Structural reform for investment top priority, says Babacan

Published 28.07.2014 00:38
Structural reform for investment top priority, says Babacan

Deputy Prime Minister Ali Babacan said that one of the most important topics on the Justice and Development Party (AK Party) government's agenda is improving the investment environment in Turkey and taking Turkey to a position in which doing business is easier for industrialists in order to improve the country's competitiveness.

Babacan said that the government had applied very extensive policies regarding various incentive mechanisms, R&D activities, production and investment promotion and would continue to do so in the near future. "No matter how many incentive programs you put into action, you cannot obtain good results unless you take the necessary steps to improve the investment environment. That is what we have been trying to cope with for years," Babacan said. He also stated that Turkey has a strong economy thanks to its strength in its wide range of sectors including heavy industry, agriculture, trade, tourism and construction. Babacan touched on the fact that apart from energy dependence, Turkey's inability to generate added value in industry is a major problem.

He continued, "The main solution for us is to launch more R&D activities, more innovation and more branding. We should look to produce more domestic goods and sell our brands with our own quality assurance standards and patents, rather than contract manufacturing. If we can achieve this and produce better added value, it will ease our current account deficit.

The state has to eliminate obstacles to investors and review the present incentive system. While preparing economic policies and determining a macro framework, our top priority is to level down the current account deficit. As long as the current account deficit remains around 4 or 5 percent, it does not pose a problem. However, when it surpasses this level, we need to pay close attention to it."

Saying that inflation has fallen to onedigit figures, Babacan added, "our secondary priority is to bring down inflation." He continued, "Although we saw the lowest inflation level of the last 44 years two years ago, it is still high at the moment. If we are resolved to drop inflation and the current account deficit, we can achieve a feeling of confidence, which accompanies development and employment. Once you say 'At any cost, I am a large company,' you mean, 'I am not disturbed by the current account deficit and inflation. My only aim is to grow.' With this attitude you accumulate risks, and the anxiety of this accumulation will hit you, posing an obstacle to growth. When you take a firm stand on risky fields such as current account deficit reduction and inflation targeting, this confidence and determination brings growth and hence employment."

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