EXTENDED PRESIDENTS' MEETING OPENING SPEECH
03 JANUARY 2020
Esteemed MÜSİAD Family, Esteemed Members of my Board of Directors,
Esteemed Members of the Press,
Welcome to our Extended Presidents' Meeting, which we hold in the first week of every year and which has by now become a MÜSİAD tradition, where the “Economic Assessment and the Expectations for the New Year” are addressed. Thank you very much for your attendance.
It is clear that the inventory of a 2019 that passed with difficult and harsh socio-political, economic and political manoeuvres, not only for Türkiye but across the whole World, means that for the year 2020 we are obliged to act with more prudent, more cautious and faster decision-making processes.
At the same time, 2020 stands before us as a year in which our ability to give the right reflexes quickly in the face of change will also be tested. Even though the decisive power of political actors is on the table, what in fact determines the direction of politics will be, as always, economic power factors and constraints.
For there is a known truth: political discourse becomes concrete in the eyes of the citizen only through the meal cooking in his kitchen, the pocket money he will give his child, the time and money he will spend getting to work, or whether he will have a job at all.
When we turn the needle towards the employer, the result in fact does not change. Even though it is the state's principal duty to ensure that citizens benefit optimally from total welfare, it will do this through us, the employer segment. For throughout history we have tested that economic systems in which the entire burden rests on the state become unworkable.
Distinguished Guests, my friends of MÜSİAD,
The economy is of course a field of expertise that finds its level of equilibrium at certain points, but it is in fact a mechanism in which the concept of the “expectation effect” shows itself most distinctly.
The theory of rational expectations, which we may summarize as “whatever the expectation is, the realization will be in that direction”, is in fact a reality we live outside the economy as well.
We are of course not suggesting that the picture presented to us by concrete developments should be ignored. But we underline that a constant atmosphere of negativity will bring us no return either.
Distinguished Guests,
Foremost among the criticisms we have received lately are comments that we constantly maintain an optimistic attitude and do not point to problems. Let me state that as MÜSİAD we absolutely do not accept this.
We argue that the atmosphere of inertia and tension that pessimistic pictures would create will undermine the positive tendencies alive in the economy.
Look, let us not forget that the pessimistic scenarios you place inside a well-functioning system will draw the well-functioning structures too into a cycle of gloom. Of course the Turkish economy is passing through a difficult process. We cannot deny this. But in these days when we have begun to feel clearly the footsteps of the Global Recession, that is, on a real-political plane where global capitalism is experiencing a blockage, every analysis made by isolating Türkiye is deficient and manipulative, both in its good and in its bad.
If we widen our angle across the world, we can see that the nationalist movement, which has grown considerably stronger with constantly repeated elections, also heralds a year of closure in the economy.
For example, in Spain the government problem has brought 4 early elections in 4 years. Depending on the main headlines interpreted as the effects on Spain of the crisis in the European Union (EU), weight was given within the governments to figures with an economics background. I think that for some time yet there will be neither government nor stability in the country. In France, as you know, the waters have not calmed for 2 years. The questioned fiscal policies of the Macron government have brought the comfort-loving French people out onto the streets at regular intervals, and it is clear that this process will continue in 2020 as well. In Italy, as you know, the figure who headed the IMF was brought to the head of the administration, but in the contracting EU economy Italy has been unable to reach the expected growth figure. 2019 was a year of mass demonstrations and socio-economic congestion: in Hong Kong the streets have turned into a battlefield since April because of the controversial bill providing for the ‘extradition of criminals to China’. This region caters to an important part of our technology imports. However, we are of the view that the socio-political tensions that China, which stands as the new superpower, is experiencing internally and the relative contraction in the Chinese economy should also be taken as an important macro datum for the year 2020.
In Iran, according to unofficial figures, more than 500 demonstrators lost their lives in the protests that began because of the increase in oil prices. Iran retains its quality as a partner for the year 2020 in the view of many of our businessmen, but the damage the embargoes have brought to our cooperation is also evident. The foreign policy adjustment the American Senate is pursuing as an alternative to the Presidential system may, under these conditions, bring us face to face with the USA once again. To look at the matter only along the axis of the S-400 defence systems would be a barren analysis. The idea of a joint European Army that Macron proposed to Merkel, and Merkel's favourable view of this matter, are also among the signs showing that NATO will stand before us in 2020 with a new structure.
In Lebanon, the demonstrations that began because of the taxes imposed on messaging applications such as WhatsApp evolved into economic difficulties, and afterwards Lebanese Prime Minister Saad el-Hariri resigned.
In Iraq too, just as in Lebanon, the demonstrations were the scene of the Prime Minister's resignation. The protest demonstrations, in which more than 350 people died, continue in places. The timing of the demonstrations in all three countries and the fact that Shiite groups lead the demonstrations create concerns for us as to whether the sectarian conflicts in the Middle East will once again be brought onto the stage. As you know, before the events in Iran began, our esteemed President had set out subtexts to the effect that events similar to those in Iraq could also be seen in Iran. Afterwards the Iranian Foreign Ministry spokesman Musevi made statements confirming this. These statements and the attacks on embassies reflected in the press are an indication that instability and especially irredentist movements are being stirred up in the region.
Under these conditions, the safe haven for Middle Eastern capital will once again be the lands of Türkiye.
In the same way, the cross-border operation carried out for the construction of the safe zone in Syria despite all the reactions, and the victory Türkiye has won as a result both in the field and at the table, open the doors of a brand-new era for the reconstruction of Syria.
Reading the demonstrations in both Iran and Iraq from the perspective of the business world is different: everywhere in the world, social events shed their local identity within a short time and become the field of movement of global dynamics. In such situations risk and threat are read in the same sentence. With both its geopolitical structure and its economy in a process of rebalancing, Türkiye can be turned into the point of attraction for the hot money in this region. On the other hand, the regional spread of such movements unfortunately also manifests itself as an element of pressure on the economic balances in our country.
We are now experiencing one of the clearest examples of this situation in Libya. After Türkiye's drilling activities in the Eastern Mediterranean drew a reaction from Greece and the Greek Cypriot Administration of Southern Cyprus, Libya's rights over the region came to be discussed once again.
The 63,000 km2 violation Greece committed in Libya's maritime area during the period of the regime problem in Libya led Türkiye to take up this matter with the Tripoli Government. For what was at stake was the security of both trade routes and energy lines.
Now the common discourse in many quarters is this: why is Türkiye in Libya? I think it would be a naive approach not to see that Greece, which is active in the Eastern Mediterranean, has since 2014 been trying to squeeze, through a Libya-centred manoeuvre, a Türkiye that is seeking to strengthen its energy strategy through the Mediterranean channel and an alternative spice route.
Distinguished Guests, my friends of MÜSİAD,
The year 2020 will be a year in which commercial intelligence rather than trade, and economic security rather than the economy, are on the table and determine the balance of power as a bargaining card.
Türkiye is a country with a very broad geopolitical hinterland. Just as this situation is an opportunity for options of economic partnership and commercial alliances, it also brings with it a rather difficult struggle for ensuring economic security.
At this point it is inevitable that Türkiye will play an active role in the reconstruction of Syria. We would like to remind you that increasing our measures on the Idlib issue and the protection of the safe zone will also remain among the hot topics of 2020. I would like to cite here once again the words of İbn-i Haldun: geography is destiny.
Türkiye is charged with watching over, for the sake of its own economic balances, the dangers and threats offered by the geography it is in as much as its blessings, and with placing them on a reasonable footing. It appears that in 2020 too Türkiye will continue, with increasing strength, to be the protector of oppressed geographies and the economic centrifugal area of the line stretching in the Middle East from Yemen to Libya, from Iran to Iraq, from Syria to North Africa.
Look,
North and Central Africa will be, and must be, an area for us to draw up a new trade plan.
As you know, the course of China's investments, especially in Central Africa, within the scope of its Belt and Road project is striking. The reconstruction of Central Africa is virtually being carried out through Chinese capital, and its logistics line passes through our country. Of course it is important to be at the connection point of the Silk Road, but within the scope of the Belt and Road, Türkiye needs to review its brand of being a logistics country, and to what extent the line will contribute to our industrial and production system must also be addressed in detail.
As MÜSİAD, in the first months of 2020 we will put two important foreign policy issues on the table with two comprehensive workshops and examine their effect on our production and trade.
One of these is the analysis of our economic partnership with the EU, which will be restructured after the Brexit process
The second will be workshops in which the advantages and threats of the Belt and Road line for our country's production, investment and industry will be laid on the table. For both phenomena contain outputs that will affect our country's SME potential in particular and our motto of domestic and national capital.
Esteemed Friends,
That the direction of the economy and of trade will shift eastward in 2020 is now an undeniable fact. In this direction, I recommend that we make our presence felt as a much more active economic partner in the region with which we have historical and cultural ties, Uzbekistan foremost among them. We began our work in mid-2019 to activate in 2020 an equivalent trade and investment network not only in Central Asia but also in the Balkan countries. I declare before you that as MÜSİAD we will open a suitable trade and investment line for our members on this matter and that we have completed a very comprehensive project in terms of content for this purpose. In the same way, we are of the opinion that increasing relations with the Asian countries and shifting export targets towards the Asian countries, which are younger markets, instead of the Western economies whose agenda is uncertain, will produce far more productive results.
We are sharing with the relevant authorities the point that a sales-oriented and project-based incentive system needs to be developed, and I would like to share with you here that we will follow a far more active action plan in 2020 for the re-regulation of the legislation on this matter.
I underline that this promising development in our new automotive drive, and in the defence industry foremost among them, needs to be supported by a domestic supply system. We stand behind the view that the driving force of sustainable development in Türkiye will insistently come from SMEs, and that the social fabric will also be rebuilt particularly through the food and agriculture sector.
With our Kırkentler project, which we will announce very soon, we will present the replanning of urban fabrics and the establishment of new settlement areas for the reverse migration that has begun as a solution that will provide a much healthier and more homogeneous demographic distribution and at the same time increase employment.
But the most vital issue for us here will be the regulation of the conditions of our companies' access to finance. Important responsibilities fall upon state and government officials here: encouraging domestic purchases will feed the appetite for production and investment in our SMEs and larger companies. We see that foreign manufacturers are still on the primary preference list for transport vehicles. Yet the use of preference in favour of domestic companies both in the automotive supply industry and in the transport vehicle infrastructure sectors is a matter also mentioned within the 11th Development Plan. We are of the opinion that it needs to be put into practice urgently.
The fact that bulk purchases or production tenders are still made with very large-scale companies continues to be a serious element of pressure for the SMEs that are the locomotive of both production and employment in our economy. For this reason we have established a system of medium-scale industrial zones in which SMEs can grow with a much healthier infrastructure and can receive orders by acting together. Here we aim to work our advantage of setting standards and being an accreditation body, an advantage that comes from being a pioneer, in favour of SMEs in 2020.
Esteemed Friends,
Politics in fact binds relations with countries at a higher authority. All the remaining communication and cooperation is provided through NGOs like us. Civil society organizations now serve as a balance between state administration, that is politics, and society.
In the new world order, NGOs (especially NGOs like MÜSİAD that are spread over a wide area and are intensively present in the economic field) find themselves face to face with a new set of functions and duties.
What are these sets:
1. The role of being a regulatory body in the economic sense
2. The role of shaping social convictions and perceptions in social life 3. The role of communication between the base and the administration along the state-politics-economy axis
At this point, with its widespread network and the diversity in its member profile, MÜSİAD defines itself, within the understanding of the world socio-economic system on the 2030 line, not merely as an NGO but as a platform, and is carrying out its transformation with this vision. We call this Renewal.
Let us explain with an example so that we may convey the change in the social function of NGOs. In the world we now see that very large-scale and multinational companies are straining national economies and have even reached the point of being a threat to them. In the 2008 crisis the world came face to face with this risk. These companies are both very difficult to manage and exert serious pressure on decision-makers by using the contribution they make to the economy. However, because of their unwieldy structures they are not flexible or open to change.
Whereas widespread capital organizations like ours serve as a kind of bridge by providing commercial and economic rapprochement and cooperation in inter-state relations.
As MÜSİAD, we set 2020 as the year of building a trade and investment network. In particular, in order to develop trade in the border provinces and to plan the production-trade-investment line together, we are activating the MÜSİAD INVEST NETWORK in 2020.
Distinguished Guests
We are hopeful about the coming year. As I stated at the beginning of my speech, the benefits that the threatening ground created by constantly repeating pessimistic scenarios would bring us are limited.
Working with determination and belief on every matter we approach with hope will of course not eliminate threats, but it will make us strong in struggling with them.
Seeing ourselves as alone in the world and subjectivizing matters within the scope of our existing problems will drive us into a vicious circle with an uncertain end. We are entering a period in which banks will accelerate their lending activities with the marked fall in interest rates. But our alternative financing options to doing business with interest, which is our red line, venture capital funds, partnership funds and a project exchange, will also come into play in 2020. What is important here is to nourish the element of confidence to be felt towards the Turkish lira and to invest in our national capital stock.
In a country, the value of money is determined by the volume and added value of production in that country. With the entry into force of the new practices in financial restructuring, we estimate that we will also experience a marked decrease in the number of debt compositions. In the same way, the return of the business world's appetite for investment will also have a positive effect on employment.
Esteemed Friends,
Water is what relieves the ache.
Yet
No one knows that the water itself aches.
We are a community that does not remain silent even at the aching of the water we press to our wound. For this reason MÜSİAD, as it always does, is ready this year too to put its hand under the stone for whatever is needed for its homeland, for its state and for the ummah.
We are concerned with carrying water to the hearts that ache in oppressed geographies. The virtue that money cannot buy is with us.
We are the volunteer soldiers who know what the trust is and who are the guardians of that trust to the last breath.
We are those who know that loyalty is a right entrusted to us even in the hardest moments, and that remaining loyal first to one's cause and then to one's leader is a debt of humanity.
We have once tasted something more valuable than money: producing, sharing and settling our dues with one another.
May God not separate us from this path. Life is indeed a struggle with the self; may it not make us fall defeated to our selves.
May the year 2020 be our year: the year of brotherhood, of partnership and of lawful earnings. May the year 2020 be MÜSİAD's year.
Abdurrahman KAAN