Tougher days await Turkish textile, top businessman says
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by Jale Özgentürk - Referans
Oluşturulma Tarihi: Şubat 24, 2009 00:00
ISTANBUL - The crisis in the textile industry began way before the global markets were struck with economic turmoil, according to Tahir Gürsoy, a well-known figure of Turkey’s textile and ready-to-wear industry. The low foreign exchange rate and high interest rate policy have been pressuring the industry’s leading companies for a long time, he notes
The global economic crisis did not "barely touch" Turkey, it shook the country, according to Tahir Gürsoy, a well-known figure in the textile and ready-to-wear industry.
"Some orders have already been canceled. Not just 2009, but 2010 will also be a tough year," said Gürsoy, who is also the chairman of Mithat Giyim. The company, whose main markets are the United States and the United Kingdom, is also one of the biggest manufacturers of the British brand Burberry. The firm also produces for many other well-known brand names such as Banana Republic, GAP, Ralph Lauren and Lacoste.
The government has been quite late in taking preventive measures, he said, added that he does not think the government’s economic management and its perspective toward main market players is healthy. "However, I don’t just blame the government. I also blame the representatives of the private sector. We have failed to unite. Maybe if those who operate in manufacturing managed to put their heads together and come up with a couple of articles for the government to assess, then maybe things could change."
Criticizing the foreign exchange policy, Gürsoy said it was among the main reasons the textile industry was suffocating. "The only way out of the crisis is production," he said.
The global crisis was not a surprise, he said, adding that the turmoil was expected to erupt since three years.
"The situation in Turkey is quite different compared to the rest of the world battling against the crisis," said Gürsoy. "There already was crisis in Turkey. Thank god the global crisis came about so that Turkey could find an excuse."
"The crisis in Turkey was generated by a low exchange rate combined with a high interest rate policy,"he said. "For the past five to six years, the industry has been abandoned. Industry players cannot receive decent credits. Obtaining credit with a 20 percent interest rate and making investment with that; can you imagine? Everyone flew the country and obtained loans from abroad. They were forced to get external loans and now everyone is in debt up to their necks."
"How can businessmen pay back the loans they got from abroad? When they took it, the U.S. dollar stood at 1.20 Turkish Liras. Now it’s well above 1.60."
On one hand is the lira’s dropping value, on the other is the decline in demand, he said, adding that Turkey used to send most of its exports to Europe but now that route is sealed. "Many orders have been canceled," Gürsoy said.
"Although the structure of the Turkish banks is strong, no banks are providing loans. And even if they did offer loans, who would take it with these high interest rates," said Gürsoy. "And what would be the point of obtaining a loan when you do not get any new orders.
"The fall in demand is the main issue," he said. "We need to accept the existence of some inflation. Somewhere around 10 to 15 percent, maybe. We are constantly bragging about putting a brake to inflation. If you ask me, Turkey’s economy was much healthier when there was an inflation of 30 percent to 50 percent, than it is right now ."
"The economic development has stalled. We need the economy to grow at least 5 percent to 7 percent. The crisis will not end this year and 2010 will be much worse," said Gürsoy.
"In order to accelerate the economic growth Turkey needs to increase investment and consumption," he said. "Turkey should now focus on production. Once people work and earn money, only then they will spend. Insisting on a tight monetary policy will only generate deflation."
Turkey’s industrial output declined 17.6 percent in December, the biggest decline since records began in 1986.
"Some orders have already been canceled. Not just 2009, but 2010 will also be a tough year," said Gürsoy, who is also the chairman of Mithat Giyim. The company, whose main markets are the United States and the United Kingdom, is also one of the biggest manufacturers of the British brand Burberry. The firm also produces for many other well-known brand names such as Banana Republic, GAP, Ralph Lauren and Lacoste.
The government has been quite late in taking preventive measures, he said, added that he does not think the government’s economic management and its perspective toward main market players is healthy. "However, I don’t just blame the government. I also blame the representatives of the private sector. We have failed to unite. Maybe if those who operate in manufacturing managed to put their heads together and come up with a couple of articles for the government to assess, then maybe things could change."
Criticizing the foreign exchange policy, Gürsoy said it was among the main reasons the textile industry was suffocating. "The only way out of the crisis is production," he said.
The global crisis was not a surprise, he said, adding that the turmoil was expected to erupt since three years.
"The situation in Turkey is quite different compared to the rest of the world battling against the crisis," said Gürsoy. "There already was crisis in Turkey. Thank god the global crisis came about so that Turkey could find an excuse."
"The crisis in Turkey was generated by a low exchange rate combined with a high interest rate policy,"he said. "For the past five to six years, the industry has been abandoned. Industry players cannot receive decent credits. Obtaining credit with a 20 percent interest rate and making investment with that; can you imagine? Everyone flew the country and obtained loans from abroad. They were forced to get external loans and now everyone is in debt up to their necks."
"How can businessmen pay back the loans they got from abroad? When they took it, the U.S. dollar stood at 1.20 Turkish Liras. Now it’s well above 1.60."
On one hand is the lira’s dropping value, on the other is the decline in demand, he said, adding that Turkey used to send most of its exports to Europe but now that route is sealed. "Many orders have been canceled," Gürsoy said.
"Although the structure of the Turkish banks is strong, no banks are providing loans. And even if they did offer loans, who would take it with these high interest rates," said Gürsoy. "And what would be the point of obtaining a loan when you do not get any new orders.
"The fall in demand is the main issue," he said. "We need to accept the existence of some inflation. Somewhere around 10 to 15 percent, maybe. We are constantly bragging about putting a brake to inflation. If you ask me, Turkey’s economy was much healthier when there was an inflation of 30 percent to 50 percent, than it is right now ."
"The economic development has stalled. We need the economy to grow at least 5 percent to 7 percent. The crisis will not end this year and 2010 will be much worse," said Gürsoy.
"In order to accelerate the economic growth Turkey needs to increase investment and consumption," he said. "Turkey should now focus on production. Once people work and earn money, only then they will spend. Insisting on a tight monetary policy will only generate deflation."
Turkey’s industrial output declined 17.6 percent in December, the biggest decline since records began in 1986.