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Turkish textile exporters in dire straits due to tax turmoil

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After being hit by a series of political crises in their chief export markets, Turkish apparel exporters are looking for ways to manage a second blow from the recent tax issued on imported fabrics. The new tax will increase domestic prices by at least 20 percent during the upcoming winter season, sector chiefs said.

Apparel and fabric exporting businessmen based in Istanbul's Osmanbey, Merter and Laleli neighborhoods organized a sector meeting in Istanbul on Saturday to discuss issues about maintaining sustainability in the sector.

Speaking to the Hurriyet Daily News & Economic Review after the meeting, Osmanbey Textiles Businessmen Association, or OTIAD, Chairman Ali Ulvi Orhan said the association members launched an emergency plan to substitute the loss in the Middle Eastern markets that comprise 50 percent of the their total exports. ''We are now more focused on the domestic market, as well as northern markets like Russia, the other eastern bloc countries and Commonwealth of Independent States,'' he said.

Due to the additional taxation issued in early 2011 on imported fabrics and apparel, as 20 percent and 30 percent respectively, Orhan expects a slash in the domestic demand for their products, as the taxation on the basic raw material will directly affect their market prices.

''This taxation is supposed to protect the local producers against foreign brands; however, the foreign brands will not be as much adversely affected as us,''he said.

The idea behind the tax was that it would boost purchases from domestic producers, he said. ''It brings up other issues, certain types of fabrics that we need to maintain seasonal trends are not produced in Turkey.''

LC Waikiki Chairman Vahap Kucuk who also attended the meeting, said the protectionism never worked out for countries, on the contrary it further increased consumer prices and damaged both the producers and the consumers.

''Iran is the best example here. They have been applying protective methods for so long; still the country is one of our chief export markets. Our products are cheaper than those presented by local producers; therefore consumers prefer our products over ones made locally.''

Also speaking to the Daily News, Istanbul Textiles and Apparel Exporters'Union, or ITKIB, Chairman Hikmet Tanr?verdi said according to the union's data the Middle East crisis did not cause an irreparable loss to the overall apparel export sector. ''But it stopped a great many new investments planned in the region, although the physical loss it cost, according to our figures it is between $500,000 and $600,000 that chiefly stems from Libya.''

Orhan, on the other hand, said the effect of the crises could not be solely measured by the physically losses and there were further, invisible, losses. ''Libya is our gateway to many other African markets. Therefore, the crisis in the country halted our exports to many other countries.''

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