Turkey reveals new economic plan to boost economy

By Feyza Süsal & Bahattin Gönültaş

ANKARA

Prime Minister Ahmet Davutoglu announced Thursday a comprehensive plan to boost Turkey’s economy through wide-ranging structural reforms in various sectors, including trade, energy and health.

Addressing a press conference jointly held with nine cabinet ministers at Ankara Palace, Davutoglu said "the main goal is to boost efficiency, improve human resource capacity, guarantee predictability and increase accountability."

The reform plan, which was presented by Deputy Prime Minister Ali Babacan to the cabinet on November 3, would be composed of nine packages with 25 prioritized structural reforms.

The premier said Turkey was beginning a new economic period with the reforms that would boost the country’s economy. A government committee would also monitor the plan for its efficient implementation.

According to the government, these reforms would be followed by further packages in the coming months.

"The aim of the new structural reform is to primarily maintain political stability and predictability in Turkey before the 2015 elections," Davutoglu said.

1- Decreasing import dependence

According to the premier, the first package of the reform program would reduce dependence on imports by 2018, which at the moment is almost $100 billion more than the country's exports.

"Our aim is to scale up the rate of exports meeting imports to 70 percent until 2018," Davutoglu explained.

The measure primarily aims at increasing the capacity of the real economy that deals with the productions of goods and services.

He added the government was planning to increase Turkey's GDP to $1.3 trillion by 2018 from $820 billion in 2013.

Also, a reduction in the current account deficit from 7.9 percent to 5.2 percent is on the cards. The government aims to eventually lower the unemployment rate from 9.8 to 7 percent with its reform plan.

He also stated the reform package would strive to transform the economy from being labor intensive to technology intensive, and boost value-added products in exports.

This program would support measures to increase the technology capacity along with the standard and quality of domestic products by promoting locally-produced equipment used in energy production, he said.

The cooperation between Turkish universities and industries for production of high-technology products would also be strengthened.

The program would promote efficient use of national natural resources by directing existing resources to non-productive areas and prevent a loss in economic competitiveness in mid-and-long term.

2 - Commercialization in primary technology areas

The second part of the transformation package aims to commercialize innovation and research and development efforts to create new brands, and intermediate or final products that are competitive internationally.

The priority areas of this program are energy, health, aviation and space, automotive, rail systems, informatics and defense.

3 - Technology development and domestic production

Davutoglu says this part of the program aims to increase the share of domestic firms in public tenders, which constitutes around seven percent of the nearly 105 billion Turkish lira GDP of Turkey as of 2015.

4- Energy production based on domestic resources 

The fourth program of the action plan stipulates reduction of foreign dependence in energy production and focuses more on domestic resources.

5- Improving energy efficiency  

This part of the program aims to reduce Turkey's energy density from $0.26 to $0.24, which means consumed amount of energy to create one unit of the GDP and reduce government building energy consumption to 10 percent until 2018 by increasing productivity.

6- Increasing efficiency of water use in agriculture

The Turkish premier said the efficient management and use of Turkey's water resources in agriculture were vital for sustainable development and food safety.

Agricultural irrigation constitutes 73 percent of the total use of water in Turkey, according to official data.

Davutoglu maintained that Turkey wanted to increase the use of ground water in agriculture and the total number of water-saving modern irrigation systems by 10 per cent each year until 2018 to mount an effective challenge against climate change.

7- Structural transformation in healthcare industries

The head of the Turkish government said incentives would be given to Small and Medium Enterprises involved in health industries.

He said the government would prioritize domestically-produced medical supplies and medical devices. 

"Turkey will hopefully be able to produce 20 percent of the medical devices it needs and meet 60 percent of its demand for medicines until 2018," said Davutoglu.

The program also plans to increase Turkey’s share in global clinical research investments and medication research.

8- Improving health tourism  

The eighth program of the package aims to increase hospital bed capacities in Turkey's health tourism sector to 100,000 beds. Also, the goal is to have over 750,000 foreign patients in a year and earn $5.6 billion revenue in a year.

The number of medical tourists who visited Turkey in the first six months of 2014 was 162,445.

Within the program, Davutoglu said they would also increase the quota for foreign students in medical education at universities.

Turkey’s healthcare expenditure reached 84.4 billion Turkish liras last year, according to the Turkish Statistical Institute, up from 76.2 billion Turkish liras in 2012.

Its health expenditure per capita increased to $583 in 2013 from $548 in 2012. The proportion of total health expenditure of the country’s GDP was 5.4 percent in last year and 5.2 percent in 2012.

The proportion of general government health expenditure to total health expenditure was 78.5 percent last year and 79.2 percent in 2012.

9- Transformation from transportation to logistics

This part of the program is designed to strengthen the country’s international position in the logistics sector, reduce the burden of logistics cost in the total cost of industrial products and shorten the transport time of the country’s products to consumer markets.

Davutoglu said they would establish a logistics coordination committee and popularize electronic systems in logistics databases.

The overall program has 25 priority areas and steps to mitigate possible risks the Turkish economy may face in the future, Labor Minister Faruk Celik said previously.

Apart from the nine areas announced in detail, the other programs will be, "increasing productivity, increasing domestic savings and eliminating waste, Istanbul International Financial Center, rationalization of  public expenditure, increasing the quality of public revenue, improving business and investment climate, increasing the effectiveness of the labor market, reducing informal economy, statistical information infrastructure development, basic and vocational skills development, growth poles center for qualified labor force, healthy life and mobility, conserving the family and dynamic population structure, institutional capacity improvement at local level, urban transformation to enhance competitiveness and social cohesion, improving international cooperation infrastructure for development."

www.aa.com.tr/en