Turkish gov’t reveals $34 bln incentive package to boost employment, cut current account gap

Turkish gov’t reveals $34 bln incentive package to boost employment, cut current account gap

Turkish gov’t reveals $34 bln incentive package to boost employment, cut current account gap

The Turkish government has announced the details of a new project-based $34 billion package in an effort to create new jobs and push down the country’s rising current account deficit.

In accordance with the scheme, 19 companies will be granted incentives for a total of 23 projects, through which 35,000 new jobs are aimed to be created directly.

The planned investments are expected to create 134,000 indirect jobs, according to a statement by the Economy Ministry on April 9.

Further details of the program were announced in an official ceremony on April 9 in Ankara by President Recep Tayyip Erdoğan, Prime Minister Binali Yıldırım and Economy Minister Nihat Zeybekci.

“The $34 billion incentive package includes exemptions from customs tariffs and government support for employee insurance premiums,” Erdoğan said, adding that the new package would help Turkey reduce its current account deficit in a dramatic way.

Turkey’s current account gap — one of the biggest in the G-20 — makes it reliant on investment flows. Investors are looking ahead to current account data for February, which is due to be released on April 11.

Erdoğan also reiterated his uncomfortableness about interest rates, noting that “it was not possible to boost investments without cutting interest rates.”

He said interest rates need to be lowered to save investors.

“How will there be investments if you do not bring down interest rates. We call this an investment-based incentive system,” Erdoğan said.

“You have to save the investor from high interest rates so that these investments could be made. When there is investment, there are employment, production and exports,” he added.

Through the scheme, an additional $19 billion contribution to the economy is eyed by cutting the current account deficit.

“We will see the positive impacts of these incentives in the next two or three years,” Zeybekci said, adding that all of the investments under the coverage were either direct or foreign-partnered.

“We aim at growing Turkey’s economy through policies that would raise production and productivity, reducing the inflation rate and relieving Turkey’s high borrowing costs,” he added.

Thousands of new jobs

Of the new incentives, Alvi Medica, Assan, Atayurt, armored vehicle producer BMC, CFS, Dow Aksa, Ekore, Ersan, polyester maker SASA, İpek Mobilya, Most Makine, Siirt Bakır, Metkap Enerji, TUSAŞ, Oyak Renault, Yıldız Metalürji, dairy producer SÜTAŞ, Tosyalı and technology and appliance manufacturer Vestel will benefit.

The biggest investment will be made by Vestel, as the company will realize an energy saving systems for electric vehicles for 28.4 billion liras ($7 billion).

Tosyalı, SASA and Metcap will also create projects with high investment volumes.

The largest number of new jobs are planned to be created by Vestel with 6,240 jobs, SASA with 5,000 jobs, Alvi Medica, which will produce stents, with 4,000 jobs, and TUSAŞ with 3,200 jobs.