BRANCH GENERAL ASSEMBLY

27 MARCH 2021

KASTAMONU

Honourable District Governor,

Honourable Mayors,

Esteemed Members of my Board of Directors,

Esteemed Presidents and Representatives of the Business and Political World, of the Non-Governmental Organizations and of our Chambers, Esteemed President and Members of our MÜSİAD Gaziantep Branch,

Esteemed Members of the Press,

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

Through the Branch General Assemblies we are today in Kastamonu, once again making the rounds of our Anatolian organizational network. With little time left before I hand over my duty, I am on the road once again in order to meet with my brothers and sisters, to open our hearts to one another on the occasion of the general assembly, and to talk about the processes, the problems and the solutions.

As you know, throughout my term of office I have not been a President who spends his time at the Head Office and sees MÜSİAD only from there. Because MÜSİAD is not an organization confined to a single province or a single region; it is a capital base that is organized both at home and abroad and that, in this form, is one of the world's few great capital institutions.

MÜSİAD is the most vivid 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 proves that it is the base of capital, of diplomacy and of industrialization in this country, and that companies of every scale can comfortably exist within the same body for the sake of their own demands and outputs. With its broad sectoral spectrum and its firms of every scale, it is a family that embraces the country's economy. If you recall, we also made the first Anatolian launch of our Renewal process at our General Administrative Board meeting hosted by our Kastamonu Branch. For this reason, Kastamonu's place in this process is a different one for me.

My Esteemed Friends, my brothers and sisters, Distinguished Guests,

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

This process, to which we have gradually grown accustomed and which has become almost our new normal, has given us new ways of living and working, and has equally created new perceptions of threat and of opportunity. In order to see these opportunities and threats, travelling to our provinces one by one and determining their constraints as well as their potential, and drawing up each city's own geo-strategic advancement and economic road map, has been an important undertaking. We have completed this. Now, through our branch general assemblies, I am experiencing the pleasure of being in contact with you once again in line with this aim of ours. Because in the world of the future it is not states but cities that will compete.

When you look today, cities that stand out with their domestic production and their contribution to gross domestic product, multiplying the national income of many a state, can as brand values have an even greater say in world production than their own countries. And believe me, this comes through the concept of self-sufficiency. Discovering each city's unique and strategic values, resources and sectors and steering them and putting them to work correctly: this is proper planning.

In this context Kastamonu holds a very great potential, both with its historical and cultural resources and with its ability to turn these resources into value. In the Economic Reform Package announced in recent weeks under the leadership of our President Recep Tayyip Erdoğan, if you pay attention, mention was made of industrialization and, along this path, of creating models that will reduce imported inputs in production planning by developing domestic and national industry. This of course pleases us. Because for years we have been underlining that the real key to development is industrialization, production and the building of a national capital stock.

However, there is a fine line here: in order to carry out industrialization, that is, in order to create appropriate industrial policies and to make them work in the field, there are two fundamental conditions. To identify the companies that hold promise for industrialization and, at the same time, to examine these provinces'

potential comparatively with their existing firms. My project of branding the provinces and turning their existing assets into value, that is, of properly determining their potential and increasing the value of the provinces through investments suited to that potential, turned at the end of my travels into a fairly comprehensive study. Every city has values of its own. Turning these into high-value-added assets brands that city and increases its contribution to gross domestic product. Comparing the cities in our country according to certain criteria with cities of similar characteristics in the world, and applying in our own cities the methods and processes by which the examples in the world produce added value, was the fundamental starting point of this study.

We gave this study the name “Developing Cities Through Their Unique Values.” That is, setting criteria for valuing one's own assets by comparison with world counterparts, and city matching. At this very point, the most important of the comparison criteria is the corporate strength that the city in question possesses. Determining a correct industrialization policy in fact comes from finding, supporting, scaling up and increasing the capital strength of the promising firms that will sustain that economy in order to create city economies, and from 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 putting city economies to work in order to carry out industrialization. Now, when we look at the assets Kastamonu possesses, we see how suitable a pilot area it could be for a study of this kind.

Its unique and origin-designated products for gastronomic trade and investment; the new tourism resources and investments that will be secured by the advantage of preserving Kastamonu's geography and historical fabric, faith tourism above all; the Ilgaz Mountains being not merely the subject of poems but at the same time an exploitable resource in terms of both cultural and underground riches; textile production preserved with its own unique and traditional manner of making. All of these are unique assets for Kastamonu. What falls to us is to derive high-value-added production models from these assets.

Imagine a city whose past reaches back to two thousand years before Christ. Kastamonu is mentioned in written sources from the 2nd millennium BC, known as the Bronze Age. In the Anatolia of two thousand BC, Kastamonu and its region appear as the lands settled by the Pala and Tummana peoples. In 1211-1212 it passed definitively into Turkish hands through Emir Hüsameddin Çoban Bey, subject to the Anatolian Seljuk State, and it becomes the place where the Çobanoğulları Principality was

founded. In 1461 Fatih Sultan Mehmet annexed it to the borders of the Ottoman State, and from that date onwards our city became a highly strategic sanjak by virtue of its position. Bringing a city of such importance into the national income far more effectively must be our main objective.

Kastamonu, which holds approximately %5 of Türkiye's population, lags well behind other provinces in giving migration to the big cities, and this situation is gratifying. In our city, where the services sector leads the economic outlook, the pandemic of 2020 and the period that followed have of course been quite difficult.

Esteemed Friends,

Like the whole world, our country too is passing through a difficult period and undergoing a difficult test. The year 2020 dragged us into a complete crisis both socially and economically. The process that began as a health crisis shattered, so to speak, the already fragile global economy.

In this economic and commercial war our country was working to guarantee its position and its weight by keeping both commercial and political diplomacy at the highest level. States are not friends or enemies of one another; they are close or distant in line with their interests. In relations that were at times strained between these two blocs, Türkiye, with its constant mediator position, became in a sense one of the balancing elements of the new world order.

MÜSİAD, for its part, holds an entirely different place and importance within this systematics of relations. Non-governmental organizations such as ours, of which there are few examples in the world and which are spread over a wide area, are like a velvet glove placed over the iron hand of the state. They can rebuild and even repair strained relations in the background through the channel of economic diplomacy, by establishing trade and investment networks. We too are carrying commercial neighbourliness beyond borders, through both our commercial diplomacy network and our reporting system that gives priority to economic intelligence. Our members' foreign trade activity in a sense guarantees the continuity of our country's new power and position in the world.

Distinguished Guests,

At just this point there is a development I cannot pass over without touching upon. As you know, for the last few days we have been living through quite eventful days in the financial markets.

Yet we have no doubt that this situation will be overcome, above all through the activation of the action plans of the reform Package and through the continuation, unshaken under any circumstance, of the trust we feel in our state. In the end, despite the statements made from outside, Türkiye is still a highly attractive country for foreign funds.

Even though we have been fixated in recent weeks on the transactions taking place in the financial markets, my esteemed friends, the essence of this business is production. Inflation is a great problem of ours. But inflation is not a matter to be solved with financial instruments. Because it is a real economic problem. Inflation is the problem of a process in which production does not suffice for consumption or cannot meet it. In that case we shall either consume little, or we shall produce a great deal and, with our surplus supply, both meet the domestic market and earn foreign currency income by exporting. Thus we shall refill our reserves and escape the middle-income trap at the earliest opportunity.

However, what is at issue here is making an end-to-end production plan. That is, production alone can sometimes remain limited. Production plans oriented towards sales must be adopted. That is, a production and trade planning is needed that suits its market and is scheduled according to the quantity, the product and the capacity of that market. Thus both domestic demand and exports are realized without interruption and without one obstructing the other. Let us go one step further: investment models compatible with production and trade planning. That is, ensuring the continuity of investment in the appropriate or strategic sector, the appropriate firm, at the appropriate time and in the appropriate product. I call this production-trade-investment synchronization.

Operating this synchronization is possible only by applying three elements of efficiency without disregarding them and by following them continuously: resource efficiency, capital efficiency and incentive efficiency. In order to achieve this synchronization, the existence and efficient use of resources such as the necessary labour force, land, energy or natural resources is essential. How should capital be deployed in this field? Or is capital going directly into investment or into wealth? Are you transferring what you earn back into your business or into wealth? This must be asked. And finally, are the incentives distributed by the state going to the right place? Is an effective distribution being achieved? Is the incentive going to production and investment or to the banking system?

Look, Esteemed Friends

Increasing the self-sufficiency policies of all our sectors that hold critical positions in domestic and national production, and in particular determining a new strategy oriented towards foreign trade, will be the right step. We saw years ago the fundamental concept at which the world has arrived today: Strategic Autonomy. That is, self-sufficiency in the domestic and national sense in critical sectors, and being able to have a say on the world production-trade-investment line. Food security, the defence industry, information technology and data security, and the pharmaceutical industry are among the most important items of these.

At just this point Kastamonu stands out as a meeting and differentiation point of many sectors in one place.

We saw and voiced these realities long before the pandemic; indeed, by launching our Renewal process before everyone else, we foresaw the fundamental strategic issues in the new world system and began to work on them as committees.

The integration into the branches of the Renewal process, which was disrupted by the pandemic, will be swiftly completed in the new administrative term, and committees will be established in a way that depends on the diversity of the resources and sectoral structures in your city. Thanks to our new project-based structure, the projects of every one of you, of each of our members, whether their own firm or their individual work, will from now on be operated in direct connection with the head office and will be turned into large projects through strong partnerships.

Believe me, every kind of production and investment plan that will reduce our dependence on imports, and the projects suited to them, will be the sole force that carries us to the Türkiye of the future. In this period our industrialists in Türkiye have a very great appetite for investment. Not only large enterprises but also SME structures are quite insistent and eager to grow and to invest. We must urgently turn this situation into an advantage. By virtue of my duty at MÜSİAD I am constantly in the field and travelling around Anatolia. Not only in the metropolises but everywhere in Anatolia, the producer is truly ready to write a new success story provided he is brought together with a financial structure suitable for investment. But there are of course some problems here. In particular, firms turning towards exports because of the foreign exchange advantage in the domestic market and supplying goods more sparingly to the domestic market. What really needs

to be done here is to increase production, especially in strategic sectors and above all in raw materials. In the long term, it is for firms to revise their import strategies, that is, in fact, to invest in raw material production.

Whatever anyone may say, it is clear in the light of the recently announced growth figures that we have displayed a serious performance of resilience. However, in order for that growth performance to attain a sustainable quality, a long and arduous road lies before us.

Our faith in our country and in our country's potential is complete, esteemed friends. Whatever was said to be impossible, we did during the pandemic period, praise be to God.

In 2020, a year that passed with economic difficulties, 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, above all 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 Center 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.

Distinguished Guests,

We support our fellow travellers at 89 points in Türkiye and through our 225 contact points in 95 countries around the world. And now we are launching a brand-new restructuring drive in order to unite them through a strong trade and investment network.

With the employment it provides for 2 million people, we, together with each of our members, have brought to this point this valuable structure that works harder every day in order to be of benefit to the Turkish economy and to the nation. 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. As a result of this we present the business world with a picture that sets out all the risks, the opportunities and the current problems.

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 reaping 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.

You will see how the line drawn in 2018 designed a road leading all the way to 2023-2030. We set out this vision years ago, before anyone else saw it. The committees we planned and established years ago are counted today as items in the economic strategies not of today but of tomorrow. We foresaw these things, praise be to God.

For example, we spoke of a smart cities and city economies committee; after us it became a policy at the Presidential level and was written into the 11th Development Plan. Indeed, the projects launched across the EU for the matching of cities showed how right and far-sighted we were on this matter. When we used the word gastro-economy, in our country it was still being carried out as limited work in the hands of a very rare and restricted group. Today it has become the fundamental starting point of tourism and of national development almost everywhere. Likewise we spoke of new resources and investments in tourism, and tourism moved beyond mere summer tourism and turned towards entirely different fields. We established our rural development committee, and there, with the Smart Rural Towns Project that I shall speak about in much more detail shortly, we supported our Ministry's annual planning. Mergers and acquisitions, Export Matching…

For this purpose, our 23 committees in total under the MÜSİAD ASSEMBLY roof that we established during the Renewal process have begun to gather the 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 capital strength in Anatolia to invest in projects or to become partners in them.

For example, with our Investment and Production Bases Project we created a model that will turn our small-scale firms, which struggle to produce in cramped spaces and therefore cannot reach a sufficient scale, into institutionalized firms ready in time to move to organized industrial zones, by building living and production zones in which all their needs are met in the same environment. We have completed the first prototype of this model, and we are beginning the construction of the second shortly.. In order to enter the world's top ten economies, and for the epidemics and disasters likely to recur under any circumstance, we must establish production bases. By establishing production bases it becomes possible to protect firms, employees and production in epidemic or severe disaster situations and to keep them going without a full lockdown.

We gave this model the short name SME INCUBATION CENTERS. This model, in which all the needs of SMEs, from training 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 too was 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 YOİKK.

Likewise, with our Smart Agricultural Cities Project we 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 as a model to the Ministry of Agriculture and Forestry.

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

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 safe purchasing platform in the second-hand vehicle market; creating a safe real estate purchase and sale platform; in line with the 2023 targets, growing selected

SMEs in 20 places and 23 locations and turning them into Türkiye and World Brands. This and many projects like it became the fruits of MÜSİAD's Renewal adventure.

We created a MÜSİAD Brand in 6 fundamental fields suited to Türkiye's 6 fundamental strategies: MÜSİAD INNOVA ( MÜSİAD YENİLİK) in order to adapt 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 make education a MÜSİAD school of thought and to give it an institutional identity.

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

MÜSİAD TIA (MÜSİAD TİCARET ve YATIRIM AJANSLARI), which we devised together with the Presidential Investment Office in order to promote Türkiye as an investment and trade market for the direct foreign investor and to make MÜSİAD's international field presence work like a trade and investment system. As many of you have witnessed, we are continuing our work without interruption and shall continue to do so. We shall carry on developing projects and serving 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 a balm to wounds through the favour 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 the desire to continue an ancient tradition, has institutionalized the culture of mutual aid and solidarity by turning the culture of mutual aid and solidarity among our members into an institutional structure, which we created with the thought of facilitating our merchants' trade.

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

Esteemed Friends,

MÜSİAD is a family, a home, a school. Here we all walk with the pride of being soldiers of the same consciousness and the same cause, and when the time comes we hand the flag over to the brothers and sisters who come after us. This rule is ancient for everyone. This is what makes MÜSİAD unique. For this purpose, being present at our branch's General Assembly makes me exceedingly happy. As I conclude my remarks here, I wish that the MÜSİAD Gaziantep General Assembly may bring blessings and that our branch's contributions to our business world may continue to increase.

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

I greet you all with respect and affection.

Abdurrahman Kaan

President of MÜSİAD