$500 mln Polyplex investment to follow $150 mln Turkey plant

Polyplex provided details of the planned facility at a press conference in İstanbul on Tuesday. Economy Minister Zafer Çağlayan, Investment Support and Promotion Agency of Turkey (ISPAT) President İlker Aycı and Polyplex senior Vice President Kapil Gupta also participated in the meeting.

The $150 million facility will be constructed in Tekirdağ’s Çorlu district, approximately two hours outside İstanbul. The facility will produce polyethylene terephthalate (PET), used in the manufacture of items such as beverage or food containers, and will have an annual production capacity of 600,000 metric tonnes. Polyplex initially expects to export products worth $1 billion per year, Gupta told reporters at Tuesday’s meeting. The company will start the construction of the plant in the second half of this year and expects the PET resin production plant to commence operations within two to three years.

The company will purchase raw materials for the resin from local suppliers such as Petkim. Gupta said the firm planned an additional $500 million of new investment in Turkey into the production of raw materials, and that Polyplex would engage in a joint venture with a Turkish or international partner for this next investment. “We plan to embark on this raw material plant within five to eight years,” he noted.

Also speaking at the event, Çağlayan said the new investment may help Turkey in its efforts to minimize its current account deficit (CAD). “This is a new brick in the wall that we have started building against the CAD following the introduction of our incentive program … The government has faith that investments offering benefits to both investors and employees, while creating added value for Turkey, will increase in the months to follow,” he said. The Polyplex facility is expected to increase its annual exports to more than $1 billion within the next three years.

Çağlayan said the investment is particularly important when considering Turkey’s dependence on foreign petrochemical products. Turkey remains a net importer of petrochemical products, which is the most significant cause of the country’s persistent foreign trade deficit, in turn fuelling CAD. Petrochemical imports caused an $11 billion foreign trade deficit in 2011, while in the same year Turkey imported PET resin raw material worth $305 million and precursor purified terephthalic acid (PTA) worth $265 million. Underscoring the government’s suggestion that Polyplex also work to produce these products domestically, he commented, “The company promises that these investments will be made too.”

Aycı said Turkey expected to exceed $16 billion in foreign direct investment (FDI) performance, and that Polyplex investment would help Turkey increase its FDI. “We could even break the 2007 record of $22 billion this year or next,” he added.

Indian Ambassador to Turkey Susmita Gongulee said mutual trade volume between Turkey and India reached $7.2 billion annually and that there is potential to increase this figure. Gongulee said the two countries could easily increase mutual trade to $10 billion in the coming years.

Polyplex entered the Turkish market in 2004 with the establishment of Polyplex Europa. Since then they have been conducting market research as preparation for the construction of a plant in Turkey, finally settling on Çorlu’s tax-free zone. The firm expects to reach out to European and Mediterranean markets via the plant, and to serve as a bridge to EU, Russian and US markets.

The government places great emphasis on the attraction of chemical investments to Turkey, receiving two “strategic” chemical investments worth $1.5 billion in the final days of 2011. One of them was the $1 billion joint investment by Turkey’s leading carbon fiber producer Aksa and America’s Dow Chemical Co. to produce carbon fiber in the western province of Yalova. The second was a new investment valued at $510 million by India’s Aditya Birla Group to establish a viscose staple fiber (VSF) plant in the southern province of Adana.