I hear the above statement in different forms with increasing frequency these days.

Yesterday, the Industrial Strategy and Action Plan was announced. The timing could not have been more suitable. I believe that in the current milieu it is of critical importance to issue an industrial strategy if only just to stress that 'industry matters.' Let us examine why the statement "No wise man enters the industrial sector in this milieu" has become so popular lately.

Recently a friend of mine from Konya, who is well aware that it is a source of pride to be a member of a family that has been involved in industrial activity for the last five decades, asked, "What can industrialists do in a country that offers five-year loans to industrialists to make investments and ten-year loans to workers who want to purchase houses?" Have you ever thought what industrialists do to make money in such a country? They naturally enter the housing construction sector. And he has. It is no coincidence that in this atmosphere more and more families that have been involved in the industrial sector for some generations have now shifted their focus away from manufacturing. If you take a look around, you will see that it is the heirs of deep-rooted industrialist families who are now pioneering the housing sector, the airway transportation sector and the energy sector.

What does this mean? Is Turkey going through a process of deindustrialization? Yes, it is. Then how shall we assess this issue? During the capital accumulation process in Anatolia, becoming an industrialist was a dream come true. You had to start with land ownership, then switch to commerce, and then go through a phase in the construction business before making it to the final phase as an industrialist. Industry meant a high level of organizational capacity.

However, Anatolia no longer has an industrialization problem. The reforms of Turgut Özal in 1980 expanded industrial activity throughout the region. The Customs Union Agreement of 1996 coupled with the macroeconomic stability assured by the reforms of Kemal Derviş in 2001 enabled Turkey to go beyond being a low-technology manufacturing goods exporter. The country started to export medium-technology manufacturing goods to Europe. The top export item was upgraded from textiles to the automotive sector. We have moved up on the ladder of the industrialization process. But nowadays the heirs of the rooted industrialist families do not care about how to move up from the medium-technology to high-technology industrial sectors. Despite all the Research & Development incentives provided by the public sector, Turkey still spins on square one.

This is nothing but the erosion of capability.  Turkey is faced with the risk of losing the capability accumulated over decades. Only two industrial countries exist in our region of the world, Israel and Turkey. Turkey is the only country in the region with a predominantly Muslim population. This industrial erosion also is dangerous for Turkey's foreign policy. This is the fundamental issue to be debated at the meeting of ambassadors.

From where does this erosion of capabilities arise? The underlying source of the problem is that the current business environment makes it difficult to become an industrialist; that a number of alternative ways to make money hand over fist exist. Every little factor, from the appreciation of the lira to the lending preferences of banks, from transportation policy preferences to customs policy, from labor market regulations to energy policy, works against the industrialists. Turkey has no industrial policy priority bundle to pave the way for industrialists and to ensure coordination across the public sector.

Nihat Ergün, Minister of Industry and Trade, declared that "the Industrial Strategy and Action Plan is of great importance and value as an instrument that will enable micro reforms." This statement raised my hopes. The remedy to the 'No wise man enters the industrial sector in the current milieu' mentality is micro reforms. Micro reforms are the way to prevent the erosion of capabilities. Let us hope for the best.

This commentary was published in Radikal daily on 07.01.2011