TBY talks to Hüsnü Özyeðin, Founder & Chairman of Fiba Group, on the Turkish economy and the benefits of diversifying risks.

To what extent has the eurozone crisis presented opportunity for Turkish business?

The eurozone crisis represents an opportunity for Turkey in the sense that Turkey and a few BRIC countries will be the sites of growth for corporations. However, because of the eurozone crisis, the banks will have to withdraw themselves from Europe as well as the BRIC countries because the European banks have constraints on adequate capital and funding for 2012 and perhaps 2013 as well. It will be negative for Turkey and the BRICs in the sense that they will not be able to borrow as much from the banks, and corporations will not be able to borrow as much from European banks. At the same time, cash-rich corporations can invest in Turkey, because it's a growing country with certain industries that are very attractive for investors. The most prominent is energy. The Turkish economy has been called a catch-up economy by economists in the sense that a lot of things that have already developed in Western countries are just developing in Turkey. One example is shopping centers and the retail business. These did not exist in Turkey 15 or 20 years ago. Now, these businesses—as well as real estate—are driving Turkey's growth.

With inflation now approaching 10%, the current account deficit is, in real terms, the second largest in the world. Is the Turkish economy in danger of overheating?

The Turkish economy may have overheated, but I have full confidence in the economic team of our government. They have taken quite a few measures to cool the economy. They are trying to balance what I call the “Bermuda Triangle": the foreign exchange price, the current account deficit, and interest rates. The current account deficit is coming down and the economy is cooling. I think in the last quarter of 2011 and the first quarter of 2012 this will be more evident. Turkey cannot manage an $8 billion or $9 billion dollar account deficit, but it can manage a $4 billion to $5 billion deficit. In other words, $50 to $60 billion is a maximum, though $40 to $50 billion dollars is better. Our energy bill is that much—about $50 billion per year. Our current account deficit should not be more than our energy bill. It should be less than our energy bill. This is how the math works.

“The eurozone crisis represents an opportunity for Turkey."

Fiba Group is investing in energy—especially renewables. Why is this such an attractive market?

Energy is one of the most exciting growing businesses here. We're becoming involved with renewable energy, especially wind. Turkey actually has the second highest wind capacity in Europe after Scotland. Germany only has a 25% to 30% wind load factor potential, depending on the location. In Turkey our potential is 35% to 45%. This makes a big difference in the renewable energy business. Turkey also has the second highest solar capacity after Spain. But solar energy technology is still expensive, though it still has room to come down. The government doesn't want to subsidize solar energy until technology prices are lower.

What about Fibabank in Turkey? What role can it play in the very competitive Turkish banking market?

The banking market is competitive, but it's also growing and there are a lot of opportunities. Since we just re-entered this market about a year ago, we don't try to do everything. We are only involved in the SME business, commercial business, and client-related treasury activities. We plan to go into retail banking slowly in 2012 when our IT infrastructure is complete. We expect it to be complete in the last week of January. As a commercial bank you must have very flexible and scalable technology.

As the founder of Özyeðin University, what impact will it have as an entrepreneurial incubator?

We don't just try to give our students an academic education, we want them to be extroverted and curious. Between high school and business life, university is a passageway. We want to make that very rewarding. We are the first university that has an undergraduate program in entrepreneurship. I think that the whole world thinks that the savior of the world economy will be entrepreneurs. If you look at the US, the major companies shed 3 million employees in 2010 because they discovered that during the crisis they can produce the same goods and services with fewer employees. Three million became unemployed from major industrial corporations, and entrepreneurs and small businesses then hired these 3 million. That's why US unemployment is still around the 9% level and it didn't go up. Entrepreneurship in Turkey, in the past two or three years, has grown exponentially. There have been more write-ups, conferences, and articles than in the previous few decades. I think people caught on to this and the government, universities, and private sector have caught on to this as well. I think that universities are the catalyst between the government, the private sector, and entrepreneurs. At Özyeðin University we try to couple with industry, and namely TÜBÝTAK, which funds R&D. We also try to encourage students to become entrepreneurs. That's why we have what we call an entrepreneurship factory in the university. Young men and women apply with their projects, and if these projects are found to be worthwhile then successful entrepreneurs and professors mentor them to move their projects forward. If they can reach a level where they can be commercialized, then we find angel investors to support them further. We try to bring their ideas to a more advanced stage.

© The Business Year - January 2012