Turkey Expects $1.2B-$1.6B Procurement Boost

In December, the Turkish government announced a plan to raise billions of dollars for defense procurement through a conscription exemption fee. The plan exempts from military conscription all Turkish men older than 28 as of Jan. 1 who pay a lump sum of 18,000 Turkish lira (about US $7,579$8,150). Turkey requires every male citizen over the age of 20 to serve five to 12 months in the military, depending on his education.

Defense Minister Ismet Yilmaz said Jan. 24 that as of Jan. 22, nearly 113,000 Turks applied to benefit from the system. More than 600,000 qualify for the scheme, but a Defense Ministry official said the final number is likely to fall should be anywhere between 150,000 and 200,000. That means the government will collect between $1.2 billion and $1.6 billion.

The money will go to the Defense Industry Support Fund, which that finances procurement programs. Turkey's procurement agency, the Undersecretariat for Defense Industries (SSM), collects annual receipts through the fund. It consists of revenues from levies and indirect taxes on alcohol, tobacco and gambling, and had been widely speculated to amount to $1 billion annually.

In a speech on Saturday,Jan. 24, Yilmaz said, "(Thanks to the paid conscription system) We are both solving these people's [conscription] problem and giving financial support to the armed forces."

Last year, the SSM said the revenues it collected from the Defense Industry Support Fund in 2013 totaled US $1.4879 billion, compared with $1.3106 billion in 2006, much less than the all-time high of $2.9896 billion in 2008.

More importantly, SSM said the fund's accrued but not yet collected revenues from the Treasury amounted to $5.7 billion at the end of 2013. The Treasury could pay that amount to the SSM in installments, or SSM could take payment in the form of Treasury backing for future loans.