs, as an indicator of the bank’s commitment to alleviate the impact of the challenging cost conditions facing the exporters as a result of the recent fluctuations in foreign exchange rates. Meanwhile, as of last year, Eximbank has further enhanced the support it provided to exporters, by diversifying the credit facilities offered to foreign importers through contracted banks.
As a result, we hope that the contribution provided by Eximbank to the competitive power and value-creating capacity of Turkish industry and exporters would increase, qualitatively as well as quantitatively in the following period, as Eximbank continues to march steadily towards its goal of providing USD 80 billion in support for exporters by 2023.”
In his speech, Erdal Bahçıvan made the following suggestions to Türk Eximbank:
- The scope of medium-term loans for the export of capital goods should be expanded.
- Export loan programs for high-tech products, which are among the goals of Türk Eximbank, should be implemented. Companies that invest in foreign countries, export high-tech products and focus on R&D and product development should be supported to the maximum extent.
- Export of capital goods should be supported through special programs by granting 1-year-maturity seller’s credits for financing freight, logistics and storage costs.
- Short-term pre-shipment and post-shipment credit maturities should be maintained, with minimum interest rates (in compliance with WTO mandates), and credits should be granted for up to 95 percent of the amount covered by letters of guarantee.
- Exporters planning to conduct sales in foreign countries through their own brand and retail units should be granted export credits through 2-year-maturity credit packages. Credit facilities to be extended should be in line with the business stages laid down in the Turquality program.
- Buyer’s Credit insurances should be extended in the context of collaborations with select banks operating in nearby and neighboring markets, new markets, and markets with an ongoing/planned Free Trade Agreement.
- SME insurance premiums in seller’s credit insurances should be reduced.
- Export revenues generated from country programs involving nearby and neighboring markets and new markets should be insured against commercial and political risks.
- A collection system should be established in cooperation with the relevant international body to ensure collection of non-performing export receivables of exporters and foreign contractors.
In his speech, Hayrettin Kaplan, Eximbank General Manager, evaluated the outlook of global and Turkish economy. Kaplan noted that foreign exchange rates maintaining their current level would reduce exports by USD 12 billion and imports by USD 12.5 billion. Highlighting the impact of the global economic crisis on potential growth, Kaplan stated that the pre-crisis growth trends were yet to be achieved. Naming export as the primary driver of growth in 2014, Kaplan also stressed that the level of investment in Turkey remained behind other countries.
“Lack of investments limits the growth of industrial production. Turkey has stopped increasing its share in world exports, which depends on the efficiency of the country’s industry, which in turn is achieved by investments,” Kaplan said, noting that the recent increase in foreign exchange rates would benefit exports due to exporters gaining a competitive edge, but the effect would be limited to short-term, as the increase in exchange rates would increase costs through its effect on inflation.
Stating that the overall credit/insurance support provided by Türk Eximbank to the export sector had amounted to USD 31.1 billion in 2014, Türk Eximbank General Manager Kaplan provided a few examples of their newly developed products, which focused on rediscount credits, post-shipment rediscount credits, export-oriented investment and operation financing credits, brand credits, short-term domestic credit insurance and buyer’s insurance programs.