Turkey’s finance sector has not only weathered the global financial recession, but it has even come out stronger. Last year it posted 12.6% growth. What are your thoughts on the performance of Turkey’s financial sector and where do you see it going in the future?
Firstly, Turkey’s growth rate is quite impressive given the global recession. That is very important. When you compare the growth rate of the Turkish economy with development in different sectors, I think it is quite low in the financial sector. We need to promote it, and we need to restructure it. We can see the light at the end of the tunnel, but the growth rate of the financial sector is quite low, for many reasons. We need more speed to take us to where we need to go to right now.
The master plan for the Istanbul financial centre was recently unveiled, and it is projected to finish by 2016 with a rough budget of $2.6 billion. How is the IFC-I working with the IFC and the NGO (non-governmental organisation) cluster associations in order to achieve this?
We researched different financial centres, like London and Dubai. The important thing is the role of the private sector. The government is doing very good things in terms of new trade laws and legal adjustments, but we need to look at the needs of the business environment and experts in Turkey in terms of taxation. There are 12 important criteria that a financial centre must meet. There are going to be banks, associations and portfolio companies and we will show how other financial centres managed to become financial centres.
We are going to collate all the data from different NGOs in Istanbul, such as the Corporate Governance Association of Turkey. They will send us their reports and share their knowledge, and we will add our own ideas with our partners, and then send them to government and the Deputy Prime Minister.
To promote the idea of Istanbul as a financial centre, we are going to use different media channels, such as the TV, round tables, events and digital media. We are going to promote the Istanbul Financial Centre motto both in Turkey and abroad.
For example, we were the moderator of panel discussion at City Week in London and the EBRD Business Forum in Istanbul this year. We have been to Davos. Those are the most important places to go to in order to promote the idea of an Istanbul Financial Centre and the 2023 vision. The main goal of the IFC-I is to share knowledge and experience between the partners of Turkey, and make Istanbul a financial centre by creating the 2023 vision.
Please give us a bit of background as to IFC-I. What was your inspiration, and what are your ambitions?
I worked for CNBC-e for 12 years, and I believe in the role of the media in promoting top issues both nationally and internationally. If you are going to encourage foreigners and your nation to believe in the idea of the IFC, you have to provide visibility. The media is very important in this regard. Also, if you are going to attract a very powerful network, you need a well-defined picture. You need to increase the awareness of the IFC. If they believe that, politicians, bureaucrats and the media will believe that. Also, it is a self-fulfilling mechanism; if you show that you can present Turkey in Davos, then we can do it. I had the chance to talk to Jim O’Neill, the retiring chairman of Goldman Sachs Asset Management in London, and he believed that Istanbul might be a financial centre, but not internationally at first. But locally and regionally, yes. The idea is very important and supportive at the same time. Istanbul has to be a local financial centre first.
I have had experience in the media, and I talked to the Deputy Prime Minister and asked him what was going to be the cutting edge in terms of doing business at the IFC. The answer is crystal clear – confidence, confidence, confidence. We have the confidence; personally I have it. I have been doing business with the power networks for 12 years. If you believe that people will do business with you, you have to prove it. I think we can right now.
There was an historic moment for Turkey recently, when Moody’s upgraded their credit rating for Turkey to investment grade. What impact do you think this will have in the short term as well as the long term?
I had a chance to listen to our Prime Minister during the World Economic Forum on the Middle East, North Africa and Eurasia 2012 in Istanbul. He underlined the importance of Turkey as a growing economy. If you balance your country as having economic potential as well as a democracy, you can reach the level you want to get to. Some believe that there is a transformation in Turkey, and others believe that it is not a good thing. But the change is very clear; Turkey is transforming very rapidly.
This is about integrity. I do not believe that it is a coincidence that Turkey’s investment grade was upgraded when our Prime Minister was in the US. It is very easy to understand balance sheet items and off the balance sheet items. The government is using these. If you are using Turkey as a partner of the US, Europe and the Arabic world, you deserve to be upgraded. I think Turkey should have been upgraded years ago. We are trying to transform both our economy and democracy at the same time. I think this is the answer. We can talk about where Turkey is going in terms of its economy and politics, but the transformation is crystal clear right now.
This means a boost to FDI flow to Turkey, more liberalisation in the Turkish economy, debt maturity extension and a decrease in the cost of borrowing.
I think it is very important that Turkey is not just growing in economic terms; it is also growing diplomatically and politically, as a stabiliser and peacekeeper in the region. Do you tie this into the message you are projecting of confidence and trust at the IFC?
Exactly. Turkey is a safe haven. You cannot compare London with Istanbul. We are trying to be secure and handle the transportation issues with subways. Istanbul is under construction. Confidence is very important. Doing business in Turkey is getting easier. That is why the EBRD wants to be here. The IFC has the second-largest office in Istanbul. Islamic Bank is moving its centre from Washington to Istanbul.
You mentioned that IFC-I is a private company. Who are your stakeholders and how do you work with them? You mentioned you work with NGOs.
IFC-I is a cluster initiative, which aims to bring together various stakeholders from bureaucracy, financial institutions, private sector, NGOs and universities, in order to collect, coordinate and disseminate studies (reports, activities etc) with a view to facilitating and accelerating the transition process and to achieve the goal of making Istanbul a global financial centre through concerted effort.
IFC-I relies on two principal structures to devise its strategies and provides a variety of services to its participants.
The first is a governance structure ‘Board of Directors’ that is supervising IFC-I and generally tasked with strategic planning, cluster development, and continuous improvement. Its responsibility involves the creation of an ecosystem of businesses, universities, government agencies, and trade associations, all systematically aligned along a specific focus: Istanbul Financial Centre.
The second structure is the Executive Committee that is in charge of managing the IFC-I and its projects, with a designated administrator of each cluster who is responsible for day-to-day decisions related to cluster operations and management. The responsibilities of the Executive Committee include, but are not limited to: relationship building, moderation of discussions between cluster stakeholders, internal and external communications, and resource allocation and distribution. It will also be active in providing services, such as business counselling, to participants and building a network of service providers that are tasked with the delivery of services and activities to cluster participants.
When you say NGOs, you mean associations, is that correct? I do not want the readers to think that an NGO is like a charity.
On a recent trip to Turkey, London’s Lord Mayor said that Britain would give their full support to Istanbul as a global financial centre. How do you think Istanbul can benefit from arguably the global financial hub and their expertise?
Firstly, I am glad to tell you that English people are incredible. You can see the value, and you can invest. I think this is a very important feature. Whenever I talk to foreign people, the interest of English society is quite impressive. They understand the potential in Turkey, and they would like to be part of this story. It is crystal clear. They believe in the importance of this partnership as well, because one way or another, they know that Istanbul is going to be a financial centre, international or not.
Istanbul is like a pregnant woman – there is going to be a birth, and if you would like to be a close relative of this baby, you can take care of him by feeding him, as a private company or a country. We can do business together. Turkey has confidence and it has an impressive growth rate and population.
Turkey is also going to be a hub for financing huge projects in Turkey and the surrounding area – the Middle East and Arab world. I know and I believe that the Prime Minister is going to announce one or two magnificent projects in the coming days, just before the election I think. We are called the crazy Turks, but I think those project can be financed, like PPP projects.
For example, the third airport. Limak and others have joined a consortium of Turkish companies and they have won the tender for the third airport in Istanbul for €22.1 billion. It is a huge project. There are a number of huge projects coming up. There are opportunities in education, banking and insurance. There are a number of possibilities to do business together.
It sounds like things are moving very quickly. Optimally, what achievements would you like to have made by the time we come back?
The IFC and the IFC-I are very hot right now. We are very close to the 2013 elections. I think there will be more than one election. We are monitoring politics in Turkey. For that reason, three important steps are going to be taken in September. We are going to reach an agreement with those NGOs and associations in September, and we are also going to accelerate the presence in both local and global by September.
The idea of Istanbul’s financial centre will be very hot after a year or a year and a half. We are getting prepared for this. The progress is very clear, and the government is working very hard. The Deputy Prime Minister is the boss of this project. Borsa Istanbul also plays quite an important role. I think it is going to be the flagship of the Istanbul Financial Centre. Borsa Istanbul is going to be a centre for Europe, the Middle East and others, and the CEO is the biggest supporter of this story and the IFC-I.
What final message would you like to send to the millions of readers in The Independent and on worldfolio about IFC-I or even about the Turkish financial sector as a whole?
Very important areas for the well-being of a global economy include entrepreneurship, corporate governance and confidence. We are trying to make people believe that if you are doing business in Turkey, there is confidence. Companies in Turkey believe in the importance of entrepreneurship and corporate governance. Those are hot topics.
The final message is that if we want to deal with the big issues in the global economy, we should find different and new ways of doing business and also making people richer, both economically and in terms of living standards. Turkey and the IFC can do this.