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Textile company owners “ready to hand in factory keys”

07/08/2008

Currency valuation problems are driving the Turkish textile industry to the brink of collapse, according to company owners.

Textile sector representatives met with the country’s industry ministry, Zafer Caglayan, in Ankara on August 7 and said that an exchange rate of 1.16 Lira to the dollar meant they were “ready to hand in the keys” to their factories. The Financial Times has said in recent weeks that the Turkish Lira is 53.7% overvalued against the dollar.

The industry representatives also told the minister that they had no way of coping with increased costs; they insisted that even powerful companies in the sector were close to running out of money.

Turkish exporters have blamed the central bank for maintaining a tight monetary policy to keep inflation down.

Textile sector exports rose 9.4% in like-for-like terms in June compared to the same month last year, however currency difficulties mean this equates to a drop in value of 3.8%.

Local media quoted Umut Oran, head of the ready-wear sector association, as saying: “We hoped the new government (formed after the July 2007 elections) would pursue policies that would increase the competitiveness of the Turkish industry, which would help us to compensate our losses in the last five years. However the extraordinary price increases in energy have erased all hope.”

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