Alarko's CEO Ayhan YAVRUCU: I am rather hopeful about 2018
In this country, we have always lived with challenges. I have been in business life since 1972. I have spent 5 years of my professional career as a public servant while 40 years of have been in the private sector. We have experienced times when we needed even 10 Dollars and time when people were prosecuted only for having 10 Dollars in their pocket. What I have witnessed through the years is that Turkey has always benefited from liberalization, not a disorderly but a well-regulated liberalization. 2017 has been an unpredictable and challenging year with its ups and downs in line with the uncertainties in the global cycle. Personally, I am rather hopeful about 2018. I cannot predict how and in what extent the focusing of the USA's national security strategy on Iran will lead to the emergence of a destabilized situation in the Middle East. On the other hand, the fact that Iraq and Syria have been tending to stabilize offers a significant opportunity for Turkey. Turkish industrialists, construction contractors and exporters must attach the utmost importance to those two markets as well as Africa.
TOURISM POSES A HIGHER POTENTIALI am more hopeful for 2018 in respect of Tourism. 2017 was not so bad but Turkey's actual potential goes beyond that performance. Turkey, in fact, currently has the potential to host some 50 million tourists and to raise the level of its tourism income to 50, even 100 billion Dollars. We are commencing our investment in Cyprus this year, and we hope to complete it by 2019. In energy field, we have completed our USD 1.2 bio investment. The first unit was commissioned at the beginning of last November, and we are, now, to commission the second unit.
ENERGY POLICIES NEED REVISIONIt is my opinion that the public policies in the field of energy should be revised. The prices were fixed in a free market, the market would have the change to regulate itself. The state should, thus, regulate the supply in such manner that we do not experience an energy shortage. And it should set the price at such level that would allow for the investments in the field remain viable for the investors. It is my hope that certain regulatory actions will be taken in 2018. In the event those issues remain unsolved in the energy field, Alarko could use the opportunities especially in the renewable energy field such as hydroelectrical, solar and wind power segments.
WE ARE PUSHING IT IN EACH AND EVERY MARKET IN THE CONSTRUCTION CONTRACTING BUSINESSIn abroad, we are commencing the project for the construction of a major highway in Kazakhstan, which will be one of the largest build-operate-transfer projects. It is a colossal project, which involves USD 530 mio investment, and is anticipated to yield USD 1.5 bio income in 16 years. We have been working for certain new projects to be launched and actualized in Kazakhstan. In Kazakhstan, we have developed a supplemental line in addition to our existing business operations and we focus on large-sized build-transfer-operate projects in abroad, acting not only as a construction contractor but also as an investor. Not only build but also finance and operate... We will be doing the same also in Europe and in Africa. I believe that this new line will considerably contribute to our success in contracting business.
EXCHANGE RATES ARE CRUCIALThe course of the exchange rates and the coal price are of crucial importance for us this year. Companies borrow the funding for their investments in the form of long-term loans, on which account, currently, the exchange rates have become even more important than our actual business. You earn a certain amount of money, but you lose it all due to some 3% raise in the exchange rates. We will, of course, remain focused on our business. We must attach the utmost importance to hedging mechanisms. I anticipate the USD/TRY exchange rate to rise to the level of 4.10 - 4.15 by the end of this year. 11-12 percent is an extremely inflation rate for Turkey. The optimal inflation rate for our country would be 5 percent, so we must definitely be able to achieve that. If such level could be achieved, I would not expect any significant fluctuation with the exchange rates; though, I do not believe that it is doable in the short term. I do not expect a snap election in 2018. The elections could be held earlier than scheduled, but such earlier date they will probably be a date within 2019. It is my hope and wish that the public finance will not be stretched further this year due to the elections.
WE MUST BASE OUR GROWTH ON INDUSTRYThe economy could grow by 11 percent, it could grow by 5 percent... What really matters, however, is the quality of the growth. We must base our growth on industry. What must not go missed behind the motto "We must produce high added-value products" is that the incentives must be offered and allocated to the field of industry. We must develop a national industrialization plan through a 10-year perspective. The plan should be developed by the state and should be contributed by the private sector stakeholders. In line with that perspective, which would be mandatory for the state and guiding for the private sector; a plan, which involves the granting of incentives and subsidies and the measuring of results in a strict manner, should be actualized. Even though we have not finalized our budgets yet, it would be fair to suggest that Alarko Group aims at growing by 12-13 percent in 2018.
Alarko's plans and expectations for 2018
• A snap election is not expected in 2018. The overall economy is anticipated to grow by 4.5 to 5 percent, and the group is anticipated to grow by 12-13 percent.
• The fact that Iraq and Syria have been tending to stabilize is considered to be offering a significant opportunity for Turkey. Africa is believed to pose a fairly high potential...
• The expectations in the field of tourism are high. The investment in Cyprus, which will be commenced this year, is aimed to be completed by 2019.
• In the event the current issues in the field of energy remain unsolved; the group will take the opportunities in the field of renewable energy into consideration.
• The group will be pushing it further for the potential markets in field of abroad construction contracting business. It is to commence a highway construction project, which involves some USD530 mio investment, and is anticipated to yield USD1.5 bio income in 16 years.