SleepTech_Mart2018-internet

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MÜSİAD proposes interestfree
financing model for
investment projects
In an effort to alleviate and
eliminate the burden of high
investment costs ensuing from
interest rates that hover around
20 percent in Turkey, the country’s
leading business nongovernmental
organization, the Independent
Businessmen and Industrialists
Association (MÜSIAD), has developed
an alternative model of
financing which they call “people-oriented”
finance. This model
basically calls for both conventional
and participation banks, which
barely include people in the process
of investments, to take part
in the country’s industrial projects
by way of multi-partnered funds
allocating finance to investors and
then sharing the profits of investments.
MÜSIAD chairman Abdurrahman
Kaan elaborated on the organization’s
projects to better
utilize Turkey’s financial system
in a mobilization effort to boost
investments, trade and exports.
Prioritizing production economics
in their analysis and projects,
Kaan said, MÜSİAD concludes that
interest rates are the biggest
obstacles hindering investments in
a sustainable growth environment.
“Therefore, we have put a lot of
labor into creating financing models
that excludes interest-rates.
No matter what the scale of
investments, this interest-free
model paves the way for investors
to become partners in investment
projects, contribute to economic
growth by financing projects and
accelerate social development in
the long run,” Kaan said.
This alternative model of financing
has so far produced three
multi-partnered funds, including a
venture capital fund, agricultural
investment fund and a real estate
investment fund. The next step,
Kaan emphasized, is to draw both
conventional and participation
banks into these funds to finance
projects. “It is necessary to include
banks in investment projects,
partner them with investors and
distribute profits. This model will
decrease the demand in interest,
thus will reduce the cost of investments.”
For this model to work,
MÜSIAD Chair Kaan underscored
both conventional and participation
banks must allocate a portion
of their deposits to these projects.
He noted that if 10 percent of the
total TL 2 trillion ($533 billion)
deposited in accounts, which
corresponds to TL 200 billion, is
allocated to investments projects,
the deposits would be mobilized
for business and trade operations.
“The reason why we are emphasizing
this model is the high
interest rates that reach 20
percent and produce extra investment
costs for businesspeople,
Abdurrahman Kaan
MÜSIAD Chairman
and these extra burdens impede
competitive capacity of our
businesses in the international
market.” MÜSIAD believes that the
current system excludes the human
factor in project financing as the
money held in savings account is
only used in the system as loans
without any return on the holder
except for the interest rate, but a
people-oriented approach will involve
more partners in investment
projects and a fairer allocation of
profits.