CHP Economic Program and New Strategy Summary 2011

CHP EU REPRESENTATION - Brussels

CHP’s Economic Program: The New Economic Strategy Production for All Prosperity for All CHP for All1 Foreword This summary presents the economic manifesto of Turkey’s main opposition party, CHP. CHP’s economic program consists of two main documents, which are in turn embedded in a much broader series of White Papers on human rights and liberties, regional underdevelopment, women and children, education, and the like.

The conclusions of these White Papers have been reflected to the longer Economic Program Document called “A New Economy with a Human and Production Focus Towards the 100th Anniversary of the Republic”. In essence, that text lays out a long term program of social and economic development with specific goals to be achieved in 2023, the 100th year of Independence.

The philosophy of CHP echoed in these pages can be summarized as follows: 

Globalization is inevitable and Turkey should be an essential part of it.

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The fundament of growth and development is the capitalist market model.

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Turkish policy is constrained by and the country shall remain firmly committed to the international-institutional arrangements such as WTO, EU, and OECD.

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Within this framework, the objective is to identify areas of opportunity that match Turkey’s endowment set and to eliminate obstacles hampering their effective utilization to maximize growth and development.

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Once again, within this framework, the state shall act an instrument of enablement and encouragement, consistent with its definition as a social welfare state.

Herkes için CHP – CHP for All. Draft translation. For full version of the report in Turkish, please visit: www.chp.org.tr/?p=20013

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CHP AB TEMSİLCİLİĞİ - Brüksel

The following summary covers macro-policy, employment and social development policy, sectoral (industrial) policy and finally regional policy objectives of CHP. Topic

2023 Target

GDP

US$2.6 trillion

Per capita income

US$31,500

Per capita income as % of EU average

85

Per capita income in East and Southeast as 75 % of EU average Exports

US$650 billion

Current Account Deficit (% of GDP)

2.5

Employment growth per annum

800 thousand

Labor participation ratios (Female/Total)

40/55

Unemployment Rate (%)

6

I. Macro-Policy A. Fiscal Policy 

Fiscal discipline is the ground stone of macro-economic (ME) stability. A Fiscal Rule is essential.

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Zero-based budgeting shall be implemented and parliamentary oversight of all extrabudgetary expenditures shall be increased. A new budget oversight committee, to be chaired by a member of the main opposition party will audit adherence to budgetary goals.

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Fiscal policy will be conducted in a countercylical manner.

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The composition of the budget will be geared to maximize growth, employment and productivity.

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Taxes shall become the primary item to finance expenditures. Measures to minimize tax avoidance and evasion will be adopted. Tax policy will be set in connection with social welfare and labor market objectives.

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The tax code will be simplified.

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An independent Tax Authority shall be instituted.

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Public debt to GDP ratio shall not exceed 40%.

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Through credibility-enhancing measures the duration of public debt shall be extended, while the share of variable rate borrowing will be lowered to reduce financing costs and free funds for current & investment expenditures.

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All state subsidies will be accounted for in that year’s budget.

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The State Tender Law which has lost its effectiveness because of numerous exceptions and exclusions during the recent years will be overhauled to meet international standards.

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The weight of taxation shall be shifted from unfair and distortive indirect taxes to direct ones.

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The tax burden on wage and salary earners will be reduced.

B. Monetary Policy 

The objective of monetary policy is to ensure price stability.

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The policy of inflation targeting shall be rendered more transparent. Detailed MPC notes and the voting records of members will be shared with the public.

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Measures will be taken to enhance the accountability of CBT, in line with international standards safeguarding its independence.

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CBT’s international (F/X) reserves shall be raised to a level commensurate with the averages of peer countries.

C. Prudential and Regulatory Policy 

The international experience has established the necessity of an integrated and proactive regulatory and oversight framework coupled with active macro-risk management. To achieve this goal

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Practices shall be targeted to reduce systemic risk, to ensure the safety and soundness of large actors, as well as to prevent asset bubbles and the concomitant fragilities in the real economy.

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A Financial Stability Board to coordinate the activities of current regulatory agencies (such as CMB, BRSA, CBT, etc) and the Ministry of Finance as well as the Undersecreteriat of Treasury shall be established.

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There will be complete transparency concerning the rules governing portfolio (financial) flows and assurances of non-discrimination.

II. The Policy Framework for Employment and Social Development A. Policies to Safeguard Current Employment 

The Economic and Social Council shall be empowered and used as the primary platform for all stakeholders to contribute to labor-employment policy.

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Measures to enhance access to credit by Small and Medium Businesses (SMA) shall be taken.

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State subsidies granted through private intermediaries shall be used to support working capital needs of SMA.

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Our objective is to fully utilize the employment capacity of leading industries such as tourism.

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We shall actively manage the migration of farm labor to industry and services to minimize employment losses.

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Ziraat Bankası and Halkbank shall remain in state domain, but all loans and other services to farmers and craftspeople shall be issued in line with private sector practices.

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The problem of unregistered employment shall be solved by reducing the tax load on labor, as well as tightening audits.

B. Policies to Create New Employment 

We shall implement a new growth strategy focused on domestic resource and labor utilization.

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Our first priority is to augment the productive capacity of the economy. A better investment climate shall be established by reducing the paperwork and tax load on production.

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Industrial policy shall target new areas promising competitiveness, and support policies shall be used to increase the value-added in traditional industries.

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Access to credit and capital for entrepreneurs shall be bolstered.

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Support shall be lent to projects increasing female labor participation. We shall use affirmative action (positive discrimination) for female entrepreneurs.

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Priority will be given to programs that aim to reduce youth employment.

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As part of our social policy objectives, we shall ensure that there is at least one income earner in every family.

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Public funds will be used to alleviate regional and social income inequality, to support industries utilizing new technologies and entrepreneurs.

C. Policies to Increase Labor Mobility (Labor Market Flexibility) and Productivity 

Enrollment at every level of formal education shall be raised to international averages, while emphasis will be placed on improving the quality of education. Lifelong education practices will be enacted.

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We shall coordinate labor, business and state activities to provide on the job training and acquisition of new skills.

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Human resources planning shall be given priority, an employment map of the country will be drawn to match education to demanded skills.

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Vocational training will be given new emphasis at secondary and university level by establishing close cooperation between industry and schools. Vocational certification will be broadened.

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Vocational-technical schooling will be encouraged by providing social security insurance to students, the cost of which will be added to the education budget.

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Private employment agencies and the state employment agency ISKUR will be actively used not only in matching vacancies to workers, but also to offer counseling and adult training.

D. Social Security and Support (Welfare) Policies 

A safety net to eradicate hunger and poverty, as well as to reduce the impact of business cycles on low-income families shall be erected at once.

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Welfare and other state aid will be provided in a manner to ensure fairness, to end arbitrariness and to uphold the dignity of the recipient.

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To ensure effective delivery of welfare to the truly needy, a poverty map of the country will be compiled.

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A new program called Family Insurance, consisting of cash payments will be initiated to provide a level of minimum income to every needy family.

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We shall link welfare and other state aid to policies for employment, encouraging recipients to enroll in state programs to raise skill levels and find jobs.

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Retirees will be paid a prosperity dividend based on real GDP growth, while pension inequalities among members of different state pension systems will be abolished.

III. Sectoral (Industrial) Policy and Strategy A. Strategy for Transitioning to the Knowledge-based Economy 

Our primary objective is to elevate Turkey from a country that consumes to one that produces knowledge-based (IT) technologies.

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Firstly, we shall strive to increase the share of high-tech and information-intensive activities in the economy by giving emphasis to schooling and R&D.

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Human (social) capital is the cornerstone of an IT economy. To increase the quality of human capital, the entire education system from pre-school to higher education will be overhauled and raised to international standards.

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The infrastructure to attract reverse talent migration shall be erected to bring back our nationals.

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The National Innovation Program will be integrated in all economic activities at all stages.

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Public-business-university cooperation shall be encouraged using every means at our disposal.

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Cooperation between industry and universities shall also be developed to achieve critical mass in R&D activities.

B. Industrial Policy Framework 

Growth should be based not primarily on external savings, but on industry and domestic labor utilization. Increasing domestic content and resource utilization in services shall be facilitated to ensure consistency with this goal.

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In manufacturing, the emphasis will be on augmenting domestic content to increase employment and value-added. Manufacturing will become once again the flagship of economic growth and exports.

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The tax and regulatory burden on production will be reduced, as input costs such as energy and transportation shall be rendered internationally competitive.

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To achieve sectoral clustering, publicly-financed industrial and techno-parks will be increased in number and size.

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To achieve economic of scale and scope collaboration and integration of SMA and large companies vertically and horizontally will be given legislative support.

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The incentive and subsidy framework currently in place will be reviewed and streamlined completely to maximize employment and to reduce inter-regional income differences, ensuring at the same time conformity to international best-practices and rules.

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Joint ventures and M&As that aim to achieve scale economies will be strongly encouraged.

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We shall study ways to re-organize company formation to increase competitiveness, technology generation, and innovation.

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Our emphasis will be on encouraging FDI in upstream industries that provide domestically produced intermediary goods.

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Bureaucratic obstacles and paperwork on entry, exit and FDI will be reduced to improve the investment climate.

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We shall ensure a level playing field in all respects between domestic and international actors.

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We shall support the Green Economy and recycling industries.

C. Agriculture and Farm Policy 

Our agricultural strategy is based on eliminating structural impediments, incentivizing investment, reducing input costs and creating an environmentally and human friendly rural world.

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To increase agricultural productivity and regain self-sufficiency the farm subsidy system will be restructured.

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Taxes on fuel used in farming will be eliminated.

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A new land reform, using the Agency for Land Allocation, will be initiated to award vacant state-owned plots to poor framers and share croppers.

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Programs and services to combine small plots and to increase yield per unit will be redoubled to increase productivity and achieve scale economies.

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We shall coordinate cooperation between small farmers to create synergies and reduce per unit cost of technology and mechanization.

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Led by Southeastern Irrigation Project (GAP), we shall build a comprehensive and nationwide infrastructure to increase irrigated lands.

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We shall institute polices to preserve bio-diversity, to protect water resources and the environment.

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Our priority will be to train the human resources in agriculture, with emphasis on technology and IT use. In this context, more resources will be devoted to improve genetic quality in seeds and animal husbandry.

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Agri-industry will be reregulated and modernized to ensure quality and hygiene standards and to increase access to export markets.

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Agricultural input and produce markets will be reregulated to prevent rent-seeking behavior and monopolization.

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Rural development programs will be reviewed to raise incomes and to reduce migration.

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Deforested lands in rural areas (2B lands) will be given free of cost of farmers for agricultural use.

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Areas currently infested with landmines will be cleared and awarded to low-income farmers.

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We shall encourage production of animal feed plants and take other measures to replenish Turkey’s sadly depleted herds.

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In agro-industry, emphasis will be given to dairy, poultry and modern slaughterhousesmeat plants.

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In fishing, our priority will be to ensure sustainable populations.

D. Energy, Mining and Infrastructure Policy 

Our energy policy will be conducted in harmony with our economic and foreign policy priorities. We shall open the process of policy formation to all stakeholders, including labor unions, professional organizations and universities.

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We shall attune our energy policy towards supplying 7% per annum economic growth, encourage private sector investment, but if necessary also use public funding to debottleneck production and transmission.

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Environmental concerns shall not be disregarded in building new generation capacity.

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A new emphasis on supply security and source diversification will be created, as we enact policies to broaden renewables use and energy efficiency to reduce dependence on imports.

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We shall invest into energy infrastructure to ensure Turkey’s position as a critical transit country and downstream production center. New international treaties shall be signed with a view on protecting national interest.

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Oil and natural gas storage facilities will be expanded to meet national emergencies and supply cut-offs.

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In nuclear generation, we shall ensure the highest safety standards, technology transfer and consider the building of new-generation reactors.

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We shall put forth legislation to encourage private investment in mining and to reduce the obstacles to entry.

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We shall encourage a transition from exporting raw materials to products based on mining and metallurgy.

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Worker safety in exploration and extraction activities shall be our utmost priority.

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Extracting industries will be reregulated to protect the environment.

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Turkey’s transportations network will be renewed and expanded to reduce costs. Rapid rail and inter-city public transportation systems will be given first priority.

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We shall speed up projects that will secure Turkey’s position as the Eurasian transit corridor. We shall also facilitate transportation and transmission networks to increase trade and commerce between, Europe, the Caucuses, China and the Middle East.

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A new master plan to safeguard clean, responsible and economically effective utilization of our coastal areas shall be prepared.

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We shall focus on our maritime fleet, our harbor capacity and our logistics infrastructure to expedite exports and to facilitate transit trade through Turkey.

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CHP EU REPRESENTATION - Brussels

IV. Regional Development Policy Framework 

The momentous evolution of the global economy, as well as changes in the political circumstances of our neighboring countries has provided Turkey an excellent advantage to hasten the development of our most underprivileged regions. In this regard, we shall pursue a pro-active and if necessary state-guided policy of development.

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The first priority will be a redeployment of the state agencies and resources to produce policies for and to attack regional differences in economic development.

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We shall prioritize public investments in health, education and transport in underdeveloped regions.

Private sector will be fully incentivized to invest in

underdeveloped regions. Where this effort doesn’t suffice we shall freely consider public-private sector ventures and as a last measure directly invest into production. 

To aid this effort, we shall swiftly compile the industrial map of underdeveloped regions, as well as undertake studies to identify geographic opportunities for regional industrial development on a competitive basis.

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Our vision for the underdeveloped East and Southeast regions is a center for production, logistics and trade with neighboring countries. In this regard, we shall primarily invest into storage and logistics capacity, and transportation networks led by railways.

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We shall actively promote opportunities in these regions, and if necessary provide incentives to FDI seeking to capitalize on opportunities in the Gulf and Middle East.

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We shall build the necessary institutions and mechanisms to increase access by entrepreneurs in these regions to credit and other capital markets.

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We shall devote attention to adopting the EU acquis in regional development policy to increase our share if EU funding for this purpose.

http://brussels.chp.org.tr