Industrial output rises 8.6 pct in December

Scion Industrial Engineering

Turkey’s industrial production increased by 3.6 percent year-on-year in December 2019, data from the Turkish Statistics Institute (TÜİK) showed on Feb. 13.

In the month, all the three main sub-indices — mining and quarrying, manufacturing, and the electricity, gas, steam and air conditioning — rose by 9.8 percent, 9.1 percent and 0.3 percent, respectively.

Industrial production is considered a vital indicator for the economy, as it is seen as a preliminary gauge for GDP growth.

However, the figure up by 1.9 percent in December, compared with the previous month.

Turkey’s industrial production also saw an increase of 5.8 percent year-on-year in the last quarter of 2019.

Mustafa Varank, the Turkish industry and technology minister, said on Twitter that the industrial production index hit the 21-month-high in December.

He said the country focused on making permanent this performance and production-based growth.

“We are working for a year in which growth is accelerating, the real sector is strengthening, and employment is on the rise,” the minister said.

“On an annual basis, all components of the index remained positive. The strong trend in the fields of capital goods, intermediate goods and high technology is an indication that we are on the right track for the future,” he added.


Turkey-UK defense cooperation ‘to grow’ after Brexit completed

Scion Industrial Engineering

It is critical for Turkey and the United Kingdom to sign a trade deal by the end of this year in order to avoid any negative implication on the two countries’ trade volume after Brexit, said Osman Okyay, the chairman of the Turkey-U.K. Business Council.

The cooperation in the defense industry will grow independent of Brexit and there is no sign it could be affected by the F-35 crisis between Turkey and the United States, according to Okyay, vice chairman of Kale group, a Turkish partner in the multinational F-35 fighter jet program.

Were you expecting the British to vote for Brexit and to confirm their decision by voting for Boris Johnson?

I was not expecting they would vote for Brexit in the referendum. Afterwards as well I thought there could be perhaps a second referendum.
But at the current situation I think the British public acted with the feeling that uncertainty is the worse.

What will be Brexit’s potential effects on Turkish-U.K. relations?

The U.K. is a very important trade partner for us. It is a market where Turkey can sell its industrial products like automobiles, and we import similar products. In other words, the trade composition is based on real sector. The trade volume is in favor of Turkey, we nearly export twice the amount we import.

Around 98 percent of our trade is tariff free. After Brexit, this will automatically be canceled. Intensive efforts started to sign a free trade or trade deal by the end of this year.

The kind of deal the U.K. will strike with the EU is critical. What will be the U.K.’s position: Will it be like Norway, Canada or Switzerland, because all different alternatives entail different status. Or will there be no deal at all. The U.K.’s deal with EU is critical for us because of our customs union with the EU. So actually, there is too much uncertainty.

The U.K.’s trade agreements with third parties will also have implications on Turkey. If the deals with countries such as Vietnam, China, Thailand, which are our competitors in certain sectors, will be in conditions more favorable than ours, this could harm us.

This is an equation with too many unknowns. We have a period of 10 months. For us, it is imperative to finalize a deal so our trade is not negatively affected.

Do you see the same willingness from the U.K. to finalize a trade deal with Turkey by the end of this year?

I can’t comment about the target for the end of the year; but we have been hearing from the highest levels that Turkey is one of the U.K.’s target trade partners for post Brexit. This is an important indicator.

Will a free trade deal further boost the bilateral trade?

If we were to include services sector that would mean an automatic boost in the trade volume. Agriculture or some other sub sectors could be included; but I cannot predict at this stage whether a free trade deal will be more advantageous than the customs union. If the U.K. were to experience a loss in its trade with the EU, then the importance of countries which it sees as target trade partners will increase.

But trade is not the only dimension of our economic relations. We have cooperation in defense industry. The U.K. is one of the countries with one of the most investments in Turkey. They also want to cooperate with Turkey in our hinterland. I am expecting to see a more structured approach from the U.K.

Can you elaborate?

Turkey is good in terms of production and the U.K. is good in terms of developing technology. I think there is a natural potential to do business together. And I have to say that we keep hearing tremendously warm messages from the U.K.

You mentioned defense cooperation, how do you think this will be affected?

Currently we have very warm relations. We have a cooperation in defense industry which will not be affected by Brexit. As the Kale group, we are one of the partners, and the British companies are working to take an active role in Turkey’s first indigenous generation of fighter jets: TF-X aircraft.

Currently BAE Systems and Turkish Aerospace Industries (TAI) have already started work on the design of the body of the plane. These works have been continuing for the past few years. On the other hand, there is an offer we gave together with Rolls-Royce for the engines of the fighter jet and talks [with the Turkish side] is continuing over this offer. We see a tremendously constructive approach from the U.K. side on that issue as well.

At one stage there were news that Rolls-Royce was planning to withdraw from the project?

Rolls-Royce never had plans to withdraw. We just had a meeting two weeks ago and the offer is still valid, there is absolutely no backing down. When you are talking about the production of a jet engine, these are projects for the long haul. It is only natural that it takes a long time.

You said the U.K. is showing a constructive approach, what do you mean?

I believe they are very eager. Independent of Brexit, Turkish-U.K. defense industry cooperation will continue to grow.

The U.S. decided last year to suspend Turkey from the joint production of F-35 fighter jets as a reaction to its purchase of Russian S-400 missiles. As Kale group you are manufacturing parts for the F-35. How have you been affected?

If Turkey were to be excluded from the F-35 program, there will be loss of business for the Turkish industry. If you ask whether that has been realized, the answer is no. We continue our production. The deadline which has been voiced by the Pentagon is March 31. There are three options; either the cooperation will totally end after that date, or Turkey could continue to be a supplier for some time since it might take time to replace it, or the supply chain will continue as it is without being affected. We do not know which of these options will take place.

And how is the U.K.-Turkey cooperation is affected, or will it be affected?

It has been two years since the contract to purchase S-400s has been signed. The first part of the delivery of S-400s took place last summer.

During all this time our defense relations have continued without experiencing any negative development. The work on the joint design of the fighter jet with BAE is going on, our negotiations together with Rolls–Royce with the Turkish government is continuing and this issue has never come up.

Obviously, defense industry is one of the first and most affected sectors from deterioration of diplomatic relations between countries. There is always this risk. Have we seen any sign [about this risk]? No, on the contrary there are very warm relations. In fact if you think about the U.K.’s relations with Russia, one could have expected them to react. But it continues its full-fledged support to the TF-X.


Osman Okyay is currently the Chairman of Turkey-U.K. Business Council and Vice Chairman of Kale Group, which he joined in 1994.

Okyay took the initiative to diversify Kale Group into high-tech fields and international partnerships. Kale’s partnerships with Pratt & Whitney and Rolls Royce were led by Okyay.

Okyay serves as the Chairman of Chamber of Commerce & Industry of Çanakkale province and is also a board member of Turkey-Canada Business Council, as well as Turkey-USA Business Council under the Foreign Economic Relations Board of Turkey (DEİK).

A board member at the International Investors Association (YASED), he is also the chairman of Aerospace Cluster Association (ACA-HUKD) headquartered in İzmir. A member of the General Assembly of OYAK Holding; Okyay also serves on the Board of Directors of Boğaziçi University and Fatih Sultan Mehmet University Foundations.


Turkey to unveil economic measures against coronavirus


Turkey will unveil measures to reduce the economic impact of the coronavirus outbreak this week, the treasury and finance minister said on March 16.

“President Recep Tayyip Erdoğan will announce steps to be taken this week,” Berat Albayrak said on Twitter.

Albayrak stressed that the country prioritized being prepared for the effects of coronavirus outbreak on the economy.

Turkey has taken measures to prevent markets from failing in access to liquidity due to the virus, he said, adding: “Turkey is more prepared, cautious than ever regarding possible global turbulence.”

For this purpose, the ministry has worked in coordination with non-governmental organizations and sector representatives such as Turkish Union of Chambers and Commodity Exchanges (TOBB), Turkish Exporters’ Assembly (TİM), Turkey’s Foreign Economic Relations Board (DEIK), Confederation of Turkish Tradesmen and Craftsmen (TESK), Turkish Industry and Business Association (TUSIAD) and Turkey’s Independent Industrialists’ and Businessmen’s Association (MUSIAD).

“Our country can overcome such processes easily thanks to its strong production infrastructure, low indebtedness, qualified and trained labor force, and a dynamic domestic market,” the finance minister said.

$2.3 bln budget surplus

Turkey’s central government budget balance posted a 14 billion Turkish Liras (some $2.3 billion) surplus in the January-February period, the Treasury and Finance Ministry announced on March 16.

The country’s budget revenues totaled 208.3 billion Turkish liras ($34.7 billion) in the first two months of this year, rising 27 percent from same period last year.

Budget expenditures rose 10.6 percent to hit 194.2 billion Turkish liras ($32.4 billion) – marking a 14 billion Turkish liras (some $2.3 billion) surplus.

The budget balance, excluding interest payments, saw a surplus of 41.6 billion Turkish liras ($6.9 billion) in January-February.

Official figures showed that tax revenues surged 22.9 percent to 139.1 billion Turkish liras ($23.1 billion), while interest payments were 26.9 billion Turkish liras ($4.5 billion) over the same period.


Turkey to keep industry alive: Industry minister

Scion Industrial Engineering

Turkey will not let the weakening of the Turkish industry due to the pandemic as the country will implement policies to keep it alive, the industry and technology minister said on May 7.

The country fights the economic, social and psychological impacts of the novel coronavirus while trying to protect citizens’ health, Mustafa Varank stressed in an online meeting of the Automotive Suppliers Association of Turkey.

On May 5, Varank announced that all automotive factories will reopen by May 11, while a large chunk of automotive factories has already restarted production and textile firms are back in operation.

President Recep Tayyip Erdoğan also said on May 4 the country will gradually normalize in the May-July period.

The recovery may take a short time or the world will continue to struggle with a years-long global crisis, Varank stressed.

He added: “Therefore, it is necessary to be ready for both scenarios, while minimizing risks, we should also consider possible opportunities.”

Turkey has been facing economic impacts of the pandemic since April, he recalled.

He also said the automotive sector experienced significant losses up to 85% in several markets, such as the U.K., Germany, and Spain.

Referring to the country’s measures to protect the employment and companies, Varank said the government pays personnel salaries, provides financing and postpones debts.

The state also gave 1,000 Turkish liras ($140) to 4.5 million needy citizens, he reminded.

The minister gave five pieces of advice to automotive industrialists, including protecting personnel health, being dynamic, supporting suppliers, raising indigenousness rate, and investing in digital technologies.

After originating in China last December, COVID-19 has spread to at least 187 countries and regions. Europe and the U.S. are currently the worst-hit regions.


Turkey’s manufacturing capacity use stands at 75.5 pct

Scion Industrial Engineering

Turkish manufacturing industry used 75.5 percent of its capacity in January, the country’s Central Bank revealed on Jan. 27.

The capacity utilization rate (CUR) of the sector fell 1.5 percentage points from last month, the bank survey said.

The CUR figures are based on the responses given to its business tendency survey by local units operating in the manufacturing industry, according to the bank.

Some 1,784 companies responded to the survey this month.

Among the six main industrial groups, the highest capacity usage was 75.2 percent for investment goods, while durable consumer goods posted the lowest CUR with 71.9 percent.

Among more than 20 sectors, the highest CUR was seen in manufacturers of wearing apparel at 84.7 percent. January’s lowest capacity usage was recorded by manufacturers of printing and reproduction of recorded media at 64.6 percent.


Manufacturing capacity use hits 15-month high

Turkey’s manufacturing industry used 77.2% of its capacity in November, its highest level in the last 15 months, the country’s Central Bank announced on Nov. 25.

The capacity utilization rate (CUR) of the Turkish manufacturing industry rose 0.8 percentage points from last month, compared to 76.4% in October, the bank survey said.

The figure in August 2018 was 77.8%.

The CUR figures are based on the responses given to its business tendency survey by local units operating in the manufacturing industry, according to the bank.

Some 1,786 companies responded to the survey this month, the bank said.


February’s manufacturing PMI strongest in last two years

Scion Industrial Engineering

In Turkey, Purchasing Managers’ Index (PMI) for the manufacturing sector posted the strongest reading of the last two years in February.

According to the Istanbul Chamber of Industry PMI Manufacturing Index report, prepared in cooperation with London-based global data firm IHS Markit, the index rose to 52.4 last month thanks to solid rises in both output and new orders.

The February figure indicated the fastest improvement in operating conditions across the Turkish manufacturing sector since February 2018.

Employment grew at the strongest rate in the same period, the report said.

Pointing to surge in demand which led to accelerated production growth, Eliot Kerr, an economist at IHS Markit, said the increase in output required faster hiring and resulted in a solid rise in staff numbers.

“These positive results suggest that the sector could be starting a sustained period of growth,” Kerr noted.


Just how bad is COVID-19 for Turkey’s economy?

Last week, the only thing Turks were talking about was Idlib. The coronavirus, dubbed COVID-19, was an exotic news story from distant lands. Since the outbreak has been classified as a pandemic and taken over the global news cycle, our object of existential anxiety has shifted overnight. Turkey has proven itself ready so far, with only two documented cases of the virus and no deaths. Still, the virus has entered the country, and its spread is inevitable.

It is important that in times like these, everyone focuses on what they can do to help. We at the Economic Policy Research Foundation of Turkey (TEPAV) have been thinking about the economic impact of the pandemic. I will take this opportunity to sketch out how our thinking has changed at different stages of the spread of COVID-19.

During the initial stages of the disease, when it was contained to China and some Asian countries, it looked like the impact on the Turkish economy would be indirect, and maybe even positive. With the Chinese economy slowing down, the price of oil started to drop. Given that Turkey is an energy-starved economy, every $10 decline in oil lightens the nation’s petroleum bill by $4 billion. A $20 decline? That’s a bonus of 1 percent of gross domestic product. If things had stayed there, COVID-19 might have been yet another lifeline for what is a fundamentally unsustainable economic model.

But as the disease spread in Europe, some adverse effects gradually became apparent, especially regarding the supply chain impact. Turkey, being part of German value chains, could be hit indirectly, we were thinking then. Trade integration (the share of bilateral trade in total combined trade) between China and Turkey is low, at 1.1 percent, but it is 6.4 percent with Germany, 11.1 percent with South Korea and 16.6 percent with the United States. If these economies were hit, the supply chains Turkey depends on would suffer, and this would hurt Turkish manufacturing.

What we didn’t understand at the time was just how fast COVID-19 spreads. Because the disease is very contagious and its kill rate is below 1 percent, it spreads with exponential speed. That is how it has shifted from being an exotic news item to a global event. We now had to face the fact that the virus would come to Turkey as well, which changes the economic picture entirely. As an economist, it’s very hard for us to make comparisons with other periods in Turkey’ history, as it must be for other countries. We simply can’t predict how people will act. People in large cities are currently doing their utmost to be less social in their daily lives. Who, in which sectors, can self-isolate? How long can people do this before they run out of supplies, have to go back to work, or simply get tired of it? What happens when not only the manufacturing industry but also the services sector starts to contract rapidly? We can only guess.

Economic management in times like these can do much to mitigate misery. Unemployment and inflation are already serious problems in Turkey. It is the most vulnerable blue-collar workers, whose incomes are going to be at risk, who will probably suffer the first economic losses of this pandemic. Turkey stands out as one of the countries which have taken precautions very early on, and we will see how things progress on the economic front. It is safe to say, however, that the government will face some very painful choices.

On the global level, it is becoming increasingly clear that an unprecedented economic contraction can only be countered with global fiscal stimulus. Those at the center of the global financial system need to take this responsibility. Unfortunately, with Donald Trump as president of the United States, that is unlikely to happen.

We will probably see uncoordinated bumps of fiscal stimuluses here and there. The problem is that there is limited fiscal room left in countries like Turkey. And as the blue-collar workers of the global economy, we are likely to take the brunt of the financial hit from this pandemic.


Brunei – Market Opportunities

Scion Industrial news

Overview of best prospect sectors, major infrastructure projects, significant government procurements and business opportunities.
Brunei has an open economy favorable to foreign trade and FDI as it continues to diversify its economy away from its long-term reliance on oil and gas exports. Investment opportunities in Brunei are driven both by government planning and consumer demand.

FDI is important to Brunei as it plays a key role in economic and technological development. Brunei encourages FDI in the domestic economy through various investment incentives offered by the Ministry of Energy, Manpower and Industry and through activities conducted by the Ministry of Finance and Economy through the Brunei Economic Development Board (BEDB).

Formed in 2001, BEDB promotes Brunei as an investment destination to move its economy away from oil and gas revenue. BEDB is mandated to work with foreign and domestic investors to develop new economic opportunities where Brunei has competitive advantages, focusing on four key areas: attracting investments, strengthening local businesses, increasing Research and Development (R&D) and innovation, and delivering infrastructure projects.

BEDB has identified several industries as potential investment sectors in its efforts to diversify the economy, including life sciences, agri-business, information and communications technology (ICT), and services. Further information on BEDB is available at BEDB’s website.

The most attractive commercial sectors include:

Upstream and Downstream Oil and Gas
Commercial Aviation
Defense Equipment
Medical Equipment
Food and Beverage Franchises
In the agricultural sector, the following investment opportunities may offer lucrative investment opportunities:
Food Imports/Food Production
Fishing Industry/Aquaculture
Brunei’s ICT sector seeks to benefit from international expertise as Brunei continues to upgrade its national telecommunications infrastructure, and the financial sector seeks to modernize its banking industry with digital platforms.

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide.


Mint Turbines Awarded Grant for Equipment and Workforce

Oklahoma’s Department of Commerce (ODOC) reached out to Mint Turbines, a 30 year old company who specializes in engine MRO services and engine repair/maintenance, to inform them that due to their industry sector, they can qualify for a grant from the Manufacturing Reboot Program that Governor Kevin Stitt rolled out. Under the Reboot Program, companies apply for a grant that is intended to assist in either retooling to develop products to help combat COVID-19 or to allow the company to expand current capabilities.

Located halfway between Tulsa and Oklahoma City, Mint Turbines is facilitated in Stroud where they operate as an turbine engine maintenance, repair and overhaul facility. “The state is very proactive in helping business grow here in Oklahoma,” said Chris Van Denhende, CFO of Mint Turbines. Van Denhende always stated that within 10 short days of applying for the grant, they were notified of acceptance.

As an awardee of the grant money, the company received $150,000. Additionally, a coordinate-measuring machine, typically known as CMM equipment, was sought after. CMM machine, typically weighing in at an astonishing 20,000 pounds, uses smart technologies to decrease measurement cycle time. A single CMM cost around $250,000 and with $100,000 of the Reboot funds going to this important purchase – $50,000 is left to be assigned to employee growth. With 45 current employees, Mint Turbine expects to see their employment double within the next three years. With labor intensive hands-on roles needing to be fulfilled, a pipeline of highly skilled individuals are sought after. The CMM machinery will also allow Mint Turbine to bid for work.

Furthermore, the funds allow Mint Turbines to expand on their product offerings while simultaneously boosting the quality of life in their city by filling numerous positions at the manufacturing facility.