Inward processing regime: Challenges and proposed solutions

Providing nearly half of the total exports in our country, Inward Processing Regime is an important phenomenon to be analysed. This thesis aims at exploring challenges encountered in the Inward Processing Regime operations and at proposing potential solutions to these problems. The questionnaire technique was employed to collect the necessary data to help determine these problems. As per its aim, this research falls under the explanatory research category and it is based on a quantitative research method. Different from previous researches, this study finds that: this regime does not create unfair competition, it does not increase import dependency, it does not increase current account deficit and it does not reduce the impact of trade policy measures. In addition, there was identified a positive impact of this regime in export and employment. Another important finding is the positive impact of the regime in the increased productivity of enterprises and its boosting power to the competitiveness of exporters in international markets. Nonetheless, due to this regime there are some changes that lead to uncertainty and equivalent goods too are found to have experienced several problems. In order for this regime to bring benefits to the economy, some measures need to be taken. When there are goods imported through inward processing regime but that can be domestically produced, then the specific sector must be supported, and domestic production of these products must be promoted. In addition, domestic producers of intermediate goods must apply the necessary techniques to produce products of a better quality. Measures must be taken too to avoid bureaucratic obstacles for firms in the countries they export and prevent the loss of existing customers, speed up customs controls and reduce the time exported goods spend in customs control units. In addition, it is considered relevant to separately identify challenges and problems encountered by competent authorities and take the necessary measures. Lastly, in order to determine the problems in greater details, it is considered of great importance to apply this questionnaire to each sector separately and conduct interviews with domestic manufacturers to collect their views concerning IPR.