New incentive package to be presented to PM Erdoğan
A new incentive package that is expected to substantially help reduce Turkey’s current account deficit (CAD) is to be presented to Prime Minister Recep Tayyip Erdoğan for his review of its content and coverage on Wednesday, Economy Minister Zafer Çağlayan has said.
Speaking at the International Investors Association’s (YASED) general congress meeting Tuesday in İstanbul, Çağlayan said the package will be announced at a later date, when the PM sees fit. “We will bring this new incentive package to the agenda of the country by rapidly making the necessary arrangements. As we built this package we took advantage of highly important information and data. We have established a very strong foundation for it,” he added.
The Justice and Development Party (AK Party) government plan, announced last year, envisages offering incentives to increase production capacity and competition in six particular sectors — machine manufacturing, iron and steel production, the automotive sector, food production and agriculture, chemical production and textiles.
Feasibility studies have been under way since June 2011. Erdoğan’s government holds these six sectors most responsible for the country’s growing CAD. Despite much speculation, details of the new incentive package, however, have remained a mystery for all this time. Some government officials, including Çağlayan, have expressed highly optimistic views regarding the incentives to the press, with some even describing the incentives as an absolute cure for the CAD. This has increased expectations in the markets of an unprecedented incentive package.
Deputy Prime Minister Ali Babacan, however, had a more prudential tone regarding the upcoming incentives. He said on Feb.21 that the markets “should not pin all hopes” for a better-than-expected economic boost on them, in what was seen as an early warning to prevent possible disappointment among business circles. “We have to be realistic … It is not true that the upcoming package will include incentives for all sectors; they are designed to address the CAD, but we cannot say they will eliminate this problem,” he explained.
The package will mainly try to attract investments to sectors defined as “strategic” by Çağlayan, where Turkey is heavily relying on imports rather than domestic production. The aim is to cut imports as much as possible, to a level that would pose less risk to the country’s balance of payments.
Çağlayan on Tuesday also emphasized that it will be understood that the new package is “so different” from old incentive packages.
“At one point, this [incentive package] was [just] my dream. This will be an incentive system that makes use of Turkey’s current and future capabilities. As a result, Turkey will become a center of attraction for national and foreign investments,” he said.One novelty to be brought into Turkish business life as well as the forthcoming package is the establishment of what are called Special Economic Zones. “With those zones, we will make investing in Turkey more enticing in the fields of healthcare, education, software production and entertainment,” said Çağlayan, adding that the matter will for the last time be reviewed at the government’s Economy Coordination Board, which is headed by Babacan, and then be voted on in Parliament.
SOURCE: TODAY’S ZAMAN, İSTANBUL