KOBİ'lerle ilgili 3ncü Büyükelçiler Forumu Konuşması

Hatun Demirer 16.11.2015
H.E. Dhafer Al Umran,
Dear Colleagues, Excellencies the Ambassadors,
Dr. Abdulhassan Al Dairi,
Distinguished Members of Bahrain SMEs Society
Distinguished Guests,

I warmly greet you all.

I am happy to take part in 3rd Annual Ambassadors Forum” organized by Bahrain SMEs Society.

In my presentation, following a short introduction, I will focus on overall picture of SME climate in Turkey. I will try to share some statistics and basic information about how the system works for SMEs in Turkey.

SMEs play a crucial role in Turkey’s economic life.

In this regard, development and promotion of SMEs are acknowledged as main targets by governments for achieving a sustainable economic growth.

Therefore, specific policies towards SMEs are designed.

National Development Plans of the Turkish Government contain SME issues, alongside with many other items.

Under the principles set forth by the National Plans, sectoral and thematic action plans are prepared, covering 8 main sectors and themes; such as industry, machine, electric-electronic, automotive, chemistry and iron and steel sectors and tradesmen and craftsmen.

But, if not properly implemented, having action plans mean nothing.

Thus, for implementing these plans, a proper coordination mechanism among and between the public institutions, private sector, scientific institutions, universities, and finance sector was created.

And a specific institution named in short KOSGEB (Small and Medium Size Enterprises Development Organization), which is affiliated to the Ministry of Science, Industry and Technology, was put in charge with the issues related with the SMEs.

KOSGEB perfoms its functions in cooperation with all relevant institutions.

Currently, Turkey has more than 3.5 million SMEs.

If I go into detail a little bit more, then, I should begin with what is an SME in Turkey?

As far as I can see every country has a specific SME definition.

In Turkey, in 2005, a particular regulation has been adopted on definition, qualification and classification of SMEs.

This also brought harmonization with the EU definition.

The scales of enterprises are defined according to the “number of workers”, and “annual turnover”.

Companies with less than 250 workers and whose annual turnover does not exceed 40 million Turkish Liras are defined as SMEs.

They are divided into 3 sub-categories such as micro, small and medium size SMEs, according to the number of workers they employ and to their annual net sales.

The first criterion, which is the number of workers, is the same as that adopted by the EU.

However, financial limits are less than those of the EU, due to the characteristics of Turkish enterprises.

Description of SMEs in Turkey
Number of employees Size Annual net Sales (TL)
0-9 Micro 1.000.000
10-49 Small 8.000.000
50-249 Medium 40.000.000
Source: KOSGEB

SMEs are deemed as engines of all kinds of economies.

They create jobs.

They contribute to the economic growth of the countries.

Thus, strong SMEs are critical for sustainable economic growth in any country.

They are also a major source of R&D, innovation and development of new products.
Moreover, SMEs play a vital role in addressing regional and sectoral imbalances in a country’s economy.

Like in many countries, SMEs are the backbone of Turkish economy. They are a very important source of employment and investment.

Turkey has recently established an ambitious goal aimed at moving Turkey from the 17th largest economy to the 10th largest by 2023.

SMEs are considered to play a vital role for achieving this goal.

Currently, existence of more than 3,5 million (3.524.331) SMEs accounts for 99.8 % of all enterprises.

77 (76.8) % of total employment, 55 (54.5) % of all wages and salaries, 64 (63.3) % of total turnover, 55 (54.2) % of added value and 54 (53.2) % of gross investment in material goods belong to the SMEs.

60 (59,2) % of total exports were realized by SMEs. Similarly, 40 (39,8) % of total imports were realized by them.

When we look at the activity scopes of SMEs involved in exports, the statistics reveal that 35% of them in industrial, 62 (61.4) % of them are in trade sectors.

SMEs carried out 46 (45.5) % of their exports to the European and 39 (38.7) % to Asian countries.

SMEs also imported 52 (51.4) and 39 (38.9) % of their goods from European and Asian countries respectively in the same period.

The clothing sector constituted 14.5 % of SMEs' exports followed by the base metal and textile industries with 12.1 and 10.3 % respectively. The sectors that stood out in SMEs' imports were the chemicals and chemical industry, base metals and non-classified machinery and equipment.

Almost 17 (16.9) % of R&Ds were realized by SMEs.

And the proportion of innovative SMEs in the industrial sector was recorded as 49 %.

Lastly, in banking sector, 26% of total loans were taken by SMEs.

Too keep the numbers and percentages in mind is difficult. In short, I may say that SMEs in Turkey are becoming stronger and stronger in many sectors.

How the system works for SMEs in Turkey?

When I was reading several materials for preparing myself for this meeting, I often came accross with the information that, SMEs all around the world generally have the same weaknesses and constraints.

And I read somewhere saying that “SMEs often don’t know what they don’t know” due lack of management capacity caused by their small sizes.

This last point looks like to be the soft belly of the SMEs in general.

Therefore, countries are generally giving a helping hand to the SMEs by means of establishing specific expert agencies or institutions.

Turkish Ministry of Science, Industry and Technology is in that sense the main governmental body in Turkey. KOSGEB, affliated with the said Ministry, is the main institution in charge of SMEs.

In fact, there are many institutions and agencies providing various SME support programs in Turkey. Existence of so many institutions requires an effective coordination. And KOSGEB is doing that perfectly

In order to enhance coordination among these institutions “SME Strategy and Action Plans” (Action Plan) have been prepared.

The main purpose of Action Plans are to ensure coordination at the national level for an effective implementation of policies related to SMEs.

These Plans also serve to harmonize Turkey’s SMEs policy with the European Union.
Current Action Plan is the 4th one and covers the period of 2015-2018.

Its general purpose is "to increase the contribution of SMEs to Turkey’s economic growth, and to enhance competitiveness of SMEs in international level in a business environment sensitive to the needs of small enterprises."

For accomplishing these goals, 5 strategic areas were specified.
1. Increasing competitiveness
2. Enhancing export capacities
3. Special emphasis be given to SMEs while improving business and investment environments
4. Enhancing R&D and innovation capacities
5. Facilitating access to finance

Currently, there are more than 650.000 SMEs registered in KOSGEB database.

KOSGEB’s programs are designed according to the basic needs of SMEs and aimed at disseminating entrepreneurship culture in the society.

Ability of SMEs to grow depends highly on their potential to invest and investment needs access to financing:

15 years ago, SMEs share in bank loans was very low. That’s the second main problem they face.

To overcome the banking system’s inability to provide funds to support SMEs, a number of support programs have been established by KOSGEB.

By these programs, SMEs attained the chance of utilizing bank credits at favourable conditions (loan interests of SMEs, which get credit from the banks that have contract with KOSGEB, are paid by KOSGEB).

So far, more than 200.000 SMEs have benefited KOSGEB’s credit interest support programs and used credits from 17 different banks having protocols with KOSGEB.

These programs created a total credit volume of 7 billion USD between the years 2003-2011.

In previous decades, finding collateral was also an important problem for SMEs.

This hurdle was overcome by the Credit Guarantee Fund (CGF) which was established in 1991. The Fund is also supported by the Turkish Treasury but the main participants are KOSGEB and Union of Chambers and Commodity Exchanges of Turkey.

CGF gives guarantee up to 80 percent of the bank loans.

Between 2010-14, more than 16.000 enterprises used the system and the volume of the loans though the CGF has reached to 2.7 billion USD. And the largest group of credit guarantee applicants were small scaled companies.

KOSGEB also focused on entrepreneurship educations. Last year more than 83.000 (83.844) entrepreneur candidates were trained.

In 2014, more than 1.000 SMEs received financial support from KOSGEB for their on-going R&D projects. (20 million USD)

Governmental bodies in Turkey are promoting and supporting R&D activities with different schemes and projects.

“Technology Development Regions” (now 44 active out of 59) which are established for creating a synegy and cooperation between universities, research institutes and the privates sector, are one example.

SMEs based in these regions receive different types of supports and enjoy exemptions. There are around 3000 enterprises in TDR.

KOSGEB also has its own Technology Development Centers (TEKMER), 41.
In an economy, R&D expenses are made through 3 channels: Private sector, public sector and universities.

At universities level, Turkey has almost the same level of R&D efforts with EU.
Turkish SMEs’s R&D efforts are relatively higher than most of the Euproean countries (TR %36, Germany, %11, Fransa %22, Poland %29, Spain %50)

According to WIPO (World Intellectual Property Organization) statistics, Turkey is the 5th country in industrial design applications, 6th country for trademark applications (clothing, agriculture, business), and 7th country for utility model applications. (27th on patent applications).

Turkey while trying to empower its national SMEs, it also engages in bilateral, regional and international cooperation organizations through KOSGEB.
As the presiding country, Turkey’s G20 priorities were formulated as the three I’s: Inclusiveness, Implementation and Investment.

This year in G20 documents, issues related to SMEs were also mentioned among the cross cutting themes taken up under various G20 work streams.

Additionally, the World SME Forum was officially launched during Turkey’s G20 Presidency in Istanbul as a global initiative for SME’s by International Chamber of Commerce, World Chambers Federation, and the Union of Chambers and Commodity Exchanges of Turkey.

If I conclude my words; SMEs are backbone of Turkish economy.

For sustainable development and growth of the Turkish economy, during the last 15 years, specific policies and strategies are adopted by the Turkish Governments related with the SMEs.

Policies mainly aimed at increasing SMEs competitiveness by means of developing their R&D and innovation capacities, improving their capacity for cooperation, engaging in new entrepreneurship activities and having access to financing, with an end goal to increase SMEs domestic and international market shares.

Thank you.

Kemal Demirciler Ambassador
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