Abdurrahman Kaan, President of the Independent Industrialists and Businessmen Association (MÜSİAD), shared his assessments regarding MÜSİAD's "renewal process" in the interview he gave to İbrahim Acar and Mesude Demirhan of Yeni Şafak. Touching also on production power and interest rate policies, President Kaan emphasized that the interest burden on the back of production must be reduced.
Emphasizing that “what is needed are investment banks, not banks that live off interest”, MÜSİAD President Abdurrahman Kaan said, “Instead of borrowing from banks, we prefer partnership.” Pointing out that the interest burden on the back of production must be reduced, Kaan said in his statement to Yeni Şafak, “Among our members there are groups that have never worked with credit. Because they operate with their own equity, they grow by 10-15 percent even in times of crisis.”
The Independent Industrialists and Businessmen Association (MÜSİAD), one of Türkiye's largest business world civil society organizations with a membership approaching 1 thousand and a branch network reaching 311 locations, 224 of them abroad, is going through a corporate transformation process it calls ‘renewal’. MÜSİAD's new management model, which is nearing completion, draws attention as an exemplary undertaking reflecting the change in ways of doing business in the economy.
A “MÜSİAD Assembly” Like the “Sun”
MÜSİAD President Abdurrahman Kaan outlined to Yeni Şafak the new management model, which he said they aim to announce after the religious holiday. One of the important pillars of the system, built on the foundation of production and partnership, will be the “MÜSİAD Assembly” and another the “Project implementation”. Alongside the new model he calls the “Solar System”, we also discussed with President Kaan current economic issues concerning the Turkish and world economies.
There is one subject that Kaan, who answered Yeni Şafak's questions, particularly dwelled on. Underlining that a system based on partnership rather than debt must take root in Türkiye, Kaan said, “There is also the matter of banks turning into investment banking rather than remaining institutions that buy and sell money. At the moment we have slowly begun to establish a structure that moves towards incorporation by merging, not through banks. MÜSİAD members have started to turn in this direction.”
Attacks Coming from Outside Affect the Economy
How do you assess the current situation in the economy at present?
Because we are a country at the centre of the world, we are affected by developments. Particularly with Trump coming to power, we see that the economic system planned for the world until 2030 has changed. Partly because he himself comes from a business background, this has had very serious repercussions on the world system. The most important factor affecting the economy in Türkiye is the attacks coming from outside and political factors. Our fragility on this matter is our biggest problem. Otherwise, when you look at the data, there is in fact no problem. Why is foreign exchange rising? The only reason is that the perception of sufficient production in Türkiye is gradually shifting towards consumption. If we can no longer settle this perception in minds in Türkiye, we will always proceed with day-to-day measures. The Ministry is doing this by keeping it under control. If we let go, it could turn back to imports again. The industrial segment is in some difficulty because of credit-based operations, because of that habit from the previous period. But once we get through this, I think we have seen the bottom. For the last 10 days a revival has also begun in the markets. If there is no other attack, we think Türkiye will enter a growth trend from now on.
Balance Is Essential on the Production and Investment Line
Did companies go through a detox in this difficult period?
As you say, a company has property and assets but clings to credit. In a period when access to finance became difficult, a detox took place. Rather than take out a loan, let me sell something from my own equity. It is as if those who did this ended up at an advantage. Would an interest rate cut ease the economy? Of course it would ease it to a degree. It corrects the perception, but would it be enough? No. Because there is a subject that we at MÜSİAD have always spoken of. We need to create a satisfactory balance on the production and investment line. Türkiye is a country whose population grows by 1 million a year. As this grows, you need to raise the perception both in industrial production and at the same time at the base of agricultural production. We need to secure this balance. We are on the production side of the business. In a country, the strength of the currency is determined by the country's production power.
The Labour Shortage Affects Production
For example, what we talk about most is that we cannot find qualified staff. Yes, there is an unemployment problem in Türkiye. But when we look at it, when you ask whether there really is unemployment, unemployment exists only in the Southeast. In all provinces apart from that there is a labour shortage. There is a shortage including unskilled labour. My businesses are in Thrace. We cannot find workers there. This affects production. We make plans. Tomorrow there is this much production, this many orders. Then you see the worker does not turn up the next day. The fundamental element that will revive the economy is people. However, we are becoming steadily poorer in terms of qualified staff as well. For example, we introduced the concept of the thematic high school in vocational high schools. We opened stores inside vocational high schools. We are trying to put forward a new beginning. While doing this, we are also trying to put forward a model. As long as we increase vocational high schools in Türkiye, we need to remedy this impoverishment, particularly the impoverishment of human resources.
How will we encourage production?
By working project-focused and tying every model in Türkiye to project-based work. Alongside rural transformation, there is the matter of linking urbanization. MÜSİAD joined the monitoring committee on rural transformation. We also have the infrastructure on this matter. And of course education planning has been entered into as well. If these three pillars are put in place, what we are speaking of can be created.
Türkiye Must Be a Production Base
How do trade wars affect the world economy in general?
Today, Türkiye's being at the centre of the world, our being in a region that holds 75 percent of energy resources, its being a bridge, and logistically our proximity to consumption markets in fact carry a very great advantage. When you make Türkiye a production base, we can enter the market very quickly as a player. Because today China's production costs have also risen. This is shifting somewhat to India. If we too are not included in this international rapprochement, it is not possible for us to grow trade.
Do difficulties in access to finance continue?
At the moment there is some easing in the banks. Loan demand has decreased. Our biggest problem was in the housing sector. Housing grew rapidly and grew entirely on bank loans. It raised loan demand at the banks a great deal. Especially when you take into account to some extent the stagnation in the industrial segment, we can say that the banks are currently in a relieved position.
Are the banks happy when their doors are knocked on less?
As for our guidance, what we have been saying for two years is that a system based on partnership rather than debt should take root in Türkiye. There is also the matter of banks turning into investment banking rather than remaining institutions that buy and sell money. At the moment MÜSİAD members have started to turn towards a structure that slowly moves towards incorporation by merging, not through banks. As interest rates fall, credit costs fall. We are already opposed to interest. From the day I took office we said we would act on systems that would reduce or completely remove the burden of interest. That is why, once we put in place good production and profitable production models, the flow towards the banks will already have decreased
Those Who Took No Credit Came Out Ahead
We have a project for medium-scale industrial zones. There we will carry out a joint project with a participation bank. We will spread this across Türkiye. Likewise we have a project on renewable energy. We are trying to run this jointly with another participation bank. We are trying to encourage investment banking. Among our members there is a considerable number of groups that never work with credit. These grow even in times of crisis. They grow by 10-15 percent. Indeed, in my own company we achieved growth of close to 20 percent in this period. Because you are working with your own equity.
We Provide Services at 311 Locations
It seems you are more careful than before when selecting members…
Of course we have criteria. It is not easy to become a member of MÜSİAD. Commercial ethics are important to us. At the moment we have close to 11 thousand members. We express it as approximately 61 thousand companies. In terms of employment numbers, close to 200 thousand jobs have been created over the past year. We will revise the figures. We are establishing MÜSİAD TV. It will begin broadcasting. We operate at 87 locations in Türkiye and at 224 locations in 94 countries abroad. In the business world, MÜSİAD has now completed its corporate transformation in line with the changes in the world and in Türkiye. We called this renewal. Here we try to act with competence and merit.
We developed a new understanding
Could you tell us about MÜSİAD's activities?
As MÜSİAD we entered a new structuring that we call renewal. Why did we do this? As MÜSİAD we completed our 29th year. We established a new understanding, a new philosophy in Türkiye. We created a new management model. We named it the solar system. It is a first in the world. I think it will become a model for Türkiye. There is again a central structure. But it is a more project-focused undertaking with a philosophy. Here we are under the main philosophy of business development and business environment development. At the same time, under the heading of planning and implementation, with a new structuring model that we divide into assembly and field, in which the high boards are again included but attached to them thematic and semi-thematic bodies as well, we have brought a new understanding to Türkiye.
There is serious demand for investment
You have a busy agenda on your desk. Is there a subject you are focusing on these days?
We have an undertaking we call MÜSİAD INVEST. We have a particular effort as a unifying force in investment, that is, for those abroad who invest in Türkiye. Again, in connection with the renewal process, there are those who come to make very serious investments. We meet with them. We even work in that area right down to their residence in Türkiye. With MÜSİAD ACADEMY we are carrying out very serious work on training qualified business people. As a capital base, MÜSİAD, with all its aspects and its projects, will both bring gains to and develop its members and serve its country; at the same time, together with this integration in the world, we are also localizing the investors who will come.