Pre-financing for machinery industry

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Pre-financing for machinery industry

Turkey
Project Summary
Elevator Pitch

Concise Summary: Help us pitch this solution! Provide an explanation within 3-4 short sentences.

Specially in machine industry, creating a new system or machinery needs innovation. Also machinery producters need more fundings for innovation. In this project, machinery producters are supported by finance companies. With this support, they create new technologies. In a particular time, they exhibit the prototypes in a showroom.Finally after selling,they pay production costs to finance companies

About Project

Solution: What is the proposed solution? Please be specific!

Machinery producters don't have huge fundings and showrooms. If this project works, they will have fundings before production costs. And they can exhibit their new machineries in showrooms. Because the competition is very hard in machinery sector. The machinery producters can not exhibit their products anywhere. The machinery technology is very important for firms and it is hidden information for them. Pre-financing solves the budget problem and showroom fixes the hidden product problem.
Impact: How does it Work

Example: Walk us through a specific example(s) of how this solution makes a difference; include its primary activities.

200 companies heared the project. 150 companies accepted the pre-financing. 120 companies admitted for new patent rights. 100 companies exhibited their new products at the showroom. In five years Gaziantep machinery exportation increased to 2 billion dollars.
About You
Organization:
Gaziantep Chamber Of Industry
Visit website
About You
First Name

Mustafa Sermest

Last Name

Çapan

Your Organization

Gaziantep Chamber Of Industry

Country

, GAZ

About Your Organization
Organization Name

Gaziantep Chamber Of Industry

Organization Phone

+90 342 221 09 00

Organization Address

Istasyon Cad. No: Kat:3 Sahinbey Gaziantep

Organization Country

, GAZ

Organization Type

Non-profit/NGO/Citizen-sector Organization

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Your solution
Country your work focuses on

, GAZ

If multiple countries, please list them here. If your solution targets an entire region, please select it below
Region(s) your solution focuses on:

Europe and Central Asia.

Range of turnover in your target firms, in USD

$1-5 Million.

Average turnover in USD of your target firm

2 Million USD

Number of employees in your target firms

Fewer than 5, 5-24, 25-49, 50-74, 75-99, 100-150, More than 150.

Average number of employees of your target firm

50

Specify the size, average and range of expected loans or investments in each target firm

2 million USD investments for each target firm.

What stage is your solution in?

Operating for 1‐5 years

Innovation
How does your proposed innovation leverage public intervention in catalyzing private SME finance?

Our suppliers are the most established companies of machinery sectors and they are the producer of the high quality products. They are helding a very competitive position in the market with their quality and prices. On the other hand the involvement of foreign capital is highly encouraged in Turkey's privatisation program, South-East Anatolian Project (GAP) and major infrastructure projects. But they need more fundings, finance solutions for competition. SME finance is the best solution for them.

What barriers does your proposed solution address?

Lack of collateral, Lack of financial capacity.

If you checked any of these barriers, describe how your solution addresses them

In order to address the feedback received from international investors about the difficulties in Turkey's investment environment, the Government of Turkey in 2001 has launched a Reform Program to improve administrative procedures. The purpose of the Reform Program is to increase domestic and foreign investments by improving the investment environment. Thus, it is intended to prevent administrative obstacles faced during investments, to reduce or eliminate some unnecessary and repetitive bureaucratic transactions and to complete the procedures rapidly. By the way, machinery producters need more fundings and finance sources for pre-financing.

Impact
Provide empirical evidence of your proposed solution's success/impact at present. If your project is in the idea phase, please provide evidence that speaks to its potential impact

The machinery industry in Turkey is largely composed of private companies rather than state‐run companies, which dominate many other sectors. Turkey has established itself not only as a major producer of machinery ($20 billion USD in 2006), but also as a major market for machinery sales. Turkey is listed among the 10 largest markets in Europe for machinery, with roughly $28 billion USD in sales. Most manufacturers are located in Istanbul, Konya, Ankara, İzmir and Gaziantep. In this project, they deserve to support for pre-financing and showrooms. It will increase their technologies and exportings.

How many firms do you expect to reach?

There are 200 machinery companies in Gaziantep/Turkey. We expect 150 firms to reach with this project.

What is the volume of private SME finance you aim to catalyze?

It is a pre-financing project. We estimate, the volume is 60 percent for each firm.

What time frame will be required to reach these targets?

1-5 years.

Does your solution seek to have an impact on public policy?

Yes

What would prevent your solution from being a success?

Prejudgments, indifference of firms, management disadvantage, political changes.

Sustainability
List all the funding sources that are required for the sustainability of this solution

State encouragements, capital abstracts, trade communities.

Demonstrate how your proposed solution has the capacity to graduate from dependence on public finance. What is the time frame?

Approximately 450 words left (2400 characters).

Demonstrate how your proposed solution will survive a potential loss of its largest private funding source

Turkey is among the largest 10 markets of machinery in Europe, with around $28 billion USD total machinery sales. The Turkish machinery industry has a wide product range. Today, the industry produces building machinery; heavy industrial machinery; machine tools; hand tools; drilling machines; pumps and compressors; textile machinery; food processing machinery; internal combustion engines and turbines; sewing machines; refrigerators; washing machines; dishwashers; valves; conveying and hoisting machines; cutting and bending machines; air conditioning units; woodworking machinery; boilers and burners. The industry is also capable of producing parts and accessories for the above‐mentioned machinery types. The share of the local inputs used in the production of these machineries is around 80 percent.

Please tell us what kind of partnerships, if any, could be critical to the greater success and sustainability of your innovation

The approach of The General Directorate of Foreign Investments will be helpful in Turkey for this project.

Are there non-financial issues that could threaten the sustainability of your proposed solution?

No.

Please tell us if your proposed solution aims to scale up through a high growth sector, expand immediately to multiple sectors, and/or scale up geographically

The project will impact the middle east countries. Also machinery parts sector will have earnings with this project.