ICI Assembly Met With The Agenda of Direct Investments and Development

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meclis-mayis2015-02

The Assembly of Istanbul Chamber of Industry (ICI) held its ordinary meeting under the leadership of Zeynep Bodur Okyay, the ICI Assembly President, focusing on the agenda of “The Role and Importance of International Direct Investment, Branding, Logistics and Industrial Strategies for our Economy and Industry from the Perspective of Sustainable Development”.

ICI Board Chairman Erdal Bahçıvan, in his talk at the Assembly meeting where İlker Aycı, the World Association of Investment Promotion Agencies President and the THY Board Chairman was hosted as a guest speaker, said that the world now focuses on the quality of the growth rather than the growth itself. He continued: “Foreign direct investment (FDI) is critical for the quality growth process of emerging countries”.

The Assembly Meeting started with the address of Zeynep Bodur Okyay, the ICI Assembly President, who began her words by commemorating the 301 miners who dies in a tragic mining accident in Soma, one year ago. She then mentioned how happy she is that the work peace has been achieved as the strike in metal and automotive plants in Bursa, Eskişehir and Kocaeli were ended. Bodur Okyay, also wished for peaceful general elections on the 7th of June, and said: “After the 8th of June, we will have to leave the general elections behind and concentrate again on making a living”.

Underlining the slowing down in the global economy, Zeynep Bodur Okyay made the following explanation: “The share of R&D in Turkey’s GDP is around one percent. The origin of the FDI that Turkey attracts should be diversified. For these reasons, there’s yet a huge progress that Turkey should make. Hopefully, we will be able realize a new leap, a new transformation. At this stage, it’s critical for Turkey to follow global technology transfers and to produce technology”.   

Following Okyay, Erdal Bahçıvan the ICI Board Chairman, took stage and talked about the fact that information and technology-intense production approach is the reality of this century and that Turkey lacks local capital stock when it comes to information and technology-intense production. Bahçıvan continued his speech: “The most effective way to overcome this shortcoming and obstacle is to attract FDI. Increasing FDI flow to Turkey will positively contribute to closing the capital deficit to a large extent, replacing old technologies in production with the new ones, increasing production efficiency thanks to new technology and opening to new markets. As an emerging country in a world where global competition is getting fiercer, we need to mobilize our efforts towards this objective more than before”.   

ISO Chairman Bahçıvan emphasized that FDI is crucial in developing the economies of emerging countries and that such investments are the most important channels for technology transfer and that they play a leading role in developing technology and added value focused competitiveness within the country.

Furthermore, Bahçıvan stated that the FDI is an indicator of a country’s investment climate and that the risk appetite of foreign investors are high and long-term to the extent that the economic regulations, transparency, rule of law and bureaucracy are well-established and strong in that country. 

Bahçıvan went on reminding that foreign money resources such as short term portfolio investments and loan-deposit flows are highly fragile investment types in the face of financial markets’ volatility and that they are quite easy to withdraw during times of volatility.  He said: “On the other hand, as direct investments are mostly canalized to physical assets in the real sector, they are not that easy to withdraw, thus they tend to last for a longer period of time. For this reason, to determine how healthy the economic balances are in a country where there is current account deficit, one does not only measure the size of the deficit, but also the share of FDI used in the funding of that current deficit”.

Erdal Bahçıvan also shared some numbers highlighting that the net FDI inflow to Turkey fell down from 8.8 billion USD in 2013, to 5.5 billion USD in 2014 and that the biggest share of the FDI entering the country between 2002 and 2014 went to the finance and insurance sectors with a share of 36,9% and secondly to the manufacturing industry with a share of 22,3%.

Bahçıvan explained that apart from the FDI, branding is another important factor for a country to overcome the middle income trap and as Turkey, we have to pursue the right strategy and exert all our efforts to become a regional brand covering the geographies around us as well. Bahçıvan continued his words as follows:


ICI Chairman Erdal Bahçıvan

“When talking about the importance of branding, we have to support the branding of cities and companies as well. Istanbul, in recent years, has come a long way in becoming a brand city. The companies in Istanbul should also develop their brands and join in this endeavor of branding our country and cities.

I would like to get your attention on another related point which I deem crucial as well: Strong, sustainable, global brands help to significantly grow export revenues, economic dynamism and strength. It’s not that easy to create such strong brands that will ensure such economic boost. We should remember that branding is a planned, long term building process that requires a lot of patience. No brand has ever become a legend over night. Looking at many globally renowned brands   we see that they have a history of over one hundred years”.

The guest speaker of the ICI May Assembly meeting İlker Aycı began his words by saying that is was not an easy task to be an investor and an industrialist, and that he was delighted to address the Assembly of ICI, regarded as the castle of industrialism. Aycı reminded the time when he addressed the same Assembly when he was the President of the Prime Ministry Investment Support and Promotion Agency of Turkey and that this time he was proud to address the Assembly as the Chairman of THY.

Aycı, during his speech, talked about THY, growing through quality partnerships and becoming the third and 17th largest airline company, respectively in Europe and in the world. He shared some further details about THY, telling that THY carries 56 million passengers annually and aims to double this number by 2023. He continued his remarks: “Turkey’s vision of becoming a regional hub will be accelerated with the completion of the third airport. Both THY and other airline companies have been pressuring the Atatürk Airport to expand. In the last 12 years, THY grew by 15% while the global aviation industry grew only by 5%. THY currently flies to 267 destinations; this makes THY the number one airline company flying to the highest number of destinations. As of today, we fly to 110 countries”.


The World Association of
Investment Promotion Agencies
President THY Board Chairman
İlker Aycı

İlker Aycı, touching also the topic of FDI, explained how they focused on sectoral diversification of investments after he was appointed as the President of the Prime Ministry Investment Support and Promotion Agency of Tukey. Aycı told that they are working to increase the number of export, projects and investment towards the surrounding countries over which Turkey has a clear competitive advantage and that they were specifically focusing on the sectors where Turkey has a current deficit.  And thanks to these efforts, he continued, while 29% of the FDI in 2010 was on production and energy industries, this number went up to 50% in 2014 and especially the new initiatives towards Africa have progressed considerably. 

İlker Aycı, mentioning that Turkey was preoccupied with the upcoming elections in the last 18 months, stated that the investment movements will accelerate after the elections. Touching upon the importance of different financial instruments and funds, Aycı described how intensely they concentrated on these topic in the past aiming to decrease the funding cost. 

Aycı also talked about logistics, making the following comments: “There is, only recently, a transition happening in Turkey, a shift from transportation culture to logistics. If a Turkish manufacturer’s manufacturing cost is 100TL and he carries these goods to a market for 115 TL, while a Polish manufacturer carries the same value of goods to the same market for 110TL, it means that we had lost that market. We have to ensure logistics integration between raw material, manufacturing and the market. To this end, we have to develop a holistic logistics approach”.

İlker Aycı, later on answering the questions from ICI Assembly members, told that THY has currently 276 planes and aims to increase this number to 433 by 2020. He also told that they were waiting for the completion of the new airport and that they wanted to open to new markets such as Far East, America and Africa. Aycı stated that Atatürk Airport was not built for the purpose of transit passenger transportation, however today 44% of all passengers landing to the airport were indeed transit passengers. Aycı emphasized the fact that when Istanbul becomes a transit hub for air transportation, that will hugely contribute to both Istanbul’s and Turkey’s economy. 


President of the Prime Ministry
Investment Support and
Promotion Agency of Turkey
Arda Ermut

The new president of the Prime Ministry Investment Support and Promotion Agency of Turkey, Arda Ermut also delivered a speech. In his speech he first said that they worked together with İlker Aycı for four years and that Aycı’s contributions to the Agency were worth mentioning. Ermut told the audience that ICI’s awareness vis-à-vis FDI was impressive and the same awareness unfortunately was not present even in some public institutions. Ermut, reminding that the Prime Ministry Investment Support and Promotion Agency’s objective was not only to serve foreign investors, but Turkish investors as well, explained how they set up the relations between the investor and the state and how they spoke the language of investors.

ICI Chairman of the Board of Directors, Erdal Bahçıvan's Speech Text Attach