One of Türkiye’s high business associations has issued a name for strategic warning as Türkiye navigates its pivotal function in world logistics, notably with initiatives just like the Belt and Road Initiative (BRI), China’s modern-day revival of the traditional Silk Road.
Launched greater than a decade in the past, the $1 trillion mission goals to attach Asia with Africa and Europe by way of land and maritime routes, which might redefine worldwide commerce routes – and, by extension, Türkiye’s function in world commerce.
Nail Olpak, head of the Foreign Economic Relations Board (DEIK), emphasised the fragile steadiness Türkiye should strike to profit from the initiative with out shedding its aggressive edge. He says it ought to embrace new alternatives but additionally safeguard its conventional strengths.
Competitive benefit
Addressing a gathering with journalists in his hometown of Burdur, Olpak stated China is reported to have spent round $50 billion-$60 billion on the Belt and Road Initiative to date.
He defined that China is attempting to rapidly and effectively entry rich markets, noting that at present, it reaches these markets by way of sea, with ships touring from Shanghai to Amsterdam in 40-45 days.
However, he identified {that a} trial performed two to 3 years in the past by way of the Middle Corridor, which incorporates Türkiye, diminished the Shanghai-Amsterdam path to 11 days, with an eventual goal to decrease this to seven to 9 days.
“A truck from one of our top export cities, Gaziantep, can reach Amsterdam in three or four days, but if China manages to reduce shipping times to eight days, we risk losing one of our biggest advantages,” Olpak stated.
“Therefore, we need to be fully aware of what we’re applauding when we talk about the Belt and Road Initiative. Trucks coming from there won’t return empty. We need to figure out how to fill them.”
Olpak additionally warned Türkiye might face a major loss in Europe, its largest market. “We must evaluate this project from this perspective.”
“If we act wisely, we can turn this process into an opportunity,” he stated and warned concerning the commerce imbalance Türkiye has with China.
“China has become our biggest partner, but with a trade imbalance of around one to 10 against us. We need to close this gap.”
Capitalizing on key location
Türkiye is understood for its geographical place between Europe and Asia, which makes it one of many key gamers in worldwide commerce and transport. Its location permits for fast transit of products, primarily by way of land routes, which have historically given Turkish exporters a time benefit.
The Belt and Road Initiative, launched by Chinese President Xi Jinping in 2013, seeks to create a contemporary Silk Road by constructing an enormous community of railways, highways, and ports to attach Asia with Africa and Europe.
The Middle Corridor – a key part of the BRI – passes instantly by way of Türkiye. This route is seen as a extra direct and doubtlessly sooner various to the standard northern route by way of Russia.
Olpak confused that Türkiye should proactively have interaction with the initiative, not merely as a transit level, however as a participant that may capitalize on its strategic location.
“We need to find ways to capitalize on it beyond just collecting a small fee for every passing train.”
Challenges for exporters
During the press occasion, Olpak additionally touched on a spread of different subjects, together with Türkiye’s ongoing financial insurance policies, whereas urging for steps to assist preserve the competitiveness of Turkish exporters within the face of challenges overseas and at house.
Türkiye has been grappling with persistently excessive development in value features, a problem exacerbated by world provide chain disruptions and fluctuating power costs.
Authorities have been pursuing a greater than a year-long policy-tightening effort to rein in inflation and overheated demand.
The central financial institution has hiked rates of interest by 4,150 foundation factors, to 50%, since June final 12 months and has maintained that it’ll hold its financial coverage tight till inflation aligns with its targets.
Over time, rate of interest hikes enhance the price of borrowing throughout the economic system, together with for mortgages, auto loans and bank cards.
Annual inflation dipped beneath 52% in August yearly, in comparison with its peak of 75% this May. The sharp drop is anticipated to proceed because the tightening marketing campaign brings value aid.
To backstop the speed hikes, authorities have additionally adjusted laws to tighten credit score circumstances, and the federal government has adopted some fiscal tightening measures to assist ease the present account deficit and rebuild reserves.
Olpak stated that whereas the federal government has made strides to stabilize the economic system, there’s nonetheless room for small but impactful changes.
“The 2% foreign exchange support for exporters could be slightly increased without significantly affecting our budget balance,” he advised. He additionally known as for the easing of the two% credit score development cap for small and medium-sized enterprises (SMEs), which he famous might present much-needed respiratory room.
“SMEs have much tighter lifelines,” he stated, pointing to their very important function within the economic system.
Exporters have been complaining about an overvalued Turkish lira, which makes their items dearer, limitations to financing, in addition to dwindling orders.
They have looked for extra forex depreciation provided that, year-to-date, inflation is 32% whereas the lira has fallen solely about 13% to the U.S. greenback.
Authorities, nonetheless, have urged lira holdings, helped alongside by excessive deposit charges.
Among his suggestions, Olpak emphasised the potential leisure of the present requirement for exporters to transform 30% of their overseas change earnings again into lira.
“We hear daily that the central bank’s reserves are improving. A step could be taken on the 30% conversion requirement. I’m not suggesting its complete removal, but there is room for adjustment,” he famous.
Contractors’ success
While Olpak painted a cautious image for exports, he was extra optimistic about different sectors the place Türkiye has confirmed its mettle.
“One area where we excel is contracting,” he stated, highlighting Turkish contractors’ substantial footprint in world markets.
“We are second only to China in terms of the number of projects undertaken,” he famous. In 2022 alone, Turkish contractors secured $31.5 billion in contracts worldwide.
However, Olpak warned that financing challenges threaten to undermine this success.
“Our contractors are daring and fast. We’ve hardly ever had a contractor who caused problems abroad. Our pricing and quality are competitive. The only challenge we face is financing.”
Investment convention
Turning to DEIK’s plans, Olpak shared particulars of the upcoming fifteenth Türkiye Investment Conference, which can be held in New York from Sept. 23 to 25.
The occasion will convey collectively President Recep Tayyip Erdoğan with distinguished U.S. business leaders and Fortune 100 executives, Olpak stated.
The convention will coincide with the United Nations General Assembly.
The occasion will embrace a collection of high-level conferences that includes Treasury and Finance Minister Mehmet Şimşek and Trade Minister Ömer Bolat, who will have interaction with U.S. traders, in response to Olpak.
Energy and Natural Resources Minister Alparslan Bayraktar and Industry and Technology Minister Mehmet Fatih Kacır can even maintain conferences organized by Türkiye-U.S. Business Council (TAIK), below DEIK, and Citigroup.
“We believe the outcomes of these meetings will be significant for our country,” Olpak stated.
BRICS: A strategic political transfer
Asked about Türkiye’s potential membership in BRICS, Olpak was measured in his response.
“I view this more as a political playing field than an economic one,” he stated, noting that Türkiye had already participated in BRICS conferences as an observer.
Türkiye just lately confirmed it had submitted a request to hitch the alliance. If admitted, it might turn into the primary NATO member within the group, which sees itself as a counterweight to the Western-led world order.
Olpak likened the event to Türkiye’s renewed engagement with the European Union, notably after the current resumption of high-level dialogue conferences.
“It’s a delicate balancing act, but I believe Türkiye can manage both relationships effectively,” Olpak stated.
Green, digital transformation
Among different urgent points, Olpak referred to the inexperienced transformation, a shift that he says presents each alternatives and threats.
“If we can perform well in certain product groups, there are great opportunities. But if we don’t take action, we will be on the losing side,” he warned.
On digital transformation, he expressed a extra hopeful outlook. “Why? Because our infrastructure and rate of progress in the digital sector are more conducive to closing the gap. In this sense, we are more optimistic,” he stated.
The DEIK chief stays cautiously optimistic concerning the future.
He known as for endurance as the federal government’s financial program unfolds however acknowledged the difficulties that lie forward, notably for sectors like textiles, automotive, and chemical substances, which have just lately signaled hassle.
“The market isn’t all rosy. There are challenges, but they were expected,” Olpak stated. Still, he stated he was hopeful concerning the medium-term program’s success, which might guarantee stabilization inside a 12 months or so.
Source: www.dailysabah.com