During the first part of his speech, Porter described the major premises of creating strategies and determining and developing a competitive approach and the role of leaders in the competitiveness of a company. He also shared his views on possible strategies that may be adopted during times of economic crisis. He devoted the second part of his speech to discussing Turkey’s economic strategies, including an in-depth analysis of the business world’s role in these strategies.

Porter later announced the results of a study conducted by the Harvard Business School and Turkcell on Turkey’s competitiveness in the global economy. The study found that the Turkish economy has competitive advantages such as a vast labor force, a high level of entrepreneurship, a rich and dynamic internal market, vast land and a favorable geographic location. Easy access to a range of global markets and better established institutions compared to other emerging economies are two other assets that give Turkey an edge, Porter noted.

He proposed that the Turkish private sector take the initiative in establishing national and regional competition councils. This will help the formation of a consensus on the economic strategy of the country as a whole, he argued. Porter also advised supporting efforts to create industrial clusters in different regions since the Turkish economy is already prone to organizing into such clusters. Porter also encouraged developing more sound coordination in economic relations with neighboring countries to fully exploit the potential that Turkey’s geographic location provides.
source: Today’s Zaman

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Disclosing the details of the new budget at a press conference on Saturday, Finance Minister Mehmet Şimşek said Turkey had prepared its budget while taking into consideration its own needs and the conditions arising from the economic crisis, underlining that talks with the IMF would “proceed on the premises set out in the budget.”

The size of the 2010 budget is TL 286.93 billion. It includes a 5.06 percent wage increase for civil servants, in two equal semiannual installments of 2.5 percent. With expected revenue of TL 236.8 billion, the deficit will be approximately TL 50 billion.

According to experts, Finance Ministry bureaucrats maintained caution while drafting the budget. The economic gloom in Turkey will persist next year, and the government will stick to its policy of fiscal discipline, they note.

The minister stated in his comments that the General Directorate for Budget and Finance remained committed to the primary target of leading Turkey out of the crisis while working on the budget.

“We will clench our teeth to maintain fiscal discipline,” he said, adding that the government is planning neither to introduce any new taxes nor abolish existing ones.

The draft budget states that public investments will amount to TL 22.3 billion, and energy will enjoy the lion’s share of total investment. The second most favored sector in terms of its share in investment will be transportation. The government is planning to allocate a total of TL 1.5 billion to these two areas.

The Finance Ministry used the policies and figures proposed in the middle-term financial plan as a basis while preparing the new budget. The directorate tasked with drafting the budget also took requests from all ministries and other state institutions into consideration when trying to balance revenue with expenditure.

Şimşek said officials estimated that gross domestic product (GDP) would be TL 1.03 trillion for the year ahead while crafting the budget. Their prediction for GDP growth was 3.5 percent. Ministry bureaucrats anticipate a consumer price index (CPI) of 5.3 percent, $108 billion worth of exports and $153 billion in imports. The minister described their predictions for these major macroeconomic indicators as “quite realistic.” The minister said the projected revenue was raised and expenditures lowered from what they were in the 2009 budget in an attempt to reduce the budget deficit.

In the revised budget for this year, expenditures are estimated to hit TL 266.75 billion and revenue TL 203.93 billion, which means a deficit of TL 62.82 billion. This is a large jump of TL 52.4 billion over the original expectation for the 2009 budget. Şimşek said TL 44.8 billion of this extra deficit stemmed from a sharp fall in revenue amid falling economic activity during the worst crisis since the Great Depression. Only TL 7.6 billion resulted from an increase in expenditures, he added. According to the draft budget, transfers to social security institutions will rise 7.3 percent over this year in 2010 and will reach TL 57.7 billion. The government will transfer TL 31.8 billion to the Social Security Institution (SGK) alone in terms of deficit financing.

The budget envisages allocating TL 8.4 billion to agriculture, and of this amount, TL 5.6 billion will be in subsidies.

The share of revenue coming from local administrations was raised by 17.6 percent to TL 19.1 billion. Including all transfers, the budget envisages allocating a total of TL 22.1 billion to local administrations next year.

According to the draft budget, TL 525 million will be spent on the Village Infrastructure Support Projects (KÖYDES). The allocation for the Scientific and Technological Research Council of Turkey (TÜBİTAK) saw an incremental rise to reach TL 625 million.

The minister vowed that the government would do everything necessary to protect low-income earners, with proper wage increases for civil servants, retirees and workers.

Like previous budgets, the 2010 budget allocates the largest share of funds to education, as the Education Ministry’s annual budget once again surpasses all others, including the projected amount for defense expenditures.

The Health Ministry’s budget was increased by 12 percent. A Health Ministry project that promotes primary health care and facilitates visits to family practitioners rather than state hospitals, currently being tried in several pilot districts, will be extended to cover all 81 provinces.

The state will exclude health expenditures from the main budget for the first time next year, with the exception of parliamentary deputies and their dependents, soldiers, indigents holding green cards and prisoners. Expenditures for treatment and drug expenses will be transferred to the SGK, and the state will allocate a certain amount of funding to the SGK every year. Next year health services for civil servants will also be handled by the SGK.

Scholarships for students will increase 13.8 percent, while the allocation for distributing free textbooks to students has been increased by 6.4 percent.
source: Today’s Zaman

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The Turkey division of the international research company GfK found in a market survey that nearly 450,000 less mobile phones were sold in the first six months of the year. In the January-June period of 2008, Turks purchased 5.46 million devices, whereas they bought slightly more than 5 million phones in the same period of this year.

The rate of decline was much more drastic in terms of turnover, however. The total earnings of mobile phone sellers amounted to 557 million euros, a 30 percent fall. According to the study, more models were introduced in the first six months of this year thanks to the entrance of new players into the Turkish market, especially from China. Companies vying to increase their share in the domestic market put forward 765 different models in the first six months of last year. However, this amount climbed to 1,119 in the same period of 2009.

Prices also saw a decline. Last year, the average price of mobile phones was 145 euros, a figure that has since dropped, retreating to 110 euros this year, but this improvement in price failed to significantly boost sales.

source: Today’s Zaman

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The three-day program will provide plenty of time for social networking, acquiring new contacts and discussing business with potential partners and clients.

Organized by the Turkish Embassy in London and the European Bank for Reconstruction and Development, the Turkish Investment Summit will provide an in-depth look into the global and domestic outlook for Turkey, including a spotlight on European Union accession.

Other topics discussed during the summit, which will also be attended by Turkish Finance Minister Mehmet Şimşek, are maximizing Turkey’s energy potential with a special focus on renewable energy sources, a review of Turkey’s best investment opportunities, an in-depth look at real estate; infrastructure; and banking, finance and private equity. A focus day on agriculture, food and beverage and retail grocery will also be included.

Varel Freeman, EBRD first vice president; Alpaslan Korkman, chairman of the Investment Support and Promotion Agency of Turkey; Tevfik Aksoy, an economist at Morgan Stanley in London and Bahadır Kaleağası, of Turkish Industrialists’ And Businessmen’s Association’s International Coordinator and EU Representative are also among the key speakers of the summit.
source: Hurriyet daily news

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The project underscores a “joint commitment to enhance energy security,” according to a statement issued by Eni on Monday. The pipeline will run between Samsun on Turkey’s Black Sea coast and the Mediterranean port of Ceyhan.

The accord was signed in Milan Tuesday by Turkey’s Energy Minister Taner Yıldız, Italy’s Economy Minister Claudio Scajola and Russia’s Deputy Prime Minister Igor Sechin and Energy Minister Sergei Shmatko.

Eni and Turkey’s Çalık Holding, which each own 50 percent, also signed a memorandum of understanding with Transneft and Rosneft on the participation of the Russian companies, according to the statement.

The 550-kilometer (342-mile) link, known as the Trans Anatolian Pipeline, will have a capacity of 1 million barrels a day, which may increase to 1.5 million barrels, according to Eni.
source: Hurriyet daily news

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EBRD is the first international finance corporation, among many others, to revise Turkey’s economic growth in a positive direction.

The bank had published a report estimating Turkey’s 2010 growth to be 1 percent. The bank has revised that outlook to 3 percent.

The economies of eastern and southern Europe including Turkey, will experience an economic contraction this year, however, signs of recovery will begin next year, said the EBRD.

Turkey’s economy will contract nearly 6 percent in 2009, however that contraction rate is still well above contraction expected in other countries in the region.

According to the EBRD, while southeastern European countries are experiencing a recession of 6.2 percent this year, the mean contraction will be 8.7 percent for eastern European countries.

Turkey will have the fastest growing economy in its region in 2010, said EBRD, with the average economic growth expected from the region is 0.7 percent. Turkey’s economic growth for that period was revised to 3 percent growth, which marks four-fold growth over the average.

Turkey’s robust banking industry will play a major role in the fast recovery, according to EBRD. The increase in the European Union’s demand and foreign trade with those countries will be a major motivator of 2010 recovery, according to the bank. Other factors will include increasing demand from EU member countries and increasing foreign trade figures. Meanwhile, unemployment will continue to be the top concern for Turkey and other countries in its region.

The EBRD also revealed plans to prioritize Turkey in regards to investments, with specific support aimed at the banking industry, the tourism sector, small- and medium-sized enterprises, media, infrastructure investments, energy, real estate, health, information technologies, agriculture and food.
source: Hurriyet daily news

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Becoming the third-largest insurance company, Groupama now aims to continue an ambitious investment plan with its Turkish branch. It announced last week the launch of “Groupama Sigorta” and “Groupama Emeklilik,” by merging Başak and Güven insurance companies. Groupama acquired Başak Sigorta and Başak Emeklilik in 2006 and Güven Sigorta and Güven Hayat in 2008.

“We joined two strong rooted companies’ forces by bringing local and international expertise together. With this merger, our clients will benefit from a strong service offering, an innovative product proposition and the strength of one of the leading international insurance companies, which already proved itself to more than 16 million customers all over the world,” said Jean-Francois Lemoux, international general manager of Groupama.

“Turkey, with its growth potential, has a strategic importance for Groupama, as it is a role model country within the group. The exciting dynamics of the market in Turkey is encouraging for us,” he said.

Targets of the group

Groupama will continue providing a competitive range of life and pension, household, liability, agricultural and motor products insurance, specially tailored to the needs of both retail and corporate customers, according to company statement. Groupama ranks second in life insurance and fifth in the non-life market with total revenues of 1.07 billion Turkish Liras (562 million euros), at the end of 2008. The new group will continue to be close to its 3 million customers with the support of more than 2,000 agents, 900 employees and partnerships all over Turkey.

The company aims to reach $1.5 billion in revenues and continues to have higher growth rates than the expanding insurance market in Turkey over the next three years.

To achieve these ambitious goals, Groupama is launching a new concept “Insurance+,” which is expected to be a milestone in the insurance market.

“We are not launching a campaign,” said Alain Baudry, Groupama Insurance general manager. “We are bringing an innovative and dynamic approach in order to provide maximum satisfaction and a strong commitment to our customers, enabling us to stay closer to them. We strongly believe that “Insurance+” will bring new dimensions to insurance in Turkey.”

“Insurance+” will cover car and household insurance services as a start. As an example, for car insurance, after the accident dossier is completed, the payment will be done within five days. If this is not the case, until the end of the year, Groupama will provide a one-year free insurance to the customer. New cars insured with Groupama will be covered with the new value of the car during three years in case of total pert and theft losses.

The new brand, Groupama, will be supported by a comprehensive campaign that will include advertising, public relations and corporate responsibility programs.

Turkey is the group’s third largest partnership in terms of turnover, reported Anatolia news agency, citing Lemoux. Regarding Güneş Sigorta, through which the group entered Turkey 18 years ago, he said: “We do not manage the company at present. If Vakıfbank decides to sell it one day, we are open to it.”

Groupama is present in 13 countries in Europe and Asia, including Italy, Spain, Britain, Portugal, Turkey, Greece, Hungary, Romania, Slovakia, Bulgaria, China and Vietnam.
source: Hurriyet daily news

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Strauss-Kahn, who is currently in İstanbul to attend the 2009 Annual Meetings of the World Bank Group and the International Monetary Fund, noted that he expected the Turkish economy to recover rapidly from the ongoing global economic crisis, saying that the Turkish economy has made great progress thanks to reforms previously implemented in the financial sector. As a member of the G-20, which forms the backbone of the global economy, he said, Turkey is not only one of the leading economies of the world, but also a dynamic member of the IMF.

According to the fund’s latest World Economic Outlook, released last week, Turkey’s economy is expected to grow 3.7 percent in 2010, after a global recession caused the country’s economy to contract an estimated 6.5 percent this year. The inflation rate in the country is expected to stand at 6.2 percent this year before increasing to 6.8 percent in 2010. The report estimated that Turkey’s current account deficit to gross domestic product (GDP) ratio would increase from 1.9 percent this year to 3.7 percent in 2010. Furthermore, Turkey’s quota in the IMF is expected to increase to more than 1 percent. Analysts note that the Turkish economy will be the fastest growing in Europe in 2010.

Speaking at a conference yesterday on the sidelines of the IMF-World Bank meetings, Professor Nouriel Roubini, a well-known economist, said macroeconomic and financial indicators show that the Turkish economy has been strong in the face of the crisis. He stated that a deal with the IMF would benefit Turkey in terms of the psychological influence it would have on investors and the market, even though there is no technical necessity for such a deal. Meanwhile multibillionaire investor George Soros stated that investments should continue in order to encourage recovery from the crisis.
source: Todays Zaman

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The collapse in European Union demand coupled with receding foreign capital inflows makes a standby agreement with the International Monetary Fund desirable for Turkey, according to New York University Professor Nouriel Roubini.

Roubini, who predicted the crippling financial crisis as early as 2006, told a crowded audience in Istanbul that a global recovery will probably be U-shaped – slow and with low growth rates for years. Speaking at an İş Investment-sponsored event Friday evening, the economist, dubbed “Dr. Doom,” said unprecedented central bank interventions helped mitigate the “systemic risk” to the world economy but that downside risks remain.

“The Turkish economy was fundamentally sound in the eve of the crisis,” he said. “But then the contagion came, resulting in a collapse in European Union demand [for Turkish goods]. The corporate sector halted capital expenditure investments. Turkey is a very open economy and its recovery depends on the recovery of the eurozone.”

Despite this, Turkey should continue macro-structural reforms and “go back to a sound fiscal framework,” Roubini said, adding that there might be some questions about whether the government’s recently announced medium-term economic program would be enough.

Under these circumstances, a deal with the IMF would be “positive for investor sentiment,” he said. “Technically, there is no need for such a deal. But it would signal that a robust policy is in place.”

The structural reforms Roubini advocated included reducing taxes, reigning in the unregistered economy, providing labor flexibility and reforming the social security system. “Your recovery demands on two things,” he said. “Sound domestic policy and good luck.”

Instead of just waiting for a eurozone recovery, Turkey should diversify its exports and head toward the markets in the Middle East, Central Asia and north Africa, Roubini added. “I am moderately optimistic on Turkey,” he said.

Shape of the recovery

Reflecting on the U.S. economy, the Istanbul-born economist predicted a U-shaped recovery. A double-dip recession, namely a W-shaped one, is “not my main scenario, but downside risks to that end remain,” he said. If the recovery would be “anemic,” the losses stemming from commercial real estate, credit cards, auto loans and student loans would be much higher than the $3.4 trillion predicted recently by the IMF, he said.

An exit from the current stimulus policy would be “very difficult,” as the massive rally in all asset classes since March clouds predictions, according to the renowned professor. “How much of this [rally] is driven by fundamentals and how much of it comes from [excessive] liquidity?” he asked, recalling that the fiscal easing by policy makers amounts to a massive $10 trillion. “Japan exited too soon in 1998 and had a double-dip recession.”

The current rally might end in a “correction,” he said. “Assuming a weak recovery, flow of macroeconomic news would be worse than expected. In U-shaped recoveries, surprises are negative rather than positive.”

Weak consumer demand

Recalling that official unemployment in the U.S. has reached 9.8 percent while real unemployment is at 16.8 percent, Roubini said this is a key reason why growth would be “well below potential” for the next few years. It is not only job losses that slash consuming power of U.S. citizens, he said, recalling cuts in wages and hours worked in many workplaces.

Roubini named other reasons for anemic growth as weakness in credit growth, the painful debt structuring in the corporate sector that hampers expansion, a large budget deficit that would hit private demand and a large current account deficit.

“Places such as the U.S., Britain, the Baltics and Dubai ran large current account deficits,” he said. “While countries such as Japan, Germany and China ran large current account surpluses. China was the producer of last resort while the U.S. was the consumer of last resort. The glut of capacity in the U.S. economy and weak demand will also result in a fall in global aggregate demand.”

Roubini was more bullish on emerging markets. “They don’t have financial leverage and liabilities,” he said. “They have cleaned up their financial systems [before]. Their potential growth rate is much higher, and they will recover at a reasonable rate next year.”

But these are not “engines of global growth,” he added. “China’s total gross domestic product is at $3 trillion, a fifth of the U.S. GDP. A total of 2.2 billion ‘Chindian’ citizens spend $1.6 trillion annually, while 300 million U.S. citizens spend $10 trillion.”
source: Hurriyet daily news

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The company has invested $5 billion in the past 10 years to explore the Black Sea and has identified 10 drilling prospects with capacity to cover Turkey’s consumption for 40 years, Uysal said in an interview in Bucharest.

TPAO has Black Sea exploration agreements with Brazil’s state-controlled Petroleo Brasileiro, and signed a joint operation accord with Exxon Mobil in November.

“The Black Sea has huge reserves, which will be the main supplier of Europe within 10 or 15 years,” Uysal said. “Our modest estimates for those prospects are 10 billion barrels of recoverable oil and 1.5 trillion to 2 trillion cubic meters of gas.”

Once the 10 drilling prospects are proven as oil or gas bearing, TPAO will start production studies, which will take about five to seven years, and by 2017 or 2020 it will start production in those fields, he said.

“Out first aim is to fulfill Turkey’s energy demand,” Uysal said. “Then we will make more investment to expand the fields’ capacity to export to Europe.”

In the next 10 or 15 years Turkey will become a vital energy hub for Europe as an alternative to Russia, from which the European Union now gets a quarter of its natural gas, Uysal said. There are many oil and gas pipeline projects passing through Turkey and “very soon Turkey’s territory will start looking like a spaghetti plate,” he said.

Samsun-Ceyhan pipeline:

The 27-nation EU, which Turkey aspires to join, seeks to reduce its dependence on Russian gas, through projects including the Nabucco pipeline designed to pump gas from the Caspian via Turkey to Europe. Kazakhstan already ships oil through BP’s Baku-Ceyhan link to Turkey’s Mediterranean coast.

Eni, Italy’s biggest energy company, and Turkey’s Çalık Holding plan to build the Samsun-Ceyhan pipeline to carry oil from the Black Sea to the Mediterranean. The project “can be up and running in five to seven years,” Eni Chief Executive Officer Paolo Scaroni said in Bucharest last week.

“In energy terms Turkey is already part of the EU,” Scaroni said. “Turkey is the most important transit country in the region. It is a matter of geography.”
source: Hurriyet daily news

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Speaking at a press conference organized as part of the International Monetary Fund-World Bank annual meetings, Deputy Prime Minister Ali Babacan said Istanbul would soon become “a significant and prominent financial center.” Babacan tied the effort to the “void” created by the global financial crisis.

“Istanbul is the natural finance center of Turkey,” he told journalists. “We need to increase its competitive power regionally and globally. The competitive strength of our economy is very important.”

The project “Istanbul International Financial Center,” or IFC Istanbul, is included in the ninth development plan covering 2007-2013.

“In this action plan, in order to have Istanbul as a global finance center, priorities have been determined to build a legal infrastructure that operates on international standards, to increase diversity of financial products and services and to develop a simple and effective system,” said Babacan. “We need to enhance our legal infrastructure.”

“In the effort to turn Istanbul into such a center, it is necessary to improve the legal aspect, which would bring expeditious and effective resolutions of disputes in the area of finance, to establish an institutional arbitration center and to accelerate legislation of laws that would contribute to the IFC-Istanbul Project,” the minister said.

One priority is to increase the diversity of financial products and services, according to Babacan. “A global finance center should have diversity in the products and services it offers and the conditions of such offers should be attractive,” he said.

Noting that building a simple and effective tax system is also a priority, Babacan said tax laws and related legislation will be made “simple, clear, predictable and sustainable.”

Reforming taxation would help the inflow of financial transactions into Istanbul and Turkey, the minister said. “We should also consider improving the regulatory and supervisory framework.”

“The current global crisis once more demonstrated the importance of coordination among regulatory authorities of countries,” Babacan said. “On the other hand, we can say that Turkey has proved itself with its strong financial and banking system. Turkey sets an example for other countries.”

Enhancing physical infrastructure is another priority for the IFC-Istanbul project. “We are targeting to develop every part of the city in terms of standards and technology,” said Babacan. “We are also working to create new software for markets and a technology platform to serve as a communication center.”

Babacan mentioned that the IFC is a long-term plan. “The IFC-Istanbul project will not only focus on a specific site. In fact, all operations across Istanbul to enhance residential areas, security and transportation, shall support the IFC,” he said. “We will focus on developing human resources and the image of Istanbul. As you all know, Turkey is very strong on human resources.”

The government has created nine working groups for the project, he said.

Responding to a question on the perceived “unease” of the government about the independence of the Central Bank, Babacan said the government was not questioning the status of the bank.
source: Hurriyet daily news

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The Turkish foreign minister also said Turkey and the EU were sharing a common destiny, history and fate, adding: “Our vision is to make an EU, including Turkey, a global power in 2050.”

Turkey has made piecemeal progress toward becoming the EU’s first predominantly Muslim member since the process started in 2005, opening talks in 11 of 35 policy areas and completing one. The EU froze talks in eight areas in 2006 to punish Turkey for its trade embargo on Greek Cyprus, which joined the bloc in 2004. The dispute with Greek Cyprus has dogged entry talks since the debut.

The Turkish foreign minister blamed Greek Cypriot President Dimitris Christofias for stalling unity talks after 42 meetings within a year. “Unfortunately, Christofias is trying to slow down the negotiations,” he said. “Nobody can blame Turkey. We did everything and continue to do everything.”

Davutoğlu said he saw Europe as a sub-continent or an extension of Eurasia like the Indian Peninsula, instead of a continent that had borders or walls like that in Berlin during the Cold War era. “As the Berlin Wall has been demolished, nobody can talk about cultural, political or economic walls separating Europe from Asia, Africa and even America,” he said.

Davutoğlu said Europe, a center of power in the world in the 19th century, felt it necessary to lay the foundation of the EU after it started to lose power due to clashes within its borders after the World War II. “Establishing the EU was a right solution to end the recession of Europe. It was a positive, creative and proactive answer,” he said. But, he said, the rest of the world also exerted efforts, and China, Russia and the United States had entered into a new transformation. “Therefore, Europe did not have the option of stopping in this rapidly changing world,” he said.

Two alternatives

Davutoğlu said Europe should choose between the two alternatives of becoming a global power or a continental power. “If we, the Europeans, want to become a global power, there are two obstacles – faced by all European powers from the first ages until today – we should overcome,” he said and enumerated them as a strategic connection with Africa and Asia and multiculturalism.

He said the EU definitely needed two key countries, Russia and Turkey, to become a global power. The Turkish foreign minister also said he could not say Turkey reached its final borders after the Lausanne Treaty was signed.

“Of course, our borders are obvious since we have the strongest army in our region from the perspective of international law and real policy, and since we have strong international legal references,” he said.

Davutoğlu said Turkey’s geography was multidimensional and defined Turkey as a European country with extension to Asia; a Balkan country; a Caucasus country; a Black Sea and Middle Eastern country; and a Mediterranean, Caspian and even a Gulf country. The minister said Turkey did not have the luxury of ignoring any of those regions and was behaving with this “historic responsibility.”

He said Turkey, which was opening new representations every year and which was asked to be a mediator in many world problems, wanted to play a global role – not just deal with regional problems. The foreign minister said the EU’s neighborhood policy also covered Eastern Europe, the Caucasus, the Middle East and North Africa.

“At the same time, Turkey wants to achieve synergy by cooperating with the EU in this region,” he said. The minister also said Turkey’s benefits in diplomacy would become the benefits for the union after Turkey became a member.

“Everybody has been convinced that Turkey would bring stability to the EU, not problems,” he said.
source: Hurriyet daily news

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