23 May 2012 13:29 [Source: ICIS news]
LONDON (ICIS)--Turkish petrochemical producer Petkim stands to benefit from a new investment incentive programme aimed at reducing Turkey’s over-dependence on petrochemical imports, Fitch Ratings said on Wednesday.
“The new incentive system differs from previous programmes by aiming to reduce Turkey's dependency on imports, rather than providing financial support based solely on a geographic basis, aiming to support under-developed regions in the country,” the ratings agency said.
“It will focus mainly on sectors like energy, mining, [automotive] and tourism, which are considered the main sources of Turkey's wide current account deficit. As intermediate goods imports constitute 43% of Turkey's total production, the government is aiming to provide Turkish manufacturers with a competitive edge to reduce the portion of imports,” Fitch Ratings added.
On 1 May, Petkim said it was targeting the billion-dollar export barrier this year, with exports having risen by 50% in value year on year to $288m (€228m) during the first quarter of this year.
The company, majority-owned by the State Oil Company of Azerbaijan (SOCAR), said it believes the construction of its $10bn petrochemical “super site” on a peninsula in Aliaga, near Izmir on western Turkey’s Aegean coast, should help Turkey cut down its need for petrochemical imports.
Modelled on the Jurong Island industrial zone in Singapore – which includes a chemical manufacturing cluster – it should more than triple Petkim's petrochemical production capacity by 2023 to 10m tonnes/year. The facility should also boost the company's share of the Turkish petrochemical market from its current 25% to 40%, according to Petkim projections.
“[The fresh investment incentive system] will be beneficial for current strategic and large-scale investments in Turkey from Turkish and foreign groups and provide further impetus for new or postponed investment plans in the slowing economic environment,” Fitch said.
The system would see the government provide strategic support through VAT exemption, export tax exemption, tax deduction, employment insurance support, interest rate support and VAT refunds, the agency added.
“The incentives could enhance some Turkish corporates' competitive advantage by providing lower labour and financing costs,” Fitch concluded.
($1 = €0.79)
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