Trade enabler

Opinion | 28 April 2017

Adnan Yıldırım, the new CEO of Turk Eximbank, speaks to Katharine Morton about his plans to build on Turkey's reputation as an exporter of consumer goods and how regional instability is affecting trade


Where does Turk Eximbank fit on the spectrum of Export Credit Agencies (ECAs) globally?

Founded in 1987, as a rather new ECA, Turk Eximbank's performance enabled it to quickly join the ranks of the world's top ECAs. When we look at the cover ratios of the ECAs, I can confidently say that Turk Eximbank's cover ratio is quite high as US$30.3bn, approximately 23% of Turkey's total export volume. In terms of cover ratios, we are among the top five ECAs in the world.

Turk Eximbank serves exporters with exactly the same systems as the ECAs in the most advanced countries, as well as taking proactive support for exports. [Also, we] can combine credit, guarantee, and insurance products under the same roof to provide its customers with fully-integrated service, namely a one-stop shop, unlike the ECAs of many other countries.

When we look at the export portfolio of Turkey, we see a shift in our exports from consumer goods to capital goods. That is exactly what we are focused to achieve as [part of the] Turkish government. As the sole official export credit agency of Turkey, we support capital goods producers with various tools, of course totally in compliance with WTO and OECD rules. To give an example, we can now extend credits with CIRR rates (via compensating the interest rate difference by the Turkish Ministry of Economy).

Turk Eximbank is different from most ECAs in that you engage in lending directly and in implementing insurance and guarantee schemes. Should ECAs aim to fill the gaps which the private markets (banks, private underwriters and reinsurers) cannot fill?

In my opinion, it is wrong to call it filling gaps. We exist in the market as a partner, namely, a solution partner. We are not acting without regard to the private sector, but together with [it].

When we look the current situation of [other] ECAs we see this kind of tendency. I mean, [they] tend to be present in the market with the private sector. We are one of ECAs who act as a one stop shop, which means that we present insurance and lending products together.

Other ECAs are seeking ways to set this kind of structure. For example, we are financing transactions which obtained collateral from private banks. In this way, we are [deepening] the banking system. On the other hand, we have a rediscounting credit program which is being disbursed under the Central Bank of Turkey's umbrella and the main item we are using is
also being granted to the private banks by the central bank.

Yet, I can say that we are prevailing with our experience, speed and know-how on export insurance and credits. We, as a developing country's state-backed ECA, are assisting our exporters in creating capital accumulation to upgrade and diversify the product portfolio and
in this way, to invest and export more.

In history, trade policy distortions have been practiced in many ways such as taxes on imports, quantitative restrictions on trade volumes (including trade bans), bans on values or even wars are used to prevent [companies] from exporting. Yet today, we support our exporters within the context of WTO and OECD rules.

What are your key plans for Turk Eximbank going forward and what challenges do you foresee?

Our first aim is to make Turk Eximbank more accessible for companies. Now, we support 7,700 companies in terms of loan and insurance support. We provide 6,400 companies with loan facilities and 2,200 companies with insurance.

We would like to reach out to as many as 100,000 companies of which 65,000 are exporters. This is our long-term goal and we will be working hard to make this come true.

Turk Eximbank provided direct support of US$33bn - US$22bn in loans and US$11bn in insurance - in 2016 for Turkish exports, which
is approximately 23% of the total export of
our country.

Our target for 2017 is to increase this amount to US$40bn which would be equal to approximately 26% of total Turkish exports. In 2016, the total export credits lent by Turk Eximbank was 44% of the total export credits provided to Turkish exporters and we are determined to increase this figure. In terms of ratios (export credit insurance and loan support over total exports of the country), Turk Eximbank is among the top five ECAs.

In addition, another aim of Turk Eximbank is to ensure that Turkey's exports include more capital goods. Turkey has been exporting mostly consumer goods which we have gained a lot
of experience.

However, now, we are ready for more complicated and sophisticated, mostly, capital goods. Turkey's potential to transform our export portfolio into capital goods production has been increasing pretty swiftly.

Moreover, we have another mission in the economy which is to assist our exporters in both traditional export credit facilities and the latest products in the market. This is of a big importance as we would like our exporters to be aware of every single detail designed to contribute to Turkish exports.

In the long run, we are targeting to get a
share of 1.5% of the whole world's trade volume and we would like to achieve that by the year of 2023, which will be the 100th anniversary of the Turkish Republic.

Having established all these goals, the indirect goal of Turk Eximbank is to create employment in Turkey by supporting our exporters in reaching their objectives. More exports mean more employment which is a win-win situation for both the exporters and our country.

I believe that the biggest challenges will be instability and uncertainty in the region. As you know, there is already an ongoing turmoil in the region for a quite a while, which has been impacting Turkey's relations with other countries. As a result, this has caused some serious problems in terms of Turkish exports. So I see these as the biggest challenges to cope with since the unrest in Syria has had a big impact on the Turkish economy. And unfortunately, we do not have control over these political events.

We have seen some unwanted developments with our neighbours as well as other countries in the region in recent years. However, we succeeded in restoring relations with some of our neighbouring countries which enabled Turkish exports gradually to increase and reach the level it at was previously. So basically, the regional developments can be said the biggest challenges.

What does 'success' look like in terms of Turkey's exports and imports?

Well, if we look at the export figures of Turkey over the years, from 2006 to 2016, we can see that it has been an upward trend. In 2006 our exports were around US$86bn and in 10 years it went up to US$143bn. We have supported our exporters as much as we could and we will be supporting them with our full efforts despite a failed coup attempt and terror attacks that aimed to destabilise Turkey.

The success from my view is achieving the transition from consumer to capital goods. As Turk Eximbank, we are well-experienced in short term (ST) insurance. On the other hand, we are now focusing on increasing our MLT (medium and long term) insurance cover.

Also, maintaining our sectoral diversification in exported goods is another important point in such a turbulent world. It is good to have well-diversified export ratios in different sectors (in Turkey, we have a balanced export portfolio in terms of sector diversification, so no sector has more than 15% share of export volume) in order to prevent sectoral crises.

We also would like to support and encourage technology companies which create high value added products and services. I believe our CIRR support will encourage most of our high value creating exporters.

Turkey has a clear target of US$500bn export figure and/or having an export share of 1.5% of world trade by 2023. As part of this, Turk Eximbank wants to increase the percentage of Turkish exports it supports from 23% in 2016, up to 26% in 2017. I believe it is good to have a target no matter how hard it seems to accomplish, and we encourage our exporters to increase their sales through different products.

Adnan Yıldırım was speaking to Katharine Morton, editor-in-chief of TFR

"We would like to reach out to as many as 100,000 companies of which 65,000 are exporters"

Adnan Yıldırım,
Turk Eximbank

"I believe that the biggest challenges will be instability and uncertainty in the region"

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