BY ISMAIL KUCUKKAYA
AKSAM- The crisis that we're suffering has various dimensions. Let me share with you with a figure I learned yesterday: Over the last two months, electricity consumption in Turkey fell 4.5%. This situation directly reflects our economic slowdown. Energy experts at Sabanci Holding told me that despite the slowdown, energy investments are still attractive. They added that they wouldn't cut back, because investments today would pay off when the economy picks up.
Another official, an owner of a large firm in the retail sector, told me that he has been shedding workers for months, but now he has to apply for the Labor Ministry to do this. I didn't know that employers had to submit written information to the ministry in order to fire more than 10% of its workers in a month. The same businessmen stated that in nearly 200 of his stores targeting women, sales had dropped very little, but sales in stores for men were at a near standstill. Interesting, isn't it?
Britain is expecting crime to rise 9%, and if the economic crisis continues, an additional 2% in 2010. In times of such crisis, public psychology has to be managed well. Markets are stagnating. The government was late in taking certain measures. Prime Minister Recep Tayyip Erdogan said that we shouldn't panic, but economic officials failed to give him the full picture. Our call for the value-added tax (VAT) to be cut was widely echoed. On the phone, Turkish Union of Chamber and Commodities Exchanges (TOBB) head Rifat Hisarciklioglu told me that that he fully supported a VAT cut
I also saw Turkish Industrialists' and Businessmen's Association (TUSIAD) head Arzuhan Dogan on TV saying the same thing, that the VAT should be cut. Deputy Prime Minister Nazim Ekren said that they would look at the issue, which shows the government's position. Another government minister I spoke to told me that some people object to the idea, but the VAT should certainly be cut. So this need is felt in many quarters, from TOBB to TUSIAD, small business owners and the Cabinet.
Now let's go back to Hisarciklioglu. He talked about very important indicators and shared critical figures with us. He said the domestic markets need to be revived in order to spur economic and job growth and that cutting the VAT was a very important tool for this. He added that this was a top item in a package of proposals they submitted to Parliament. Hisarciklioglu said that 93% of the revenues of firms in Turkey are related to the domestic market, and thus the main engine of growth in Turkey is domestic consumption. This shows, he said, that cutting the VAT would be a very powerful tool.
Hisarciklioglu added, 'The most important indicator showing that the economy is shrinking is that the increase in VAT receipts between the first 10 months of this year and the same period last year was only 2%. Inflation was 13%. So the domestic market shrunk by 11 points. We have to cut the VAT to revive the domestic market.' This is a concrete suggestion. Please revive the markets and give the people some relief.