Turkish firms put trade before politics

Date: 07/05/1998

By Myles Neligan

ALDO Kaslowski has assumed something of an ambassadorial role since he took over the family business.

The chairman of Istanbul-based chemicals firm Organik Holding is as keen to promote closer trading links between the EU and Turkey as he is to seek out new markets for the specialised chemicals his firm makes.

Back home, as a member of the board of Turkey's influential business lobby Tüsiad, Kaslowski has become a vocal campaigner for democratic reform and greater market liberalisation in his country.

"Turkey now has a more or less free market and we are actively preaching a greater degree of democracy, but drastic measures will be needed to put the country on a firm economic footing," he admits. "At the moment, inflation is very high, and this is felt by the people on the street."

Last year, consumer prices rose by 85%. The government is taking measures to cap inflation, which is expected to stabilise at close to 80% this year, but it needs to go further.

Kaslowski argues that major structural reform including a vigorous privatisation programme and thorough-going changes to the tax system are needed.

Yet, despite Turkey's shortcomings, this industrialist who sells half his exports to EU member states urges Europeans to take his country seriously.

"Turkey is a regional power of 62 million people with an unsaturated market for many types of goods and a well-educated workforce," he declares. "But, in the long term, the country's future lies in its position as a gateway to Russia and the countries around the Caspian Sea. Many Turkish firms are already active there, and in the future we will be able to act as a conduit for European investment in the region."

As he talks about the EU's rebuff of Turkey last December, when Ankara was excluded from Union accession talks because of its patchy human rights record, Kaslowski cannot prevent his disappointment from overshadowing his natural diplomacy.

"The events of last December came as a blow to the Turkish people," he admits. "We do not see why we should not be treated as a candidate for membership on a par with the others."

Yet he draws a sharp distinction between the political battles over Turkey's application for EU membership and the more pragmatic business relationship between the two trading partners. "European countries take in 58% of our exports. We need the EU," he says bluntly.

His assessment of the three-year-old customs union between the two countries is generally positive.

"In the first two years, the net result was a trade surplus for the EU. But over the last year, the balance has shifted more in Turkey's favour. Both sides need to make progress on harmonising standards," he argues.

In keeping with his prediction that the countries of Asia Minor are set to take off economically, Kaslowski says that it is these countries, rather than the EU member states, which are the current focus of Organik's business strategy.

"Half of our exports, worth about 13.6 million ecu, go to the Union, and we are always keen to strengthen our ties with our European clients. But the EU market for chemicals is saturated and many European countries are still in the grip of recession," he says. "We have no plans at the moment to set up a manufacturing base there."

Faced with this apparent dead end, Kaslowski has decided that Organik, a firm with annual sales revenue of 90 million ecu, should aim to become a niche supplier of fine chemicals (high-grade products for specific industrial applications) in the EU.

The fine chemicals trade is attractive because its low output levels mean that producers do not need to set up large-scale manufacturing operations, and success does not depend on achieving big economies of scale.

Kaslowski also reveals that an increasing proportion of his business comes from highly specialised orders tailored to the specific needs of his customers: products which naturally carry a higher profit margin than the commodity chemicals which form the mainstay of the sector.

"Service is becoming an increasingly important aspect of the industry," says Kaslowski. "This is very much to our advantage because it is much more difficult for the big producers like Hoechst and Bayer to compete on service. They don't have the necessary flexibility."

Interview with Aldo Kaslowski, a leading Turkish businessman.