Chairman of TGSD: US Tax Decision is an Opportunity for Turkish Garment Industry, but Support is Necessary
Toygar Narbay, President of the Turkish Clothing Manufacturers’ Association (TGSD), emphasized that the new customs tariff announced by US President Donald Trump creates an opportunity for the Turkish ready-to-wear and garment industry, but that the support package prepared by TGSD should be implemented urgently to make use of this opportunity.
Toygar Narbay, Chairman of TGSD, issued a statement following the new customs tariff announced by US President Donald Trump. In his statement, Narbay said that the increase in tariffs imposed on countries such as China, Vietnam, Sri Lanka, Cambodia, India and Bangladesh with the decree signed by Trump on April 2 could increase the demand for Turkish ready-to-wear products. “This could lead to a reshaping of production basins and provide a significant advantage for Turkiye’s garment industry,” Narbay said.
Support Package Essential to Boost Competitiveness
Narbay said, “In order to seize this opportunity, the ready-to-wear exporters, whose competitiveness has been diminished due to high interest rates and suppressed exchange rate policies, need to be urgently supported by the support package announced by TGSD.”
He also pointed out that between 2022 and 2024, while inflation increased by 138%, the minimum wage rose by 249% and interest rates by 258%, but the exchange rate basket increased by only 101%. He emphasized that there should be a link established between these numbers. Narbay stated that according to the model developed by TGSD, due to the high interest rates and suppressed exchange rate policies, the costs of ready-to-wear companies increased by 27% in foreign currency terms during the two years between 2022 and 2024, and as a result, their profit margins declined from 10.5% to -5.1%. He continued: “The ready-to-wear industry has very low dependency on imports, and the added value remains in the country. Therefore, despite high domestic inflation and the minimum wage being raised far above the declared inflation rate, companies are experiencing extraordinary losses in profitability and competitiveness because the exchange rate was kept 33% below the announced inflation rate.”
Narbay, in his statement, emphasized that the 2% support given for currency exchange, regardless of the firms’ import or export figures, effectively means 10% support for a company that imports 80% and creates 20% added value. However, for an industry like the ready-to-wear sector, where 70% of the added value remains in the country, this support is insufficient. He stressed that currency exchange support should be provided at a rate of 10% of the sector’s net exports.
Additionally, Narbay pointed out that the provision of a 2,500 TL support to all sector firms without considering the scale is important to support economies of scale. He also requested that Eximbank’s rediscount rate be half of the policy interest rate and that the interest collection be made at the end of the period.
