TBY talks to Nihat Ergün, Minister of Science, Industry, & Technology, on local efforts to boost R&D and the need for more high-tech manufacturing.

Nihat Ergün
Nihat Ergün worked in the fields of free trade, accounting, consultancy, and management advisory services before entering politics in 1994, when he was elected Mayor of the Derince district in Kocaeli. He was later elected as a Deputy from Kocaeli Province at the 2002 general election. Playing a key role in the AK Party’s decision-making unit, Nihat Ergün was appointed to the cabinet in 2009.

How would you characterize Turkey's current R&D capacity, and what steps is the government taking to help Turkey become a global leader in R&D?

The path to economic development passes through production. In recent years, Turkey has become a country that produces more and generates greater value-added. Annual exports, 95% of which consist of industrial products, have reached $152.5 billion as of 2012. Production is one of the most important targets for Turkey. However, we also need to ask ourselves: What will Turkey produce and how will it do it? A decade ago, Turkey was a producer and exporter of low-tech products. In 10 years, the share of low-tech products in overall production has reduced to 25%, whereas the share of medium-technology products has reached 70%. By 2023, the share of high-tech products in overall production will increase to 20%–25%. Turkey desires to create at least 10 new global brands. The government of Turkey and the Ministry of Science, Industry, and Technology carries out significant projects to enhance the scientific and technological capacity of the country. The High Council for Science and Technology has been convened for its 25th session. Prime Minister Erdoğan chaired 16 of the 25 meetings carried out in 30 years, and this clearly represents the science and technology policy that is adopted by the government. We strictly follow and successfully implement the decisions made by the High Council for Science and Technology. The Ministry of Science, Industry, and Technology implemented the Industrial Strategy Document at the beginning of 2011. Out of 72 actions that are determined by the document, 23 are carried out under the “Technological Development of Companies." Compared to 2002 figures, the share of R&D expenditure within the national income of Turkey has doubled and is almost 1%. This, however, is not enough. By 2023, the share of the R&D budget in overall national income is expected to reach 3%, and two-thirds of the overall R&D spending shall be covered by the private sector. In other words, R&D spending made by the private sector is expected to reach $40 billion, with over $20 billion coming from the public sector by 2023. The government of Turkey has considerably increased the budget that is reserved for education and R&D. What is even more important is that the right policies are formulated and the budget is allocated to rightful purposes. Together with KOSGEB and TÜBİTAK, affiliated bodies of the Ministry, we strive to promote innovation and entrepreneurship based on technology as well as collaboration between the universities and the industry.

To what extent does collaboration between the academic and private sector play an important role in building Turkey's high-tech capacity?

In order for a country to become the leader in the world in terms of economic development, it must possess universities and academia that are in line with world standards. The researchers and academics must be able to generate knowledge or publish papers that create value. Knowledge and information that is the result of tremendous efforts set forth in the universities must find its way into the markets, and must not be left on the shelves of the libraries. Bearing this in mind, the Ministry has undergone a transformation process in 2011. Both the title and the responsibility areas of the Ministry have changed. The Ministry focuses on both academia and industry. Providing mechanisms for industry-university collaboration is one of our major tasks. Enhancing the quality of universities and bridging the gap between them and industry is a great challenge that we ambitiously strive to overcome. The Innovative and Entrepreneur Universities Index is a quantitative and concrete instrument for measuring the innovation capacity of universities in Turkey. Until 2002, there were only two technoparks in Turkey. Today, there are 50 technoparks, of which 34 are operational. A performance index pertaining to these technoparks has also been prepared and announced. The enterprising company of the Informatics Valley, a specialized technopark, has been established. Many companies are expected to carry out their operations in Informatics Valley. The Law of Technology Development Regions offers many incentives, support mechanisms, and various exemptions to companies and academics that operate in those regions. The Techno-Entrepreneurship Capital Support Program and Industrial Thesis Program are two very important instruments delivered by the Ministry. The new Patent Law has introduced significant arrangements concerning the promotion of university-industry collaboration. Universities will now be able to own patents and generate income from their licensed products. Academics who are the inventors of products will also have a share of at least 30% of the patent rights. Our main target is to ensure that the universities undertake the main role in this endeavor.

What are the advantages of Turkey as a location for foreign investors to base their manufacturing operations?

Turkey is distinguished from its neighboring countries in many ways. There is political stability in Turkey, and there has been continuous growth for almost 10 years. Turkey has even become one of the fastest-growing economies in the world. It has clearly demonstrated its determination to regulate the banking system and stated that there would be zero tolerance of any factor that would deteriorate fiscal discipline. There will be no concessions from the fiscal policies that have been implemented in the last decade. Such strict policies are indeed behind the relatively low impact of the global financial crisis on Turkey. Political stability enables swift decision-making and implementation. Macro economic balance and political stability are two very important benchmarks for foreign investors. Turkey offers very attractive opportunities to foreign investors thanks to its well-functioning democracy, well-educated labor force, and a decreasing amount of red tape in bureaucracy. Surrounded by seas on three sides, Turkey is an advanced country in terms of transportation means, energy resources, and industrial infrastructure. Turkey is a three- or four-hour flight away from the most important trade centers in the world. Countries in the Caucasus, Middle East, and Africa, which bear great potential, are also very close to Turkey and we hold cultural and historical bonds with these countries. Trade volume between Turkey and those countries increases everyday. There are railway links from Turkey into Central and Eastern European countries. To support investors, state incentives were updated in 2012 and state aid has reached a noteworthy level compared to many countries in the world. Tax advantages, advantages on customs duties, state contributions to insurance premiums, free allocation of parcels for investments, support on credit interests, and covering the corporate tax received over income of the employees are important components of the new incentive package. In addition to these, the Ministry of Science, Industry, and Technology along with its affiliated bodies offers up to 60% grants in cash. In terms of tax rates, Turkey is one of the countries with the lowest rates. Free zones are created to promote exports from Turkey. The production in those free zones is exempt from all kinds of taxes. Specific regions are established to promote technology and R&D. Tax advantages are introduced over the income that is generated in those regions, and the cost of employees for employers has been reduced to a minimum level. Similarly, in order to ensure efficiency, promote clusters, and provide common solutions to the problems of industry, Organized Industrial Zones (OIZs) have been established. Companies that are located within the OIZs are exempt from several taxes and operate free of all the bureaucratic procedures. Moreover, companies that are established within these zones enjoy better state incentives. Turkey holds a significant internal market potential with its population of 75 million people. Purchasing power is increasing. Turkey is emerging as an attractive country with its domestic market and easy access to a population of 1.5 billion people in Europe, Eurasia, the Middle East, and North Africa.

“We strive to promote innovation and entrepreneurship based on technology as well as collaboration between universities and industry. "