The Industrial Cost Trap: Customs Duties Threaten Export Competitiveness

Turkey's production-oriented growth model is at a critical crossroads, caught between rising intermediate goods costs and shifting customs policies. The global competitiveness of manufacturers is being shaped not just by exchange rates, but by the direct cost of accessing essential production inputs.

Intermediate Goods Duties Squeezing Manufacturing Lines

UTEP President Bektaş highlighted a significant loophole: while capital machinery can be imported duty-free under investment incentive certificates, the essential components required to operate these machines are facing additional tariffs. This creates a direct surge in total production costs.

■Critical components such as electronic components, cables, plastic parts, batteries, and connection equipment are facing increased import duties.

■Protectionist measures intended to safeguard local producers are inadvertently raising the cost of production.

■Current regulations risk shifting global supply routes rather than effectively shielding domestic manufacturing.

The Predictability Deficit in Industrial Investment

Given that industrial investments are predicated on multi-year strategic plans, frequent amendments to tax regulations are undermining the stability of the investment climate. Bektaş emphasized that capital owners prioritize predictability over uncertainty.

■Costs for energy, labor, financing, and logistics have outpaced the depreciation of the local currency in recent years.

■Frequent shifts in fiscal policy jeopardize the long-term strategic planning of industrial players.

■The misalignment between exchange rates, taxation, and industrial policy is eroding the price competitiveness of exporters in global markets.

The demand for predictable financing and cost stability by industrialists is a critical signal for the banking sector. As the cost of production inputs rises faster than currency depreciation, it poses a medium-term risk to the repayment capacity of industrial credit portfolios and the risk management of bank industrial exposures. Stability is not merely a preference; it is a necessity for the sustainability of industrial financing.