Suffering from a loss of competitiveness due to the weak lira and high inflation, the head of the Istanbul Apparel Exporters Association (IHKIB) has requested a three-year support program to save the ready-to-wear sector.
President of the association Mustafa Paşahan warned that the key industry is in danger and called for a rescue package that includes low-interest financing, higher currency conversion support, and maximum investment incentives. Paşahan said that the program must be launched by the beginning of 2027 to allow exporters to look ahead and operate independently of macroeconomic fluctuations.
'If we do not act, the exit from the sector and the loss of market share will continue,' Paşahan told Ekonomim.
Turkey's apparel industry is facing severe pressure from rising expenses, high interest rates, and an insufficient rise in the foreign exchange rate. Paşahan said that manufacturing costs soared 567% over the last three years, and the producer price index rose over 400%. Meanwhile, the foreign exchange rate increased by 235%.
According to Paşahan, this 150-percentage-point gap has wiped out the competitiveness of Turkish manufacturers. He said the main issue is not a shortage of demand. 'The problem is not a lack of orders,' Paşahan said. 'We continue to receive orders, but we struggle because we cannot meet the price expectations of our buyers.'
DEMANDS FROM THE GOVERNMENT
The sector recorded an export record of 21.2 billion dollars and employed more than 1.1 million people in 2022. To regain its footing, owners want the government to apply sixth-zone investment incentives — the country's most comprehensive regional support package — to the textile and apparel sector for three years. This package includes tax cuts, customs duty exemptions, and social security premium support.
Additionally, the association is requesting that the currency conversion support for exporters be raised from 3% to 10%. They are also asking for sector-specific loans with a three-year grace period and an interest rate below 15%.
With these changes, Paşahan believes the industry can double its export value from 18 dollars to 36 dollars per kilogram by 2030. Future growth will focus on value rather than volume as Turkey aims to become the premier hub for affordable luxury and quality.
‘RELOCATION TO EGYPT IS LIMITED’
Paşahan also downplayed reports of local manufacturers relocating to countries such as Egypt due to rising domestic costs. He said that most Egyptian investments were made between 2004 and 2012 and very few firms have moved recently.
'If a company relocates, it is because they cannot manage the costs,' Paşahan said. 'No one moves their production to another country just for fun.'
