Big Financial Partnership for the Defence Industry
Defence Industry Export Support Credit Protocol was signed between Defence Industry Undersecretary Murat Bayar and Türk Eximbank General Director Hayrettin Kaplan on 11 March. With this protocol, when foreign countries offices apply for credit, Undersecretariat Defence Industry and Turk Eximbank will evaluate and assign the principals. In this meeting, Head of Departments of International Cooperation of Undersecretariat for Defence Industry Lütfi Varoğlu, Eximbank Country Credits Deputy Director General Alaaddin Metin, General Director of Eximbank Hayrettin Kaplan and Defence Industry Undersecretary Murat Bayar gave a speech and analyzed the importance of protocol. Varoğlu firstly mentioned to a meeting that was done last year for contributing export target and he said, “We came together for contribute 500 billion USD target in 2023 of our government. In this meeting, 25 billion USDs target was set with sub-sectors and bottom elements like civil aviation, airline, space, defence and security in 2023. To reach this aim, we should upgrade”
Head of Departments of International Cooperation of Undersecretariat for Defence Industry Lütfi Varoğlu: “We aim to strong our competitive forces with finance on the basis of product. This is our basic expectation”
According to protocol, Varoğlu explained that procedure will be followed like this: While our companies make an offer, they will reduce to writing their demands for country credits.Undersecretariat for Defence Industries, evaluate bilateral relations, necessity of customer country, provision and the quality of product and service and specift the suitable ones..We won’t accept deadly weapons into this finance package.
Varoğlu stated: “We made an agreement with Eximbank in this subject. Our firms made the titles. We evaluate that titles with Eximbank. In the proposal stage, we will give letter of intent if the idea of we will offer finance package to the country that we will export. Our firm present that letter of intent to contracting authority with the related proposal. If we win tender or proposal is regarded suitable it will evaluated with Eximbank.If we win tender, credit application will be evaluated with Eximbank and a new country’s offices.
Varoğlu also said that, “Last year’s sale figures was published at 1 January 2013. The number was 1.260 billion USD. It is still lower number in comparison to other sectors. We hope that this figure will be better with these finance packages and sale opportunities between countries”
Eximbank Country Credits Deputy Director General Alaaddin Metin: “In export business, the rule is to credit %85. If it is necessary for the country’s benefit, we give support of %30 of contract franchise fee for the local spending.’’
Alaaddin Metin informed us about country credits. He firstly said: “Since the year 1987 till today, we make receipents use 2.3 billion USD buyer credit. If there is politic risk in the credits that we make use this risk will be compensated by Undersecretariat for the Treasury”. Country limits is specified according to OECD country risk classification. According to Metin’s speech, assigned limits were so low so last 2 years they specified a new system. They designed a system that specifies the limits that provides exporters to compete their rivals. In this system; -In OECD countries 0,1,2,3. country groups take risks till 500 million USD, 4. country groups till 315 million USD
5. and 6. Country groups till 300 million USD and 7. Country groups till 250 million USD.
Metin stated that in his speech “If our exporters needs more credit, it will be increased by the decision of Council of Ministers. According to our new system which is about to finish and ready for the presented to Council of Minister, we can give limit until OECD 0,1,2. country groups 750 million USD, 3.country group 600 million USD, 4.country group 450 million USD, 5.country group 400 million USD, 6.country group 350 million USD, -7.country group 300 million USD
In order to start loaning, recipient should apply to Eximbank. In application, information about project and it’s cost, contribution to Turkey, its finance packages, employer and contract, contactor Turk firm, credit condition that demanded, offered assurance, government guarantee and bank credit should be written. Metin, explained the process like this: “After the application to Eximbank, we analyse the feasibility work. If it is okey for us, we submit for the Undersecretariat for the Treasury’s approval. After the approval of Undersecretariat for the Treasury we start to meetings and loan agreement with debit side
Eximbank General Director Hayrettin Kaplan: “The agreement that we made today is a milestone.”
In the meeting, Eximbank General Director Hayrettin Kaplan also informed about the last years performance of Eximbank. Kaplan mentioned that Eximbank is in a transformation period last 2 years. He said that “Our support was 8 billion USD in 2010, in 2013 our support is 22 billion USD. Our support increase %8.5 to %15. We think that medium and long term finance packages will contribute a lot. In this context, the agreement that we made today is milestone. Maybe we can’t get a fast solution but in the coming years, finance packages will contribute a lot.
Defence Industry Undersecretary Murat Bayar: ‘‘Our finance level is better now, with the loan of Eximbank we will be more competitive.’’
According to Bayar, reputation of our armament is very good and everyone knows that Turkish armament use upscale kits. He said that, “When we produce something with our technological possibilities, that products gain an important potential in the international market. The only problem we have that we don’t have enough credit and finance. Our export will be value-added, has technological content and pay attention the relationships between countries.”
