PROBLEMS OF THE TEXTILE INDUSTRY WANTING SOLUTIONS

 

1. FINANCIAL PROBLEMS

The insufficient amount of loans extended by commercial and state banks to tradesmen and craftsmen operating in the textile sector, high loan interest rates and short maturities reduce the opportunity to invest in the sector and cause difficulties in repaying loan debts.

 

2. PROBLEMS THAT INCREASE COSTS AND MAKE COMPETITION DIFFICULT

 

a) Social Security Institution (SGK) Premiums and Taxes are High

The cost of SSI premiums and taxes is high enough to hinder competition. Although our country is advantageous compared to EU countries in terms of employment costs, it has higher employment costs than China and other Far Eastern countries. Our country is among the OECD countries where the highest deductions are made in terms of wages taxes and SSI premiums.

 

b) Energy Prices Are Above Competing Countries

Our textile industry faces a significant competition problem, especially due to expensive energy. This factor negatively affects our country's competitive advantage in world markets. After the recent increases in electricity tariffs, the discount that our Tradesmen and Craftsmen received through Industrial subscribers has been abolished.

 

c) Cotton Prices Are Above the World Average

The inadequacy of production in the domestic market and the tendency to purchase cotton from the USA, which is cheaper than domestic prices, have placed our country among the importing countries in cotton. In addition, the termination of credit and input support practices given to cotton producers has magnified the problems in cotton. There is uncertainty in cotton support. Cotton production cannot be increased due to the low amount of support. Seed breeding in cotton is also insufficient.

 

d) Unfair Imports from the Far East and Far East Subcontracting

In the textile industry, goods originating from the Far East, especially China, cause unfair competition in our country and threaten the sector.

 

e) Incentives were distributed unplanned and unprogrammed

Idle capacity has been created in the sector because the incentives given over the years have been directed towards investments that increase productivity and are not aimed at the production of new products.

 

3. STRUCTURAL PROBLEMS

 

a) Unregistered Employment is Common

One of the primary structural problems of our country's textile industry is; unregistered employment is coming. It is claimed that when those working unregistered in the sector and those working in companies in sub-sectors are included in this figure, the rate reaches 80%.

Unregistered employment consists mainly of subcontractors and contract manufacturers. In order to reduce costs, they are procuring low quality, dumped textiles from Far East and Pacific countries instead of domestic textiles, which puts our local industrialists in a difficult situation.

 

b) Lack of a National Textile Policy

Since our country does not have a national textile policy and is constantly neglected by political governments, there is no program, planning and strategies for sectoral growth and development. Due to lack of coordination, even the geographical distribution of investments within the country cannot be realized rationally. Wrong investments made due to lack of coordination, on the one hand, lead to the creation of excessive capacities in some sub-sectors, and on the other hand, significant amounts of foreign currency are spent on imports due to no investment in some areas. Investments do not cause an increase in production and employment due to lack of planning, on the contrary, they negatively affect the competitive conditions of existing enterprises and cause decreases in production and employment.

 

c) Research and Development (R&D) Activities are Insufficient

Another important problem regarding the sector as a whole is the lack of research and development (R&D) activities. This problem, which is valid for all sectors, also negatively affects the textile sector and constitutes one of the most important obstacles to stable and rational development. Our country is among the countries with the lowest share of R&D expenditures in GDP. Insufficient R&D expenditures lead to a decrease in competitiveness and the inability to produce high value-added products.

 

d) Problems Continue to Be Experienced in Textile Education

The educational status and especially the quality of education in the textile sector in our country is inadequate. This inadequacy is the most important underlying weakness of the textile industry. Our Tradesmen and Craftsmen cannot find apprentices to train, especially in professions that require mastery.

 

e) Own resources of tradesmen and craftsmen are insufficient

One of the most important problems of the textile industry is the lack of equity resources of tradesmen and craftsmen. Since its debt burden is high, it is more affected by economic crises. The fact that more than 80% of the workplaces in the sector are SMEs and that their equity capital is insufficient compared to their competitors makes it difficult for them to implement new technologies and modernize their facilities. The insufficient working capital of tradesmen and craftsmen constitutes one of the important obstacles to both maintaining production and opening up to foreign markets.

 

f) Tradesmen and Craftsmen Work at Low Capacity

Unfair competition conditions in the sector arising from these reasons have reduced production and employment, and billions of dollars of investment have remained idle due to the inability of tradesmen and craftsmen to work at full capacity.

 

g) Free Zones have moved away from their purpose

Free zones established to increase foreign capital inflow and exports have not been able to achieve this aim.  The entry of products produced with numerous incentives into the country also causes unfair competition for our domestic producers.