Sabancı Holding Chairman Guler Sabancı's New Year Message


Dear colleagues,

In my message last year, I had stated that 2008 would be a year of uncertainties for the world, many issues were literally "on a knife's edge", and it was hardly possible to predict on which side they would fall.

I had said that Turkey should be surefooted and cautious due to such uncertainties, that the EU accession process should be accelerated, and that the remaining, micro, structural reforms aiming to increase productivity should be enacted simultaneously.

I must admit, to my regret, that the year 2008 was one where a large number of undesired yet predictable events indeed occurred.  Many banks, investment banks and financial institutions in the USA and EU became victims of the ever expanding ‘sub-prime' crisis.  Many among them were effectively acquired by the governments of their states, and nationalized.  The US government, those of the EU member states, and their central banks injected billions of dollars into the markets.  However, as in the majority of financial crises, it is the "loss of confidence" which is the most damaging part of such events, and we see that such confidence has not yet been completely restored.

Turkey has spent 2008 with her primary focus being on national politics.  The Constitutional Court case to close the AKP consumed most of the time of both the ruling AK party and the opposition parties until the end of summer and as of then the upcoming local elections has been the focus of attention.

While escalating PKK terrorism maintained its importance in 2008, favourable developments were recorded in foreign relations with our neighbours, and in the election of Turkey to the UN Security Council.

Although some of the reforms we anticipated in 2008 had not been performed, the Turkish economy's performance was positive when compared to that of many countries.  Despite this, our economy has been affected by the extremely negative economic developments worldwide during the last quarter of 2008.  During this period, however, a significant slow down has been observed in the real economy as a result of worsening market expectations, and this despite all the, albeit piecemeal, measures taken by the economic policy makers.

Although our country has a very sound banking sector resulting from the reforms enacted after the previous crisis in 2001, a liquidity shortage has emerged in the markets.

Regarding relations with the IMF and EU, which were the major anchors of the economic success achieved between 2001 and 2007; unfortunately, while an agreement with IMF seems to have been deferred to the beginning of 2009, the EU process seems to have slipped considerably in the list of priorities.

The Sabancı Group entered 2008 with prudent budgets.  During the first three quarters of the year everything went as planned.  During the last quarter, on the other hand, the contraction resulting from the crisis which started affecting our country as well, was felt in every sector; we have yet to see to which degree and how we were "relatively" affected in every sector where we operate.

I suspect that, just as our country is "relatively more resistant" compared to many other countries, we too have come through a year in which we have been "relatively" less affected in every sector where we are present, thanks to our strong equity structure, our active management concept, and the strong productivity culture of you, my valued colleagues.  We will announce these when our final consolidated figures become available.


Dear Colleagues,

On the eve of the year 2009, we believe that, while the governments of the USA and EU member states and Central Banks go on acting in the correct direction and in unison, the new government of the USA will contribute to provide the markets with confidence.

I think that the non-financial sector, one of the two elements of the current worldwide crisis, will begin a recovery towards the end of 2009; essentially because, the world knows relatively well how to cope with this problem, and has already started to implement the solutions.  The critical point here is to keep the credit taps open, and to provide the markets with the liquidity needed.  This of course depends on the soundness of the financial sector.

Measures implemented by the countries would be useful in this regard.

On the other hand, in the second element of the crisis, the financial sector, we think that it will take 5-8 years to restructure the balance sheets, eliminate the "toxic assets", and create a healthier revenue stream. This is longer than is commonly estimated today.  Of course, in the meantime, the restructuring of the financial system, the revision and redesigning of the international structure formed particularly following the Second World War will become a major issue of the world's agenda.

The point to bear in mind is that such changes cannot be dictated by the West, as was the case post WW2; significant changes have occurred in the global balances since then.  The fact that production has shifted from the "West" to the so-called BRIC(T) countries, especially China and India, as observed during the last ten or fifteen years, has given rise to a fast, and significant, income growth in such countries.  As a result of such growth, highly important developments have occurred in human resources in such countries.  Recently, they ceased to be merely cheap production areas, and have started to be sources of R&D in many fields as well.  Besides, as these are, on a global scale, the rare countries in which there is an excess of  saving, they will also be the source of the liquidity needed in the coming years.

Considering the sizes of the markets, their productive forces, the fast development in their human resources, as well as the financial resources being accumulated in their hands, it seems that such countries will play a major role in shaping the new world order to come.

We will enter a world order where the regulations in the financial field will be more restrictive, markets will be more diverse and fluid, and, on a company basis, "sustainability" will gain more importance.  In such an order our country will come across significant opportunities.

An active representation of our country in these significant long-term formations becomes more important in this respect.

In Turkey, on the other hand, I think that, as the Government authorities have announced, a basis of agreement with IMF will be found promptly, which will ease access to international liquidity for Turkey.  Besides, there are still measures to be taken in terms of revitalisation of domestic demand, which is the most important means to overcome stagnation.

As far as the economy is concerned, the first quarter of the year will be a critical period for action; each day lost without concrete steps to reverse the slowdown in our economy will aggravate the issues.  Of course this would also have its political consequences.  This is true for relations with the EU as well; even the most ardent supporters of Turkey openly say that the process would be endangered if significant steps are not implemented.  We must revitalise the relations with the EU, turn the current economic crises into an opportunity, and give more attention to our relationship with EU. The General Elections of March 29 must not be seen as an obstacle to such steps, but open the way for them.

One of the major problems of our country is unemployment.  I want to discuss this issue separately.  Turkey failed in lowering unemployment below 9% even in the period where it recorded growth rates of 6-7%; this means that unemployment in our country is basically not a result of a "lack of demand", but it is a "structural" problem.

Of course, the increase in the growth rate will create possibilities for many positive developments, including slightly decreasing the unemployment rate, but it cannot be the sole remedy for such a critical issue.  It will be necessary to target certain structural changes both in the distribution of labour, and its cost.  Finding a solution to unemployment, bringing the inflation rate further down, and coping with our foreign deficit in a competitive global medium is almost impossible without lowering the ratio of the total cost of labour to its productivity.  The actions to be taken must absolutely contain structural measures to lower the labour cost, and encourage productivity increases.  And therefore, in the year 2009, we must focus on this and similar important structural reforms again.


Dear Colleagues,

Being the Sabancı Group, we are entering 2009 closely following the developments in the world and in Turkey, taking many necessary actions, and making our plans accordingly.  We foresee that the current stagnation will dominate the first half of 2009 and that the decrease in commodity and oil prices will lower inflationist pressures.  We have been making our budgets and plans and taking measures accordingly.

As I said before, we foresee that we will begin to see a recovery in the markets during the second half of the year, at the latest in the last quarter;, we expect that the year 2009 will pass with a slightly positive growth rate.  We will work more, and we will work more actively, without allowing ourselves to be demoralised.

The late Mr. Sakip Sabancı used to say "Urge spoils the play".  Here and now we must think out of the box, the limits we are accustomed to.  We must review what we have been continuously doing, revise our business processes, and should be more courageous to change, shorten, and even abolish them.  We must respond to the changing conditions with change.

I believe that we will create opportunities both in ourselves and our structure, in our markets and our segments, while successfully overcoming the difficulties of the year 2009.  The basis for doing so will be our drive towards innovation, on which we have been focused during the recent years, with our successful Six-Sigma outcomes, with our strong financial structure, and with our effective cash and performance management; in short, with the SABANCI DIFFERENCE.

We know that such periods create real opportunities for groups such as ours, which have a strong capital base and effective management concepts.  As always, we will take advantage of  such opportunities together.  We will carry our deserved flag "Sabancı of Turkey" to much higher levels.

I wish you and your families a new year full of health, happiness and peace.