Exports fund may boost arms sector

ÜMİT ENGİNSOY ANKARA - Hürriyet Daily News

Turkey’s rapidly growing defense industry needs an export support fund from the government to further bolster the country’s defense exports, senior procurement officials and analysts have said.

Ankara expects to export defense goods worth more than $1 billion this year, but a fund is needed if the figure is going to be rapidly increased, they said.

The main customers for Turkish defense goods are largely in the Middle East, the Persian Gulf, Southeast Asia, Central Asia and Eastern Europe, but the industry is also now looking at Africa, according to analysts. Turkey’s main export articles include armored vehicles of every sort, small naval platforms and military electronics.

But many of Turkey’s rivals, who are also trying to export to these areas, usually support their offers with attractive financial packages.

Purchasing countries that are no so wealthy usually make use of such export funds provided by the seller to buy their defense needs and pay back in time.

“Turkish defense products attract a lot of attention worldwide. To help exports, the creation of a defense industry export support fund would be very useful,” Murad Bayar, head of the Undersecretariat for Defense Industries (SSM), Turkey’s defense procurement agency, recently told the Hürriyet Daily News.

“We are in contact with several governmental agencies to find a solution to this matter. Our efforts are progressing,” Bayar said but did not elaborate.

 “For example, China, among others, is a potential exporting rival for Turkey. And it backs its sale offers with attractive and lucrative finance packages. This very much helps their defense sales, especially in Africa,” said one defense analyst speaking on condition of anonymity.

“Defense deals with affluent states in the Persian Gulf area do not require the backing of an export fund, but in other places of the world the presence of such a fund is a great plus,” the defense analyst said.

Presently, Turkey’s Export-Import Bank’s assets cannot be used to support defense sales because of its founding principles, Bayar said. “But under our initiatives, Eximbank’s loans could be used for the sale of some software and simulator systems,” he said.

In a major example, a partnership of SSM, the German shipyard HDW and a smaller Turkish shipyard are competing with South Korea’s Daewoo to win a contract worth $1 billion to sell two U-209 class submarines to Indonesia’s Navy.