ISTANBUL Turkish business leaders are looking to the government for easier credit, tax incentives and other assistance to support local industry and narrow the country's widening foreign trade gap.
"Direct or indirect incentives must be given to manufacturers to support production," Okan Oguz, chair of the Exporters Assembly of Turkey told Reuters on Wednesday.
The appeal for aid comes after Turkey's industry minister said the country would take steps to cut auto imports in hopes of trimming the foreign trade deficit, which rose 122 percent to $9.202 billion in January-May 2000.
Industry Ministry Ahmet Tanrikulu said on Friday Turkey would adjust its customs regime within the next month, possibly forcing imported autos through a single entry point on the Iranian border to make them prohibitively expensive.
Business leaders acknowledged direct industrial subsidies would likely provoke the anger of the World Trade Organization (WTO) and Turkey's main trade partner the EU, which said it was taking Tanrikulu's comments "very seriously".
But some form of tariff protection was necessary to safeguard local industry, they said.
"Even the EU countries have various tariff or non-tariff barriers to automobile imports," said Atalay Sahinoglu, head of the assembly of the Istanbul Chamber of Commerce.
Regulatory aid could be just one part of a wider program of support for local industry, another business leader said.
"Production and investment need to be supported through tax adjustments," said Erkut Yucaoglu, head of leading private sector business association Tusiad.
He called on the government to provide loans to Turkish industrialists at the level of benchmark bond yields, currently about 32 percent, rather than prevailing corporate rates near 45 percent.
Legal and fiscal reform could also encourage consolidation in the country's industries, rendering them more competitive, he said.
"Mergers and acquisitions should be stimulated in both banking and manufacturing through tax exemptions and simplifying bureaucratic procedures (that govern them)." Turkey plans to cut inflation from nearly 60 percent currently to single digits in 2002 under an economic reform program backed by $4 billion in International Monetary Fund loans.
The program projects slower currency devaluation based on its inflation targets, placing added pressure on Turkish exporters.
(Reuter)