Advantageous Strategic Product Support Program

Issue 86 - November 2018

With the restructuring of political borders in the world, the establishment of commercial blocks, trade agreements and constantly changing macroeconomic data, the issues of indigenization and nationalization have become the agenda of the ecosystem. Turkey has also started to work on these issues and has renewed its Development Plans and Strategic Roadmap by taking into consideration these elements.  This framework focuses on supporting investments that contribute to reducing the current account deficit problem; activities aimed at encouraging the domestic production of intermediate goods that have high import rates, adding value to the national economy, increasing the domestic input ratio in the manufacturing industry and developing the domestic manufacturing industry.

The Republic of Turkey is inclined toward indigenization in Turkish Industry in order to reach the target to become “one of the world’s 10 largest economies” and has created a new program called the  “Strategic Product Support Program”  to address the challenges facing SMEs as their important roles are essential in the development of industry. With this program, which is to be conducted by KOSGEB, the expectation is that domestic production of imported products in Turkey is ensured and that the current account deficit is reduced and accordingly the contribution to Turkey’s economic performance is provided. It is important for our country to meet the current deficit so that the vision of 2023 can be attained.  Analysis of the current account balance concludes that this target can only be achieved by indigenization of intermediate goods with high import rates, which we refer to as strategic products, and by the nationalization of technology and serial production.

The strategic product support program supports  investments to contribute to the reduction of the current account deficit by the indigenization of strategic products with high imports by increasing technological production capabilities, the production of domestic and national products determined in the framework of Government Programs and Annual Programs and the utilization of higher domestic input in production.

The “Strategic Product Support Program” for enterprises is very significant. Not only is it important for the development of production capacity but also for the comprehensive feasibility studies that KOSGEB requests from companies prior to the project application. As a result of the feasibility studies, the enterprises will have obtained macro data such as current status analysis, market analysis of the sector in which they are performing, strategic plan, feasibility of the project and project risk analysis. This data constitutes a road map for future forecasts of the enterprises.

Small and Medium Scale Enterprises can benefit from this support. The enterprise can apply for this program individually, or by forming a partnership with the stakeholder or large scale enterprises. It is necessary that the enterprises that have applied for the support are performing activities in at least one of the 9 strategic areas designated as Strategic Products:

20- Manufacturing of chemicals and chemical products 

21- Manufacturing of basic pharmaceutical products and materials 

23- Manufacturing of nonmetallic mineral products (provided that there is a cooperation with the defense industry) 

26- Manufacturing of computers, electronic and optic products

27- Manufacturing of electrical equipment 

28- Manufacturing of machinery and equipment not elsewhere classified 

29- Manufacturing of motor land vehicles and semitrailer 

30- Manufacturing of other transportation vehicles (except for 30.99) 

32- Manufacturing of medical and dental tools and equipment

The maximum limit of the support that will be granted under the SME Strategic Product Support Program is 5,000,000 TL, as refundable and/or nonrefundable. Support rates will be 70% nonrefundable and 30% refundable within the scope of Machinery-Equipment Support and 70% nonrefundable for other support items. 15% will be added to the nonrefundable support rates for the products purchased with domestic goods certificate for machine-equipment costs and software costs. In this case, a 15% reduction is applied to refundable support rate. Thus, the rate of nonrefundable support increases to 85%.

The support items include Machinery-Equipment Support, Software Costs Support, Personnel Cost Support, Information Transfer Support, Test-Analysis, Calibration and Reference Sample Support and Service Procurement Support.

The applications for the first period was received between 1 January and 31 March 2018. The application dossier, Preliminary Evaluation and Technical-Financial Reports were submitted by 15 May 2018. The Board’s evaluation was held between 16 May and 30 June 2018.

The applications for the second period were received between 1 July and 30 September 2018. The application dossier, Preliminary Evaluation and Technical-Financial Reports will be submitted by 15 November 2018. The Board’s evaluation will be held between 16 November and 31 December 2018.

The maximum duration of an investment project is (thirty-six) months under the SME Strategic Product Support Program.