Security fears hit investment efforts

ISTANBUL - Hürriyet Daily News

DAILY NEWS photo, Selahattin SÖNMEZ

Turkey’s new incentive system, which introducing special privileges for investments in the underdeveloped southeastern provinces, is a positive step forward, but fails to spread hope because of the security problems ongoing in the region, according to a number of business leaders from the region.

“The incentive scheme is very well-crafted and comprehensive, but I regard it as impossible for any investor to come to Şırnak unless a peaceful environment is maintained,” said Osman Geliş, the president of the chamber of commerce and industry in the southeastern province of Şırnak, said.
“The level of unrest has increased since relations with Syria took a worrying turn,” he said.

Şırnak and its neighboring province Hakkari have the largest problem in terms of economic development, Geliş told the Daily News in a recent phone interview. “If investors are still not coming to the region despite powerful incentives, this is because of the lack of peace,” he said.

These two provinces, along with several others in eastern and southeastern Turkey, are facing large security problems with the outlawed Kurdistan Worker’s Party (PKK) intensifying its attacks over the last two months.

The investment scheme divides the country into six zones in terms of investment priorities. The provinces in the sixth zone are promised to receive the most investment support. The main incentive is that the government will pay employee insurance costs on the minimum wage for 10 years for investments made in sixth-category provinces, in order to support labor-intensive businesses.

“Turkey will definitely benefit from the incentive scheme, but there is zero possibility for provinces like ours to make use of it,” said Ahmet Şen, the pessimistic head of the Hakkari Chamber of Commerce and Industry.

In particular, Hakkari lacks equity capital, according to him. “We need investors [from outside the province]. But why would they choose Hakkari over other provinces under this incentive scheme?” he said.

Şen suggested putting the eastern and southeastern provinces of Hakkari, Şırnak, Ardahan and Van – the latter of which was hit by a devastating earthquake on Oct. 23, 2011 - in a separate category, granting them additional incentives such as direct equity injections.

“Security is a [major] problem in itself. But even without the security problem, companies would not come here to invest,” Şen said.

“The largest incentive is to create a peaceful environment,” said Diyarbakır Chamber of Commerce and Industry head Remzi Can, adding that parliamentary efforts regarding the new constitution should continue.

Complaining about investors preferring to work in risk-free regions, Can said the chamber also offered to match companies from outside the province with local ones for partnerships.

In a press meeting last week, he also expressed his opposition to a recent government decision to turn a former tobacco factory and depot in Diyarbakır into a prison instead of an industrial zone.

“Investments and trade are conducted in peaceful places. We are very uncomfortable with the [security] problems, but you see our businessmen from the western regions investing in Iraq, which is one of the most unstable countries in the world,” Van Commodity Exchange (VATBO) chairman Feridun Irak said.

“The goal has been to attract investors from western Turkey to the region for years, but we have seen no one from the west coming to the east for investment,” he said, adding that entrepreneurs in the region should be supported in the first place.

“The incentive scheme, which is the most comprehensive in the history of the republic, still does not satisfy our demands,” he said.

The PKK is recognized as a terrorist organization by Turkey, the United States and the European Union.