The Turkish Steel Exporters Association evaluated the possible effects of the Turkish government's new investment incentive package on the country's steel industry and voiced its further demands for the sector.
As per report, the package, effective as of January 1st 2012 will provide investors with incentives including VAT exceptions, customs tax exemptions, tax reductions, cuts in employers' social security contributions, allocations of sites for investments and VAT refunds. The incentive package aims to increase domestic production of heavily import dependent products thereby helping to reduce Turkey's foreign trade deficit
1. New incentive package provides opportunities beyond investors' expectations;
Mr Namik Ekinci president of Turkish Steel Exporters Association said that the new incentive package provides opportunities beyond investors' expectations with its very comprehensive supports and its detailed structure in terms of regions aimed at overcoming regional differences within Turkey in the development of domestic industry. Stating that the new package will play an important role in creating new jobs with its attractive structure capable of enticing foreign investors to invest in Turkey and its extended scope aimed at reducing Turkey's trade deficit we believe that the new package will further strengthen the Turkish economy and will provide further impetus for increased competitiveness for Turkey as a whole.
2. Promoting raw material investments will reduce dependence on imports;
Mr Ekinci emphasized that the importance of the focal point of the new incentive package for the Turkish steel industry which is to increase the production of heavily import dependent intermediate goods and products and pointed out that investments exceeding USD 5 million for the production of products of which supplies are 50% above dependent on imports are defined as strategic investments within the scope of package. Within this framework, we think that the most important gain of the Turkish steel industry provided by this package is the further development of domestic resources and the reduction in dependence on imports of raw materials through the promotion of new raw material investments.
3. Iron ore extraction and beneficiation projects may accelerate in Turkey;
Recalling the agreement between Turkey and the European Union prohibiting direct subsidiaries for the iron and steel industry, Mr Ekinci said that new tax incentives funding supports at low interest and allocations of sites for investments will increase the attractiveness of projects for the supply of raw materials and intermediate goods which are used by the steel industry.
Mr Ekinci went on to say that the inclusion of the mining industry within the fifth group will provide support for new iron ore extraction and beneficiation projects, as well as investments devoted to ferroalloys, another important input material for the steel industry. Turkey's iron ore reserves are mostly low grade with a Fe content of 30% to 35% while the quality required by the steel industry is iron ore with approximately 60% to 65% Fe content.
4. New shipbreaking plants needed to increase local scrap supplies;
Given that Turkish steel production is 72% dependent on the use of steel scrap, the Turkish Steel Exporters Association stated that further incentives are needed to increase local scrap supplies such as regulating the maximum age for motor vehicles in circulation according to European Union standards and establishing new ship dismantling plants in regions other than Izmir, the current center for the Turkish ship dismantling industry.
Mr Serdar Kocturk VP of Turkish Steel Exporters Association said that they have received hearsay information that the regulation for maximum motor vehicle age will be included in the incentive package framework in the coming period. Regarding new shipbreaking facilities if minimum wage incentives are also provided for this labor intensive industry in new free zones close to major centers of the Turkish steel industry such as Iskenderun and Istanbul, then Turkey may become a major center for shipbreaking and new shipbreaking plants may add up to 4 million tonnes to Turkey's local scrap supplies.
Source: Steel Guru. 16 April 2012