A new Strategic Approach for Export and International Cooperation. Turkish Defense Industry Export Momentum Expected to Accelerate
Defence Turkey: Dear Ms. Asuman Vangölü, you have recently been assigned as the Head of the International Cooperation Department of the Undersecretariat for Defense Industries. In this new era starting with your assignment, will there be any restructuring and a new strategy that would elevate the Turkish Defense Industry’s exports and enable our products and companies to be heard more in the international arena?
Actually, it has been ten months since my assignment. During this period, together with my colleagues we initiated studies for a new structuring and strategy that would enhance our power in areas of both exports and international cooperation in the upcoming period and that will carry our sector to better grounds in the global market.
We are aiming to accomplish the development of a new Strategic Plan for Export and International Cooperation consistent with our Undersecretariat’s Strategic Plan for 2017-2021 at the final quarter of 2016. The points we need to focus on strategically emerged with the participation of the sector’s stakeholders, and as such we will be launching a brand new strategic management approach which will put the relevant projects and activities into practice, enable performance monitoring and feedback, and when necessary execute the updates according to the new goals that may appear. Actually, these studies that we have been conducting revealed the need for a new structure in our department. We would be able to accomplish more comprehensive studies through a new unit, which would carry out activities towards the development of international policies and the implementation of new strategies.
Defence Turkey: Taking the export figures of 2015 into consideration, what’s your evaluation on the current status of the sales in respect to the years ahead? What would you like to say about the deficiencies on your part and the steps to be taken?
As known, our export accumulated to $ 1.66 billion in 2015, so it was 0.5% over the amount of the previous year. According to the data provided by the Turkish Exporters Assembly, our sector maintained its existing level in exports in a time when our country’s overall exports declined by 8% and it is quite important that our sector was one of the two sectors with positive growth rate. Then again, as the sector our export goal for the ambitious 2023 vision was set at $ 25 billion. In order to reach this figure, we have to achieve an average yearly increase of around 35% in the upcoming period. Currently, the accomplishment of a boom of that magnitude through existing methods appears quite difficult. At this point, I would like to point out that our crucial deficiency is addressed as a “Strategy on Export and International Cooperation” towards the ambitious 2023 vision which would enable the efficient utilization of our resources. As I mentioned before, we have already launched significant studies in coordination with our stakeholders on this subject, and our analysis is that our companies should display more effort in this area as well. Moreover, I rely on the fact that we need to analyze key issues such as the accomplishment of sales at the “platform” level; doing so would enable massive movement in our exports sales. In addition, the realization of joint venture opportunities with our parties in the upcoming period are of central importance.
Defence Turkey: The International Cooperation Department is planning to release the ‘Export and International Cooperation Strategy for 2017-2021’ as the Undersecretariat for Defense Industries. What kind of a vision will be revealed through this strategy report? Is there a road map that you determined for the launch of offices abroad or different organization models?
I have to say that our Undersecretariat’s Strategic Plan for 2017-2021 will play a critical role in the identification of the vision for the Strategy on Export and International Cooperation. Most of the situation analysis activities of our strategy development project have been finalized. Our department scrutinizes the feedback regarding the obstacles in exports and the steps that need to be taken. As you may recall, the Defense and Aerospace Industry Exporters’ Association had organized a “Search Conference” at the end of 2013 in order to abolish the obstacles in exports and to establish suggestions on solutions with the participation of the representatives from the relevant institutions, associations and companies. If you review the conclusion report of that conference, you will be confronted with many problems that are still existing. Within this scope, we aim to prioritize some of the issues that need to be resolved in the upcoming period and to eliminate our deficiencies and enhance our efficiency.
Regarding foreign structuring, we would need to make an assessment on factors such as requirements, regulations, stakeholders’ considerations, etc. through a holistic perspective in order to evaluate the alternatives. We observe that disclosing a road map upon completion of a comprehensive analysis, within the scope of the Strategic Plan on Export and International Cooperation, would be a reliable approach.
Defence Turkey: As the Undersecretariat for Defense Industries (SSM), you have inaugurated SSM offices in Belgium, USA, Saudi Arabia and Kazakhstan during the previous period. This has been done in order to improve our country’s efficiency in foreign countries regarding the defense industry arena, toward promoting our products more effectively and to be closer to the international markets. What would you like to say on the activities of these offices and their contributions to our industry?
The first of the International Cooperation offices was established in 2011 and they have been providing support to our companies’ business development activities and contribute to the promotion of our industry in the regions in which they are located with the motivation of enhancing the opportunities for exports.
From the first day of my assignment, we have been conducting important activities for identifying and increasing the efficiency and effectiveness of our foreign offices. Within the scope of situation analysis activities, we prefer to do data–driven reasoning. We aim to clarify our road map in light of the results of the analysis, as I have mentioned previously.
Defence Turkey: We are monitoring that Turkey is quite active particularly in African and Asian markets in recent years. According to the export figures regarding these regions, and in light of the SaSaD’s data of 2014, we realized that the export sales figures increased drastically by 55% in 2014 compared to the previous year. When we considered these figures, we surmised that Turkey’s focus was directed to these regions and that Turkey built a close cooperation based on trust with the countries of these two regions. In order to increase our share in the Asian and African markets, are there any studies planned in the near future, in order to increase awareness towards our products and capabilities, such as through active promotion studies in which more companies could participate and at which more products could be displayed?
First of all, I believe that region-specific approaches in exports are not appropriate anymore. Focusing on your question, there are notable countries in Asia and Africa in which we have potential in respect with our activities based on export and defense cooperation. Thriving economic and social relations with the African continent in all areas were initiated with our country’s Expansion to Africa Policy in 1998 and cooperation in the defense industry gained momentum in recent years, in parallel with the strengthening of these relations. The Asian region also holds great potential regarding cooperation in the defense industry.
The cuts in defense budgets of developed countries and the maturity of traditional markets unavoidably pave the way for the need to penetrate into new markets. Turkey has cultural and historic ties with the Asian and African countries and these ties bring us multiple advantages. Turning this potential into alternative types of cooperation is possible. The Turkish defense industry significantly developed its defense industry infrastructure and extended its product range. It is heading towards relevant new markets including Asia and Africa and to increase its effectiveness there is of utmost importance. Within this framework, as the SSM’s Department of International Cooperation, we are working out a plan for discovering alternative cooperation opportunities in the defense market and toward increasing our share in this market.
As you know, product development is a serious process. Proper promotion of the developed product, the presentation of the product to the right audience at the right time and places is a whole different process. Within this scope, the participation of our countries in the defense industry fairs held in the Asian and African regions bear great importance. SSM conducts an essential task by the participation of our senior level authorities in the fairs and encouraging the attendance of defense industry companies through “National Participation.” Among our priorities in the upcoming period is our participation in the major fairs identified, introducing our indigenous products and capabilities, enhancing our cooperation with friendly and allied countries.
Establishing new joint ventures in world markets is another area of opportunity. Turkey has crucial capability and experience in the defense industry arena. Transferring this experience and boosting certain regional markets as part of bilateral and multilateral cooperation are possible. Turkish defense companies already have joint ventures and both Turkey and the relevant foreign party are benefiting from the advantages of these affiliations. Revealing cooperation potential by sharing know-how, experiences and technology will also contribute to the creation of a market with depth in the aforementioned regions. Our companies have significant experience in building joint ventures. We are conducting research on these types of opportunities and we believe that fulfilling the needs in a joint manner will be beneficial for all parties.
Defence Turkey: Regarding Asian and African markets, in order to increase the current export potential, do we need more aggressive defense industry policy and a different strategy that would leave our strong competitors behind, in which transferring certain capabilities through joint investments, joint production methods are applied more efficiently? What is your comment on the studies carried out and on the next actions to be taken?
Today, all countries are struggling to possess outstanding defense technologies in parallel with their capacities, in order to enhance their technological accumulation and reduce their foreign dependency in this area while also raising their export potential level in the defense market. As a consequence, technology transfer between the countries has become a vital tool. We, as the SSM, are providing our support in the establishment of joint ventures and bilateral and multilateral cooperation in the defense industry arena. As you are aware, our companies have already established successful cooperation in various countries and our determination in this context will continue.
Defence Turkey: What would you like to express on the current status of our existing cooperation with the Arabic countries and Middle East countries? How was the year 2015 for Turkish companies in those regions?
As the products developed and manufactured by our defense industry reached a level sufficient for competing in international markets, quite successful projects were accomplished by our firms with the Middle East and Gulf countries. Many platforms were delivered to these countries within the recent period; primarily Wheeled Armored Vehicles and High Speed Patrol Boats. On the other hand, the Memorandum of Understanding signed between Aselsan and Saudi Arabia’s Defense and Security Technologies (DST) Company in November 2015 was materialized through a Company Contract in February 2016. In addition, a protocol on the joint initiation of R&D studies was signed in November 2015 by the SSM and Saudi Arabia’s King Abdulaziz City for Science and Technology (KACST) Institution.
Regarding the upcoming period, we are aiming to participate in the defense fairs in the region and planning promotional activities through the participation of our defense industry companies. To this end, with the positive references from the successful projects we accomplished in the Middle East region, we maintain our activities to increase cooperation and export effectiveness in defense and security technologies.
Defence Turkey: Dear Ms. Vangölü, Turkey has been striving to gear up in the Asia-Pacific region in recent years. What type of activities have you been conducting to increase Turkey’s effectiveness and competition in this market? What would you like to say regarding the ongoing programs and co-operations?
Our effectiveness has increased in the Asia-Pacific region in the recent period. We regard this region to be beyond merely a developing market but also as an environment that has sustainable and efficient cooperation potential. We are exerting efforts to establish long-term relations based on mutual trust, which is consistent with the interests of the parties in the region. To this end, we are continuing our dialogues with the countries of the region. We participate nationally in at least one event in the region each year, basing the cooperation we build upon the principle of mutually sharing experiences and know-how.
In the current situation, the leading companies of our sector are carrying out and strengthening their business development activities in the Asia-Pacific region.
Defence Turkey: There are countries such as Thailand, Philippines and Singapore in the Asia-Pacific region where Turkey is not quite active, but intends to increase its activities as well. Do we have an identified strategy for strengthening our cooperation with these aforementioned countries and for selling products to these markets?
Considering this region, we would like to develop our relations in line with our policy as was mentioned previously. In general, and in addition to the contact with the companies within those countries, we believe that intergovernmental contact would encourage relations to gain impetus. We assess that there is ample opportunity for defense industry cooperation with the aforesaid countries. With more frequent visits and contact, besides our attendance and participation in the events held in those countries during the next period, we will try to build-up our relations with these countries.
Defence Turkey: What are your comments on the market studies for the South American countries such as Peru, Uruguay, Ecuador, Chile, Brazil and Colombia and the existing cooperation? What would you like to say about the priority areas, export opportunities and the potential awaiting our companies especially in the South American region?
In line with our country’s versatile foreign policy goals, we have observed that the relations between our country and the Latin American countries have gained momentum in many areas in recent years. From the perspective of defense industry cooperation, our activities with the countries of the region are continuing as well. The aforementioned countries are going through supplier diversity in the procurement process. When the defense industry products export market’s volume is examined on a global scale, we see that this region has an undeniable importance and therefore we evaluate that the region has significant cooperation potential with our country.
We hold official talks with many countries of the region toward conducting cooperation negotiations and have hosted numerous delegations from this region in our country. As a result of all these negotiations, we notice that the awareness of the Turkish defense industry has increased in the region. Throughout our contact, we aim to make Latin American countries regard our country as an alternative supplier in addition to their permanent suppliers.
In order to establish cooperation with the Latin American countries, we have to take the unique dynamics of the region into consideration. Our approach for this region is not merely focused on exports; we also aim to build joint production. Within the scope of the cooperation developed with the Latin American countries, the senior defense industry executives of the countries of the region were extended an invitation by our Undersecretariat for Defense Industries (SSM) to the Efes drill on 30-31 May 2016.
In 2015, with the support of our Undersecretariat, Aselsan has awarded a contract to Chile for the modernization of the Chile’s military helicopters. Aselsan’s electronic warfare system is being integrated to the Chilean helicopters.
Currently there are export and joint production opportunities on naval, air and ground platforms, air defense systems, platform and system modernizations, simulation systems and security systems in Latin America. As SSM, we aim to further expand our activities in Latin America in the upcoming period. Due to the high cost of marketing activities in the region and because of the distance and language problems, our companies’ level of business development activities in the region has not yet reached a desirable level. With our support, our companies would be able to conduct more efficient activities in the region and closely follow the developments in the region.
Defence Turkey: In order to increase its efficiency, the European Defense Agency (EDA) is closely collaborating with various international organizations, European Union Institutions and non-EU member third countries such as Norway, Serbia and Switzerland. Within this scope, is it possible for Turkey to build cooperation with the EDA in a partnership model similar to those three countries?
The European Defense Agency (EDA) is a European Union agency established within the framework of European Union Common Policy on Security and Defense for providing support to member countries and EU Council in developing Europe’s defense capacity. It is possible to participate in the projects and programs of the EDA by building a partnership model with the EDA similar to the countries you have mentioned. In my opinion, this type of cooperation would provide advantages to our country. The EDA, as an institution, is one of the most important decision makers in the development of the European Union defense industry policies. Taking part in the EDA will enable us the opportunity to deepen our cooperation with Europe in the main areas of the defense industry.
Defence Turkey: Turkey recently succeeded in having the right to be presented in the executive board of the European Security Organization. Which advantages will be brought to us in the international arena by taking part in this prominent organization?
In my opinion, this development in the European Security Organization is a priceless one on behalf of our country’s defense industry. The European Security Organization is a platform based on cooperation, in which Europe’s leading defense industry companies mutually exchange their views. Having a representative in the executive level of such an entity and monitoring the activities of the organization are quite meaningful in respect with directly following the activities of the European defense industry and the novelties in Europe. Existence in this organization will help in integrating our defense industry with the European industry, enabling our companies to collaborate with the European companies on multi-national projects, conveying experience and know-how gained in these projects, to our domestic industry. In this respect, it is quite important to have a representative in the decision making position in the European Security Organization and we wish for its continuation in the future.
Defence Turkey: What are the joint projects conducted with NATO at the Undersecretariat level?
NATO has its novel armament system. As we are a NATO member state, Turkey follows all the procedures and is involved in all processes. As the Undersecretariat, we are participating in NATO Armament sub-working committees as well. By attending the activities of the various sub-working groups on logistics, certification and other different armament issues, we are tapping into the know-how and experience of NATO.
Defence Turkey: Ms. Asuman Vangölü, the Efes military exercise was accomplished this year for the first time with the participation of friendly and allied countries in actual scenario. Moreover, an exhibition of defense industry products was held near the selected observer area again for the first time. What are your assessments on this activity from the perspective of defense industry products’ promotion?
This year the Efes Drill gained in international dimension with the participation of combatant forces of eight countries, senior military representatives and foreign military attachés resident in Turkey, under the coordination of the Land Forces Command. In line with the demand of our Land Forces Command, a defense industry exhibition was realized under the coordination of our Undersecretariat as well with the attendance of our 18 companies providing platforms and systems to Turkish Armed Forces (TAF) inventory. Due to the field conditions of the exhibition site, intense infrastructure work was carried out by the TAF and the site was prepared for the exhibition. Our participant companies were selected from the companies whose products were utilized within the scope of the operation scenario and an idea on the domestic participation rate considering our defense industry’s fulfillment of TAF demands was thus given to the domestic and international participants.
As it has been the first practice, we will be assessing the lessons learnt with the TAF representatives and our companies in the upcoming period. Regarding the exhibition activity which is planned to be conducted once every two years during the operations with international participation, we will also be evaluating the alternatives to contribute to the Efes Drill which already has a brand value and for richening the activity.
Defence Turkey: One of your tasks as the Department of International Cooperation is searching for new international programs. Are new cooperation and programs aimed to be built under Turkey’s leadership in the new period as part of this task? Will there be a relevant vision?
As you know, considering the large-scale platforms requiring technological superiority, many developed and emerging countries regard fulfilling this type of requirements through taking part within multi-national programs instead of acting alone. It is an affordable, cost-effective, faster and less-risky approach. Turkey is also satisfying a portion of the Turkish Armed Forces’ requirements through international cooperation by participating in programs such as F-35 and A400M.
In the upcoming period we consider it essential to attend several international programs and to develop new cooperation programs lead by Turkey. We are seeking out the opportunities for programs, making evaluations with the stakeholders and discussing the potential of cooperation with relevant countries to this end.
Defence Turkey: Finally, do you have any message to convey to our readers?
I would like to express my gratitude to Defense Turkey Magazine for their support in the promotion of our Turkish Defense Industry capabilities and I would like to point out that announcing our international cooperation activities through your magazine provides us motivation and strength. I’d like to take this opportunity to wish you continuous success and pay my respects to all your readers.
