Obligation to change 40% of FX revenues to be lifted
“We’ll establish a damage assessment commission for the public finance when we come to the power.
We’ll remove the obligation imposed on exporters to change 40% of their export revenues on the same day.”
HOW WAS THE RESPONSE TO THE COMMON POLICIES TEXT?
It was received well by the West. We prepared its English version. There is a high demand for it mainly from embassies. I think that not only embassies, but also foreign banks, financial circles, and large groups will reevaluate Turkey as of May 15.
WHAT KIND OF WORK DOES THE NATION ALLIANCE HAVE FOR THE EARTHQUAKE?
We prepared the Common Policies Text before the earthquakes. Six people, who prepared the economic chapter of the text, are doing a new study now. We’ll prepare a report consisting of three or four chapters. The first chapter focuses on the quake-hit region and what needs to be done urgently, from tents and containers to permanent houses, from education and health to infrastructure. The second chapter includes financing. The cost will be USD 103bn, according to the Presidency of Strategy and Budget. But it is estimated at USD 150bn, according to our study. The report will also contain elements related to transformation and what needs to be done in the risky regions on the fault line, including Istanbul, that haven’t been hit by an earthquake. We have proposals to build new homes, reinforce old structures and rarefy the industry in the region. One of the ways to eliminate destruction in 11 provinces hit by twin quakes on February 6 is to raise the industry. You should create jobs and employment so that the cities can stand up. There is a problem, a threat at this point. The report will also focus on what we can do in the region and how we can support the incentive shift to the region.
CONSTRUCTION OF NEW HOUSES HAS ALREADY STARTED IN THE QUAKE˹HIT REGION. HOW MUCH WILL THE COST BE AND HOW LONG THE CONSTRUCTION WORK WILL CONTINUE?
Starting the construction of houses is scientifically wrong, according to academics and experts. The cost and financing change in line with the number of years of their completion. An annual expenditure of around USD 17bn is needed. We don’t know the current state of public finance to finance this amount with the current public resources. We’ll establish a damage assessment commission for public finance when we come to the power. We’ll see the actual situation on May 15 and the following days. We’ll look at foreign aid and budget opportunities and make a prediction.
WHAT KIND OF MODEL DO YOU ENVISAGE TO RAISE THE INDUSTRY IN THE QUAKE˹HIT REGION?
We need to think and plan 11 provinces not only as a local industry but also as an export base to be opened to the Middle East after they raise. There are two primary sectors. One of them is the agrofood sector which has been neglected. 20% of the agricultural output is produced in the region. The second one is the textile-apparel sector. The region should have importance as the gate of the new era opening to the Middle East during the planning of these sectors, as it has raw materials for them. The region has also a port opportunity. Moreover, entrepreneurship is highly neglected in Turkey. The founders of WhatsApp and Instagram earned billions of dollars in the U.S. We should put our young potential into play. We should create a model that promotes entrepreneurship.
WHAT DO YOU PLAN FOR EXPORTERS?
The obligation to change 40% of export revenues will be removed. Every exporter is also an importer. You seize revenues today, and they can’t find money to buy raw materials the next day. The structure has been established by the mistakes of the government. We’ve become foreign dependent in the raw materials and semi-finished goods sectors. Moreover, there is a clear unbalance as the latest inflation exceeds 50% while the policy rate is 8.5%. We’ll do what is necessary for all, including the interest rate and foreign exchange (FX) rates. FX rates will ease when a substantial foreign capital inflow starts. Exports have come to a halt today. The government proposed a 2% premium for exporters. They make up many models. The first button was wired wrong. Others follow it. The Central Bank will come to the point of FX purchases one day. It’ll start to raise reserves. If you see a sharp decline in FX rates due to foreign capital inflow, it means that the Central Bank management of that will have done what was necessary.
CAN YOU EVALUATE THE CURRENT STATE OF THE INWARD PROCESSING REGIME ˷DIR˸?
I prepared DIR, and I am the founder of it. We brought the same regime implemented in Europe. It’s a very exceptional implementation in Europe. If the material can’t be found, and there is a supply problem, DIR has resorted.
DIR was one of the choices of the government. But it has turned into an automatic institution with no examination. It became suitable for every item. Everyone brings every product now. That’s why it became a mechanism that regresses and reduces competitive power and adversely affects production. The Turkish manufacturing industry suffers in the long term. We have come to this point with a USD 0.3 profit abroad. We’ll subject DIR to a serious examination and audit. It runs against the industry now.
WHAT DO YOU THINK ABOUT THE ENERGY COSTS OF INDUSTRIALISTS?
There is a non-transparent price structure, especially in natural gas. The gas deal inked with Russia was revised twice. The natural gas market should fully be open to competition. The distribution companies have become unable to pay their debts to banks due to FX-based privatization. The Energy Market Regulatory Authority (EPDK) has accepted all demands of distribution companies with the order of the government. As consumers, we pay its cost. We need to review the electricity and natural gas markets in terms of competition and solvency of households and industrialists.