Overview of SMEs in Turkey

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• Overview of SMEs in Turkey
• Ismet Riza ÇEBI
• SMENCP

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Definition of SMEs adopted by the Turkish
institutions (1)
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Definition of SMEs adopted by the Turkish
institutions(2)
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In Turkey, SMEs constitute

• 99.3 of all the enterprises
• 76.7 of actual employment
• 26.5 of investments
• 38 of value added
• 10 of export

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• MAIN SECTORS of TURKISH SMEs
• 26.1 Metallic Goods
• 25.6 Textiles, Clothing, Leather Products
• 24.3 Wood Products and Furniture
• 12.7 Food and Beverages
• 3.9 Paper Products
• 7.4 Others

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• REGIONAL DISTRIBUTION
• of SMEs
• 38 Marmara Region
• 17 Aegean Region
• 16 Mid Anatolia
• 11 Mediterranean Region
• 9 Black Sea Region
• 6 South East Anatolia
• 3 East Anatolia

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SMALL INDUSTRY ESTATES

• Small manufacturers and repairsmen that are
  scattered in the towns and work under inefficient
  conditions are clustered together in Small
  Industry Estates.
• The Ministry of Industry and Trade encourages
  establishment of small industry estates so as to
  enable artisans and craftsmen conduct their
  business in modern workplaces and facilitate
  their transition to medium sized industry.

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Small industry estates

• provide healthy working conditions
• increase economic efficiency
• reduce environmental problems
• improve firms access to technology
• improve firms access to vocational training
  (apprenticeship education centers)
• enable firms to cooperate and improve networking
  

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Long term and low interest credit is provided for
the establishment of small industry estates by
the Ministry of Industry and Trade since 1965.
There are 74.377 firms in 318 estates. 459.644
people are employed in those estates. At 105 of
these estates there are apprenticeship education
centers and at 136 of them there are training
centers.
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ORGANISED INDUSTRY ZONES They are the
industrial zones that are established according
to a plan, with all the necessary institutions,
facilities and infrastructure in accordance with
certain standards. Establishment of organised
industry zones in Turkey started in 1960s by the
starting of planned period. There are 48
completed industry zones in Turkey.
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Organised Industry Zones aim at

• Planned development of cities.
• Dispersion of industry to less developed regions
  of the country.
• Overcoming industrial utilisation of
  agricultural land and putting non-agricultural
  lands to use.
• Increase in cooperation between firms.

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Construction of Small Industry Estates and
Organised Industry Zones has been among the major
policies for the establishment of local
industrial infrastructures. Besides these, Free
Zones and Technoparks have also been established
for the creation of industrial infrastructure.
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NEW INDUSTRIAL CLUSTERS

• After 1980 some of the less developed cities in
  Turkey have entered a phase of rapid
  industrialisation driven by SMEs. They are the
  new industrial clusters of Turkey.
• They are the provinces which have marked a
  successful trend in terms of gross product,
  population and industrial indicators.

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• These provinces have mostly specialised in
  major branches of industry in which they have
  tradional background, on the basis of SMEs and
  they opened up to international markets.
• Afyon, Balikesir, Bilecik, Bolu, Çorum,
  Denizli, Eskisehir, Gaziantep, Kahramanmaras,
  Konya, Karabük Karaman, Kayseri, Kirklareli,
  Malatya and Usak are among them.

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EU TURKISH SMEs COMPARISONS

• When SMEs in Europe are compared with the typical
  Turkish SMEs, the latter are at a lower
  administrative and technological level subject to
  severe financial troubles and obliged to work
  under a more disadvantageous working atmosphere
  in terms of access to information, quality
  infrastructure, economic stability, qualified
  labor, legal and institutional factors.

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EU TURKISH SMEs COMPARISONS(1)
.
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EU TURKISH SMEs COMPARISONS(2)
TURKEY
EU
More than 90 lack of information in financing
instruments
70 lack of information in financing instruments
Lack of proper legislation (late payments
increases subcontractors finance credit
difficulties)
Effective measures in late payments and
subcontracting rules
Negligible
Extensive awareness promotion on the impact of
EURO
Credit guarantee schemes are a modest instrument
Promotion of credit guarantee schemes
Difficulty for SMEs in accessing modern financial
instruments
Extensive use of modern financial instruments
(Venture capital, Credit Guarantee, leasing)
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EU TURKISH SMEs COMPARISONS(3)
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KOSGEB
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SERVICE UNITS

• Institutes - 3
• - Regional Development Institute
• - Market Research and Export Promotion
  Institute
• - Enterpreneurship Development Institute
• Small Business Development Centers
• (KÜGEM) - 28
• Technology Development Centers
• (TEKMER) - 10
• Representatives - 4

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SMEs and Finance

• In Turkey there are limited loan facilities for
  SMEs. The share of SMEs in total bank credits is
  at the level of 5.
• The loan demands of SMEs in Turkey are provided
  mainly by Halkbank, Eximbank and Development Bank
  of Turkey.

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VARIOUS FINANCIAL RESOURCES

• KOBI Investment Partnership Inc.
• Credit Guarantee Fund
• Partners TESK-TOBB-MEKSA-TOSYÖV-KOSGEB-HALKBANK
• (898 projects since 1994)
• Venture Capital
• TTGV

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R D SUPPORTS
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TÜBITAK-TIDEB TECHNOLOGY FORECASTING AND ASSESMENT
DIRECTORATE
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VISION
TIDEBs aim is to strengthen industrial research
and technological development ability in
accordance with National ST Policy
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MISSION

• to develop and apply tools for the stimulation
  of industrial RD
• to involve all the partners in accomplishing
  the mission, and
• to accomplish the mission at high quality
  public service level

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ACTIVITIES

• RD Assistance Program
• Tax Exemption
• University-Industry Cooperative Research
• Center Program
• Brokerage Events

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RD FINANCING

• I. The Decree of Investment Incentives
• responsible agency is Undersecreterait of
  Treasury
• TIDEB has the evaluatory role

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RD FINANCING

• II. Tax Exemption
• responsible agency is Ministry of Finance
• tax is postponed for RD performing industry
  for a period of three years without interest
• postponed amount is limited with RD expenses
  up to 20 of yearly corporate tax
• evaluation is done by TIDEB

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RD FINANCING

• III. RD Assistance Program
• responsible agency is Undersecreterait of
  Foreign Trade
• The Decree by Government published on June
  1995 and improved on Nov 1998
• Includes grant (by TÜBITAK) and
  low - interest loan (by TTGV) for the eligible
  RD project costs

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RD PROJECT OBJECTIVES

• New product development
• Improvement of product quality standarts
• Application of cost reduction and / or quality
  improvement techniques
• Development of new production technologies

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FUNDED ACTIVITIES

• concept development
• feasibility studies
• laboratory work
• design
• prototyping
• pilot production
• patenting
• problem solving after sales

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SCOPE OF SUPPORT
Duration max 3 years Amount no max
limit Ratio max 60 of the total project
expenses min 32 for SME s, 25 for
large ind. Range personnel, equipment, s/w,
travel, consultancy, in-country RD
outsourcing, material and patenting
costs are granted
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SUPPORT

• It is a grant
• Industrial companies including IT sector can
  apply
• No specific application period
• RD performance is the determinant factor
  for the base grant ratio

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SUPPORT RATIO

• base ratio max 50
• contributor factors
• Phd employment
• university collaboration
• sales ratio of own licensed products
• RD on critical technological areas
• patenting

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SUPPORT TO INTERNATIONAL COLLABORATIVE RD
PROJECTS

• Industrial participants to international
  collaborative RD projects benefit without
  further evaluation
• - no limit on duration
• - basic grant ratio is 50
• University / research institute participating
  international project together with Turkish
  industry receive full support upto 100.000 USD
  per project expenses

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PROJECTS EVALUATION MONITORING

• Evaluation is done by external experts from
  universities designated by TIDEB
• Project approval is done through the appointed
  Field Commitiees
• TIDEB appoints a project supervisor for the
  semi- annual monitoring of the project
• Expenses are granted semi-annually supervisors
  report depenting on
• Evaluation and monitoring is done through site
  visits

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IMPACTS

• companies are encourage to undertake research
  technology development
• improvement of RD infrastructure
• use of project and resource management
  techniques is facilitated
• collaboration is encouraged
• tacit knowledge is encouraged
• documentation is stimulated
• commercialization is supported

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CURRENT STATICS

• Number of firms 937
• Number of projects 2193
• Approved number of projects 1645
• Total grants commited 956MUSD
• Grants paid to date 105.33 M USD
• Number of completed projects 852

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PROJECT PROPOSALS RECEIVAL RATE (CUMULATIVE)
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BREAKDOWN TO FIRM - SCALE
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BREAKDOWN OF INDUSTRIAL RD PROJECTS BY TECHNOLOGY
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COST BREAKDOWN OF INDUSTRIAL RD PROJECTS BY
TECHNOLOGY
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GENERIC TECHNOLOGIES
GENERIC TECHNOLOGIES
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OTHER
65
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GENERIC TECHNOLOGY BREAKDOWN
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BREAKDOWN BY CITIES
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SME PROJECT IN GENERAL
NUMBER Of FIRM
740 TOTAL PROJECTS
1174 APPROVED NUMBER Of PROJECT
836 NUMBER Of PROJECT REJECTED 155 NUMBER Of
COMPLETED PROJECTS 343
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SME PROJECT IN GENERAL
NUMBER OF PROJECTS 1174 TOTAL GRANT
COMMITED
339 MUSD AVARAGE PRIJECT SIZE
? 0,29
MUSD GRANTS PAID TO DATE
27,20 MUSD
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BROKERAGE EVENTS

• Dec 1997
• Production Technologies-National
• May 1998
• Textile Technologies-International
  collaborative R D activities with ten

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ÜSAMP - UNIVERSITY - INDUSTRY COOPERATIVE
RESEARCH CENTERS PROGRAM

• Aim
• to stimulate university - industry
  collaboration
• to concentrate on industry activated projects
• to have graduatest experienced on industrial
  research activities
• to increase and strengthen university research
  potential

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ÜSAMP CENTERS

• structured by contribution of a university,
  TÜBITAK and at least three industrial company
  or an umbrella organization
• located in a university area
• functioned according to the participating
  industry needs
• financed by TÜBITAK 50 of yearly expenses
  for five years

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ÜSAMP CENTERS

• Since 1997, 15 applications from 12 universities
• Currently 3 centers are operational
• Ceramics Research Center - Eskisehir
• Advanced Production Systems Research Center
  Adana
• Textile Research Center Izmir
• Imortant applications are in the areas of
• biotechnology
• automotive industry
• MEMS

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AB FP6

• FP6 is new for SMEs of TURKEY
• TURKEY did not participate previous frame program
• There are some project in which Turkish companies
  and institutes take part.
• Total number 71 only 6 partner from Turkey is SME

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Thank you for your attention