Download Priorities of the Turkish

SPEECH
BY
ALI BABACAN
Deputy Prime Minister of
Republic of Turkey
AT THE SIDE EVENT ON
'PRIORITIES OF THE TURKISH
G20 PRESIDENCY'IN
ADDIS ABABA
13 JULY 2015
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Ladies and Gentlemen, Distinguish Guests, it’s a real pleasure to be here with such a
distinguish audience.
As you know, this year, year of 2015, Turkey is chairing the G20 platform. G20 means
19 countries plus European Union. These 19 countries are composed of both developing and
developed countries. But when we add all these countries up, it means two third of the
world’s population, it means 75 percent of the global trade and it means 85 percent of global
GDP. And all the continents are represented in the G20 platform. But still, we thought , as the
Turkish presidency of G20, we should emphasize inclusiveness as one of our top priorities.
G20 should consider non-G20 countries. Whatever we decide, we should try to estimate the
possible impacts on non-G20 countries and we should make sure that the non-G20 countries’
views, opinions are also properly reflected in the G20 agenda. So, when we announced our
priorities for this year, we put inclusiveness as our top priority, one of the three Is of Turkish
presidency. And the second I is implementation. The third I of Turkish presidency priorities is
investments. Actually when we look at all the three Is, these are maybe much related with the
global development agenda. Actually more or less, the reason why we are here today in Addis
Ababa is the UN conference on financing development. So the priorities of Turkish G20
presidency and the UN agenda of this year is hugely overlapping.
We are now half way through our presidency and on 15th and 16th of November, we
are going to have the G20 Summit. So the leaders of the G20 members will meet in Antalya to
make the final decisions about the global economy and financial affairs. G20 was born in the
aftermath of 1997 and 1998 crisis; it was at first Ministers and Central Bank Governors level.
And the very first G20 meeting which I attended as a minister was actually in November
2002. But then after 2008-2009 crisis, G20 started to meet at leaders level.
G20 has worked quite hard in the aftermath of the crisis, made many decisions, but we
thought implementation, the second I, is also at the very essence for the creditability of G20.
And the third I, investments, an area which is highly relevant for both developing and
developed countries. When we talk about investments, sometimes we immediately remember
developing countries or low-income countries. But actually the developed world also needs
the worn out investments to be renewed. So these three Is of Turkish presidency have found
very strong ownership across the G20 membership. And our priorities as the chair of the
platform became the priorities of the platform overall. And this has been decided in both
February and April Ministerial Meetings.
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I would like to now talk a little bit more on the inclusiveness agenda, the first I.
Inclusiveness for us have two important dimensions; international dimension and intranational dimension. International dimension, I talk maybe just a little bit about G20 care more
about non-G20 countries, but we have specific emphasis on LIDCs, low-income developing
countries. We invited all the ambassadors in Ankara of low-income developing countries to
get their views and provide us input. Also on the sidelines of the World Bank, IMF Spring
Meetings held in Washington D.C. in April, we hosted a dinner during which we brought
together G20 finance ministers together with low-income developing countries’ finance
ministers. So these interactions also shed us light about how to proceed.
When we look at the intra-national dimension of inclusiveness, we are putting a lot of
emphasis on SMEs, small to medium sized enterprises. Actually, both LIDC and SME
perspectives are cross-cutting subjects for every single G20 agenda. Because in many
countries, up to 8 percent of the employment is actually generated by small to medium sized
enterprises. G20 had a B20 structure, the business perspective. It is important yes, but we
found that mostly large corporations are represented there. And we had the L20 structures of
which work compose of unions of workers working for those large corporations. So we
thought that SME perspective needed some more emphasis. And in order to come up with a
permanent structure to represent the SMEs, on a global level, we have launched a global SME
Forum together with International Chamber of Commerce.
ICC, International Chamber of Commerce has membership in more than 130 countries
and they are now organizing themselves in all of those countries so that the global SME
Forum which we’ve already founded -and the legal entity is a foundation. So for the first time,
the small to medium sized enterprises will have a global voice in different international and
multinational platforms to voice the needs and the expectations of the SMEs and also to
follow up what is being decided, what kind of new action is being taken and what kind of
impact these will have on SMEs.
Again when we look at the intra-national perspective of inclusiveness, we have put a
lot of emphasis on women and we have launched W20, Women 20. We already have a B20,
Business20 and L20, Labor20, C20 -actually we have the Turkish chair of C20 today among
us, Zeynep Bodur, chairing the C20 work for all the G20 countries. We have Y20, Youth 20,
we have also T20, Think-Tanks -and T20 is also represented in this meeting. So W20 is new.
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So why have we launched this? Because we thought that G20 countries and countries beyond
G20 also should put more emphasis on women’s issues especially in the working sphere. How
to enhance the role and effectiveness of women in business? What to do more about women
entrepreneurs? The labor participation rates of women in many countries are unfortunately
below men. G20 had already targeted to decrease this difference between men’s labor
participation rate and women participation rate in every country by 25 percent by year 2025.
So whatever the labor participation rate for men and women, let’s say in the one country it is
40 percent for women and 60 percent for men and the difference is 20 percent, we should
decrease this 20 percent to 15 so 25 percent of 20 by year 2025. G20 already decided this. But
how to form an advocate group so to say, to make this happen and to follow up with the eyes
of women? And that is what W20 will be about.
Another perspective; youth unemployment. It’s a huge issue all around the world. If
you ask me what is the single most important residual of the 2008-2009 economy and
financial crisis is, the increased youth unemployment around the world. Even in Europe, some
countries had more than 50 percent of unemployment rate for the young people, this is a huge
issue. We are now trying to put some numerical target, put some measurable targets so to say
about how we can mobilize the country to target youth unemployment and bring the youth
unemployment rates down through many different policies, active labor market policies,
decreasing the rigidities in the labor market and so forth. So these all are going to be
important aspects of our inclusiveness agenda.
There are of course so many subjects here being discussed in Addis Ababa in the UN
conference framework. But when we talk about inclusiveness, we also have to talk about
energy. We are going to be hosting the very first G20 energy ministers meeting in Turkey that
was never held before. And the main focus of this meeting will be access to energy, especially
focusing on sub-Saharan Africa. African Union is very well represented in G20. But the views
and inputs of more countries will be taken into account and we believe that we may come up
some solid decisions to enhance access to energy, access to electricity around the world. Also
food safety is a very important subject. We already hosted the second ever food and
agriculture ministers meeting in Istanbul in May. The main focus has been food safety and
waste, how to take it, how to decrease food waste has been one of our main focus items.
When we look at the figures it is really frightening. How much food we waste in a year is
really frightening. It costs a huge amount of money. And if we can really decrease the waste
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and direct it to possible means towards countries where poverty and hunger is still abandoned.
Then this might be a really good input for the whole world.
Ladies and gentlemen, distinguished guests, the second I, implementation of Turkish
presidency is also an important agenda item. We are talking a lot, a lot of communiques are
issued, lots of decision papers are floating around, many international, multinational
platforms. We agree to doable things. But do we actually do them? Do we implement what we
talk is an issue. According to OECD and IMF, which made a joint study, if only G20
countries just fulfill their promises, if G20 countries actually do what they have declared as
structural reforms, the global economy will grow by an additional 2 percentage point by year
2018. So what we decided to do as the Turkish presidency is, we came up with a monitoring
mechanism idea and we asked OECD and IMF to come up with prioritization of these
structural reforms which will be followed up through a monitoring mechanism. Those
countries who have promised or announced that they will be doing reforms will be followed,
will be reported, so there will be a sense of accountability across the G20 table for the reforms
that have been already promised or that have been already declared. Structural reforms at the
end of the day, are the key elements of increasing potential growth. You can have higher
growth rates through monetary policies, through fiscal policies but these are not long lasting
policies. These don’t really have long lasting-influence and if you overdo it, if you just use
fiscal policy to develop, you may end up with a huge public debt, if you use too much of
monetary policy tools, you may end up with high inflation. So there is a limit to how much
you can actually use the monetary policies sphere or the fiscal policy sphere. But the real,
sustainable, healthy way of growing is actually through structural reforms. Structural reforms
in many areas, how to make our countries more attractive for investors? Structural reforms,
how to build more and more confidence in the country? How to make our countries real states
of law so that investors have trust in the legal system so that they know what to expect. How
to enhance predictability, the regulatory predictability? Labor market reforms, product market
reforms, these are all at the heart of sustainable growth in many countries. So our emphasis on
structural reforms will be mostly through the second I of Turkish presidency, the
implementation.
Third I, investments. Especially infrastructure investments. Of course, it is extremely
important for all the countries to make ourselves better places to invest for the private sector.
But also how to design and how to finance infrastructure investments in a better way? It is no
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secret that there is a huge investment gap as calculated by OECD, as calculated by many
international organizations, World Bank, IMF or others. Trillions of dollars, different
calculations by different organizations. But almost every single country in the world needs
more investments, more infrastructure investments, that’s for sure.
First, quantity, how to increase the quantity, but also the quality. So I will first
emphasize the quality and then we’ll back to quantity which needs more broad explanation.
Quality investment is very important. How to spend the government money, public resources
in a better way for more productive investments so that we can make sure that it is not just the
political motivation deciding on the prioritization of the investment but actual needs of the
country, which will be definite. Political motivation could push a country towards a certain
kind of investment but actually the real needs of the country could be in another area. So the
better prioritization of the investments means actually better ways of spending public
resources.
And the quantity... How to have more resources? At the end of the day, infrastructure
investments means more financing, more money. How to do it? And in an era of high public
debts, in an era of urging more fiscal consolation, in an era of needs for prosperity in many
parts of the world, what to do about it? For those countries, which have the fiscal space,
which have the ability to spend more, we are, as the G20 platform, advising them to spend
more on infrastructure, productive, high quality infrastructure. But for many countries, who
really don't have the fiscal space, then mobilizing private resources is very important. So how
to attract more private money into public infrastructure projects? It’s a key area to work on.
What can we do about it? Public private partnerships is an important one and if we can design
it in a nice way and if we can really build credibility and trust into those projects, there is
ample amount of money -sovereign wealth funds, pension funds or reinsurance companies,
insurance companies funds- which are now parked at very low return investment areas. And
in an era of negative interest rates in Europe, many of those funds are now looking for long
term, better return, but trustworthy investments.
So we are working very hard on how to make the infrastructure projects as an asset
class for possible investors? How to standardize these projects in terms of the legal
framework, in terms of financing technics, in terms of the technicality and how to securitize
them? At this point, Islamic finance happens to be an important tool for financing
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infrastructure projects. But for private money, for private resources to flow into infrastructure
projects, it is very important to have a strong legal framework to have a good regularity
framework so that investors feel confidence. During the time of the investment or during the
time that the investment will be serving, probably there will be three governments, maybe
five, maybe ten governments, maybe fifteen ministers will change all throughout that time.
How to make sure that the private sector has the confidence that they are going to invest and
they are going to see that project live throughout this process. So these are very important
subjects that we ask the World Bank to work on. Within B20 we have a task force for
investment and finance issues and also under G20 we put together a working group for
investment infrastructure so that both on the government side and on the business side, the
work is now underway including of course the international and financial organizations to
reach those goals. And we hope that we could have something tangible by the end of this year.
When we talk about investments, mobilizing local resources is also another important
area. Actually many countries could have domestic resources but somehow parked at different
places. How to extract them and how to direct these to infrastructure projects in a wise way.
This is also an important area. Multilateral development banks or regional development
banks...What can we do to make them cooperate better, how can we intense their financing
capability? How to have more low cost financing for especially sustainable infrastructure
projects including the renewable energy and so forth. So all these are important subjects that
we have been working on and we are going to continue to work on throughout this year and
beyond.
Ladies and gentlemen, distinguished guests, when I told you about the single most
important residual of the crisis -in a negative way of course- about youth unemployment, we
also have to remember that unfortunately in many countries, in the developed world also,
inequalities are rising. The gap between the rich and the poor is growing. And the wage is
getting less and less percentage of the GDP. So fixed salary or wage earners are getting lower
and lower percentage of the GDP in their countries. This is a huge issue. And what to do
about it? And we are also observing lot of skills mismatch. So the skills that the industry
needs versus the skills that the possible workforce or unemployed workforce have, there is a
mismatch. So, here, the practical training programs, the skills programs and lifetime learning
will be very important concepts in many countries. Especially during the time of very fast
technological change, during the time when economic sectors are changing in terms of their
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weight, whatever the skills are valid today, we'll be probably not valid in 15-20 years time. So
how to adapt our workforce to ever-changing needs of the economic sectors and the industry.
And people have now longer life spans. The average age of dying is getting higher and higher
which means longer life durations, faster changes. So lifetime learning is going to be a very
important subject if we want to really deal with the unemployment issue and the wage issue.
And productivity is very important and it has a lot to do with training our workforce in a
better way. The better we train our workforce, the higher the productivity will be. There is a
very high correlation between the two.
Ladies and gentlemen, distinguished guests, when we look at the global economy
overall, maybe the worst of the global economic crisis is behind us. Things are recovering,
maybe slowly but there is a recovery. But this recovery is fragile, it is uneven and still not
strong. So putting the global economic growth into a strong, sustainable and less uneven
trajectory will need lots of policies. When we look at the developed world, the growth rates
are somewhat better compared to maybe 4-5 years ago but in the developing country group,
the growth rates are dropping and the next ten years’ growth rates versus last ten’ years
growth rates, probably we are going to see lower growth rates on average. An exception is
low income countries. In low income countries, the growth rates are quite good, 5 to 6 percent
on average. But we have to be very careful so that this global growth continues in a
sustainable way and there is a lot to do especially in terms of policy coordination and
cooperation. Especially the Central Banks, the reserve currency issuing central banks, should
work in a well-coordinated way so that if one central bank moves in one direction and the
other central bank negates this or if they act in conflicting directions, this will not be good for
the global economy. So G20 has an important responsibility for this policy coordination. Not
only every G20 country should care about what each other is doing, but also G20 collectively
should care about what the non-G20 countries are doing as I said at the beginning. So we are
going to be putting a lot of emphasis on all these.
We have taken over the G20 presidency from our Australian colleagues and Australian
colleagues did a good job actually starting some good initiatives like the global infrastructure
hub, infrastructure investment hub in Sydney. So this is like a knowledge exchange hub so
that countries will learn more from each other and we are pushing the agenda forward. And
after Turkey, it will be our Chinese colleagues taking over the G20 presidency. And we are
working very closely with both of them because we have this troika structure -troika meaning
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the current presidency, past presidency and future presidency to provide the continuity in the
G20 governments because we don't have secretariat for G20. It is only this troika structure
which brings continuity but we are sure that our Chinese colleagues will also take over this
agenda and push it forward and add new elements to it. So we are also looking for the Chinese
leadership for taking forward and pushing all these agenda items for many years to come.
Ladies and gentlemen, distinguished guests, I have lots of things more to say in my
notes but we are also quite impatient to hear our panelists and we never wanted our G20
presidency to be a monologue. So I will stop here so that we can hear more from our panelists
about their discussion of what G20 should do and how we can link better the UN processes
with the G20 agenda. Because today's conference in Addis Ababa is actually a prelude to the
UN summit in Europe in September which will be exclusively focusing on developing issues.
And then, in December, we have the UNFCCC, the COP21 meetings in Paris for global
sustainablity issues; climate change and so forth. So this year, the year of 2015 is a very
important year for the development agenda. The millennium development goals are now
being finalized this year and we are coming up with sustainable development goals for the
year 2030, more comprehensive, more detailed and more ambitious and more difficult to get.
But it is only with our collective resolve and it is only with true international corporation that
we can enhance all these agenda items for a collective better outcome for the world. Thank
you for your attention, thank you for being here and looking forward to hearing our panelists.
Thank you.
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