TURKEY’S PLASTICS INDUSTRY GROWS DESPITE COUP ATTEMPT

PAGEV declared that Turkey has a strong economy and solid financial markets thus a strong growth in Plastics Industry after the failed coup attempt which happened in Turkey. The statement came at the Dusseldorf K exhibition which Turkey has one of the biggest participation of 114 companies and trade visitors of more than 1000 business people.

Turkish Plastics Industry embraced growth by increasing production in 2015. Production capacity of the industry reached 8,6 million tons by a 3,2% increase in 2015 vs previous year. The estimated output will reach 9 million tons by the end of 2016. Production on value basis declined by 6,6 percent reaching $32,9. Drop in oil prices and EUR-USD parity brought losses on value basis.

Out of 8,6 million tons of plastics production in 2015, plastic packaging took the lead with 3,4 million tons, followed by plastic construction materials with 1.9 million tons. With this amount of production, plastics industry used its full capacity by 73 percent. Domestic consumption in the industry increased 4.1 percent reaching 7,6 million tons vs same period of the previous year.

Commodity Goods exports in Turkish Plastics Industry decreased in amount and value in 2015 vs 2014. Amount of exports became 1,58 million tons decreasing by 1,6% with a 12,8% decline on the basis of value reaching $4,34 billion. Top export destinations of the plastics industry were listed respectively as Iraq, Germany and England. Another problem is insufficient national production of feedstock; import-dependency continued in 2015. Raw material import in the industry increased by 3,7 percent reaching 6,3 million tons, while declining by 15,1 percent on value basis reaching $9,4 billion.

Plastics raw material production in 2015 was around 1 million tons. Investments on production equipment costed $765 million on average in the last five years. 25 percent of these equipment were manufactured in Turkey while 75 percent were imported.

Speaking at the press conference Mr. Yavuz Eroglu, President of PAGEV said “Concerning all this figures, we can clearly see that Turkey became the 2nd largest Plastic Goods Manufacturer in Europe after Germany and 6th largest producer globally. Although the volume is good still industry have problem with raw material as the domestic production only serve 15% of local market demand. The rest which is 85% has to be imported globally. Also for the plastic machinery; only 30% is produced domestically and the rest has to be imported. Concerning theese two figures the main advantage of Turkey is the Entreprenuership. Plastic Industry with low capital investment and easy market entry is an ideal area for entreprenuers. One thing that we are working on as industry is to increase the value addition thus the sofistification of Turkish product. When we check the figures the average export value of top 10 Plastic goods exporting countries is 5,3 USD/kg whereas Turkey has average 2,8 USD/kg export price."

"PAGEV took action to help industry provide higher added value through state-of-the-art technology with competitive advantage. PAGEV took action to establish the first PAGEV Plastics Center of Excellence in Turkey with support of the Ministry of Science, Industry and Technology. Initial target of this center that will enable high-technology production will be increasing added value to $4 per kg and narrowing the foreign trade deficit" said Eroglu.

Eroğlu further noted that ". The Foundation will establish the ‘Plastics Center of Excellence’, where technologies with higher added value will be developed to support small- and large-sized plastics producers. The Center will be built near the Istanbul PAGEV Vocational and Technical High School, and will have an indoor space of 30,000 square meters. The first stage of the project, which is a facility of 3500 square meters, is expected to be commissioned within one year. The entire project is an investment of 23 million Dollars lira and will take four years to complete. The Center will serve the chemical, rubber and composite industries as well with research, certification, testing and laboratory services, and cooperate with industrial companies, universities, research institutions, professional associations and nongovernmental organizations for developing the latest technologies. The Center will also provide professional and technical training and advisory services. The machinery industry will benefit from the Center as well through quality and quantity improvements in plastic machinery, mold and equipment production. All of these will improve the competitive strength of the industry, ultimately making Turkey the global hub of plastics production."

PAGEV presedent also commented on last coup attempt and its effects to Turkish Economy and Plastics Industry. “Concerns that the recent failed coup attempt will affect the rising momentum in Turkey’s Plastic Industry are not reasonable. We strongly believe that the likely short-term effects of this failed attempt will not be accompanied by any deterioration in the major economic indicators and further reinforce Turkey’s commitment for structural reforms.” said Eroğlu.

Functioning Financial Markets

In the period immediately following the failed coup, markets still functioned normally. A series of policy measures, such as easing liquidity conditions, was taken by the Central Bank of the Republic of Turkey to encourage financial markets and to prevent the banking system from being exposed to the negative effects.

Strong Banking System

Turkish banks have higher capital adequacy and lower non-performing loans ratios when compared to their peers in Europe and emerging markets. Moreover, the banking system in Turkey recovered quickly in the aftermath of the 2001 and 2008 crises and has proven resilient during temporary shocks such as terror attacks and geopolitical risks over the past two years.

Growth Prospects

The economic growth in Turkey has been quite resilient to various shocks over the past 2 years, averaging 3.5%. The country's GDP increased by 4.8% in the first quarter of 2016 compared to the same period last year. The government has new structural reforms, as well as new incentive schemes for foreign and domestic investors in the pipeline. These together with strong domestic consumption will stimulate the growth and accelerate confidence in Turkey. PAGEV as the representative of Industry globally share updates to our business partners all around the World. We have also shared the latest information with our partner NGO’s in K Show namely Plasticseurope and EUPC. There are some possible or even likely short run effects of the recent turmoil, such as declines in tourism or foreign investment. Still, the long-run fundamentals of the economy will tend to reassert the short-run disruptions.

External Liquidity

The concern regarding the external financing requirements of the Turkish economy is commonly discussed by the rating agencies. Turkey has so far shown a good track record of paying back its debt (no any state default in his history), continues to find financing from abroad and has strong public finances. The government also has “significant fiscal space to respond to shocks” while keeping its budget deficit below 1%. Tax income supports the budget at the moment and the decreased need for borrowing will keep public debt at a reasonable level.

Conclusion

Turkish political parties from all ideologies, citizens, non-governmental organisations and media have stood in solidarity against the coup attempt. The public demonstrations lead by all political parties in the Parliament and throughout Turkey has shown Turkish citizens commitment for democracy. Turkey is a nation united for democracy, sustainability and stability. Foreign investors in Turkey have declared a statement reiterating commitment for investments in Turkey.Consumer confidence in dometic market is still strong.Daily life and business is running as usual , only point you can feel the extra security is at the airports . Although it is politically time consuming to filter the people in connection with coup attempt in Military , Goverment and Politics; business runs on normal pace and Turkish Plastic Industry leads to contribute to global industry.

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