By IMAM GUNES
official export support institution in AS THE ONLY
Turkey, Turk Eximbank played a key role in helping SMEs and other exporters weather the pandemic. The bank also launched new strategies for 2021 and beyond with new incentive packages, including launching five more branches in provinces where SMEs are concentrated. Ali Guney, Board Member and General Manager of Turk Eximbank, outlines the bank’s activities in 2020 and plans for 2021.
HOW WAS 2020 FOR TURK EXIMBANK?
We successfully passed the test in this challenging period. The support we gave in 2020 increased by 6% to USD 41.9bn compared to the first 11 months of the previous year. •ur export subsidy rate rose to 28%. Credit utilizations increased by 11% to USD 26.7bn compared to the same period of 2019. The number of exporters we served reached 12,688 as of November 2020. SMEs constituted 71.8% of these companies. Ninety percent of our exporters who became our clients since the beginning of 2020 have been SMEs. The funds we received from the international markets to support our exporters totaled USD 2.8bn in 2020.
For the first time in Turkey, and the second time globally, we obtained EUR 380m in funding with a 50% guarantee from the International Bank for Reconstruction and Development (IBRD). We also received USD 100m in funding with from the Islamic Development Bank (IDB), which was disbursed through the participation finance method for the first time.
Moreover, we launched Participation Finance Investment Loans with term options of up to 10 years for the first time for exporters and SMEs who are looking to work within the principles of the participation finance system. We finance exporters and SMEs for up to one year by taking on the liability of their short-term receivables. We started to meet the tender guarantee, performance guarantee and advanced letters of guarantee needs of investment goods manufacturers, contracting companies and shipbuilding firms with the Letter of Guarantee program.
WHAT ARE THE FINANCIAL FACILITIES YOU PROVIDE FOR FOREIGN BUYERS?
The credit insurance programs we offer are among the products that support purchasing companies abroad that work with our exporting firms. In this context, export prices are guaranteed.
Buyer’s credits are another financial facility we provide for buyers abroad. We can finance states or provide financing under the state guarantee offered by Turk Eximbank within the scope of international credits. Within the context of credit agreements signed with banks abroad, we provide short, medium and long-term buyer’s credit. We also make buyer’s credit available through Turkish banks’ branches and subsidiaries located abroad.
Moreover, we extend Commercial Interest Reference Rate (CIRR) Interest Support, which we developed with the support Turkey’s Ministry of Trade in order to promote Turkish exports of high value-added capital goods. Through the support of the Ministry, we give credits to foreign buyers purchasing capital goods from Turkey with CIRR, which is the lowest interest rate that can be given by •rganization for Economic Co-operation and Development (•ECD) member countries.
CAN YOU TELL US ABOUT THE FUNDS YOU HAVE PROVIDED THROUGH INTERNATIONAL COLLABORATIONS?
We have increased our initiatives to receive funds from the world’s leading banks and supranational institutions such as the World Bank (WB) and IDB. The amount of funds we received from international markets through syndication loans, binary credits and supranational institutions was USD 2.8bn in 2020. As a result of these activities, we had a total fund stock of USD 9.7bn excluding the Central Bank’s funds.
Moreover, based on developments in rhe export credit portfolio, we also evaluate TRY-denominated issuance opportunities for domestic investors in addition to Eurobond issuance in international capital markets.
As Turk Eximbank, we also attach great importance to cooperation agreements allowing co-financing, reassurance or coinsurance/co-guarantee transactions with export support institutions of third countries, in which our exporters and contractors will carry out projects with foreign partners. We have recently signed cooperation agreements on reassurance transactions with export support institutions in the U.S., France, UK and Denmark. Talks continue with institutions in countries such as Austria, Sweden, Finland, the Netherlands and Japan to sign similar agreements.
Negotiations are also continuing on general cooperation agreements with multinational regional development banks and export credit institutions of other countries. In accordance with Turkey ’s Africa Strategy, we are taking steps to strengthen our relations with active financial institutions, especially in Sub-Saharan Africa. We signed an agreement with the Trade Development Bank (TDB), which was similar to the framework cooperation agreement we signed with the African Trade Insurance Agency (ATI) last year. We continue to work on a cooperation agreement with Afreximbank to establish closer relations with the institution.
Moreover, we cooperate in many fields, such as insuring refunds of financing we provided to members of the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) and the Organization of Islamic Cooperation (OIC) and insuring our bank’s funds received from foreign markets. We also actively participate in meetings organized to enhance recognition of these agreements and raise awareness in companies.
Q: WHAT ARE THE PROJECTS YOU WILL CARRY OUT IN 2021?
A: We have made plans for 2021 and beyond based on the strategic transformation project we kicked off in 2020, grounded in the idea of transformation of our supports to exporters to further increase exports. We determined the problems our exporters experienced and the expectations to increase exports through surveys and one-on-one interviews.
One of the visions of our new strategy is to activate our supports to export both on a country and sectoral bases. Within the scope of our studies based on data analysis, we evaluated target countries and sectors. We will also help our companies to expand abroad, which have never made exports and have potential in this field.
On the one hand, we have evaluated the efficiency of the supports we gave; on the other, have we prepared sub-projects looking at how to work faster and be more productive. We have accelerated efforts to adapt ourselves to the dynamism in exports so our exporters don’t struggle with documentation and procedural burdens. We will continue to increase our support in 2021.