We are designing our public policies not for the sake of future generations as the Koreans do, but for the sake of the upcoming elections.

Last week I argued that the new incentives bill did not have a spirit. Let me carry on from there. To what do I refer when saying "the spirit of the bill"? If you are interested, please read on.

Each crisis is an opportunity for revitalization. Korea successfully seized this opportunity after the 1997 crisis. Samsung Electronics, for instance, grew after the crisis. By the way, I don’t want to mislead you. Samsung Electronics was not incorporated out of blue by the supporters of the ruling party, in a way with which we are familiar in Turkey. Samsung Electronics was founded in 1969. In fact, the founder company, Samsung Holding, dates back to 1947. With its performance in 2011, Samsung Electronics was the number-one electronics company of the world. How? With the Korean-style incentive system designed in 1997. So, can the new incentive package which went down big create a Turkish Samsung? I don’t think so. We are designing our public policies not for the sake of future generations as the Koreans do, but for the sake of the upcoming elections. I am not judging whether this as good or bad. I am just restating the reality.

The overall revenue flow of Samsung in 2010 was around $258 billion. This equals one-third of Turkey’s GDP. I am talking about annual revenue worth more than the GDP of Finland. Let me provide a point of reference, as we like to compare things like that here in Turkey: if Samsung was a country, it would have the thirty-fifth biggest economy of the world. Let me add that the revenue figures above do not contain the revenues of overseas subsidiaries. Samsung’s construction company built the Burj Khalifa in Dubai and the Petronas Towers in Malaysia. And Samsung Electronic was the number-one electronics company of the world in 2011. We are talking about gigantic companies here. I think when talking about the spirit of an incentive scheme, these must be kept in mind.

Here is the second point: I think the new incentive system design does not reflect any intention to create a Turkish company that can be a world-leader. In fact, I do not see such an intention in any aspect of the industrialization debates in Turkey. Fostering world champions as a target is never discussed. It is not discussed whether or not this would be a good thing, either. Korea’s industrial policy tradition, however, seems to have such a perspective. It is like we are nomads in Anatolia. They, however, have gigantic and deeply-rooted companies. Not just one, but many of them. Among the electronics companies that originate from Korea are Samsung, Daewoo, and LG.. Moreover, all of these are highly competitive in the global arena. What is the meaning of being one of the most important companies of the world in a particular sector? It is being in a ruthless competition with the rival companies of other countries. Here, we see the issue like “It is not a problem that the companies are small as long as we all can get a share of the pie.” Korea, however, has a different perspective. There, those with skills can leave the others in the dust. Here is the billion-dollar question, then: what do we want? Tiny national companies or huge global partners? The proposed incentive system does not answer this question.

And the third point: how did Samsung Electronics become the number-one electronics company of 2011? I think Samsung’s success is the product of the wisdom of opening the Korean Information and Communications University in 1997. They were aware that development is an all-out effort, opened a university that would to specialize in research and training engineers and managers in the field of information technologies in the midst of the crisis in 1997. It was this university that enabled Korean engineers and managers to work in the labs of Samsung and other electronics giants, in all fields related to electronics. A well-educated, skilled labor force lay at the core of Korea’s competitive advantage. I do not see this multidimensional perspective in our incentive package. What I see is small workshops all around Turkey; self-satisfied local partners of global giants. What can I do? There is nothing to see beyond this yet.

This commentary was published in Radikal daily on 17.04.2012