BRANCH GENERAL ASSEMBLY

16 MARCH 2021

İZMİR

Honourable District Governor,

Honourable Mayors,

Esteemed Members of our Board of Directors,

Esteemed Presidents and Representatives of the Business and Political World, of the NGOs and of our Chambers, Esteemed President and Members of our MÜSİAD İzmir Branch,

Esteemed Members of the Press,

I say welcome to the General Assembly of our İzmir Branch and I respectfully greet you all. Distinguished Guests,

Despite the difficult conditions of the pandemic, I am pleased to be able to touch Anatolia as far as circumstances permit through our branch general assemblies, and thereby both to hold our general assemblies and to have conversations with you about our country’s economic, commercial and political agenda. What did we say? MÜSİAD is the most effective and widespread capital platform in the field, one whose like is rarely found. With this quality it has penetrated our country’s capillary veins in both economic and social terms, and it advances with the strength that comes from commanding even the finest field knowledge.

With little time left before I hand over my Presidency, I have been constantly on the move — both for my homeland and for our MÜSİAD, within which I have grown since its founding and in every stage of which I have served — in order to take the pulse of Anatolia at every opportunity, to come together with our members, to be in touch with them, and to listen to sectoral problems directly from those who live them and convey these to the relevant authorities. I can say that the number of days I have spent at the İstanbul Head Office is very few beside the time I have spent travelling. I take both happiness and honour in this. Because MÜSİAD is not a capital group confined to a single region with a narrow sphere of influence. MÜSİAD is the most living witness of this country’s social, political and economic history, and indeed one of the elements that built it.

In its new form, renewed after the Presidential System of Government and structured in the manner most suited to the speed- and project-production-based understanding of the new world order, MÜSİAD, in this country,

proves that it is the base of capital, of diplomacy and of industrialization, and that companies of every scale can comfortably exist within the same body in pursuit of their own demands and outputs. With its broad sectoral range and its firms of every scale, it is a family that embraces the national economy.

Distinguished Guests,

The year 2020 challenged us greatly. The process that began with a health crisis turned in time into a global economic crisis as countries’ economic balances were disrupted, and it does not appear possible that this process will end overnight. This process, to which we have gradually become accustomed and which has become almost our new normal, has given us new ways of living and working, and it has likewise created new perceptions of threat and of opportunity.

My dear friends, the pandemic in fact showed us a reality we had never taken into account: when production stopped all over the world and all doors were closed — that is, when everyone, every nation, was left on its own — how was each going to look after itself? While for years we produced and traded with globalization and the economic wind it released upon the world, with the effect of the pandemic globalization suddenly turned into a model whose very existence is questioned. As the new balances of power were being calculated, Asian economies came to the fore both as a production base and as the new centre of supply and logistics lines.

When the mobility of capital, goods and people came almost to a standstill with the pandemic, countries began to revise their economic planning within the framework of “self-sufficiency”. From this point onward, the aggressive global economic system clustered in certain countries slowly gave way to unitary structures and to new production bases. This time, however, the existence of national economies, in which the effect of the state will be felt far more strongly, will be essential. It is precisely at this point that our domestic and national capital and industrialization policies are the sole axis that will carry us to the 2023 targets and beyond. The pandemic has in fact greatly increased Türkiye’s importance on the world economic atlas. This opportunity must be seized immediately and in the most effective way.

Distinguished Guests,

We are not an island country. We are a country encircled by a large number of neighbouring countries along our borders or in our axis. When to this are added territorial waters as strategic as the Aegean, the Black Sea and the Mediterranean, whose protection is essential for the sake of the Blue Homeland, we see and experience that both political and military diplomacy pass along a very fine line.

Today we are in İzmir. The ownership of the islands in the Aegean and the interventions Greece makes from time to time through the islands are evident. And one of the hottest items on the agenda in recent days is the tension in the Eastern Mediterranean that began with the Souda base on the island of Crete. Of course our state has given the necessary response to these manoeuvres. Of course, in the face of the slightest threat to our rights — including our land and sea borders and the exclusive economic zones there — the necessary response is given. This situation is only one example.

Yes, a country encircled by so many neighbours; while it must be constantly on the alert politically in the face of diplomatic and military conditions, it is also fortunate in economic and commercial terms. Because every neighbour is a new bond, a new relationship, a new commercial alliance. It is here that important duties fall to capital organizations such as ours. Because states establish relations with one another not personally but within the circle of interests. The same is true in commercial life. Non-governmental organizations spread over a wide area such as ours are like a velvet glove drawn over the iron hand of the state. In the background they can rebuild and even repair strained relations through the channel of economic diplomacy by establishing trade and investment networks. And we, with both our commercial diplomacy network and our reporting system that gives priority to economic intelligence, are carrying commercial neighbourliness beyond borders.

It is precisely for this purpose that we restructured our local and global networks and designed the MÜSİAD Trade and Investment Agencies System. On the state side of this system we received the support of the Presidency of Strategy and Budget and of the Investment Office. The aim of this system is to bring the investment or production partnerships our country needs together with foreign demand, and at the same time to bring foreign capital together with its domestic stakeholders through an end-to-end support mechanism during the process of its investing in Türkiye. On this matter the Investment Office and MÜSİAD will share their own member and investor portfolios, and the contribution of new investments coming to Türkiye to the industrialization drive will be increased. The system we have named MÜSİAD INVEST is the management model of the cash flow in this process.

Not only these systems: our renewed structure is in fact built, thanks to its project-based operation, upon bringing the projects of all our branches and representative offices in local and global networks together with suitable stakeholders and investors, or encouraging possible partnerships and preparing the appropriate legal and bureaucratic ground for them. Because our aim is to enable all our members, through MÜSİAD’s sphere of influence and its umbrella, to increase their capital strength and become the locomotive element of industrialization. This is our principal duty. Because we are a capital platform.

Distinguished Guests,

To say “I told you so” is, believe me, a heavier burden for the one who says it than for the one who hears it. Because a pressure builds up inside you: should I have insisted more? We drew attention to the importance of production. We stated that financial markets have been and will remain insufficient to explain the real economy! In production, no sector should be neglected. That is, production in agriculture and livestock, industrial production and production in the services sector must be synchronized. One field of production must absolutely not be sacrificed to another. This is called the Multiple Production Model. Moreover, production alone is not enough. It is essential that we plan on the basis of a sales-oriented production model. That is, to produce after guaranteeing the market and the sale. But this too is not enough. After correctly identifying domestic demand, foreign trade planning must be done. Otherwise you start importing while speaking of full warehouses. And this adversely affects your terms of trade. This too is not enough: for production and trade, the continuity and sustainability of investment is required. We called this end-to-end systematic the synchronization of production, trade and investment. And the fact that these matters were personally highlighted in the announced Economic Reform Package and recorded as a state policy makes us happy and also honours us for having been of some use in this regard.

In September 2018 I made a statement to Anadolu Agency: “In our country consumption has for a long time exceeded production. The solution to the problems is closely related to being able to reverse this phenomenon. That is, by making the transition to the understanding of “consuming by producing”, it is possible to overcome all problems, economic ones first and foremost. Only to the extent that we succeed in producing can we be the rising country of this century. Otherwise, we may come face to face with losing even today’s gains." I said. At the point we have reached today, the fact that the plans for combating inflation will be built on this axis is also encouraging.

Türkiye has still not been able to use effectively its position on the supply and logistics lines. Türkiye is still not a country that has managed to bring out brands or to market high value-added products in the sectors in which it is expert and in which it has been a producer in the world for many years. I give this example everywhere. It is a simple but effective example: there are differences between selling flour and selling simit, in terms of brand, of price-return and of commercial return. Yet making simit out of flour is not such a difficult process. It nevertheless adds value to the basic raw material. The producer in Türkiye is still far from this mentality. However, the fact that our esteemed President placed particular emphasis on value-added production and on branding in the newly announced Economic Reform Package is proof that we have entered the right axis. I extend my gratitude, on behalf of myself and of my institution, to Mr. Recep Tayyip Erdoğan, our leader, for his vision that reaches beyond today.

Distinguished Guests,

As I said at the beginning of my speech, one of the reasons I visit the provinces one by one instead of sitting at the centre is to identify promising companies for the execution of industrialization — that is, in order to form appropriate industrial policies and to make them work in the field — and at the same time to examine the potentials of these provinces comparatively with their existing firms. My project of branding the provinces and turning their existing assets into value — that is, properly identifying their potentials and increasing the value of the provinces through investments suited to these potentials — turned into a rather comprehensive study at the end of my travels. Every city has its own distinctive values. Turning these into high value-added assets brands that city and increases its contribution to GDP. Comparing our cities according to certain criteria with cities of similar characteristics in the world, and applying in our cities the methods and processes of the value added produced by the examples around the world, was the basic starting point of this study.

We gave this study the name “Developing Cities with Their Distinctive Values”. That is, determining criteria for valuing one’s own assets by comparing them with world counterparts, and city matching. At this point the most important of the comparison criteria is the firm strength that city possesses. Determining a correct industrialization policy in fact passes through finding, supporting and scaling up the promising firms that will keep this economy standing in order to create city economies,

increasing their capital strength, and carrying out the domestic and national production drive in such a way as both to brand the cities and to strengthen the firms. I call this operating city economies for the execution of industrialization. We were the first to voice many concepts, and then we saw them appropriated by other people in other media. God willing, we will not experience the same thing in this case.

Distinguished Guests

I made statements in various media regarding the Economic Reform Package announced last week. It contains innovations that please us, both in terms of its main headings and in terms of the boards established to achieve economic coordination and to gather scattered data. However, the package in fact also shows us the process in which industrialists — that is, we ourselves — must be far more active and productive from this point onward.

The pandemic reminded us of such concepts that these have become the new elements of power by which the future will be shaped: food and agricultural security, renewable energy and energy investments, new lines in logistics, mergers and acquisitions, economic security, insurance and reinsurance, smart cities, infrastructure and superstructure investments abroad, production bases and campuses, pharmaceutical raw material production, technical textiles and many more that I cannot list. In particular, the strategic importance of derivative energy sources and of mining investments, and the new financial system and investment instruments that will emerge in this field in the matter of the green deal, are new agendas we have not encountered before but of which we must become aware and for which we must prepare at the earliest moment. Somehow, these concepts were each the name of one of our committees during the renewal process. At a time when no one knew or could voice these concepts, we made them strategic goals and established committees. Perhaps the fact that the same headings now appear in our country’s reform package and have become the new resource and investment management items of the new world may be an answer to the criticisms we received at that time. Praise be to God, we have seen these too.

Distinguished Guests,

Yes, economically a long and arduous road awaits us. Inflation, employment, the efficiency of resources and incentives, public finance — many fields. For example, while the average inflation rate of the G20 countries for 2020 was at the level of %3.6, Türkiye’s 12-month average inflation in 2020 was realized at %12.3. At present, the most up-to-date inflation figure for the February 2021 period, at %15.6, also indicates that the upward trend continues.

In the same period, the rise of domestic producer prices on an annual basis to %27.09, the highest level of the last 21 months, the core inflation figures running above the headline inflation indicator, and the continuation of volatility in the exchange rate indicate that inflation will be one of the most important items on our agenda in the coming period. Because price increases originating in global markets are outside the sphere of influence of the Central Bank of the Republic of Türkiye, we see that the effect of tight monetary policy in the fight against inflation is diminishing. Therefore a great deal of work falls to us in terms of production and exports. A country’s monetary strength is determined by that country’s investment and production strength. Türkiye is a large and strong economy. And by its nature it displays situations contrary to the fundamental laws of economics and also succeeds in emerging from every difficulty. Look: among the G20 countries there was no country other than China and Türkiye that recorded growth.

Of course this performance was not surprising for us. For as MÜSİAD we had voiced at every opportunity that Türkiye, with its existing manufacturing potential and flexible production capacity, has a serious advantage when compared with other countries of its kind.

Increasing the self-sufficiency policies of all our sectors that hold a critical position in domestic and national production, and in particular determining a new strategy oriented towards foreign trade, will be a correct step. Indeed, it is seen that these matters are given priority in the Reform Package.

Our faith in our country and in our country’s potential is complete, dear friends. Praise be to God, during the pandemic process too we did whatever was said we could not do.

In 2020, a year that passed with economic difficulty, we held one of Türkiye’s most important fairs.

We held with broad participation and successfully completed MÜSİAD EXPO 2020, the largest fair held after the pandemic, which drew intense interest from both exhibitors and visitors. Nearly 15 thousand visitors from 102 countries, chiefly from Europe, Asia-Pacific, Eurasia, Africa and the MENA countries, 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 it also gave foreign investors the opportunity to examine closely the investment opportunities in our country.

Distinguished Guests,

The economy of İzmir, which has a multifaceted structure, is based on industry, agriculture, trade and tourism. Ranking third in manufacturing industry after İstanbul and Kocaeli, İzmir is Türkiye’s largest export port.

With its natural beauties and historical riches, its road, rail, air and sea transport and its sufficient accommodation facilities and infrastructure, the tourism sector develops with each passing day. The exports of İzmir, which ranked 4th among Türkiye’s largest exporting provinces in 2020, displayed a strong performance with USD 9.5 billion, despite having recorded a decrease of %2.4 compared with the previous year.

The prominent groups in the said exports were Chemical Substances and Products, Ready-Made Clothing and Apparel, and Furniture, Paper and Forest Products.

In İzmir, which exported goods and services to a total of 210 countries in this period, the first three places were taken by Germany, the USA and the United Kingdom.

We are working to carry İzmir’s trade culture, which has existed for many years, and its successful production and export performance further forward with each passing day, beyond merely preserving them. 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.

We, together with each one of our members, have brought to this point this valuable structure, which works more each day in order to be of benefit to the Turkish economy and to the nation with the employment it provides for 2 million people. We do this with the strength we draw from our institutional culture, our accumulated knowledge and our organization. By processing the information we obtain through you from domestic and international regions, we are building an important database. As a result of this, we present to the business world a picture that sets out all the risks, opportunities and 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 at the outset was “together”.

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

As MÜSİAD, we are developing projects aimed at increasing the contribution made to the national economy and at improving the culture of partnership among our members.

For this purpose, our 23 committees in total under the MÜSİAD ASSEMBLY umbrella, which we established during the renewal process, have begun to gather the potential investors and industrialists in Anatolia around certain projects, with projects suited to their own thematic or sectoral fields. These projects have begun to encourage the capital strength in Anatolia to invest in projects or to become partners in them.

For example, with our Investment and Production Bases Project we have created a model that will, by building living and production zones where all their needs are met in the same environment for our small-scale firms which have difficulty producing in narrow spaces and which for this reason cannot reach scale, turn them in time into institutionalized firms ready to move to 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 the top ten economies of the world, and for epidemics and disasters likely to recur under any circumstances, we are obliged to establish production bases. By establishing production bases, it becomes possible to protect firms, employees and production in situations of epidemic or severe disaster and to keep them going without a full shutdown.

We have named this model, in short, SME INCUBATION CENTRES. This model, in which all the needs of SMEs — from education to accommodation, from social activities to artistic environments — 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 works planned at 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 YOİKK.

Likewise, with our Smart Agricultural Cities Project we have launched an initiative in order to encourage rural development and thereby support reverse migration and attain a homogeneous population structure. We presented this as a model to the Ministry of Agriculture and Forestry.

With the Smart Agricultural Cities Model, we have developed an initiative to encourage rural life and to support rural development, with opportunities targeting the population crammed into the large cities and in particular women’s and young people’s enterprises.

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 grassroots.

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 23 locations in 20 places and turning them into Turkish and World Brands. These and many other projects have been the fruits of MÜSİAD’s renewal adventure.

We have created the MÜSİAD Brand in 6 basic fields in line with Türkiye’s 6 basic strategies: MÜSİAD INNOVA ( MÜSİAD YENİLİK) for adapting to the conditions of innovation management and digital transformation.

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

MÜSİAD ACADEMY, in order to turn education into a MÜSİAD school and to give it an institutional identity.

2023 YER-EL (20 YER 23 EL), which covers the work directed at our Anatolian firms in order to bring World Brands out of Türkiye by increasing branding and the brand values of companies and to turn our SMEs into large-scale corporate brands; MÜSİAD INVEST (MÜSİAD YATIRIM), in order to convert into mass investments and partnerships the credibility advantage of the MÜSİAD Brand in Türkiye’s investment strategies, its field presence and the savings kept under the mattress, and to establish a systematic of investment funds,

MÜSİAD TIA (MÜSİAD TRADE and INVESTMENT AGENCIES), which we designed together with the Presidential Investment Office in order to promote Türkiye as an investment and trade market for the direct foreign investor and to operate MÜSİAD’s foreign field presence like a trade and investment system. As many of you have witnessed, we continue our work without interruption and we shall continue to do so. We will continue to develop projects and to serve our country, our nation and the lands where we were born.

As MÜSİAD, while upholding the ideals of our founders and these goals 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 to wounds thanks to the favour of our members, and enables us to strengthen the culture of brotherhood and pass it on to new generations.

Our Qard al-Hasan Fund project, which we brought to life out of the desire to continue an ancient tradition, by turning 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, has institutionalized the culture of mutual aid and solidarity.

On the other hand, we are also continuing the practice of the “Zimem Ledger”, another of our ancient traditions, with the support and contributions of all our branch members, chiefly the head office. Dear Friends,

MÜSİAD is a family, a home, a school. Here we all walk with the pride that comes from being soldiers of the same consciousness and the same cause, and when the time comes we hand the flag over to our brothers 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 complete my words here, I wish that the MÜSİAD İzmir General Assembly may bring good things, and that our branch’s contributions to our business world may continue increasingly.

I wish success to our branch president, to the board of directors, to the MÜSİAD Women’s Committee and to our Young MÜSİAD brothers. I thank Mr. Ahmet, the President of our MÜSİAD Local High Board, and our local relations committee, as well as Mr. Oktay, the president of our production and trade high board, our professional staff and everyone who has contributed.

I greet you all with respect and affection.

Abdurrahman Kaan

President of MÜSİAD