Southeast frowns on gov’t stimulus

Government efforts to boost employment and undermine the appeal of outlawed groups in the country’s southeast have been greeted with dissatisfaction in the region.

"We do not find the [economic stimulus] initiative sufficient. The investments made so far did not reduce unemployment. On the contrary, they increased it," Tarkan Kadooğlu, president of the Eastern and Southeastern Industrialists’ Federation, told Hürriyet Daily News & Economic Review on Friday. "Our 2008 research shows unemployment increased to 40 percent in the southeast, indicating that investments to date have failed to meet expectations."

With the incentive and employment package, announced Thursday by Prime Minister Recep Tayyip Erdoğan, the government divides Turkey into four sections based on socio-economic development levels in an effort to eliminate regional disparities.

Further incentives will be applied to foster investments in the disadvantaged third and fourth regions of southeastern and eastern Anatolia. Investors will be supported with cuts in social-security premiums for workers, free land, reduced taxes and cheap credit.

As part of efforts to solve the Kurdish issue, Erdoğan last year pledged $12 billion over the next four years in investments for the Southeast Anatolian Project, or GAP, in a bid to create jobs. According to information obtained from the GAP administration in Ankara, 1 billion Turkish Liras of the promised funds were transferred and used to promote rural development, establish schools, increase hospital capacities, finish roads and develop irrigation.

The region’s economic players, however, think the efforts remain insufficient. Kadooğlu said bureaucratic procedures should be reduced to draw new investment and that incentives should be expanded to include mining and other key sectors. He also said the duration of the incentives should be expanded to at least 10 years. "Otherwise, you cannot attract investors," he said. "The return of an investment takes years and an entrepreneur does not invest if you offer a reduced corporate tax limited to a few years."

Lacking substance

Eyyüp Sabri Ertekin, chairman of the Şanlıurfa Chamber of Commerce and Industry, said investments were essential to prevent terrorism and unemployment. "However, the package does not include existing investments. They should also enjoy the incentives offered in the package. Their competitive power should be protected," Ertekin said. "Incentives rather concern the bodies that are investing, not the employees working in investment projects." Osman Geliş, chairman of the Şırnak Chamber of Commerce and Industry said Şırnak, which has no major infrastructure and is hard-hit by terrorism problems, should have been treated differently.
"Şırnak could have been categorized in a ’fifth region’ together with Hakkari," he said. "Şırnak has no road, airport or free zone and cannot be thus treated in the same category with Van, Erzurum, Adıyaman, Erzincan or Mardin, where the infrastructure has mostly been completed. Şırnak [also] has a negative image stemming from terror and no investor will come if further incentives are not provided."

Cahit Erbalcı, president of the Southeast Industrialist and Businessmen’s Federation, said investment should be facilitated and promises should be kept."We want the investments to gain further impetus. If the [GAP] project and investments are finalized and production increases, jobless people will not engage in terror," Erbalcı said. "But the rest of the [previous] $12 billion in support is yet to come. Promises should be fulfilled more hastily."

A warning on the budget

Though the government’s new incentives package is positive, the biggest problem facing the economy is how to manage the budget deficit, said a top industrialist.

Speaking at the presidential council meeting of the Turkish Enterprise and Business Confederation in Ankara Friday, Arzuhan Doğan Yalçındağ said Turkey should analyze what’s been done in the economy until today.

"Then we have to decide how long this fiscal and monetary expansionist policy can go on," she said. "When and how are we going to move on from the demand-stimulating approach?"