BRANCH GENERAL ASSEMBLY

9 MARCH 2021

ELAZIĞ

Honourable Deputy Governor,

Esteemed President and Members of our MÜSİAD Elazığ Branch,

My Esteemed Members of the Board of Directors,

Esteemed Presidents and Representatives of the Business and Political Worlds, of the NGOs and of our chambers, Esteemed Members of the Press,

I welcome you to the General Assembly of our Elazığ Branch and respectfully greet you all.

Distinguished Guests,

As you know, 2020 has been left behind as a rather difficult year. Particularly from the beginning of 2018 onwards, we were insistently emphasizing that the global economic system was under considerable strain and that we might find ourselves having to face a serious commodity crisis. Yet the point at which this expected crisis erupted came from a place no one could have predicted: the Global Epidemic. Unlike the others, this crisis did not have an economic basis; but in terms of its effects it made us question the economic system, which came to a standstill all over the world.

It is not only the world economy: we too are on the eve of taking very critical decisions. Look, I would like to summarize for you the economic picture that stands before us. To do so is a responsibility I bear towards you, my esteemed members, as the president of MÜSİAD. It is clear that Türkiye has entered a sharp bend. Not only the COVID process: in the pre-COVID period as well, for the Western economies that had begun to experience commodity shortages in parallel with the shift of production and supply lines in the world economy towards the east, the COVID process has in a sense been the final point that pulled the pin on a system ready to explode. In the statements we made at that time we underlined that a sharp commodity crisis awaited the world in 2020 and the period thereafter. And not only commodities: we repeatedly underlined that we were in a vicious circle in which real economic problems were being addressed with financial instruments and policies, and that this situation, with the inflation especially in the derivative markets, would cause money to lose its value and its definition, and would even bring the monetary system to the point of collapse.

In fact, in the period ahead, in order to determine the strategies needed for the sustainability of the production model we must change, of our trade and supply systems, of our investment policies and of our monetary policies, it is of quite vital importance to outline how the capital sector views the process and along what kind of road plan it should move. For inflation and exchange rate shocks are in fact eroding the capital stock in our country and increasing the state's percentage share particularly in fixed capital formation. In other words, in order to ensure continuity in capital formation, the state mechanism is trying to keep the system standing by filling the place of the diminishing private sector share, and this too is the harbinger of yet another unhealthy way of functioning. My Esteemed Friends,

According to last year's data, USD 351.244 billion of capital stock was generated in Türkiye. This corresponded to approximately one third of national income. However, in the formation of this stock the share of the state rose to the level of %20, and the gap between the private sector and the state began to widen. We foresee that this gap will be at a much more dramatic level this year. Although the %22.5 rate in fixed capital investments in the third quarter growth figures is encouraging, unfortunately such factors as exchange rate shocks, companies being constantly in restructuring, declining investment appetite, the effect of negative expectations, and in time the crowding-out effect of interest rates on investments are bringing the erosion in private sector capital stock to a risky level. This also shows us that the state will have a far greater influence on the free market and will become a direct supplier and seller both in food and in essential consumer goods. Indeed, during the COVID process states secured absolute dominance in the market through supports and incentives, moving to an understanding of the social state so that their citizens could come out of this crisis with the least damage. Now, as globalization is being questioned in the new period, a change of system draws attention: the emergence of national economies and of the self-sufficient country economy. For, if you recall, the full lockdown we experienced at the beginning of the pandemic completely destroyed the understanding of solidarity between countries.

Distinguished guests,

We have expressed it repeatedly: the reconsideration of capital, incentive and entrepreneurship efficiency and the establishment of a new production planning accordingly. Thanks be to God, many of the studies and reports we prepared on this matter found an echo at state level, and as MÜSİAD we once again put our signature to systemic changes. Indeed, last week a legal arrangement and a regulatory basis was established for the interest-free housing and vehicle acquisition system, which we call the interest-free financing model and which is largely composed of our members. And on the matter of self-sufficiency, a policy we have constantly repeated has finally begun to resonate within state bodies: the synchronization of production, investment and trade. Self-sufficiency is in fact also the key factor for price stability and for the strengthening of the national currency. In order to emerge from the spiral of cost inflation and pass to a demand inflation at reasonable levels, we must in fact back up our supply, logistics and production capabilities alike with packages covering every possibility, and above all establish the philosophy of national production as the point of departure in all our sectors. Moving away from input dependency in our key sectors, above all food, agriculture and livestock, and in the high value-added manufacturing industry and the technology-intensive sectors, is an element that will make it easier for us to return once again to the principle of equity efficiency. The effective use of our resources and the mobilization of the savings factor will present us with efficiency criteria in three fundamental areas: capital efficiency, incentive efficiency and entrepreneurship efficiency.

Esteemed Guests,

The evolution of capital not into wealth but into investment and capital stock will ensure that, in difficult times, we attain a more resilient structure both for our companies and for our state budget. This passes through effective project management. The private sector must take the burden of forming capital stock off the shoulders of the state and become directly involved in the system through project-based partnerships. We have all witnessed together the impasse into which the path of money earning money where it stands, by using financial market instruments, has brought not only us but the entire world economy. At this stage, entrepreneurship efficiency is also a matter that must be kept in view.

Of course we are not speaking of obstructing entrepreneurship policies; yet in this process we have also witnessed how resilient each company is in the face of shocks. We must remove companies that cannot withstand shocks from being an additional burden on state budget items and adopt a more effective and selective entrepreneurship policy. Another element at this point is that vocational qualification training oriented towards development should be carried out within correct planning.

For a strong economy is possible only with the existence of an adequate and qualified labour market. For this reason, the mobilization for qualified employment that we shall launch from now on, within the framework of future simulations as to which sectors will face which type of personnel shortage, will make us strong in terms of achieving labour force efficiency in the new world system and thus in terms of the effective use of resources. Finally, incentive efficiency is an important matter in terms of the effective distribution and management of state resources.

Of course our state is taking steps towards supporting entrepreneurs and companies for the development of projects and for these to increase investment. Yet how and in what manner these incentives are used, whether they truly create resource efficiency or cause a waste of resources, must be thoroughly investigated. To this end, we attach importance to projects and to the incentives provided to these projects being taken up once again with a set of evaluation criteria. Particularly for the sake of the number and the effectiveness of the investments to be made in Eastern and South-Eastern Anatolia, we are working with all our might for these three efficiency criteria to become state policy.

Esteemed Guests,

During the preparation of the 11th Development Plan we carried out genuinely joint work with the Presidency of Strategy and Budget and added to the development plan very critical sectors and the action plans included in their road maps. In the subsequent period, for the second time in the history of Türkiye, a capital organization and a high-level state institution decided to work together within the framework of a joint memorandum, and a Strategic cooperation protocol was signed between the SBB and MÜSİAD. This is an important breakthrough. I would like to underline it. Indeed, our Committees at the Head Office have begun joint work with the relevant Departments within the SBB for the execution of the items that are the subject of the planning. I have no doubt that my colleagues in the coming term of administration will work with the same seriousness and devotion so that this process may spread across Anatolia as well.

Likewise, in recent weeks we hosted at our Head Office building a delegation composed of the Governor of our Central Bank, Mr. Naci Ağbal, and his senior bureaucrats. We held consultations on highly critical matters. We even decided that the Central Bank team and our relevant committees would work jointly on some projects carried out by our committees. We underlined that, just as we played a very active role as MÜSİAD in the SBB's 11th Development Plan, we would show the same support this time in the process of achieving the inflation targets.

Owing to the conjuncture, our state bodies have of course been obliged to make certain temporary policies and will continue to be so. The important point here is not to refrain from supporting our state in the process we are going through. We are receiving the first-period outputs of the steps taken with the aim of preventing the excessive loss of value in the TL and the course of high inflation, for example the adjustment in credit costs. The insistent and determined stance of the economic administration and of the Central Bank in the fight against inflation, and their preference for cooperating with all economic stakeholders in order to develop policy at this stage, have of course given hope to business people, to the end consumer and to foreign capital alike. In other words, up to this point there is of course a movement in a good direction.

As I have also expressed in various statements, I conveyed these views personally to the economic administration as well; there are certain action plans that are essential particularly in Anatolia and for our companies operating at your scale of production: that incentive systems be implemented in coordination, be monitored, and be applied in accordance with the principle of selectivity. Achieving a sustainable growth trend in investments depends on being more "selective" in the incentives and supports provided for investments. The incentive mechanism can work more efficiently only by ensuring that existing supports are spread to the base. It must be ensured that whether incentives and Credit Guarantee Fund (KGF) supports genuinely turn into investment is monitored, and that State supports being channelled into financial markets is prevented. If necessary, incentives should be distributed not in cash but in the form of an investment component.

Another action plan for the strengthening of Anatolia in terms of investments is the spread of OBİ Incubation Centres and ensuring that SMEs rather than others benefit from incentive systems. It cannot be denied that the contribution which the national investments we shall make in high value-added sectors, above all our key sectors, will make to our price stability policy particularly in the medium and long term is of vital importance. In this process, encouraging investment not only for the companies that gain an advantage through their scale but also for our SMEs, the locomotive element of the Turkish economy, and improving the factors that negatively affect their appetite for investment, above all access to space and to financing, will both enable them to grow over time and reach much higher-volume production capacities and provide positive returns for our employment policies. In this context, instead of an incentive mechanism from which only a small number of large enterprises can benefit, an incentive model in which SMEs are the focal point should be adopted. Esteemed Guests,

The global economy, which before the epidemic was expected to grow at a rate of %3.5 over the whole of 2020, is estimated according to current forecasts to have contracted in this period within a band of %4.5 - %5.0.

Although the global economy, which contracted sharply in 2020, is projected to recover relatively in 2021, forecast uncertainty remains high depending on the course of the epidemic.

Our country, for its part, is among the leading countries to have come through this difficult process with the least damage. Türkiye is a strong country, inoculated against difficult turns. As is known, the Turkish economy, which grew at a rate of %5.9 in the last quarter of 2020, was in this period the country recording the highest growth among the G20 countries after China. Over the whole of 2020 the Turkish economy grew at a rate of %1.8 and displayed a performance that surprised all the international institutions which at the beginning of the year had made contraction forecasts for it. It would not be wrong to say that the Re-Normalization process will increase the revival of both the services and the production sectors, and that this will be reflected positively in our national income in 2021. Yet here again the determining factor is the course of the pandemic and the efficacy of the vaccination work. For, in the event that we come face to face with a third wave, in order to make up for the probable loss of capital we would experience once again, we must continue production without pause in certain regions, just as China has done, and move towards increasing our stocks.

And this of course passes through the logic of establishing safe production bases in which every stage has been thought through. Our fundamental aim in this model is to develop the strategy China has pursued under our country's conditions with even more advanced conditions and with a logic that gives priority to the human being and to nature. Whatever anyone may say, in the light of the most recently announced growth data it is clear that we have displayed a serious performance of resilience. Yet for the growth performance in question to acquire a sustainable character, a long and difficult road lies before us.

Increasing the self-sufficiency policies of all our sectors that hold a critical position in domestic and national production, and above all determining a new strategy oriented towards foreign trade, would be a correct step.

Indeed, despite the breakthrough we have made in recent years particularly in the services sector, the manufacturing industry preserves its importance for the Turkish economy. The industrial sector, which expanded at a rate of %10.3 in the last quarter of the year, and the manufacturing industry, which grew at a rate of %10.5, were the driving force of the growth for the period in question. Esteemed guests,

The COVID 19 process is not one that will end from one day to the next. Experts state that even if the vaccination work is completely finished, social immunity will take time. In other words, we have just as much road ahead of us. While all this is happening, a new way of life is in fact quietly entering our lives, and we are calmly adapting to these new rules.

Moreover, even if the COVID process comes to a complete end, there are two more great problems awaiting us: climate change, and biological terrorism or armament. Therefore, in this process every country is of necessity making its own back-up plans. In every field, from production to security, measures will be taken against a possible recurrence. In order to be able to reflect the advantage in question on the field with all its parameters, we must prepare the manufacturing industry very well for the medium- and long-term transformation process brought about by Covid-19. For there lies before us a field of opportunity in which, by using our R&D and innovation capacity and our labour force competences to develop them, we can in the long term make a serious leap in the global economy.

Look, it is not a matter of coincidence: read once more now the names of the committees in our Renewal process, which we launched two years ago by analysing these days very well and by drawing up a genuinely strategic road map. You will see how the line drawn in 2018 designed a road extending all the way to 2023-2030. We set out this vision years ago, before anyone else saw it.

We said the New Routes and Approaches in Logistics Committee. Look, now logistics companies and the new routes they draw are giving direction to world trade. We said the Domestic and National Production Planning Committee; look, now the basic point of departure of unitary economic structures has become domestic and national production planning. We said the Energy and Mining Management and Investments Committee; today, in the name of energy security and new mineral deposits, an entirely different field of economic sharing is taking shape. We said the Industrial Zones and Campuses Committee; look, today establishing production bases has become an essential field of investment all over the world. We said the Smart Cities and Urban Economies Committee; after us it became a policy at Presidential level, it was incorporated into the 11 Development plan. Indeed, the projects launched across the EU for the twinning of cities showed how right and how far-sighted we were on this matter. There are many more examples: Gastro-economy, Rural development, Mergers and acquisitions, Export Matching… These strategies, which for a time we had difficulty understanding and for which we even criticized those who thought of them and built them, have today, look, become the world's new turning points. So it turns out that one must first listen impartially, then show respect and try to understand.

Now Türkiye too has entered a process of Renewal, with the same logic and as our Honourable President has also expressed. A new reform movement has begun. God willing, we took its first step yesterday with the Human Rights Action plan, in which I also took part. Our faith in our country and in our country's potential is complete, dear friends. Praise be to God, during the pandemic we did whatever was said to be impossible. In 2020, a year that passed in economic difficulty, we held one of Türkiye's most important fairs.

We held MÜSİAD EXPO 2020, the largest fair to be held after the pandemic, which drew intense interest from participants and visitors alike, with broad participation, and completed it successfully.

Close to 15 thousand visitors from 102 countries, above all the countries of Europe, Asia-Pacific, Eurasia, Africa and MENA, attended the four-day fair. At the fair, which we held under the slogan "Global Trade is Here", we hosted 400 purchasing delegations from 50 countries. EXPO 2020, which we held at the İstanbul TÜYAP Fair and Congress Centre and which was attended by business people, politicians and academics from every region of the world, enabled our business people to open up to new collaborations while also giving foreign investors the opportunity to examine at close hand the investment opportunities in our country.

Esteemed Guests,

In Elazığ, which holds an important place in the field of industry in the Eastern Anatolia region, it is seen that despite the development recorded in recent years there is no high value-added technological production.

As the field in which the province has particularly recorded development, mining draws attention. While copper, chromium, argentiferous lead and bentonite constitute the province's principal mineral reserves, the export of mining products is Elazığ's most successful field.

Despite the %22.1 decrease experienced in 2020 compared with the previous year, in Elazığ, which ranks 44th among Türkiye's largest exporting provinces, a total of USD 166.2 million of exports was carried out, and within this the share of Mining Products was %85.

In Elazığ, which in this period carried out exports of goods and services to a total of 67 countries, we see that the first three places are taken by China, Romania and Sweden.

We will continue to work to carry Elazığ's success in industry further upwards. As MÜSİAD, we support our fellow travellers with 89 points in Türkiye and 225 contact points in 95 countries around the world. And now we are launching a brand-new restructuring movement in order to unite them within a strong trade and investment network. Together with each one of our members, we have brought to this point this valuable structure, which works harder every day in order to be of benefit to the Turkish economy and to our nation, with the employment of 2 million people that it provides.

We do this with our institutional culture, our accumulated knowledge and the strength we draw from our organization.

By processing the information we obtain through you from domestic and international regions, we are building an important database. And as a result of this we present to the business world a picture that sets out all the risks, the opportunities and the current problems.

Distinguished Guests,

As you know, we launched our Renewal process in order to prepare in advance for the new world system. Our motto in setting out was "Together".

We have fulfilled almost all the initiatives we planned and promised within the framework of our Renewal process. Now, with our large-scale projects, we are gathering the fruits of this process.

As MÜSİAD, we are developing projects aimed at increasing the contribution made to the country's economy and at improving the culture of partnership among our members. To this end, our 23 committees in total under the roof of the MÜSİAD ASSEMBLY, which we established during the Renewal process, have begun to gather potential investors and industrialists in Anatolia around specific projects, with projects suited to their own thematic or sectoral fields.

These projects have begun to encourage the power of capital in Anatolia to invest in projects or to become a partner in them.

For example, with our Investment and Production Bases Project we have created a model that, by building living and production zones in which all their needs will be met in the same environment for our small-scale companies that have difficulty producing in confined spaces and therefore cannot reach scale, will in time turn them into institutionalized companies ready to move into Organized Industrial Zones. We have completed the first prototype of this model, and we are soon beginning the construction of the second as well..

In order to enter among the first ten economies in the world, and for epidemics and disasters that are likely to recur under any circumstances, we are obliged to establish production bases. By establishing production bases, it becomes possible to protect companies, employees and production in situations of epidemic or severe disaster, and to keep them going without a full lockdown.

We have named this model, in short, SME INCUBATION CENTRES. This model, in which all the needs of SMEs, from education to accommodation and from social activities to artistic settings, are met within the same living space, aims to create a safe production and living space both for our workers and for our producers and their families. This project of ours has also been one of our undertakings planned from the centre and transferred towards Anatolia. At the same time, this project of ours was registered as a project under state auspices by the SBB within the scope of the Coordination Council for the Improvement of the Investment Environment (YOİKK).

Likewise, with our Smart Agricultural Cities Project we have launched an initiative in order to encourage rural development and in this way to support reverse migration and to attain a homogeneous population structure.

We presented this to the Ministry of Agriculture and Forestry as a model.

With the Smart Agricultural Cities Model, through its opportunities targeting the population crowded into the big cities and especially the enterprises of women and young people, we have developed an initiative to encourage rural life and to support rural development.

Today many of our members in Anatolia are carrying out preparatory work in order to implement this initiative in their own regions.

Many more projects like these have been produced by our committees and spread to the base. Branding cities in the field of Gastro-Tourism through Gastro-economy and Turkish Culinary Arts; establishing structures such as Caravan Tourism and Field Hospitals through multiple partnerships; creating a secure purchasing platform in the second-hand vehicle market; creating a secure real estate buying and selling platform; and, in line with the 2023 targets, growing selected SMEs in 20 places and 23 locations to turn them into Türkiye and World Brands. These and many projects like them have been the fruits of MÜSİAD's Renewal adventure.

We have created a MÜSİAD Brand in 6 fundamental fields in accordance with Türkiye's 6 fundamental strategies: for innovation management and adaptation to the conditions of digital transformation, MÜSİAD INNOVA ( MÜSİAD INNOVATION).

In order to develop the strategic sectors and business models of the future, MÜSİAD FUTURE (MÜSİAD FUTURE),

In order to turn education into a MÜSİAD school and to give it a corporate identity, MÜSİAD ACADEMY.

2023 YER-EL (20 YER 23 EL), which covers the work directed at our Anatolian companies with a view to producing World Brands out of Türkiye by increasing branding and the brand values of companies, and to turning our SMEs into large-scale corporate brands,

In order to convert, within Türkiye's investment strategies, the credibility advantage of the MÜSİAD Brand, its field and the savings kept under the mattress into mass investments and partnerships, and to establish a systematic framework of investment funds, MÜSİAD INVEST (MÜSİAD INVESTMENT); and, in order to promote Türkiye as an investment and trade market for the direct foreign investor and to operate MÜSİAD's international field presence like a trade and investment system, MÜSİAD TIA (MÜSİAD TRADE and INVESTMENT AGENCIES), which we designed together with the Presidency's Investment Office.

As many of you have witnessed, we are continuing our work without interruption and will continue to do so. We will go on developing projects and serving our country, our nation and the lands in which we were born.

As MÜSİAD, while upholding the ideals of our founders and these targets of ours, we are on the other hand also continuing the MÜSİAD tradition.

Our Qard al-Hasan Fund, one of the finest applications of this tradition, is balm for wounds thanks to the goodwill of our members, and enables us to strengthen the culture of brotherhood and to pass it on to new generations.

Our Qard al-Hasan Fund project, which we brought to life out of a desire to continue an ancient tradition, has institutionalized the culture of mutual aid and solidarity by transforming the culture of mutual aid and solidarity among our members into an institutional structure, which we created with the thought of facilitating the trade of our merchants. On the other hand, we are also continuing the "Zimem Ledger" practice, another of our ancient traditions, with the support and contributions of all our branch members, above all the head office.

Dear Friends,

MÜSİAD is a family, a home, a school. Here we all walk with the same consciousness and with the pride of being a soldier of the same cause, and when the time comes we hand the flag over to our brothers and sisters who come after us. This rule is ancient for everyone. This is what makes MÜSİAD distinctive. For this reason, being present at the General Assembly of our branch makes me exceedingly happy. As I conclude my words here, I hope that the MÜSİAD Elazığ General Assembly will bring good, and that our branch's contributions to our business world will continue in increasing measure.

I wish success to our branch president, to the board of directors, to the MÜSİAD Women committee and to our Young MÜSİAD brothers and sisters. I thank Mr. Ahmet, the president of our MÜSİAD Local High Board, our local relations committee, our professional staff and everyone who has contributed.

I greet you all with respect and affection.

Abdurrahman Kaan

President of MÜSİAD