The Economic Stability Shield Package Should Be Expanded

The "Economic Stability Shield" package, implemented to mitigate the effects of the coronavirus, has proven insufficient.
It is unclear how the sectors to be supported are determined and why the plastics and chemicals industry is not included.

The COVID-19 pandemic, which has shaken the world, is severely impacting all economies. With production slowdowns, job losses, and exports coming to a standstill in some areas, many governments have implemented economic stimulus packages. In Türkiye, the "Economic Stability Shield" package was personally announced by President Recep Tayyip Erdoğan. A total of 100 billion Turkish Lira in resources has been allocated to mitigate the effects of the coronavirus. After the announcement of the 21-point stimulus package, the Minister of Industry and Technology, Mustafa Varank, held a video conference with leading representatives of the business world to gather their opinions on the package. Minister Varank consulted with a total of 60 people, including the Presidents of the Sector Councils of the Union of Chambers and Commodity Exchanges of Turkey (TOBB) and the Board of Directors of the Organized Industrial Zones Association (OSBÜK), to discuss the current state of the industry. Varank stated that they would convey the demands arising from these meetings with the real sector to the Presidency. At the meeting, which was attended by figures representing the business world on a sectoral basis, Varank sought opinions from several individuals regarding additional measures that could be taken in the coming days. Among them was Yavuz Eroğlu, the Chairman of the TOBB Plastics, Rubber and Composites Assembly and also the President of PAGEV (Turkish Plastics Industry Association).

THIS PANDEMIC IS A FORCE MAJEURE EVENT AFFECTING EVERYTHING, THEREFORE SUPPORT MEASURES SHOULD COVER ALL SECTORS.

During the 4-hour video conference, Eroğlu, speaking on behalf of the sector, shared his views on the announced "Economic Stability Shield" package. Following the meeting, Eroğlu stated that while sectors not considered priorities during the pandemic, such as real estate and airline tickets, were included in the package, they saw it as a deficiency that the plastics sector, which provides inputs to many sectors including packaging, medical, automotive, white goods, textiles, cosmetics, and construction, was not included. While acknowledging that public resources are limited, Eroğlu emphasized that these resources should be used fairly for all sectors, saying, “Priority areas in industry must be correctly identified. Using ”force majeure“ to prioritize some sectors while excluding many others undermines the sense of social justice. We must determine and allocate the limited resources effectively and equitably to all priority areas. In a period when we need complete unity, providing separate support to a few sectors using a method whose criteria are unclear harms the sense of social justice.“.

INDUSTRIALISTS SHOULD BE SUPPORTED.

Eroğlu, pointing out the shortcomings they observed in the package for their sector, said: “The package should be expanded to include our sector. Plastics and chemicals should be among the sectors that will receive support in the package. Because if we are going to present food hygienically to consumers, plastic packaging is indispensable. Products used everywhere in our hospitals, especially operating rooms, are also indispensable. It is not understandable that the Chemicals and Plastics sector is not included in the "Sectors to be evaluated within the scope of force majeure" section, especially in the "Withholding Tax, VAT..." deferral section of the announced support. Our industrialists, who pay their taxes and loans on time, should benefit from the incentives, support, and discounts provided by the state during this difficult period. In this sense, companies in our sector should also benefit from support such as the deferral of SGK (Social Security Institution) and Withholding Tax. Exemption from all taxes paid to the state until June 2020 will be an important contribution for our sector, which has been affected by the global recession. The flexible working allowance for the remote working model should also be expanded. In the global economic recession, it is vital to provide more support to those who produce and work. It is essential that banks, like state-owned banks, adopt a flexible approach to loan repayments.“

WHY SHOULD FOOD AND PACKAGING PRODUCTION NOT STOP?

Eroğlu continued: “If the “stay at home” campaign implemented to prevent the pandemic is expanded and factories are also considered for closure, then for life to continue, the food, packaging, cleaning, health, pharmaceutical, logistics, agriculture and livestock sectors, and related industries, need to continue production. A halt in production in this area means consumers will not be able to access food, medicine, and hygiene products. In this context, packaging production must continue so that food can be presented to the consumer hygienically. The plastics sector serves many sub-sectors such as packaging, medical, automotive, white goods, construction, aviation, and machinery. In the event of possible factory closures in Türkiye, all sectors can be evaluated separately, but the production of packaging for food must continue. If markets are to remain open, the food-related packaging sector must also continue its production. Due to the importance of this situation in terms of preventing the spread of the pandemic and maintaining hygiene, the packaging sector, including single-use and medical products, must continue production. In this context, France, one of the countries facing the Coronavirus, has included the Food and Food Packaging Industry in its “Priority Industry” list. Similarly, Belgium has included its Packaging Industry.“ "It was evaluated in the 'Vital Industry' list."”

ACCESS TO FINANCE SHOULD BE MADE EASIER.

One of the important issues that the real sector reminded Minister Varank of during the meeting was financing. Industrialists, noting the difficulties they have experienced with banks during this period, argued that the Credit Guarantee Fund (KGF) should play a crucial role, especially at this time. They stated, “The KGF should be considered sufficient, without leaving the issue of collateral and mortgages to the discretion of the banks. If this is not done, banks will prefer their reliable and problem-free customers, and support will not reach businesses that are most severely affected by the crisis.”.

Eroğlu also reminded that energy prices used in industry have increased significantly, and stated that reconsidering the issue during these critical times and reducing electricity prices used in industry would be a meaningful incentive. He added that the 100% increase in electricity prices within a year has created a heavy burden for producers.

EROĞLU: GOOD THINGS ARE HAPPENING TOO

Eroğlu stated that positive steps were also taken amidst the chaotic environment caused by the coronavirus, and announced that they had initiated a joint project with the Ministry of National Education, saying, “We have launched a meaningful social responsibility project with our Ministry. Students at PAGEV Vocational High Schools will produce disposable products such as forks and spoons in their schools and deliver them free of charge to people currently under quarantine in dormitories as part of the virus outbreak measures.”.

Eroğlu also stated that it was a correct practice for markets to start selling fruits, vegetables, and bread in bags due to the risk of virus transmission, and argued that making disposable plastic bags free again in markets during these days of pandemic threat would reduce the risk of viruses being carried from home to market and from market to home due to the repeated use of cloth bags.

Best regards,

Ertan GÜNEŞ
Secretary General

Turkish Plastics Manufacturers Research, Development and Education Foundation

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