BRANCH GENERAL ASSEMBLY—19 MARCH 2021–KOCAELİ

Honourable Members of Parliament,

Honourable Deputy Mayor of the Metropolitan Municipality,

Honourable District Governors,

Honourable District Mayors,

Esteemed Members of our Board of Directors,

Esteemed Presidents and Representatives of the Business and Political World, of Non-Governmental Organizations and of our Chambers, Esteemed President and Members of our MÜSİAD Kocaeli Branch, esteemed members of the MÜSİAD Women's Committee, my brothers and sisters of Young MÜSİAD,

Esteemed Members of the Press,

Welcome to the General Assembly of our Kocaeli Branch, you have brought joy with you; I respectfully greet you all.

Distinguished Guests,

Throughout my term as President, I have constantly been together with you in order to take the pulse of Anatolia at every opportunity, to come together with our members, to reach out to them and to convey sectoral problems to the relevant authorities by listening to them directly from those concerned. My dear friends, this attitude has been my fundamental philosophy: not to regard the Turkish economy as consisting of İstanbul alone and not to be confined to İstanbul, to reach out to our members as they deserve and in a manner befitting the spirit of MÜSİAD, to see the economic and commercial conditions in the most remote regions of the country and to identify the resources or the problems there. For MÜSİAD is a capital platform whose like is rarely found in the world, and it is known by its widespread presence.

Today we are in Kocaeli, one of Türkiye's fastest developing and industrializing provinces. Our city is referred to as the largest industrial center after İstanbul. Having received considerable migration along with the rapid industrialization process it entered in the 1960s, Kocaeli also constitutes a part of the İstanbul metropolitan area in terms of various economic and social functions and, of course, when geographical proximity is taken into account.

Esteemed Guests,

Making the right plans in industrialization and in domestic and national production has now reached a vital point. However, while implementing industrialization policies, it is essential that we at the same time make effective use of the resources of our cities and transform them into high added-value assets.

While doing this, it must of course be taken as a fundamental objective that our cities create brand value on the one hand and that their own social and urban structures are preserved on the other. Moreover, the pandemic period also points to certain turning points for us: climate change, the necessity of the green deal and, for a more sustainable economy, a model of industrialization that respects nature.

Look, the month of March brought with it very serious transformations for our country: the Economic Reform Package that was announced, the market-regulating laws issued one after another, the fact that the supports the state provided to its citizens as an extraordinary measure because of the pandemic, in accordance with the principle of the social state, have gradually turned the state itself into a market player, the settling at a certain level of our exchange rates, which were once an internal parameter of ours but have gradually become the most affected by foreign political winds, and the tight monetary policy resorted to in order to combat rising inflation rates and the interest rates that have risen as a result…

Let us recall what happened in the early stages of the pandemic. The movement of capital, goods and people came almost to a standstill, and countries turned inward around the rule of “self-sufficiency”. This in turn revealed once again the need to revise the established rules of globalization, and the concept known as resetting, that is, the great reset, began to be discussed. What was the great reset?

1. Each country giving priority first of all to its own resources in the synchronization of production, trade and investment

2. Export items and quantities being determined only after domestic demand has been calculated definitively and over the long term

3. Minimizing dependence on imports

4. Countries revising their long-term policies concerning their natural resources — water first and foremost, as well as minerals and derivative energy resources

5. Drawing up plans capable of coping with the drought that will confront us as a natural consequence of climate change and with the inflationary effect that will be created by the resulting rise in food prices

6. Establishing sound production bases so that production does not stop, or so that any disruption remains temporary, in the face of possible epidemics and disasters

7. Diversifying the China-centred supply and logistics system and reducing this high dependence on China

8. Re-debating the duties and powers of the tripartite structure composed of the World Bank, the International Monetary Fund and the World Trade Organization, and preventing practices carried out to the detriment of developing countries

9. In the face of the ageing world population, they began to revise their economic planning within the framework of new and dynamic countries coming to the fore and becoming production bases.

10. With the shock the pandemic caused, countries giving greater weight to their national economy systems.

With these ten items I have listed above, our domestic and national capital and industrialization policies are now the sole axis that will carry us to the targets of 2023 and beyond. The pandemic has in fact greatly increased Türkiye's importance on the world economic map. This opportunity must be seized immediately and in the most effective manner. And Kocaeli is our most influential province in determining the centrifugal force of this industrialization movement in Türkiye.

Although the early development of industry and trade in Kocaeli reduced the weight of the agricultural sector within the provincial economy, this situation has led our city to specialize as an industrial focal point. What I mean here makes it imperative that industrialization be carried out in a planned manner and without harming the natural resources and the distinctive values of our cities.

Esteemed Guests,

One of the most strategic trump cards of the new era is logistics. We are personally witnessing the logistics wars taking place in the world right now. When we insistently established our Committee for New Routes and Investments in Logistics within the scope of the Renewal process, we in fact stipulated that our country's position as a transit country be evaluated in the best possible way, that the China Silk Road route be used in the most effective manner in favour of our country and, of course, that projects be developed to revise our ports and port management — the fundamental trump card of logistics — in line with the requirements of the age and in harmony with the digital era. At the point we have reached today, both the rightness and the vision of the Renewal we carried out and of the points we touched upon are becoming evident once again.

For example, the Gulf of İzmit is a natural harbour. Its proximity to a major trade centre such as İstanbul makes transit road transportation possible. With 5 state ports and 43 private piers, it holds an important place in maritime transportation. For these reasons, although it is one of Türkiye's four smallest provinces with a surface area of 3,505 km2, it is among the four largest provinces in terms of its share of production within Turkish industrial output.

When we look at Kocaeli's gross product, we see that the share of the industrial sector exceeds %70. The manufacturing industry in particular is highly developed. Although the exports of Kocaeli, which ranked 3rd among Türkiye's largest exporting provinces in 2020, recorded a decline of %19.6 compared with the previous year, it displayed a strong performance with USD 12.3 billion.

The Automotive Industry, which ranks first in the province's exports with a share of %47, is increasing its importance for the Kocaeli economy day by day. In total automotive exports, Kocaeli ranks 2nd with a share of %23 nationwide.

We can therefore say that Kocaeli is one of the exemplary cities not only of industrialization but also of resource use.

As I said at the beginning of my speech, one of the reasons why I visit the provinces one by one instead of sitting at headquarters is to identify companies with promise, for the sake of implementing industrialization — that is, of formulating appropriate industrial policies and making them work in the field — and at the same time to examine the potential of these provinces comparatively with their existing companies. My project of branding the provinces and turning their existing assets into value — that is, of properly identifying their potential and increasing the value of the provinces through investments suited to that potential — has, at the end of my travels, turned into a rather comprehensive study. Every city has its own distinctive values. Turning these into high added-value assets brands that city and increases its contribution to GDP. The fundamental starting point of this study was to compare our cities according to certain criteria with cities elsewhere in the world that have equivalent characteristics, and to apply in our own cities the methods and processes by which those examples in the world produce added value.

We named this study “Developing Cities Through Their Distinctive Values”. That is, determining criteria for valuing their own assets by comparing them with their counterparts in the world, and city matching. At this point, the most important of the comparison criteria is the corporate strength that city possesses. Determining a correct industrialization policy in fact requires finding and supporting promising companies that will keep the economy on its feet in order to create city economies, enlarging their scale, increasing their capital strength, and carrying out the domestic and national production drive in a way that both brands the cities and strengthens the companies. I call this putting city economies to work in order to implement industrialization. Kocaeli is so suitable a city to be one of the pilot applications of this project that I wholeheartedly believe we will together undertake very important projects not only in industrialization but also in branding, in creating a city economy and in building smart cities.

Esteemed guests,

In its new form, renewed after the Presidential Government System and structured in the manner most suited to the new world order's understanding based on speed and project generation, MÜSİAD is proving that it is this country's base of capital, diplomacy and industrialization, 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 range and its companies of every scale, it is a family that embraces the country's economy.

Moreover, even if the COVID process ends completely, there are two more great problems awaiting us: climate change and biological terror . Therefore, in this process every country is of necessity making its own contingency plans. In every field, from production to security, measures will be taken against a possible recurrence. In order for us to reflect this advantage in the field together 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 before us lies an area of opportunity in which, by using our R&D and innovation capacity to develop our workforce competencies, we can make a serious leap in the global economy in the long run.

We believe that we have a serious advantage particularly in terms of geographical position, and that this will create a great area of opportunity for our country in the future projections of the global economy.

Look, it is not by coincidence: read once again 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 path leading all the way to 2023- 2030. The committees we formed with this vision have become the fundamental strategies not of today but of tomorrow as well.

We said Domestic and National Production Planning Committee; look, domestic and national production planning has now become the fundamental starting point of unitary economic structures. We said Energy and Mining Management and Investments Committee; today an entirely different field of economic sharing is emerging in the name of energy security and new mineral deposits. We said Industrial Zones and Campuses Committee; look, today establishing production bases has become an indispensable field of investment all over the world. We said 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 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 we once had difficulty understanding and for which we even criticized those who conceived 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 esteemed President has also expressed.

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 in 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 investing in Türkiye..

It is 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 upon encouraging possible partnerships and preparing the appropriate legal and bureaucratic ground for them. For our aim is to ensure that all our members increase their capital strength thanks to MÜSİAD's sphere of influence and its umbrella, and thus become the locomotive element of industrialization. This is our essential duty. For we are a capital platform.

Dear Friends,

The whole world left 2020 behind as a difficult year. In this respect, it is very important for us that our cities can emerge from this period without lowering their performance as much as possible, despite all these difficulties.

Since the beginning of 2018, we had been insistently emphasizing that the global economic system was under considerable strain and that we might have to face a serious commodity crisis.

But the flashpoint of this expected crisis came from a place no one could have predicted: the Global Pandemic. Our state is now combating the adversities this process has caused us with all its means. The Economic Reform Package announced and led by our esteemed President Recep Tayyip Erdoğan brings us new road maps and facilities in many fields and especially in domestic and national industrialization. A long and difficult process lies before us. One of the problems we must cope with in this process is of course our inflation rate, which strains us on account of food prices.

Distinguished guests,

Due to the conjuncture, our state organs have of course had to make, and will continue to have to make, certain temporary policies. The important point here is not to hold back from supporting our state in the process we are going through. You are all aware of the interest rates that the Central Bank raised yesterday by a margin that got ahead of the markets.

As I have said in the statements I have made repeatedly, a tight monetary policy in the fight against inflation is of course at the discretion of the relevant state units; however, operating it on a single parameter will after a while set in motion a process working against the business world and investors.

After the USD 1.9 trillion stimulus package the USA has provided in order to revive the market, the dollar, which will of course experience a supply surplus, will flow towards developing countries. However, it is important for our country that this flow be lasting rather than short-lived. Nor would it be right to lay the whole matter at the door of Central Bank policy. We must trust both our Central Bank and our Economic Administration. The Central Bank is that country's guarantor of financial stability. In a sense, it is the country's showcase for the foreign investor.

However, when it comes to credit costs, it will be necessary to think from somewhat different angles. Today we are in Kocaeli. For the industrialists here to be able to sustain their own assets or to be enthusiastic about new investments, the cost of credit is an important item.

Raising interest rates is of course done in order to attract to our country the foreign currency whose supply is increasing and to remedy our foreign currency shortage. However, no clear exchange rate level has yet been determined for foreign currency purchase auctions. Is the hot money coming in sufficient? Who really gains from a low exchange rate and high interest? How is the banking sector affected by this situation? How much longer can the real sector resist it? All over the world, those who make money from hot money come to a country when the exchange rate is high and leave when it falls, thereby securing gains of serious amounts. Financiers who borrow at zero or near-zero interest in their own countries and make gains on the exchange rate in Türkiye are in fact engaging in carry trade. In other words, we need to think carefully about how lasting the incoming funds are. In a high-interest environment, if it still provides a high return against inflation, holders of deposits or bonds come out ahead. In the banking sector, the situation differs in terms of deposit and loan maturities. In fact, banks come out ahead when interest rates are low. The real sector, on the other hand, can resist up to a point in an environment of high credit costs. Because as a result of both high indebtedness ratios and the deterioration of the investment climate, a decline in investment appetite and losses in production begin. And that means an increase in inflation, a rise in the unemployment rate and a contraction in GDP. In short, we are passing along a path within a difficult equation, on which we must act in a very planned manner.

That the new Economic Reform Package takes production as its basis in inflation and gives priority to national industrialization makes us happy, as it means seeing the results of the insistence we have shown on this matter. Of course, on this issue we will continue, under the leadership of our esteemed President, to stand behind our Economic Administration both as the business world and as civil society organizations. We will continue to inform the state administration constantly with the field data we reach and continuously draw from the nerve endings of the country, and to support the production of policies.

Esteemed Guests,

Our country, for its part, is among the leading countries that have come through this difficult period with the least damage. As is known, the Turkish economy, which grew by %5.9 in the last quarter of 2020, was the country that recorded the highest growth among the G20 countries in that period after China. Growing by %1.8 over 2020 as a whole, the Turkish economy displayed a performance that surprised all the international institutions which had made contraction forecasts for it at the beginning of the year. We also expect a growth figure of between %5.5 and 6 in the first quarter of 2021. If we maintain such a course throughout the year, it is highly likely that we will be able to close 2021 with overall growth at the level of %5.5.

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.

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. However, here again the determining factor is the course of the pandemic and the effectiveness of the vaccination efforts. For in the event that we face a third wave, in order to make up for the possible loss of capital we would experience once again, we must continue production without pause in certain regions, exactly as China has done, and take the path of increasing our stocks.

And this of course passes through the logic of establishing secure production bases every stage of which has been thought through. In this model, whose details I will touch upon shortly, our fundamental aim is to develop the strategy China has pursued under the conditions of our own country with even more advanced conditions and with a logic that gives priority to the human being and to nature.

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.

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

In 2020, a year that was economically troubled, we held one of Türkiye's most important fairs.

We held MÜSİAD EXPO 2020 — the largest fair held after the pandemic, which attracted intense interest from both exhibitors and visitors — with broad participation and completed it successfully.

Close to 15 thousand visitors from 102 countries, chiefly from Europe, Asia-Pacific, Eurasia, Africa and the MENA countries, attended the four-day fair.

Distinguished Guests,

As MÜSİAD, we support our fellow travellers with 89 locations 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 through a strong trade and investment network. We have brought this valuable structure — which works harder every day to be of benefit to the Turkish economy and to the nation with the employment it provides for 2 million people — to this point together with each and every one of our members.

We do this with our institutional culture, our accumulated knowledge and the strength we draw from our organization. By processing the information we obtain from domestic and international regions through you, we are building an important database. As a result, we present to the business world a picture that sets out all the risks, opportunities and current problems. As you know, we launched our Renewal process in order to prepare in advance for the new world system.

We have fulfilled almost all the initiatives we planned and promised to carry out 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 country's economy and at improving the culture of partnership among our members. To this end, our 23 committees in total under the umbrella 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 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, by building living and production zones in which all their needs will be met in the same environment for our small-scale companies that struggle to produce in confined spaces and therefore cannot reach economies of scale, will in time turn them into institutionalized companies 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..

In order to enter the top ten economies in the world, and for the epidemics and disasters likely to recur under any conditions, 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 CENTERS. This model, in which all the needs of SMEs — from training to accommodation, from social activities to artistic settings — are met in the same living space, aims to create a safe production and living space for both our workers and our producers and their families. This project of ours has also become one of the initiatives 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 Presidency of Strategy and Budget (SBB) within the scope of the Coordination Council for the Improvement of the Investment Environment (YOİKK).

In the same way, with our Smart Agricultural Cities Project we launched an initiative in order to encourage rural development and thereby 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 have developed an initiative to encourage rural life and to support rural development, with its opportunities targeting the population crowded into large cities and especially the enterprises of women and young people.

Today many of our members in Anatolia are carrying out preparatory work 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 20 places and 23 locations and turning them into Türkiye and World Brands. This and many projects like it have been the fruits of MÜSİAD's Renewal adventure.

As many of you have witnessed, we are continuing and will continue our work without interruption. As MÜSİAD, while upholding the ideals of our founders and these targets of ours, we are on the other hand also carrying on the MÜSİAD tradition.

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

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, foremost among them the head office.

Dear Friends,

MÜSİAD is a family, a home, a school. Here we all walk with the pride that comes from sharing the same consciousness and from being soldiers of 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 time-honoured 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 Kocaeli General Assembly will bring good things and that our branch's contributions to our business world will continue and increase. I wish success to our Branch President who is handing over his duty, to the board of directors, to our new president who will take over the duty and to his administration. I thank Ahmet Bey, the President of our MÜSİAD Local High Board, and 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