ECONOMIST CONFERENCES 16TH ROUNDTABLE MEETING

25.06.2008
-SABANCI HOLDING CHAIRPERSON GULER SABANCI:
-“WE, AS THE SABANCI GROUP, DO BELIEVE IN THE FUTURE OF TURKEY.
AGAIN WE DO AIM AT AN 18-20 PERCENT GROWTH AT SABANCI
WITHIN THE NEXT THREE YEARS”
-“TURKEY WILL GROW BY 4 PERCENT THIS YEAR, ALTHOUGH IT IS CONSIDERED
ONE OF THE TROUBLESOME YEARS.  A RATE  TWICE THE OECD AVERAGE”
 
Prime Minister Recep Tayyip Erdogan and Sabancı Holding Chairperson Guler Sabancı attended the panel on “Turkey at a Crossroads” at the 16th Roundtable Meeting organised at the Hyatt Regency Hotel by Economist Conferences, part of the unit “The Economist Intelligence.”
In her speech at the panel, Sabancı Holding Chairperson Guler Sabancı said that they believed in the future of Turkey, and they aimed at a growth of 18-20 percent within the next three years.
Giving a speech at the 16th Roundtable Meeting organised by Economist Conferences, Sabancı noted that the years 2002 and 2006 were proud ones for Turkey, with inflation and interest rates low, foreign capital inflow high, privatisation accelerated, and high rates of growth recorded.
Sabancı stated that the Prime Minister Tayyip Erdogan and government members pulled their weight in the process of EU accession, and Turkey locked on that target, and had a successful period, such process was one of a crucial change and transformation for Turkey.
Having said that, although the issues of priority of Turkey in the year 2007 were elections and security, the country had managed to grow by 4.5 percent, the inflation rate ended up being around 8 percent, and the direct foreign investment reached a record-breaking figure of 22 billion dollars, Sabancı emphasised that the macro-economic balances and the macro- economic discipline showed the necessity for micro-arrangement.  “We have said so.  And our government worked on it,” said Sabancı.
Guler Sabancı reminded the audience of the fact that, particularly as of April this year, some major reforms, as expected by the business world as well, were implemented in Turkey, which were the employment package, Social Security Reform, and R&D incentives.
Sabancı noted that the automatic pricing process was a must for the electricity and energy market, and this was achieved, and added “This is also a source of confidence for us, in respect of our investments in the field of energy.”
-“ACHIEVEMENTS IN THE PAST CONSTITUTE AN INDICATOR FOR THE FUTURE”-
Telling that they see the performances and achievements in the past as an indication of the future, Sabancı added: “We, as the Sabancı Group, are confident in the future of Turkey.  Sabancı Group grew by approximately 20 percent during the last 4 years.  Now we look to the next three years.  Again we at Sabancı are aiming a growth of 18 to 20 percent within the next three years.”
Sabancı stated that, as per the sectors they are in as a group, they anticipated that the banking industry would grow by 17 percent, insurance by 19, retailing by 12, and energy by 18-20, and added that the Sabancı Group was operating and continuing to investing in all these four sectors.
Guler Sabancı said that they provided 1.6 billion dollars for their organic investments during this year, which amount excluded acquisitions and their intentions in the privatisation tenders, the addition of which would lead to a much higher figure.
Highlighting that they were planning investments of 6 billion dollars, excluding privatisations, within the next three years, Sabancı noted that an uncertainty had been being experienced in Turkey, which they considered temporary and expected to end as soon as possible, on top of the one prevalent globally, saying: “We consider these to be temporary.  We believe in the potential of Turkey in the short and long run.”
Sabancı said that they had also some expectations, particularly including engagement in a struggle against informal economy, against which there were some initiatives; and that and they expected the acceleration of such initiatives.
“Our wish is that Turkey shifts to a system of profit based on economic fluidity and productivity, rather than a rent-based economy.  And the main point of this involves reduction of the informal economy,” said Sabancı.
-“TURKEY WILL GROW BY TWICE THE OECD AVERAGE”-
Stating that the Turkish Commercial Code needs renewal, and she hoped that the Parliament would give the priority to this issue, Sabancı said: “We, as the Sabancı Group, do both believe in the future of Turkey, and rely on its past achievements.  And we are sure that these will be achieved as well.”
Sabancı said that the budget share allocated to education had considerably increased during the recent years, and Turkey had a dynamic, demanding and outward-oriented domestic market with own domestic potential.
Pointing out that the geographic position of Turkey was also an important factor, Sabancı told that Turkey served as a bridge for its significantly-growing neighbours, and another factor was that Turkey could also be considered as an energy bridge.  Guler Sabancı continues her words as follows:
“The world discusses food and energy. Turkey is a bridge in energy, and has a significant potential in food.  With these brought up together, we see the Turkey’s potential for growth.  Turkey will grow by 4 percent this year, although it is considered one of the troublesome years.  A rate  twice the OECD average... We do not like 4 percent.  And I think Mr. Prime Minister does not, either.  We want Turkey to grow by 7 percent as a minimum, as it used to manage in the past.”
-“CURRENT DEFICIT IS A SENSITIVE ISSUE”-
She noted that they, as the Sabancı Group, were interested in nuclear energy as well, and that the investments they were currently planning were based on natural gas, thermal, coal and renewable energy, they were planning to invest 6 billion euro in such businesses related to power generation, and wanted to have a well balanced portfolio, and to increase the share of renewable energy.
Guler Sabancı said that such package did not include distribution networks, but merely electricity generation, and their target was, if this is done, to realise at least 10 percent of the power generation in Turkey.
Expressing that the ever-growing current deficit was a sensitive issue in Turkey, and the rate of growing thereof was somewhat higher this year, Sabancı said:  “I personally do think that Turkey will always have a certain extent of current deficit.  We are a country in the mode of growing.  Hence we will have a certain current deficit.”
-GULER SABANCI'S QUESTION-
Upon the question of Sabancı Holding Chairperson Guler Sabancı “Power generation plants were planned to be privatised.  At what stage are we in this respect?,” Prime Minister Recep Tayyip Erdogan stated that the privatisation process of the power generation plants within the scope of privatisation was in progress, and added: “We want to start the privatisation in power generation with a pilot application only.  Our concern is that, whether they make the necessary investment at once or not.”
Prime Minister Recep Tayyip Erdogan emphasised that privatisation in power distribution was a smooth process, and noted the following:
“When it comes to power generation, you see that they refrain from making investments.  Because they think ‘first I make money, then make investments.’  This concern is the case with us right now.  Therefore we must start with a pilot application, and see “whether the one who is actually awarded generation and distribution will really make the required investment or not.’  At this point I want to give an example.
Both the networks and the high-voltage transmission lines are all overhead.  Overhead lines must be transferred to the underground so that the losses and illegal abstraction can be eliminated.  We have made considerable investments in this task in last 2 years.  Every Tom Dick and Harry directly attaches a hook, and steals the electricity thereby.  They also steal in indirect ways.  You cannot satisfy such power demand.  An unfair competition prevails here.  This is substantially committed by some factories, as well.  As I said, the human factor.  Network must be moved to the underground.  If these investments are made, then the privatisation will be a meaningful step.  Otherwise it will make no sense.  This is where the trouble lies.”
Upon another question on the privatisations in energy sector, Prime Minister Erdogan  stated that there some difficulties were being experienced in this respect, and added:
"We have learned from our experiences.  We have seen that those who had managed to ensure amortisation for themselves evaded investment when the time came.  I do not claim that all investors are so.  There are events we have experienced, we have witnessed.  These have thought us the meaning of ‘a burnt child dreads the fire.’  Because we have been burnt before.  This is where the trouble lies.  Therefore we intend to start with a pilot application.  After the pilot application we will generalise this operation.”
Taking the floor on the same subject, Guler Sabancı too expressed that she had some concerns regarding the energy shortage, and added: “Energy must not be an obstacle for the growth of Turkey.  I take this question as a warning.  There is a risk in energy.  And, to my mind, there is a trouble therewith in the short run.”
Upon a question if the government had been doing anything in respect of reducing the power consumption, Prime Minister Erdogan reminded the audience of a meeting that had been held on that issue at the TOBB University of Economics and Technology recently, where the energy saving had been discussed.
 
-RELATIONS WITH THE IMF...-
The question of Sabancı Holding Chairperson Guler Sabancı, “What is the future of the relations with the IMF?” was answered by Prime Minister Erdogan as follows:  “We do no more need the IMF in terms of monetary relations.  When we assumed the office, 5.5 years ago, we owed 23.5 billion dollars to the IMF.  Now our debt is approximately 10 billion dollars.  This does not pose any problem for us.”
Erdogan emphasised the importance of the IMF especially in terms of accreditation, and in the negotiations, and stated that the technical works were in progress among the Ministry of State, interested persons, and IMF officials.