Science, Industry and Technology Minister Nihat Ergün expressed his opinions to Strategy Magazine on a wide range of topics from KOSGEB supports for entrepreneurs to domestic automobile production and from the 2023 Targets to the first year of the incentive law. Turkey has an enormous internal market and a great interest emerged toward Turkey particularly in regions such as the Middle Eats and Africa, said Science, Industry and Technology Minister Nihat Ergün and he went on to share his views on building up a domestic automobile brand. “Building up a domestic automobile is important for the society to pass a psychological threshold,” Ergün said, underlining that this emphasis was not an emotional one, but the emphasis was in line with economic and rational grounds. Entrepreneurs got succeeded greatly with KOSGEB supports. Can you share the latest development on this subject? We regard entrepreneurship as one of the most important issues of Turkey. We know that entrepreneurs will play a major role in solving our economic and social problems. To achieve $500 billion of exports in 2023, enhancing the competitiveness of existing business is of capital importance. But it is also necessary to set ground for a great number of and successful firms to be established. That’s why we attach a great importance to enlarging the entrepreneur pool and increase the number of newly established firms in our country. There two major difficulties that our people experience in entrepreneurship: Our people either do not know how to establish and maintain a business or even if they know it, they cannot obtain initial capital. So we have commenced a very comprehensive support program within KOSGEB to solve all these problems. The first phase of the program is to benefit from entrepreneurial educations. KOSGEB determines the content of these education programs and the municipalities or nongovernmental organizations organizes the programs as in today’s example. The number of those who have benefitted from entrepreneurial educations hit 125.000 now. sWe are not satisfied with it, and provide to our brothers and sisters who have participated in the entrepreneurship educations with support to establish their own businesses. We provide up to 30,000 Turkish Liras of grant, up to 70.000 Turkish Liras of loans for these friends provided that they prepare a business plan. The 70.000 liras of loan is provided for a period of four years with two years of grace period and zero interest rate. Some 6.500 citizens have opened their own business since 2010 thanks to these supports. Our target is to have 5.000 brothers and sisters to benefit from KOSGEB supports every year. KOSGEB supports are certainly not limited to new businesses. We implement very important support programs for existing small and medium scale enterprises (SME) to help them solve problems they experience in areas such as financing, exports, research and development, cooperation, clustering, marketing. We will keep improving these supports both in quantity and quality according to the needs of the businesses. What is the present situation in domestic automobile production? What is your goal from now on as the government? You know that our Esteemed Prime Minister Recep Tayyip Erdoğan has drawn an analogy regarding this matter. A “brave fellow” is needed to engage in this business, he said. The real sector should do the job to build up a competitive brand in today’s free market economy environment. Fifty years ago maybe we could have talked about a public enterprise, but those days are over. This is what we see when we look the scene regarding domestic automobile: There are rich “fellows” in Turkey, but they are not “brave”. There are “brave” ones, but they are not rich “fellows”. It takes a serious amount of capital and experience to invest in a sector like automotive. There are many people who can produce cars from top to bottom. But it is a different and detailed process to turn these projects into investment, production, marketing and brandbuilding. In this sense I can say that there are many projects prepared by the brave ones. We will see to what extent they will be realized in the upcoming period. Naturally, it is out of question for Turkey to relinquish such a goal. Turkey will eventually build up its own domestic automobile brand. This indeed is the massage that we are trying to give the real sector. This will happen anyway, so we tell them “let it happen in your hands.” Our industrialists should be more idealistic about domestic automobile. We have brought up many facilities with incentive system. We have even revised it in terms of automotive in the previous days. In my opinion, it will be to the point if the domestic automobile is electrical. Therefore we have initiated an important support program regarding electric vehicles within TÜBİTAK (the Scientific and Technological Research Council of Turkey). What is the present situation of Turkey in the goal of high-tech product manufacturing base? What are your short term targets? The amount of Turkey’s exports reached $152.6 billion in 2012 from $36 billion in 2002. An increase in the quality of our export products played a role in this success as much as an increase in the amount of products. Compared with 2002, we see an upgrade particularly from low-tech products to middle-tech products. While the share of the low-tech products receded to about 25 percent, the share of middle-tech products climbed to 70 percent in that period. The research and development, innovation and technology policies of our government played a very crucial role in this change. The research and development budgets of both the public and private sectors rose by significant ratios. However, we are not up to the level befitting this country in high technology as in many fields. We can do a much better job... We target to lift the rate of the research and development expenditure to gross domestic product to 3 percent in 2023. This means a $60 billion budget, $40 billion of which will come from the private sector and $20 billion from the public sector. Of course, the consequences of this budget are also import. By 2023, we target to increase the share of high technology and high value-added products to 20-25 percent in production and exports. The main axis of our education, university, research and development and industrial policy now is to maintain this transformation. We see that the amount of our industrial products increase in the external markets, and a fall in imports? We are your expectations in these areas for the period 2013-2014? We have to say that imports will increase again as Turkey grows faster, the domestic demand increases in the current structural balances. That’s why it will be more right to approach the issue with long perspective. It will not be a success if we reach a $500 billion export versus $600 billion imports in 2023. We have to balance exports and imports, even produce a surplus. Your previous question is important because of this. While we import high-value added products, we export middle-value added products. Transition to high technology production will lead to a decrease in imports in the middle term as well an increase in exports. As a matter of fact we designed the latest incentive system so as to support higher standard investments in better conditions to that end. What did the incentive system, which was launched last year, contribute to the Turkish industry in its first year? The latest incentive system includes radical elements rare in the world indeed. There are significant advantages particularly regarding the high value-added products, which are not manufactured domestically. 2012 was the year when we put on the brakes in terms of growth due to risky environment in the world. Naturally the economy policy change had an impact on the pace of investments. The incentive system by its structure brings more significant and worth-considering investments in the foreground. I can say that we achieved the targets as of the first year considering these developments. However, we will in fact evaluate the system after now. The economic growth will accelerate with 2013 and the positive outcomes of the incentive system will become unequivocally visible. We have made very significant regulations for the investments to be made in the 6th region. We see that many firms have lodged applications to invest in organized industrial zones located in the region, which makes us happy. We are now on a historic threshold of solving the terror problem. When this process reaches a certain point successfully, the biggest source of hesitation for the investors regarding the region will be set aside. So I think that in the 6th region provinces there will investment boom in the next few years.