Product Security Solutions Currently Implemented by Public Institutions in Turkey
Despite accelerating pace of growth in the share of privately-owned firms due to mounting sense of urgency to ensure that commercial rights granted to them by respective jurisdictions are not merely nominal protection mechanisms by employing product security solutions; governments across the globe and their affiliated public or semi-public institutions continue to dominate the demand side of the product security (product authentication/track/trace systems) market.
The situation and market trajectory of product security solutions in Turkey is no exception in this regard, and goes hand in hand with the prevailing global trend. Attempts of Turkish government to design and implement product security solutions to reap multiple benefits as diverse as safeguarding public health, securing high amount of tax revenues and protecting both consumer and commercial rights via installing track and trace systems that cover various vital goods go back to as early as the beginning of 2000s.
The current situation in Turkey with respect to different product security solutions enforced by the government is as follows:
Tax Stamp System for Tobacco Products and Alcoholic Beverages
The main motivation and logic behind government’s desire to track and trace tobacco products and alcoholic beverages is the necessity to guarantee the high amount of tax levied on these products. Both tobacco products and alcoholic beverages alike, irrespective of whether they are domestically produced or imported, are taxed quite heavily in the form of one-time imposition of a high rate of excise duty (special consumption tax) and value added tax.
To manifest the vitality of such a system for these products, we should briefly note that the percentage of tax amount in relation to the unit price may exceed 80% for some products and the total annual tax derived from these two group of products (tobacco products and alcoholic beverages) has recently reached to approximately 10% of the aggregate national budget revenue.
Serialization of Medicinal Products
The primary drive for the surveillance of human medicinal products through serialization method which would pose potential risks to the wider public health in case of mass circulation of counterfeited or smuggled products, on the other hand, is more associated with the government’s desire to stem grave financial losses that would be otherwise suffered by the Social Security Institution.
The Social Security Institution is a public body tasked to cover the medical expenses of almost the entire population within the context of the ‘general health insurance scheme’ already in effect for many years now. Serialization method which functions by implementing unique 2D codes to the inner unit packages is employed by Health Ministry. These 2D codes provide the feature of uniqueness to all unit medicines which in turn enable Social Security Institution, the agency that buy the overwhelming majority of medicines in the market, to successfully track medicines and determine any wrong-doing or abuses.
Holograms for Cultural and Artistic Products
The principal stimuli for the Ministry of Culture and Tourism to include books and CDs within the framework of ‘track&trace system via security holograms’ can be described as the Nation’s long-standing effort to keep up with the need to reduce the number of cases of copyright violations that are notoriously detrimental to the development of cultural and artistic production. The system operates with one single firm authorized by the concerned public body to produce and distribute security holograms to the entire market. This system has so far delivered on its original goals of coping and eventually diminishing the number of unauthorized circulation of cultural and artistic works such as books and CDs.
National Marker System
The high tax content of oil products, analogues to that of tobacco products and alcoholic beverages, leaded to the emergence of the urgent need to track and trace fuel for the sake of securing such a significant amount of tax for the national budget. This mounting need was finally satisfied to a great extent by the establishment of the ‘national marker system’, a tracking mechanism that operates by adding a special chemical mixture to all oil products. This tracking scheme is carried out and supervised by the Energy Market Regulatory Authority to tackle illicit trade of fuel, which would otherwise be widespread in the absence of such an effective security solution due to Turkey’s geographical proximity to world’s top oil producers and its heavy reliance on importation. Considering that approximately %17 of the national budget is made up of VAT and excise duty generated from oil products, the vitality of installing a tracking system of this nature become more evident.
As elaborately cited above, all four major product security systems in Turkey are being enforced and carried out by the government agencies. No matter how fast the market share of private actors in the product security sector grows, the sheer importance of the strategic concerns such as public health, commercial rights, budget targets and to some extent national security which are all inherently associated with product security is likely to keep governments and its affiliated institutions as the leading market players in coming years.