Turkey’s capitalists receive huge amounts of incentives

Turkey’s AKP government grants ‘super incentives’ for the country’s capitalists, while deciding to cut the wages of working people
Saturday, 04 August 2018 21:08

Turkish President Recep Tayyip Erdoğan had announced the 23 projects within the scope of “Government Grant on Investments Based on Projects” on April 10, and stated that those projects would benefit from “super incentives”. However, the details about the incentives and the projects were unclear until the last week of June, when the details on how 9 of the projects would benefit from incentives. Finally, on August 3, details on three more projects were revealed.

Those three projects comprise 60% of the total amount of incentives, 135 billion Turkish Lira ($26,5 billion). Two of the projects belong to BMC, a vehicle-manufacturing company owned by Ethem Sancak, a capitalist known for his very close relations with Turkey’s ruling AKP party, and one belongs to Bosch.

The two projects by BMC have a total investment of 1,2 billion lira ($236 million) which will receive “super incentives”, and while one of them is on a production facility for producing 35,000 diesel engines, the other one is on manufacturing railway vehicles, especially locomotives. Bosch’s project worth of 1,2 billion lira is on producing a new generation high-pressure gasoline injection system.

All three of the projects will benefit from incentives such as VAT exception, customs duty exemption, corporate tax cut, support for income tax withholding, support for employer’s national insurance contribution, support with qualified personnel, and energy support. The total amount of incentives the projects benefit nearly reaches the amount of the investments themselves.

It is thought to increase export and decrease the current account deficit through those projects. However, the issues of the investment topics chosen, technology, or the scale are open to discussion. Moreover, Murat Çetinkaya, the Director of the Central Bank of Turkey, had announced that inflation rates would skyrocket, and the “solution” they found was dropping the raise rates on working people’s wages.