Justin Vela in Istanbul -
The city of Istanbul, with its skyscrapers, minarets, and expansive bridges, signifies the achievements of the "new Turkey," yet it's the rapid development of next-door region Anatolia, Asia's westernmost terrain which comprises the majority of Turkey's landmass, that signifies the potential.
In a recent report, the Turkish Enterprise and Business Confederation (Turkonfed) reported that Istanbul is still Turkey's richest province, with an added value of TRY12,902 per person (€5,813). On the other hand, almost all Anatolia's provinces had added values per person of less than half that. Kayseri had an added value of TRY5,827 per person. The poorest province, Van, far to the east along the border with Iran and Armenia, reported only TRY3,159 per person. The report put the country's average added value per person at TRY8,336, or €3,721.
The levels of development remain uneven, but in the past two decades Anatolia (the name derives from the Greek word anatoli, or sunrise) has changed from a backwater that inhabitants fled in search of new lives in western cities to a place of increasing industrialisation and opportunity on an international scale. This change is most famously embodied by the so-called "Anatolian Tigers," cities that grew impressively as a new breed of businessmen, often religiously conservative and running small and medium-sized enterprises (SMEs), rose in prominence in the 1990s. The Turkish version of Germany's vaunted Mittelstand was born.
According to Erkin Aydin, coordinator for retail banking marketing at Turkey's Finansbank, SMEs really became a focus for banks following Turkey's 2000-01 domestic financial crisis. Before that, due to high inflation and a difficult macroeconomic situation in Turkey, banks largely opted to grant loans to big commercial and corporate companies rather than SMEs. "They were not trying to grant loans to SMEs because they were getting a lot from treasury bills," says Aydin.
Following the crisis, the government instituted deep reforms of the banking system and banks began looking for new opportunities. "Banks changed their focus to SMEs because there is a huge cake over there. It is much faster and easier than doing corporate and commercial banking. It is also less risky because you are spreading your risk all over the country to hundreds of thousands of customers," says Aydin.
Today, there are an estimated 2m SMEs active in Turkey. While the global economic crisis two years ago caused banks to reduce loans to SMEs, the Turkish government is now actively promoting their growth and last year the number of loans to SME's increased 50.1% from the year before to nearly $80bn.
The Independent Industrialists and Businessmen's Association (Musiad), a trade organization of about 5,000 members, materialises the rise of Turkey's SMEs, both in terms of fuelling growth in Anatolia and influencing Turkey's increasingly diverse foreign policy. "About one-third of our members are in Istanbul. The rest are in Anatolia, all the rest of Turkey, you can say," says E. Tarik Argit, Musiad's vice-secretary general.
Musiad was founded in 1990 by a small group of Turkish businessmen. Today, Musiad companies, nearly all SMEs, contribute about 15% to Turkey's GDP and approximately $17bn to Turkey's export revenue, with 47 offices around the country and 91 contact points abroad.
In the lobby of Musiad's Istanbul headquarters, dozens of awards sit on shelves that ascend to the ceiling on one side of the room. The Jeddah Chamber of Commerce & Industry. The Palestinian furniture delegation. The Pakistan business forum. The National Chamber of Commerce & Industry Malaysia. Musiad does much business with Western countries, but there appears to be a clear focus on other Muslim nations, proving the strength of the cultural affiliations that Turkey offers. "There are good export markets [in the Muslim world]," says Adem Donmez, Musiad's coordinator of sector councils. "Not better than Europe, but more suitable. We see the buying power of these countries going up."
According to Argit, Musaid and the ever-increasing number of SMEs popping up across Anatolia feed innovation in all sectors of Turkey, especially in manufacturing and construction. They are also feeding the economy and the country's reputation, as the Turkish government takes Musiad, and representatives from other trade organizations, around the world on frequent trips abroad. "About the government, we are getting the same facilities that have been given to others," says Argit. "The government now is trying to increase the trade volume by 2023 to $500bn, so we are together, you can say."
While some warn that Turkish banks are lending too much to SMEs, non-performing loans (NPLs) have actually fallen in Turkey, according to Finansbank's Aydin. "All the banks are sending the data of the companies to the credit bureau. If the owner has bad credit history, no-one can grant a loan to that customer. The system is getting better and better everyday," he says.
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