The president of ITO calls for increasing the limit and fees on commercial credit cards

Istanbul Chamber of Commerce (ITO) President Şekib Avdagiç emphasized that both the limits and payment options of these cards, which are a very important tool in the payment chain of companies, must be evaluated separately from individual credit cards.

Avdagiç evaluated the latest events related to the business world and the economy.

Referring to the use of commercial credit cards, Avdagiç stated that many small and medium-sized companies make their payments with company credit cards, and that the purchase and sale and collection of money can be completed in card payments, without additional charge, follow-up. or some process is required.

Noting that there is a need to update business credit card limits and a long-term installment loan process, Avdagiç said: “We should not ignore the possibility that the limits and installment restrictions applied to credit cards commercial transactions may also have an impact on increases in bounced check rates in recent periods.”

‘REDIDENT CREDITS REDUCE THE PRESSURE’

Avdagiç stated that the reduction of interest rates by the Central Bank of the Republic of Turkey (CBRT) and the increase in the limits of rediscount loans granted through commercial banks through Eximbank is a very valuable step in two aspects:

“Although the credit costs of companies using direct rediscount loans remain high, they have decreased very significantly. The second issue was that as businesses reached rediscount loans at these costs, they could use their preferences in a different way, since there was not much difference between the costs of rediscount loans and business loans.

However, the introduction of affordable rediscount loans to the market will also reduce pressure on business loans. Banks, which have to convert their resources into loans, will have to create more profitable commercial loan packages to create new demand due to the decline in demand there. Therefore, the reduction of the cost of rediscount loans by the CBRT will contribute to bringing the costs of commercial loans used in the market to a slightly more reasonable level.”

Avdagiç stated that companies are reluctant to use high-cost loans: “Until recently, there was a problem of access to financing. Currently there is more talk about the cost of financing than about access to financing. “Consequently, there are inflows into the capital market,” he said.

EQUITY RATIO WARNING

Avdagiç stated that when the country’s small, medium and large companies are examined “on the scale of developed countries”, it is seen that their capital ratios are low and continues as follows:

“In Europe something like ’50 percent equity capital, 50 percent foreign resources’ is accepted.” The capital ratio is lower in Türkiye. Therefore, it is very important for Turkish companies to proportionately increase their total capital within a reasonable period of time to protect themselves against costly outsourcing.”

‘THE STOCK MARKET SHOULD STOP BEING A PLACE OF PLAY’

Avdagiç stated that the stock market should be transformed from a place where investors want to make high short-term profits to a long-term investment area and said: “There are new players in the stock market in the millions, but between 2 and 2 .5 million of these players invest approximately 50 thousand liras. Therefore, the capital market is still very superficial for us,” he stated.

Avdagiç noted that there has been demand in the stock market recently and said that this interest should be converted into a structure that includes more funds and longer-term professional investments.

Avdagiç stated that the efforts of companies to quickly open up to the capital market are promising and stated:

“The Capital Market Board (CMB) is working very effectively on this issue. The WBC’s sensitivity on this issue is correct and important. Let’s make a self-criticism here about companies. Companies also need to be reviewed according to standards that will very quickly open to the capital market. In other words, when they apply to the CMB, they must prepare a structure that does not reject them due to certain deficiencies, but allows them to open up to the stock market on the first application. “We see that there is rapid movement in the business world on this issue.”

‘CHANGE MUST BE ABLE TO FOLLOW INFLATION’

When referring to exchange rates, Avdagiç stated that, in principle, they do not make any predictions on this issue. Avdagiç said: “If inflation continues in Turkey and the exchange rate maintains its horizontal course for a long time, sudden jumps may occur after a while. This affects the pricing strategies of all companies.” saying.

Avdagiç stated that this situation creates an additional inflation figure: “In this sense, it is important that the exchange rate can follow inflation in a gradual and balanced manner, taking inflation into account, although not completely, from a macro perspective. . “When this happens, we will be able to make our prices for the next period dependent on inflation, create our export prices and calculate our costs.” he used the expression

EURO/DOLLAR PARITY STATEMENT

İTO President Şekib Avdagiç stated that the euro/dollar parity for imports and exports is close to a reasonable level, and that although the demand for dollars is increasing worldwide due to recent global economic events, it is not They expect the euro to still appreciate.

Avdagic said:

“The level of 1.08-1.10 in the euro/dollar parity is a level that can be considered reasonable and ideal, but it is not an issue in which we can intervene. There is a structure created by the international situation, which has been suppressed by the recent economic development in Europe, especially due to the war between Russia and Ukraine.

If we divide the economic regions into three in this period: Europe, China and the United States, the most prominent region here is the United States. Therefore, when we take into account the developments related to the American economy, the war between Russia and Ukraine and the burden it creates, and the situation with China, we see that the dollar is currently strengthening. When we think in this context, we hope that the euro/dollar parity does not fall below 1.05.”

Avdagiç pointed out that the weight of the dollar in the composition of Turkey’s exports is close to 60 percent and explained that there are many countries that export in euros, but they always trade with the Turkish Republics, Africa, the Middle East and the Far East in dollars.

AUTOMOBILE AND HOUSING MARKET

Referring to the automobile market, Avdagiç said that the drop in second-hand car prices was the melting of the bubble that was formed due to extraordinary prices in previous periods. Avdagiç made the following assessment:

“We went through an extraordinary period in which the balance of the automobile market was altered. Now that balance is being restored again. We are not discovering anything new, we are returning to a market that has been routine and normal for years. I don’t find the word “fell” very realistic here. There was a speculative process, but now it is returning to normal. Pricing occurs where supply and demand intersect, so price can be determined at a more realistic point where supply remains the same and demand becomes more controlled.”

Regarding the real estate market situation, Avdagiç said that changes in Turkey’s family structure affect the real estate market.

Avdagiç stated that there is an annual housing demand of 800,000 to 850,000 units in Turkey and said that if this demand cannot be met, it is inevitable that housing prices, especially rents, will remain high.

Avdagiç stated that “a more reasonable-sized housing production process” should be implemented: “In the West, taverns of 100 to 120 square meters are very few, and the average apartments are 65 to 80 square meters. “It is absolutely “It is necessary to pave the way so that people can once again have access to decent housing.” said.

Avdagiç stated that land costs are also important in this regard and that measures need to be taken to eliminate land financing from housing financing in Turkey.

Avdagiç stated that when a loan is granted for housing financing in Istanbul, 55 percent of the resource granted is not housing financing but land financing, as long as it does not go to the outskirts of the city, “Housing projects that will reduce This proportion of land below 20 percent must be implemented.” he said.

‘THE MOST IMPORTANT ISSUE IS THE FIGHT AGAINST INFLATION’

Avdagiç stated that the fight against inflation is one of the most important issues in the economy and said:

“As soon as the inflation rate, interest rates, the cost of money, access to credit begin to be controlled, all of this will see a rapid improvement and reach more reasonable levels. Therefore, we attribute the main argument for the solution of all these issues, the restrictive monetary policy, the level of interest, the cost of credit, to the rapid decline in inflation. “If we can do this, that is, if we manage to reduce inflation in the Medium Term Program to 33 percent in 2024 and 16 percent in 2025, these issues that we have already talked about will gradually begin to come off the agenda. “(BRITISH AUTOMOBILE CLUB)