Turkiye’s Machinery Exports Generate $4.4 Billion Income in 2 Months

At the end of the first 2 months of the year, Turkiye’s total machinery exports, including free zones, reached $4.4 billion.

According to data compiled from the Machinery Exporters Association (MAIB), Turkiye’s total machinery exports, including free zones, were determined to be $4.4 billion at the end of the first 2 months of the year.

Although the base effect of the high increase of 20% in the first 2 months of last year was observed, there was no decline in this period. Exports of construction and mining machinery, textile and clothing machinery and food industry machinery attracted attention with an increase of 29% in quantity and up to 22% in value.

According to the data, there was a decline of up to 28% in quantity and 25% in value in the exports of electric motors, generators and machine tools.

Machinery exports to Russia, where exports continue to decrease due to sanctions, decreased by $130 million at the end of February. The share of Germany and the USA, where exports including free zones were $950 million in the first 2 months, in total machinery exports increased to 21.5%.

“Russian sanctions made our competitors hide data”

MAIB President Kutlu Karavelioglu, in his statement to the AA correspondent regarding export figures and developments in the sector, touched upon the effects of the sanctions on world machinery trade on the world machinery trade, and said:

“The machinery industry has recently been heavily affected by the restrictions on dual-use products that are assumed to be used for Russia’s defense needs. In this process, which turned into an unnamed embargo, the increasing uncertainty in the list of sanctioned products, the fact that a machine that was not included in this list while the order and advance was received, entered this vague list while waiting for the balance after delivery, and our money remaining in Russia, has been causing trouble for our industry for a while.

The pressure exerted through the banking system reduced our machinery exports to Russia by 37% in the first 2 months; By the end of the year, our losses may exceed $1 billion. Knowing the difficulties of taking back this large market that it left to China, the West does not give up looking for ways to send its machines without risking its businesses. This fraudulent situation causes significant deviations in machinery foreign trade data. We attribute the hesitation in announcing foreign trade figures of some European countries, which earn from trade rather than the manufacturing of machinery, to the shifts in trade routes.”

“While our customers are slowing down, our competitors are speeding up”

Karavelioglu said that the first signs of financial recovery are emerging in the global tightening environment.

Karavelioglu emphasized that according to World Trade Organization data, in 2023, when world trade in goods will decline by 5%, EU machinery and equipment production is calculated to decline by 1.4% in base effect-adjusted prices.

Noting that in an environment where financing costs, polarization and regional conflicts are so high, it is natural for risk appetite to decrease in developed countries, Karavelioglu said:

“In fact, a decline in this direction for Europe started before the epidemic, and the weaknesses of the region became invisible thanks to the urgent measures against the disruption in supply chains. However, not every country’s machinery manufacturing industry is affected by this conjuncture to the same extent. PMI data, which dropped to 46.5% in the Eurozone last month, has reached its peak in countries such as India, Brazil and Mexico, which have managed to attract large machinery investments in recent years. In short, while our customers in our main market are slowing down, our competitors in developing countries are accelerating. In the fierce race between machinery exporting countries, the fact that our machinery exports to Germany and the USA continue to increase reveals the strength of our ties in the West as well as our power in technology development.”

“The intensity of investments should not allow unfair competition”

Kutlu Karavelioglu pointed out that the strategic approach towards the machinery sector, which is at the center of the resharing of production and the twin transformation, continues in the 12th Development Plan.

Karavelioglu reminded that machinery and equipment investments, which increased by 12% in total between 2019 and 2023 in the world, increased by 70% in Turkiye, reaching up to $168 billion annually.

Karavelioglu said that with this extraordinary performance, Turkiye’s share in world machinery and equipment investments will increase to 3% in 2023. “Since a significant part of these investments were made by our machinery manufacturers, while machinery production increased by 12% in terms of quantity in the world during this difficult period dominated by crises, it increased by 65% in our country. The contribution of the incentive certificates given in the same 4 years, with a total fixed investment amount exceeding ₺5 trillion, cannot be denied in this vitality. However, despite all its benefits, we must also see that incentive legislation can create an element of unfair competition by rendering the defensive measures developed against dumped goods in our import regime dysfunctional.”

“We are the only general manufacturing industry left that does not respect the locals.”

MAIB President Karavelioglu underlined that the effects of technological polarization in machines, which constitute the largest item in world trade after oil, have a positive impact on Turkiye’s exports, but do not benefit its imports.

Karavelioglu stated that in this environment where they are creating a good alternative among their Western competitors with their price, quality and technology diversity, industrialists imported $12 billion worth of machinery from China, where they could not sell machinery, and increased the foreign trade deficit to $17 billion , and said: “Although it is not announced after the first 4 months of 2023, everyone should self-criticize the fact that the share of domestic machines that are allowed to be purchased with incentives is 89% in energy investments, 67% in services, 71% in mining and 96% in agriculture, while it remains at 39.6% in the general manufacturing industry. Within the scope of the ₺1.25 trillion investment incentive certificate issued in 2023, the share of the machines to be brought duty-free and VAT-free reaches $18 billion. In January, when we imported $3.3 billion worth of machinery, our production decreased for the first time since the epidemic and by a serious rate of 5.5%. The contraction in our main market and the continued rise in imports while losing ground in Russia is a threat that may interrupt our superior performance of the last 4 years.”

Source: Trthaber / Prepared by Irem Yildiz

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