TOBB President M. Rifat Hisarcıklıoğlu was the live guest of the Bloomberg HT channel and answered Kerem Alkin’s questions.​


Union of Chambers and Commodity Exchanges of Turkey

Turkey is a role model for European economies

28.09.2011 / Sakarya

TOBB President M. Rifat Hisarcıklıoğlu was the live guest of the Bloomberg HT channel and answered Kerem Alkin’s questions.​


Assessing the world economy, TOBB President Hisarcıklıoğlu said, “When we look to see where the world’s economy is headed, it is evident that we have not had such a time as fraught with risk as now in our lifetimes. We have entered perhaps the most troubled times in our lifetimes. The European Chambers Union represents 120 million establishments. It represents 35% of the world’s economy. I hold office as the Deputy President and one of the most prominent subjects of discussion in the Board of Directors’ meetings is the global crisis as it affects the whole world.

We know that the global crisis which started in the second half of 2008 and the crises in America are still ongoing and we aren’t aware of its implications. When we view it as a global crisis we can see that the precautions taken in 2009 have not helped the situations in 2010 and 2011. This crisis, which started out as a crisis in the finances sector and turned into a public finances crisis, has actually happened to us previously on a lesser scale in 2001. This time however the scale is much larger. Back then Turkey was able to overcome this crisis via its own internal dynamics and production facilities. Unfortunately we face a much graver situation here and now.”

- “Turkey has considerate prestige”

Stating that Turkey has considerate prestige in the area of economics throughout the world, Hisarcıklıoğlu said “Everyone listens when Turkey speaks. There is a success story here. When you consider the first 6 months we have grown by 10.2%. This is an unattainable number for many countries that we started off with. A 2% growth would noticeably help any economy in Europe.”

- “The USA and European economies’ problems are different”

Emphasizing that the crisis has started off as a financial crisis, the TOBB President said, “Afterwards, due to public debts and the mismanagement of public budgets the situation became a national issue. The problem of growth and unemployment is still growing today, especially in the USA. The problems of the USA and the EU are quite different. The USA has recognized that solutions will not be forthcoming any time soon. The economy is unable to recover, employment is not increasing. The unemployment figures are too high. In the last month about 200,000 people have become unemployed. These numbers are very grave.

- “Europe lacks leadership”

Stating that European and American economies are tightly connected, Hisarcıklıoğlu said, “When they are so closely linked we see a raise in debt ceiling resulting in political conflicts at councils and, as we have seen before in Turkey, an economy lost and aimless. The most important problem in Europe is that there is a crisis of leadership. A leader capable of navigating the situation has not come forward from the 27 countries that make up Europe. This slows down the decision making process. There is a fire and the first thing to do is to call the fire brigade. When you lack a leader, the call is never made. By the time you get down to consulting what should be regarding the situation, the fire keeps spreading. The biggest problem is Greece.

Crisis in Greece has rendered production dead. The public budget is unable to be managed with the aid previously received as the aid is 140% of the gross national product. One of the precautions to take is laying off of 200,000 public servants. Of course, this presents a social issue.

If the Greek Prime Minister follows the suggestions made by other European countries and the IMF there will be hope for the recovery of the Greek economy but this would also mean political suicide.

The difficult decision is to choose between the salvation of Greece and the political preservation of self. This decision must be made carefully by the Greek government. The government was handed this situation and there’s nothing to do. The snowball effect has grown and come to a point where it cannot be stopped or turned.

If Greece is allowed to go bankrupt then Portugal, Ireland followed by Italy and Spain will also suffer. The problem of these 5 countries together is the sum of 2 trillion dollars. To whom do they owe this money? France is owed 911 billion dollars, Germany 704 billion dollars and Britain 418 billion dollars. It is impossible for them to carry this burden. The complete bankruptcy of Europe may be imminent. This would affect the whole world immensely.”

- “Europe is our market”

“From our perspective, Europe, where we conduct 57-58% of our foreign trade, is our market,” stated the TOBB President and went on, “This market has shrunk by 700 billion dollars in the last year. Europe has lost as much as the whole of Turkey’s economy.

This is a very large figure for us as that is our market. We sell our goods there and if that market shrinks and gets poorer then our ability market our goods there decreases. This will in turn cause problems for our sectors that rely heavily on exporting. We must observe the European economy closely.

Hopefully actions will be made rationally to avoid entering such a crisis and precautions be implemented as soon as possible and render the European economy traversable again.

We have become so completely interconnected that even though we are greatly inconvenienced by the bond we cannot view this as release or relief for us. We have urged them to fix their economies. Mr. Babacan even visited Greece at the start of the crisis to offer to share our experience with them.”

- “Turkey is a role model for European economies”

Turkey has become a role model not only for İslam countries but also for European economies, stated Hisarcıklıoğlu and went on, “Turkey’s economic structure is sound, our banks are strong, and our public finances are strong. When we look to either side we see crises all around us and aimlessness. Turkey seems to be an island of stability in a sea of turmoil. This has brought us an excellent opportunity.

We have a 2023 goal; to be one of the top 10 economies in the world. If we can take advantage of this opportunity then we have a chance to reach that goal.

We must preserve our unity and solidarity. Whenever Turkey is about to take off, internal strife holds it down.

We will not allow this to happen. Especially, I, as TOBB President, am connected to 365 chambers and exchanges; I am in 81 provinces and in 160 counties. We are organized in the southeast, east, north, south and everywhere. I have met with all chamber and exchange presidents numerous times until last month. We will definitely not allow this to happen. We will leave no possibility of conflict among brothers. We are determined on this issue.”

TOBB President Hisarcıklıoğlu stated that there is one thing that must be carefully approached in the coming times, “Our economy is now the 17th largest in the world and according to information from the first 6 months of the year, we are the world champion with a growth of 10.2%. This is an extraordinary achievement. The Turkish private sector is writing a success story with a contribution of over 90% to the 10.2% growth.

The Turkish private sector’s total investment in to first 6 months is 50 billion dollars. Every single dollar means the decrease of unemployment in Turkey. Turkey needs to find employment for 700,000 of its youth every year. The Turkish private sector has made investments totaling 50 billion dollars while also achieving 10.2% growth. Unemployment figures in the world are rising while Turkey’s decreases. Why? Because the economy is growing. What do we need to do to find jobs for 700,000 people? It’s simple. Today, we are the 65th country in terms of ease of establishing a business according to World Bank research. There’s something amiss here. 17th largest economy in the world, world record in growth during the first 6 months of 2011 but 65th in the ease of establishing business index. Our entrepreneurs really do work magic.

- “The greatest obstacle to business is the system in Turkey”

Talking about the problematic system in Turkey, Hisarcıklıoğlu said, “There is no fault with people. If you look for faults with people then that means you are not considering the matter fully. Is there fault with the working of the system? Then you must first investigate the system. Unfortunately the system in Turkey is the greatest obstacle to doing business right now. For this reason, we must reconstruct the system.

We must reconstruct the system as it is no longer possible to make repairs here and there while keeping it functioning. Despite this system our private sector manages to achieve such success. But what do we need to do? It is the implementation of a new constitution, which is backed by 92% of chambers and commodity exchanges. In order to redesign the system you need to start from the ground up. The reconstruction of Turkey is through a new constitution.”

Stating that the new constitution must be reached through social agreement, TOBB President said, “Everyone – political parties, NGOs and the whole of society – wants a new constitution. All parties in the Grand Assembly have promised this before the elections. There something to be said by everyone if there is to be total social agreement regarding the new constitution. We must listen carefully to what is said. We must agree on the principles of the majority. We must plan Turkey’s future carefully without bickering on political arguments.

Today, no one can hold Turkey back. 30 years ago when the late Özal was told that it was just a dream, he replied that they could not imagine the things he dreamed. We have surpassed everything he dreamt of and acted upon. Where we used to get 300,000 tourists before and Özal said we would get 10 million they told him he was dreaming. Now, we get 30 million. Is there potential? Yes, Muğla province has a coastline of 1141 km. Do you know how much Spain has? 840 km. Muğla makes a Spain and a half.

We can take more. We are ahead of everyone with our quality, standards, service standards and hotel quality.”

- “We must be increasing the quality of democracy”

Stating that we must start building from the ground up, Hisarcıklıoğlu said “Turkey has agreed on the need for a new constitution. Our expectation from the parliament in coming term is that a sound foundation is laid down and be realized in the coming term. This is because the quality of democracy directly influences economy. If you want to be a strong economy the quality of democracy is vital. The level of prosperity of the people is very important.

In conjunction, we must enact tax reforms, employment reforms and legislative reforms in the coming term to prevent off the record economy. The judicial system reform is very important. It is very important that the working of the judicial system be rapid and just. Today, the judicial system, especially regarding commerce, the most basic process takes 2 years to finalize.”

- “There can be no growth or development without risk”

Stating that another important issue is the management of the public administration, Hisarcıklıoğlu stressed the importance of a public administration reform. “We need to be implementing a legislative framework where public administrators are able to take risks. Today’s system discourages risk taking in public administration. As this is the case the solution to all our problems lies with public administration. Where will we solve our problems? In public administration. The public administration system tells the administrators to not take risks. Then who will? There can be no growth or development without risk. Today, in commerce, you have to take risks if you want to be successful. The structure of the public administration is very important in this framework. 50% of our population is under 28 years of age. We must enact an education reform to prepare this youth to grasp the nature of the real world. It must approach everyone on equal footing. We must not raise quality and standards to the top instead of to the masses but we must raise the quality and standards of the masses to the top. For years we have taught English in our schools. How many children graduated from these schools can actually speak English? They can’t. This means there is something wrong with our education system.

Another important point is that Turkey must enact a vocational training reform to provide a springboard. Vocational training is one of the starting points. When we observe developed countries we see that vocational training rates are around 70%.

Germany, for example, is at 70%. We are at 35%. We are at 50% of that.”

- “The encouragement system needs to be redesigned”

Pointing out the importance of redesigning the encouragement system in the upcoming term, Hisarcıklıoğlu said, “The redesigning of the encouragement system must be a priority for Turkey in the upcoming term. The most important priority, the duty of the private sector, is to take precautionary measures to increase productivity. If Turkey can increase the productivity of its current workforce to that of Germany without even adding anything else, it can become the 17th largest economy. We have a great opportunity in this, we must improve our productivity.

- “Those who cannot invent get left behind”

Hisarcıklıoğlu stated, “Today, those who cannot invent get left behind in the race. We must educate our children to bring about inventions. Our universities and industry are very important in this regard. We must support inventors. We cannot prosper without inventions.

You buy a 60 gr. cell phone and sell 10 tons of sheet metal in return. You can’t compete against something like that. How much investment is required to produce that 60 gr. cell phone? 500 million dollars. How much investment is required to produce 10 tons of sheet metal? At least 2 billion dollars. There is a vast difference in investment between the two. The income from the investment on the 60 gr. cell phone is more than that of 10 tons of sheet metal. This means we need to focus on high technology. The design of the encouragement mechanism must be geared toward this.”

- “We must expand to new markets”

Stating the advent of new markets in the world, Hisarcıklıoğlu said, “Today, the population of the middle class in Asian countries is 2 billion while it was 500 million 10 years ago. To our east, China has population of over a billion. They spend more than Europe. This means that there is more high expenditure population in 2 countries together greater than that of the whole European Union. We’ve always looked to China to buy but the truth is China is a very big importer.

After the USA, China is one of the largest importers in the world. There is a strong interest in middle class goods of foreign origin. China is the place where you will see the most BMW’s. But look closely and you’ll see that those who cannot afford the BMW instead produced knock-offs. China the place where you will see the most knock-off BMW’s.

This shows that there is interest in whatever goods labeled Made in Turkey or Made in whatever other country. We need to be expanding towards these markets. In fact there is a market we have never been to, South and Central America. Mexico is the world’s 14th largest economy in the world. It’s bigger than us. Per capita income is 14,000 dollars. They export a sum of 300 billion dollars and America is open to this country. Do we sell anything there? We don’t sell anything there, we’ve never been. We must turn our projections to Latin American and Central American countries. Europe is an old continent with an old economy with little movement as well as an old population. If we want to be one of the 10 largest economies in the world we must expand to new markets and I believe we will succeed.”

- We must encourage our young women to become entrepreneurs”

Emphasizing that half the population is women, Hisarcıklıoğlu said, “50% of the population is women. But when we look at entrepreneurship numbers, women are represented by only 6%. There is great potential here. In the upcoming term we must encourage our young women to become entrepreneurs; we must provide them with role models. As the Union of Chambers, this is what we are doing.

We, the Union of Chambers and Commodity Exchanges of Turkey, have established the Women’s Entrepreneurship Council. Afterwards, we established women entrepreneurship councils on our framework of chambers and commodity exchanges in 81 provinces. They are more excited and motivated than the men. Now we must support them and give them the opportunity to engage in enterprises.

Another untapped resource is our young entrepreneurs. 50% of Turkey’s population is below the age of 28. The future belongs to them. This is our greatest advantage and disadvantage in the future. If we educate and direct them well, Turkey will be in the top 10 and then a world leader. In this regard we must enable and support our youth and women to become entrepreneurs.

- “Those who have Turkish Lira incomes should convert their foreign currency debts to the TL right away”

Stating that, in the last 9 months, the TL’s loss against the euro has reached 29%, TOBB President said, “This has its advantages and disadvantages for our economy. The advantages are regarding those sectors which rely on exporting and tourism. On the other hand our industrial sector which imports intermediary industrial goods will see an increase in costs. This will cause inflation and price hikes.

Another aspect of it is that, today, Turkey imports almost all of its energy needs. The rise of the dollar from 1.40 to 1.70 has increased our energy costs by 12 billion TL. Rise in foreign currency and energy costs will reflect on our industrial sector.

The total debt of the Turkish private sector in both domestic and foreign financial and real sector is around 255 billion dollars. This 255 billion dollar debt is actually a large number in terms of currency risk. It will not affect those with a foreign currency income as much as it will those who have a TL income but foreign currency debts. Therefore my suggestion to the Turkish private sector is that those who have Turkish Lira incomes should convert their foreign currency debts to the TL right away to avoid the risk factor.

- “The Central Bank is acting correctly”

Stating that they support all of the Central Bank’s policies, Hisarcıklıoğlu said, “Mr. Başçı is at the helm at the head of the Central Bank and is confident. He is acting correctly. As the world’s economies collapse, how will you find employment for 700,000 people every year by raising interest rates to prohibit consumption domestically? How will we find employment for the 3 million unemployed today? Who will foot the social bill for this? It is easy to talk big but once you’re at the helm, the decisions you make will be immensely important. In this regard we fully support the decisions made by the Central Bank in recent times. We must keep growing especially if we are to reach our 2023 goal.

We must grow by 7% each year. You say you want to be one of the top 10 economies in the world. And how will this be achieved? Is it possible by increasing interest rates? It is not.”

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