KLAUS – Economy 2015: Which business types, sectors promising?

Economy 2015: Which business types, sectors promising?It is always a good indicator to, figuratively speaking, look over the shoulder of international financial institutions with a view to answering the question about which industry sectors look promising for a specific year for a particular country. With regard to Turkey in 2015, and according to the European Bank for Reconstruction and Development (EBRD), on the one hand it is small and medium-sized enterprises (SMEs) that matter most as a successful business model, while on the other hand, we take note of the food and beverage as well as the health sector, as just two examples of those in for a further upward trend.

Similar to commercial banks, international public lenders engage in due diligence and undertake a detailed risk analysis before agreeing to a loan, or in some instances, offering a grant that need not be repaid. Besides that, they often work with local intermediaries which themselves carry out a further credit risk evaluation.

In the post-financial meltdown scenario, after American and European banks went bust and the bubble of bad consumer loans exploded, neither a leading commercial bank nor a reputable international lending house would want to be seen amassing toxic debt ever again.I had an opportunity to visit one of the EBRDand#39s offices in the Turkish capital, Ankara, and am grateful for the insight I was given into how the bank operates.

Active in this country since the year 2009 it coordinates its work via three bases, namely in Ankara, Gaziantep and Istanbul, whereas the bankand#39s headquarters is located in London. Almost 45 billion euros have been invested in Turkey since then by means of over 130 individual undertakings.

Serious monies, to say the least.In the past it was infrastructure, agriculture, energy, industry and finance.

Recently, a significant string of newly approved loan facilities came about for the Republic of Turkey.First, it seems that the EBRD believes in the importance of SMEs as the backbone of the Turkish economy, already contributing 60 percent of the nationand#39s exports, a dramatic increase from standing at only 10 percent a decade ago.

One such new facility with $127 million will be administered via II Bank with a view to supporting SMEs in the agriculture sector, SMEs eager to improve their energy efficiency and women-led businesses. In a linked venture, Finansbank obtained the green light for a 50 million euro facility aimed exclusively at women-run SMEs.

Second, a leading beverage manufacturer, Erbak UludaI Iecek, in Bursa, is now able to draw 30 million euros from a loan facility to innovate and upgrade their product range, including product lifespan, as well as to invest in corporate governance. It seems natural in a country with a growing population plus an enormous inbound tourism sector — supporting food and beverage enterprises makes perfect sense.

Third, after having written about the relevance of SMEs and the beverage sector as one example of industries that are bound to prosper, let me introduce a hospital project in Adana Here the EBRD is co-financing a 542 million euro high-tech hospital with 215 million euros. It will be a public-private partnership (PPP)omposed of Turkish and international companies.

The venture is part of a Turkish government 12 billion euro health sector expansion program aimed at building about 60 new hospitals in cooperation with the private sectorDid I engage in too much number crunching, perhaps? In this case I simply had to, in order to put SMEs and intermediaries and a few sectors into perspective. All the details were kindly provided by the EBRD, and rest assured, I am not intent on providing free PR to a small number of enterprises, but without supplying the details, this article would have been nothing but a vague summary.

What I read between the lines is that Turkish SMEs can grow even further as an engine and stimulator of the economy and that many diverse industry sectors are bound to generate profits in 2015 and beyond. Sector diversification seems to be the buzzword.

It shows the confidence of the EBRD in the general state of the national economy, as well.I will address the tricky subject of related salary and (minimum) wage levels in a future column.

SOURCE: Today’s Zaman