Firms in eastern Turkey financially crippled by terrorism

Published 27.11.2015 22:47
Updated 27.11.2015 22:52
Firms in eastern Turkey financially crippled by terrorism

Entrepreneurs who invested in the eastern and southeastern regions during the reconciliation process have experienced difficult times due to the terror events that have taken place over the past six months. Such events have pushed the banks to take some measures such as imposing more restrictive conditions or requesting the repayment of credits taken before the maturity date. The reconciliation process was launched to end the decades-long conflict between the government and the PKK terrorist organization in 2013. The process helped to provide peace in the region, which enabled new investments and businesses to develop.

The business people, who claim that many companies went bankrupt and many people became jobless, are planning to complain about the issue by consulting with Prime Minister Ahmet Davutoğlu. Regarding the issue, the president of the Diyarbakır Organized Industrial Zone, Aziz Özkılıç, said the terrorist attacks in these regions following the June 7 election affected all sectors in a negative way. Stressing that, in addition to the developments in the Middle East, which have already depressed exports, the violence in Turkey has made the conditions for entrepreneurs even worse. "Some private banks demand the credit repayments to be made before the due date. This has brought the enterprises to the brink of bankruptcy," Özkılıç said. He also claimed that these banks are demanding a higher interest rate to give credit to the companies in the east, compared to their counterparts in the West. "The credit that we utilize requires an interest rate of 18 percent, which is given at 12 or 13 percent in the west. Despite these higher interest rates attributed to the risks in the region, they insist that the credit repayments be made at earlier dates. By arranging appointments to discuss the issue with Davutoğlu and Deputy Prime Minister Mehmet Şimşek, we will complain about these unjust practices of the banks," Özkılıç added.

Moreover, Diyarbakır Industrialists and Businessmen Association President Burç Baysal said: "These banks imposed even more restrained credit requirements and other conditions on businesses," and stressed that businesses in the region are pushed to downsize due to their inability to take credit. Hak Industrialists and Businessmen Association President Ramazan Azboy said: "Unable to take credits, some firms went bankrupt. If the banks do not change their attitudes and practices, the situation will get even worse." He emphasized that after the terrorist attacks the banks changed their attitude towards the businesses, which caused the local businesspeople and investors to experience serious problems.

In the southeastern industrial city of Gaziantep, local firms experience a problem of credit recalls. In this city, many small firms, employing between 50 and 100 staff, got into financial trouble because of credit recalls and the inability to resort to external borrowing to finance their investments. Within the last year, 20 firms in the carpet sector declared bankruptcy. As a result, more than 1,000 people became unemployed. Regarding the issue, Southeastern Carpet Exporters' Union President Selahattin Kaplan said: "If the financial problems stemming from the recent practices of the banks do not change, then the outcome will be much worse." He added that they conveyed their message concerning the issue to both the presidency and Prime Ministry.

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