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
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