16 Nisan 2011 Cumartesi

Tax hike for textile imports worries companies

Tarık Bozbey says both local and international firms are quite angry about the government's recent tax decisions. DHA photo

Tarık Bozbey says both local and international firms are quite angry about the government's recent tax decisions. DHA photo
Domestic and foreign companies are increasingly worried about possible ambiguities as Turkey prepares to launch tax hikes for textiles, raw materials and accessory imports in order to support the domestic industry, according to the chairman of an exporters union.

“While trying to secure the rights of textile industrialists, we should also consider the position of retailers,” said Tarık Bozbey, head of the Mediterranean Exporters Union. According to Bozbey, Turkey is dependent on some products that are not sufficiently supplied domestically, such as cashmere and silk.

“We should be very careful about such taxation arrangements,” Bozbey told the Hürriyet Daily News & Economic Review in an interview Tuesday. He said the tax rate applied on textile imports is about 10 percent, but the figure is likely to be raised to 40 percent around the summer.

Talking about his impressions during an event that brought leaders of international and local textile retail chains and manufacturers together with diplomats from foreign countries last week, Bozbey said both local and international firms were “quite angry” about the tax decision. “Executives from Sweden’s Hennes & Mauritz, or H&M, reacted against the possible tax hike. Executives of Indian and Chinese firms operating in Turkey joined them,” he said. According to Bozbey, foreign retail chains will be hit by the announced policy, as most of them rely heavily on imported textile products from Southeast Asia.

Bozbey suggested that products or raw materials that are not sufficient in the domestic market or not manufactured at all should be exempt from taxation, while tax hikes for the rest of the products should be implemented gradually.

Cotton price surge

U.S. cotton prices have surged by nearly 35 percent since the start of the year, and were at around $1.9 per pound as of March 15. The rise owes much to persistent fears that global supplies might fall short of robust demand in emerging markets and political uncertainties in the Middle East and North Africa.

Commenting on rising commodity prices, Bozbey predicted at least a 50 percent rise in cotton prices over the next few months. “This will be reflected on the consumer starting from this summer,” he said.

Meanwhile, Şahin Eroğlu, the vice president of Colin’s, Turkish clothing manufacturer and retailer, said surging cotton prices would force the company to raise prices. “Both tax hikes on textile imports and raw materials as well as cost hikes will affect the domestic textile industry,” Eroğlu told the Daily News.
“We plan to focus on European countries, primarily on Britain and Germany in opening up new stores,” Eroğlu said. Colin’s plans to open 30 new stores in Turkey and 102 stores in 18 countries this year, he told journalists. “Our current annual revenue of $500 million will rise to $2 billion by the end of 2011,” he said, adding that the firm will invest nearly $20 million in new stores this year. Eroğlu also said the firm is in talks with a Chinese retail chain to penetrate the vast Chinese market.

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