EMEL – Gov’t grants fail due to poor guidance for firms

Gov’t grants fail due to poor guidance for firmsEvery year, hundreds of Turkish entrepreneurs net millions of liras in state grants to develop smart projects, yet few of these ambitious people are able to carve out a better future for their start-ups due to a lack of consulting mechanisms between experts and companies.Market experts stress that huge amounts of money have been wasted in projects that are doomed to fail without healthy guidance.

This also exposes the lack of a state philosophy to encourage entrepreneurial abilities.Previous failed projects that were supported by government grants have shown that providing consultancy to young firms must be the number one priority however, observers argue that the authorities ignore this fact.

Most entrepreneurs, inventors and companies say it has not been enough to simply secure a grant to develop their projects, since they were unable to get to the right people and sources to consult with.One of these examples was a technology project developed by Fahri zkan.

zkan secured TL 100,000 for a street-level 3-D navigation program in 2009. However, he failed to deal with the basic requirements of establishing a company and did not learn how to manage the company’s taxes and accounting.

His feasibility studies failed, and now he has to pay large amounts in tax debts to the state. zkan stresses the urgent need for the government to introduce a consulting mechanism for post-grant management so that the money given to firms will not go in vain.

Small- and medium-sized enterprises (SMEs), entrepreneurs and project developers mostly usually use channels such as the Small and Medium Industry Development Organization (KOSGEB) and the Scientific and Technological Research Council of Turkey (TuBITAK) to get state grants for projects. The council provided grants for 8,371 projects out of 13,604 applications between 1995 and 2001.

A total of 5,525 of the projects that received grants were successfully implemented. Murat Ieker, the coordinator of a local investment consultancy program in Istanbul, told Sunday’s Zaman of a separate problem Ieker said the state grant projects lack transparency and that the public is not informed of the money allocated for grants.

“We need a comprehensive cost-benefit analysis for projects that receive grants. What is important is that these projects create added value and benefit the economy in the medium and long term,” he says.

Like many other emerging countries, Turkey has been struggling to boost its research and development (RD) investments over the past decade it has secured little progress so far The share of funds drawn from Turkey’s gross domestic product (GDP) for RD investment remained the same in 2013 as in the previous year, recent data show. Turkey was expecting to increase the RD share of GDP to 1 percent in 2013 — a critical benchmark, according to observers.

The share of funds drawn from Turkey’s GDP for RD stood at 092 percent that year Such poor performance puts the government’s goal of reaching a 3 percent contribution of GDP to RD by 2023 in serious doubt.Turkey was the 68th most innovative country in 2013 among 142 countries, according to The Global Innovation Index 2013, co-published by Cornell University, INSEAD and the World Intellectual Property Organization (WIPO).

The World Economic Forum’s (WEF) Global Competitiveness Report (GCR) 2013-2014, published in September of last year, ranks Turkey the 44th most competitive market among 148 world economies.

SOURCE: Today’s Zaman