Kacır: We Enabled the Creation of a €170 Million Fund for Supply Chain Use

Forex - Minister of Industry and Technology Mehmet Fatih Kacır stated regarding the project "Supply Chains in Turkey: Addressing Sustainability Through Deeper Integration with European Value Chains," “With a grant support of 17 million euros from the EU, we made it possible to create a resource of 170 million euros to be used in supply chain financing, with the participation of the European Bank for Reconstruction and Development (EBRD) and other partner banks.”

Minister Kacır attended the opening event of the project and emphasized that the project offers a multidimensional support mechanism to ensure the inclusion of enterprises in the European supply chain, stating:

PRODUCTION AND SUPPLY: As Turkey, during this period when global value chains are being reshaped, we stand out positively from the rest of the world with our political stability, strong logistics connections, investor-friendly regulations, and robust production and technology development infrastructure. We have succeeded in becoming the production and supply destination for companies seeking access to world-class, quality, sustainable, and flexible production at competitive costs.

CUSTOMS UNION: Our country, which has access to a market of one billion people through the Customs Union and free trade agreements, hosts many international companies' production and R&D centers today. Turkey is currently in a position to export the most products competitively to the highest number of countries in the vast region extending from Central Europe to China. Our recent achievements in high value-added and competitive production have positively affected our trade relations with the European Union, which has become a primary market for our companies, especially alongside the Customs Union.

GREEN DEAL: We are implementing steps to enhance the competitiveness of our industry in European markets. With the "Green Deal Action Plan" we prepared, we initiated our compliance process with the European Green Deal. With the support of the EBRD, we created "Sectoral Roadmaps" assessing alternative technologies, potential emission reductions, and necessary investment needs for the steel, aluminum, cement, and fertilizer sectors, which will be most impacted by the border carbon adjustment. We identified an investment need of over 70 billion dollars for the green transformation of these four sectors by 2053.

DIGITAL TRANSFORMATION: Through the "Turkey Green Industry Project" and "Turkey Organized Industrial Zones Project," conducted in collaboration with the World Bank, we are providing over 700 million dollars in financing to our industrialists, SMEs, and green technology ventures. With KOSGEB financial support, we allocate the 300 million euro resource obtained from the EBRD to digital transformation projects aimed at increasing the competitiveness and productivity of SMEs.

MANUFACTURING INDUSTRY: Approximately 490,000 enterprises operating in the manufacturing industry, more than 10% of them exported last year. The current scale of companies provides important insights into their export capabilities. While only 4% of micro-scale manufacturing enterprises exported, we see that this rate exceeds 80% in large-scale enterprises.

TARGET MARKET: We are aware that today, particularly for SMEs, there are many challenges in opening up to foreign markets, especially in establishing commercial relations with developed economies. Having the necessary know-how and experience to export, conducting market research, complying with standards, regulations, and demands, positioning products and services to meet the needs of overseas customers, making additional investments, and accessing trade finance are all indicative of different levels of administrative, technical, and financial barriers that our businesses must overcome in this process.

COMPETITIVENESS AND INNOVATION: As the Ministry of Industry and Technology, we have always acted as the implementer, supporter, and advocate of measures that will open the way for our industrialists in global markets to overcome these barriers. In this regard, we have initiated projects and programs that directly or indirectly eliminate all visible and invisible obstacles faced by our industry in global markets, from the integration of our manufacturing industry's supply chains to the support of R&D infrastructure, from twin transformation to access to finance for our SMEs. For over 15 years, our Ministry has operated as the Program Authority in managing IPA funds in the "competitiveness and innovation" sector and has implemented nearly 90 projects with an 800 million euro budget within the framework of EU policies that demonstrate significant alignment with our national strategies.

GLOBAL VALUE CHAIN: We are launching a multifaceted support program aimed at improving the participation rate of Turkish firms in global value chains, deepening trade connections between the EU and Turkey, and encouraging our companies to adopt Environmental, Social, and Governance (ESG) principles. Through the program, we intend to increase the supply chain financial volume to ensure that both our large enterprises and the SMEs within their supply chains adopt the EU's sustainability standards.

17 MILLION EURO GRANT: With the EU's grant support of 17 million euros for this project, we made it possible to create a resource of 170 million euros to be used in supply chain financing, with the participation of the EBRD and other partner banks. The anchor buyers participating in the program will guide the firms within their supply chains to reshape their business processes based on ESG principles.

ACCESS TO INCENTIVES: In return, the firms within the supply chain of the anchor buyers will gain access to the results-based incentive mechanism offered by the program. The anchor buyer will have the opportunity to collect the invoice amounts of their supplies before the due date and at discount rates much more favorable than market conditions. I would like to especially emphasize that we will incrementally increase the support amounts for SMEs and large enterprises in the earthquake-affected region in this mechanism aimed at integrating 300 of our firms into the European value chain.

KEY ROLE: As another important component of the program, we aim to provide comprehensive understanding of ESG principles, sustainability, and digitalization to 1000 of our firms through consulting and knowledge transfer, and to raise their preparedness levels for integration into European value chains. Development agencies' extensive field experience will play a key role in the promotion of the program and the selection of suitable candidate firms.

FINANCING SOLUTIONS: Akbank and Şok Market have taken action to create a joint supply chain financing program as part of the program. We are also pleased that a significant number of suppliers of Şok Market, Turkey’s leading food retail company located in the earthquake region, are participating in supply chain financing for the first time through this program. We aim for this mechanism to set an exemplary model in the market, encouraging other banks and corporate buyers to provide more and larger-scale supply chain financing solutions to our country.

LEAD ROLE: We will continue to implement projects that increase the share of our enterprises, especially in the manufacturing industry, in global value chains and enhance their competitiveness. We hope that our project will provide significant momentum to our efforts in this area and pave the way for many more comprehensive and results-oriented projects in cooperation with the EU and EBRD. I would also like to emphasize that our Ministry is ready to take a leading role in the design and implementation of investment and financing projects to be developed under the "European Sustainable Development Fund" mechanism.