Erman Ilıcak anlattı: Ülke ekonomisine katkı sağlayan projeler

Good morning. First of all, dear Minister, dear President, dear District Governors, and dear participants, I want to say hello to all of you. Today I feel a bit like a host, but this is my first time attending here, and I think the last time I was at such a meeting was 11 or 12 years ago. So if I make a mistake or misspeak, please forgive me. Today I am here to share the ideas we have prepared with our colleagues and to listen to your ideas throughout the day. I hope it will be an eye-opening and beautiful meeting for all of us.

When we say economic summit, we usually think of money, interest rates, monetary policies, inflation, exchange rates. But today I will not talk about those. I want to draw your attention to our industry, heavy industry, and projects that will add value to Turkey.

As you saw in the short introductory video earlier, Rönesans actually started as an engineering and contracting company. Over time, initially with real estate projects in Turkey, at that time shopping malls and city centers needed to be redefined. There was a need for shopping malls. In the early 2000s, we made our first investments in that area. But the company's founding, as I'm sure you all know, started in St. Petersburg, Russia in 1994. And international contracting services have always been in our DNA. It continued. To date, we have completed thousands of projects totaling $50 billion, 70% of which are abroad—$35 billion abroad and $15 billion in Turkey. We have done almost everything you can think of: the longest tunnel, the world's longest tunnel, Europe's tallest building, and many more. In terms of contracting, there is almost no geography we haven't gone to, no project we haven't done.

In recent years, with the World Bank's IFC becoming a partner in our holding, we reorganized our organization in line with the World Bank's sustainable development goals. Looking at both the investment and contracting sides, we actually have three main branches. The first is infrastructure investments. What do we do here? We try to build infrastructure based on safe and sustainable energy for cities. For example, we are working on a 330 km line between Mersin, Adana, and Gaziantep in southern Turkey, electrifying the existing railway, making it safer, signaling, and replacing rails. We are repeating similar projects in Europe, the Netherlands, and other parts of the world. Similarly, we build public buildings, housing, earthquake-resistant housing in Turkey. We currently have 10,000 employees working in earthquake zones. Along with that, we produce office buildings, hospitals—almost everything you can think of. For the last 10 years, we have been trying to produce industrial solutions that will bring foreign currency to countries. For the last 12 years. What do we do? For example, to commercialize Turkmenistan's natural gas—one of the richest countries in the world in terms of natural gas—we are building industrial facilities with our Japanese partners. Refineries, processing natural gas to sell to other countries and earn foreign currency, not only in Turkmenistan but also in Turkey and many European countries, we continue similar projects.

Since 2018, in this context, we started a project in Ceyhan to build a polypropylene production facility, which Turkey has a very serious deficit in and has needed for years. It was a very instructive and long journey for us. This journey took almost 6 years. At the end of the 6th year, we had our financial close at the end of last year. It was a $2 billion project, and for us, it was a project where we stepped out of our comfort zone and really struggled. Apart from that, with public-private partnerships and foreign partners, we invested around $5 billion in the transformation of healthcare, and we led a total of $15 billion investment in the health sector.

With the experience we gained from these, as I said, we formed a team for projects that we think will bring foreign currency to Turkey and close our foreign trade deficit, and we started to think more with that team. Today, as the global economy is being reshaped, when we look at the next 5 years, for us the longest period is actually 5 years. We have never planned or even thought beyond 5 years. So everything is 5 years. Our longest period is 5 years. When we look at the next 5 years, we see protectionist walls, reshaping of supply chains, shifting production more to local or friendly neighboring countries, a volatile relationship between euro, dollar, yen, and yuan, and exchange rate differences. We think there will be an abundance of project financing provided by export banks to support exports. And we think there will be some postponement and relaxation of carbon neutral plans for 2050, not only in America but also in Europe. On the other hand, in many countries including ours, there is a rapid transformation in sustainable energy, and we think it has gained momentum and will continue. And through this, we are moving towards a new world where energy is produced, stored, and consumed at the same place. This will deeply affect many hegemonies and cartels. It will provide significant advantages to countries like ours. We see the same in industry. We see a trend towards local production, local consumption, producing where it is consumed, and as much as possible, high value-added production. In fact, all countries agree on localization and, if possible, nationalization. So we think the next 5 years will be full of adventures, with many opportunities and threats, as the cards are reshuffled.

As we enter this new era, Turkey stands as a very solid market with a relatively young population of 85 million, an economy exceeding $1 trillion, and low public and private sector debt. On the other hand, unfortunately, we have a chronic foreign trade deficit problem. And we think we have to solve this problem and take serious, giant steps to solve it. That is actually why I came here today—to share these ideas with you. When we look at our foreign trade deficit, we see a large deficit of $80 billion. This deficit actually consists of two parts. One is the energy part. We spend about $50 billion on energy needs.

When we break down the $50 billion, we consume 50 billion cubic meters of natural gas annually. We spend almost $20 billion on natural gas each year. We consume nearly 1 million barrels of oil per day. Unfortunately, we can only meet 15% of this from within Turkey; we import 85%. We import almost all of our natural gas. While saying this, I want to note that we are also experiencing very good developments. On one hand, with the work of Turkish Petroleum in Gabar, oil has been discovered and access to oil resources is increasing rapidly and being commercialized. On the other hand, in the north of Turkey, in Filyos, 160 km offshore at a depth of about 2000 meters, we are extracting natural gas—close to 600 trillion cubic meters—using very serious technology, and the amount is increasing every day. By around 2030, Turkey will be able to produce nearly 20 billion cubic meters of natural gas, God willing. As I said, out of 50 billion cubic meters, we will produce about 20 domestically. When we look at renewables, all over Turkey, our cooperatives, especially with solar panel investments, are producing twice their own consumption and feeding the rest into our grid, seriously supporting production. On the investment side, Turkey is making a serious move. More investors are investing in wind. With the partnership we established with TotalEnergies, about 30 very large companies are constantly pursuing investment opportunities. Currently, Turkey provides 45% of its total energy from renewables. We are 11th in the world and 2nd in Europe. By 2030, with expected lower oil prices and our domestic production, we think about $30 billion will be transferred, meaning a positive improvement of $20 billion in our foreign trade deficit.

Apart from energy, when we look at the industrial side, we see the difference between exports and imports approaching $32 billion. It has generally been between $30-33 billion. Where does this come from? First, industrial machinery and parts used in industry: almost $14 billion. Then plastics and chemicals: about $13 billion. Then gold and silver: about $12 billion. Industrial metals, steels, aluminum, chromium, zinc: also around $12 billion. Electronic components: almost $65 billion. On the other hand, which countries do we have more deficit with? China is first, then Russia. We import more machinery, equipment, and many parts from China, and more energy-related items from Russia. South Korea, Japan, India are also countries with which we have large trade deficits. On the other hand, we don't seem to have a deficit with America. With the European Union, we are almost balanced—we import as much as we export. Why can't we balance with these countries? On the other side, there is a highly vertically organized structure where the state and businessmen work together, plan together, and act together. We are up against that structure. Their access to capital and natural resources is much cheaper than ours. Their financing costs are also much cheaper. So competition becomes very difficult. We are struggling.

When we look at high-tech and high-value-added projects, looking back at how many projects over $500 million we have done in the past 10 years, we first see a very serious breakthrough in defense industry. We managed to invest about $5 billion with very high value added. Apart from that, with Ford Otosan, Sasa, Kalyon, SOCAR, Cengiz Holding's investments, and our Rönesans Holding's investment in Ceyhan, a total of $23 billion has been invested in what we call strategic projects in the last 10 years, and all these projects were supported by our Ministry of Industry and Technology. Seriously supported. When we break down the projects, SOCAR invested about $7 billion in our country. Another $7 billion for defense industry and TOGG together, since it was a similar project. So another $7 billion. The investments made by other private sector using project-based incentives in the last 10 years were around $8 billion, maybe $10 billion. We might have missed some. When we scan project data from many projects done domestically and abroad, to reduce our foreign trade deficit by about $10-12 billion—from 30 to 20—we need to allocate $60 billion to such industrial investments in the next 5 years. $60 billion. In the last 10 years, as I said, we spent about $20-22 billion. Considering we spent an average of $1-2 billion per year, we need to spend $12 billion per year. That is 5-6 times more. We need to spend that much to close our foreign trade deficit, at least by 35%.

When we invest $60 billion in new investments over 5 years, we see that it would contribute about $15 billion to our GDP and reduce our foreign trade deficit by about $10 billion. But looking at the private sector's performance in the last 10 years, including myself, we frankly don't believe the Turkish private sector can achieve this on its own. In this sense, our Ministry of Industry and Technology has very serious contributions on a project basis. They try to do everything possible, starting with various tax exemptions. But on the other hand, as I said, we are up against a structure where states are partners, and it is really difficult for us to compete and attract investment to Turkey. I saw this when I first did this project in Ceyhan. To give a brief summary, for a $2 billion investment, we had to allocate $700 million in equity, and the preparation phase lasted almost 4 years. Because finding and bringing in foreign partners, securing financing from abroad without government guarantee, took a very serious amount of time and equity. The construction will continue for the next 4 years and then continue. And we still don't know whether we can provide any protective shield in the next 4 years or in the coming process. We always face the risk of Saudi Arabia dumping prices and selling these goods to Turkey much cheaper. In this situation, as a result of the study we did with our colleagues, our proposal is: first, the state needs to determine our priority sectors. After determining the sectors where we can be competitive, we need to reduce them to projects. Then, for each project, we request that the public not only be a supporter but also participate as a strategic partner, not limited to 49%, and seriously support these national projects. Then we must develop financing solutions. Not just equity participation, but also the public must participate in financing solutions and support us. And these should not just be private sector projects; they should be national projects of the country. If necessary, 100% should be done by the state.

And finally, we must create protective shields in our country in the next 10 years—I know it doesn't sound good, but we must—and ensure the development phase of these projects within the next 10 years, and during this period, it would be appropriate for the state to exit these projects and invest in other projects in the same way. When these investments of about $60 billion are made, we will provide employment for 30,000 people. As I said, we will add $15 billion to our GDP and close $10 billion of our foreign trade deficit. After all these statements, I want to share that I have infinite faith that a new world order is being established and we can achieve the place we deserve by working together. And as I said, I will be here all day today. I am eagerly waiting for your ideas. Thank you very much for listening to me. Stay well.