The gong rang for “Participation Banking and Entrepreneurship” at Borsa İstanbul

A gong ceremony is hosted by Banking Regulation and Supervision Agency (BRSA), Borsa İstanbul and ITU ARI Teknokent as part of the Banking and Entrepreneurship Workshop with the participation of the Deputy Prime Minister Mehmet Şimşek. After the gong ceremony, at which Borsa İstanbul Chairman Himmet Karadağ, Banking Regulation and Supervision Agency (BRSA) Chairman Mehmet Ali Akben, İTU Rector Prof. Dr. Mehmet Karaca and the President of the Participation Banks Association of Turkey (TKBB) Fahrettin Yahşi were present, conferences and trainings on "Entrepreneurship" will be held at the workshop that aims to bring together participation banks and entrepreneurship ecosystem.

In an effort to bring together the participation banks and entrepreneurship ecosystem, as well as to enable the mental transformation of the participation banks’ top management and to give information to the entrepreneurs on how to make investments, Borsa İstanbul in cooperation with ITU ARI Teknokent will host a 2-day workshop including conferences and a series of trainings.

Along with Deputy Prime Minister Mehmet Şimşek, Borsa İstanbul Chairman Himmet Karadağ, BRSA Chairman Mehmet Ali Akben, ITU Rector Prof. Dr. Mehmet Karaca and the President of the Participation Banks Association of Turkey (TKBB) Fahrettin Yahşi were present at the gong ceremony held for the opening of the workshop at Borsa İstanbul.

At the gong ceremony which took place as a part of the workshop, Deputy Prime Minister Mehmet Şimşek mentioned that the workshop covered two important issues, and added: ”Entrepreneurship ecosystem, all by itself, today is a critical issue both for Turkey and the world. Participation banks, indeed, have the potential to be a significant component of this issue. I am not sure if it fulfills that function today.”

Şimşek also stated that Turkey had a delayed start compared to the world in many topics in the past, however achieved a big progress in the recent years in terms of developing, establishing and improving the entrepreneurial ecosystem.

Underlining that angel investors were important components of the entrepreneurship ecosystem and pointing out the harmony between participation banks and angel investors, Şimşek continued:

“Despite the harmony, participation banks are not in the angel investment system. Therefore, I highly recommend the participation banks to form entrepreneurship funding, support angel investors or participate as angel investors as a part of the process. As the government, we actually support the entrepreneurs and funds that support the entrepreneurs by fund transfers. We are very much aware of the importance of the improvement of the entrepreneurship ecosystem.

Fortunately Turkey does not have large underground riches. Maybe if we had, we could have relied on that, like other countries in this geography. I see that more than 90% of some of our neighbors’ income comes from oil and natural gas. Now we see that it is not a good system.”

Şimşek: “Turkey’s biggest strength is indeed the entrepreneurial spirit besides its young population.”

Stating that despite geographical obstacles and problems that global economy is facing as well as the struggle in the Middle East Turkish economy is still going strong Şimşek said: “Besides its young population, Turkey’s biggest strength is indeed the entrepreneurial spirit.”

Expressing that despite the difficulties, Turkish economy is continuing to catch up with West, Şimşek added:

“The success of Turkish entrepreneurs under these difficult circumstances is due to their dynamism. All components of the ecosystem are present here today. For example, I was very impressed that ITU's Incubation Centre is ranked 18^th in the world, and 8^th in Europe. I congratulate the Rector and everyone who contributed. University is a very important component. Universities need to go through a major mental revolution, there are a few universities who managed such transformation.

In the West, they don’t want to hire professors who haven’t gone bankrupt, but we do not have such an approach, because we do not have performance based culture. We have taken many steps towards building this ecosystem. We examined every concern brought to us and did the necessary legal regulations.

Recently there is a major R&D reform made by our government and the bill passed by the Parliament. The bill includes in fact important issues particularly about commercialization of R&D and our universities to play a more powerful role in this regard. Our universities should definitely encourage students to be a part of the system, and to become entrepreneurs after their basic training."

"Additional effort is required in order to increase the share of the participation banks in the system to 15 percent by 2023."

Pointing out that additional effort was required in order to increase the share of the participation banks in the system to 15 percent by 2023, Şimşek also stated: “As the government we have given and will give the necessary support. However, we expect the participation banks to focus on the main topics of this workshop that is entrepreneurship ecosystem, instead of copying traditional banking. Real future, real profit is right there.”

Indicating that in the traditional system competition was high and margins were low Şimşek said, the returns would be higher in the case that participation banks became a significant component of the entrepreneurship ecosystem.

Giving the participants a brief information about their services as the government, Şimşek finally pointed out that the legal infrastructure of chattel mortgage to facilitate access to finance for SMEs was completed, and that they expected it to pass by the Parliament during the summer period.

“We opened our doors to 3 million Syrian brothers and sisters”

Underlying that they strongly supported the entrepreneurs, Şimşek said: “At the moment, our only capital is our human and our entrepreneurs. It is also our biggest strength. Turkey is an open country. We opened our doors to 3 million Syrian brothers and sisters. The West sees it as a burden, we see it as an opportunity. That is our difference. The fact that Turkey is open, will not be a burden but will bring extra strength in the long run.”

Reminding that important regulations were discussed and were finalized at the Reform Monitoring Group meeting the week before, Şimşek ended his speech telling the audience:

“Please take this as an example: we attract the most qualified and intelligent students of the World to Turkey. We give scholarship to those who rank the 1^st in their country. Now we will develop a model to maintain them in Turkey. We will give work permit to those coming from anywhere in the world and invest in Turkey, to those who buy houses above a certain scale. Because Turkey is hungry for capital.

We have to attract those with capital and those with intelligence –keeping in mind intelligence is also a capital- to Turkey. We need to facilitate the bureaucratic processes, in this regard. In fact, we need to provide a better ecosystem compared to the world and in fact all elements of this ecosystem currently works. Hopefully our Parliament works in summer, all regulations are put into effect and the ecosystem gets stronger. We need to run well all the elements of the ecosystem.”

In his speech at the Gong Ceremony of the Participation Banking and Entrepreneurship Ecosystem Workshop, Borsa İstanbul Chairman of the Board Himmet Karadağ, stated that in a period when the global uncertainty rose and economy slowed down, SMEs had an important role. He also said development of financial models for SMEs with convenient scales and convenient terms would contribute to Turkey’s entrepreneurship ecosystem, eventually supporting Turkey’s economic growth.

Stating that entrepreneurship was crucial for Turkey to maintain and accelerate its growth, Karadağ pointed out various mechanisms together with venture capital investment funds, individual investor participation, and angel investors, were put into action to encourage entrepreneurship.

Karadağ continued:

“As Borsa İstanbul we take on the task of serving as a versatile platform between investors and financial markets, real sector and public sector in Turkey's economy. We contribute to companies’ development and growth through opportunities and projects developed by the stock market. We set up the “Private Market” one and a half year ago to provide solutions for the financial and entrepreneurial investments by bringing together investors and entrepreneurs. The most important feature of this platform is to provide entrepreneurs with financing and liquidity without going public. Within a very short time after its establishment the Private Market has already become a big family with 332 members. We have already provided around TRY 24 million to member companies. We aim to operationalize the Patent Market in the near future within the structure of the Stock Market to enable patentees and investors who need patents to operate.”

Pointing out that they strove for developing new structure and instruments to improve the entrepreneurship and investment ecosystem in order to ensure entrepreneurs benefit from financing without interest, the Board Chairman of Borsa İstanbul Karadağ remarked that he hoped both vertical and horizontal development of the country’s entrepreneurship ecosystem through works of financial markets particularly Borsa İstanbul’s in the upcoming period.

Speaking at the gong ceremony organized as a part of the workshop, the President of BDDK (Banking Regulation and Supervision Agency) Mehmet Ali Akben stated that the current era was the era of technology and the developments in information technology changed rapidly what we already know and continued: “Today the trending topic is the Industry 4.0. It is planned that the means work effectively with each other through concepts such as the internet of things. Existing production infrastructure can’t compete with the Industry 5.0 revolution.”

Akben emphasizing that the worst impact of this change would be on the employment mentioned: “Despite that the technological developments pose risks, it provide major opportunities for developing countries as Turkey. Funds of knowledge must be transformed to technology products through innovative ideas. In this regards, youth entrepreneurs also known as start-ups distinguish with their great successes. Everyone has to support the integration of start-ups to the national economy. Participation banks have a crucial role. By providing financial resources to start-ups, participation banks will realize the profit-loss sharing model that provide them higher profit margins with lower investment.”

The Rector of the Istanbul Technical University (İTÜ) Prof. Dr. Mehmet Karaca speaking on behalf of İTÜ ARI Teknokent stated that Industry 4.0 was on the Turkey’s front burner while this topic was on the agenda of the 3^rd generation universities like İTÜ for the last decade. Indicating that 3^rd generation universities were universities that provide knowledge for the society and embody the patent-product-utility models to improve the standard of living, Karaca underlined that in this regard İTÜ was the one and only university in Turkey ready for the future with its technocities. Indicating that more than 30 companies out of 250 companies within İTÜ ARI Teknokent were working on finance technologies Prof. Dr. Mehmet Karaca stated that İTÜ was ranked 18^th worldwide and 8^th in Europe among entrepreneurial universities.

Speaking at the Gong Ceremony as the opening of the Workshop, The President of the Participation Banks Association of Turkey (TKBB) Fahrettin Yahşi mentioned that technology companies who are able to accurately read the new era’s needs would get ahead of the worldwide known brands and small business ideas changes the conventional business models.

Yahşi continued:

“The state with almost all of its institutions supports the entrepreneurship ecosystem. But its development is not possible only with the support of our state. There is the need for the private sector to shoulder some responsibility. The actual venture capital investments are also very limited. We cannot achieve our goals with the current investment amount. It’s not possible to solve the problem of access to finance with only the support of the state. We need to develop new instruments to bring together the capital and the entrepreneurs. Venture capital fund can provide new opportunities to participation banking. As the participation banking industry we are working on this issue and looking for ways to participate venture capital operations. I am positive that in a short while participation banking will make a remarkable start and contribution concerning venture capital. I would like to mention that we, as the participation banks, will do our part to support the venture capital.”

Following the opening speeches, the conferences and trainings on the first day of the workshop took place at Borsa İstanbul’s İstinye campus, while the second day activities will be held at İTÜ ARI Teknokent.