Turkish barter market eyes legislation for healthy growth

According to Orhan Besle, chairman of the board of Sistem Barter, there are some 40 specialized barter exchanges like his company active in Turkey, although he added that the number is difficult to define because there is no specific recording mechanism in place for the industry. According to Besle, the Turkish barter industry has reached a total transaction value of TL 5 billion, with 15,000 business making use of the system. “Almost all industries are represented, but mainly companies in the services, construction and media sectors are involved in bartering,” Besle told Sunday’s Zaman.

“Organized bartering was introduced in the Turkish market in 1996. The major difference between barter and the conventional swap method is that each customer has the opportunity to receive as much of any product -- which they actually need -- as they want from an existing pool,” Besle explained. Barter firms also offer companies with a platform and alternative payment system that provides a level of security and accountability that informal bartering can’t.

Boosted by financial crisis

Across the world, the barter system is rapidly gaining success. According to the International Reciprocal Trade Association (IRTA), a barter industry trade body, there are more than 400,000 businesses involved in the global barter industry, with a total worldwide transaction volume of 12 billion euros in 2009. There are between 600 and 900 commercial and corporate barter companies serving all parts of the world.

The global financial and economic crisis has given the barter economy a considerable boost, as companies faced with slow business and a shortage in cash look for ways to capitalize their unused capacities and excess inventories. “We’ve noticed that there is much more interest in the barter system lately. Due to the economic crisis, there is a lot more excess business capacity, like empty hotel rooms or unused production capacity, and bartering monetizes that excess capacity, meanwhile creating capital and employment,” IRTA President David Wallach told Sunday’s Zaman.

Instead of slowing down business, the economic recession has only served to boost the barter economy. “The industry has been growing at a rate of about 7 percent a year, with a 7 to 10 percent increase last year, and we expect to see the same steady growth continue in 2010 and the following years,” Wallach said.

Unfair practices

That growth is even more stunning in Turkey. According to Besle, the Turkish barter sector is growing at a breakneck pace of 50 percent a year. “But even this rate is still insufficient. In my opinion, the industry has the potential to reach more than 50 percent of Turkey’s gross national product [GNP],” he said.

However, in order to live up to its full potential, Besle is convinced that the Turkish barter sector urgently needs legislation enabling it to operate as a more legitimate and recognized part of the economy. “The government should introduce legislation on barter as soon as possible, before more companies harm the trade with unfair practices. Turkey could adopt the system used in the US, one of the best examples in the global barter market. We need a supervisory body to follow developments in the market to prevent any possible misuse. Only in this way can we get rid of the rotten apples in the sector and eventually grow as an alternative to the banking sector in Turkey.”

Bank credit cards for bartering

Speaking to Sunday’s Zaman, İstanbul Barter Exchange Operations Manager Cavit Durgut says they have recently begun studies to engage the barter system with a bank credit card mechanism. “We recently established our own website, and it is open to use. There is increasing demand from our customers. We are planning to increase the number of members to 3,000 before the end of this year and switch to a ‘barter credit card’ system by the beginning of 2011,” he noted. Such a development, Durgut says, will be a milestone in regulating the market. “We could establish the largest barter pool in Turkey,” he says as he adds that companies from small and medium-sized enterprises (SMEs) to large conglomerates could benefit from such a system. “It would be relatively more practical.” Durgut says they are currently meeting with banks and could sign a contract with at least one by the end of 2010.

He notes the number of barter exchanges as well as firms benefiting from barter services in Turkey increased during the 2009 global financial turbulence. The number of barter exchanges in Turkey reached 50 in 2009, compared to 15 a year before, he said, adding that most companies that experienced difficulties in repaying their debts in cash found a safe haven in barter services amidst the crisis.