Turkey is endowed with immense social and cultural wealth, and is a strategic crossing between Europe and Asia. In addition to being one of the main routes for transportation and energy lines, Turkey is also noteworthy with the opportunities and potential it offers. Lucky to have the dynamic population the business world needs, Turkey also offers the ideal conditions required for investments, thanks to its liberal economy.
Moreover, Turkey has a Customs Union with the European Union, and is also on track with accession negotiations with the EU.
AVERAGE GROWTH: 5 PERCENT
Turkey, which has its leading export and import partners in Europe, achieved an average annual growth of 5 percent since 2002. Turkish economy is expected to become the fastest growing one among all OECD members, in the next 5 years as well. Turkey’s exports grew from 47 billion USD in 2003, to 152 billion USD by the end of 2013. The same period saw tourism revenues grew from 14 billion dollars to 32.3 billion.
STRONG BANKING SYSTEM
Once Turkey got out of the political and economic crisis it endured in 2001, it first secured political stability. Then, it proceeded to implement necessary reforms of its banking system, which was one of the hardest hit sections of the economy. Thanks to these reforms, Turkish banking system was able to evade the string of bankruptcies which hit financial institutions in the US and EU from 2008 on. Turkish banking system is praised as a model of confidence and profitability, from Western Europe to Middle East.
ATTRACTED 135 BILLION DOLLARS
In addition to the finance sector, which proved its mettle against the global economic crisis, Turkey has also drew attention with its strict financial discipline and stable economy policies, and attracted 135 billion US Dollars in foreign direct investments in the last decade.
Thanks to this excellent performance achieved in such a short time frame, Turkey became an extraordinary "rising economy" in the global arena. In 2013, 2013 Turkey ranked 6th among EU member states, and 16th largest economy of the whole world, in terms of purchasing power parity figures for GDP.
COMPETITIVE EDGE IN THE MARKET
1 Strong macroeconomic fundamentals
2 Substantial domestic market
3 Strong growth performance
4 Strong public and banking sectors
5 Dynamic and competitive private sector
6 Young and educated population
7 Rapid industrialization and urbanization
8 Rapid increase of purchasing power
9 Strategic geographical location
10 Developed infrastructure
11 Generous investment subsidies
12 State subsidies for SMEs, exports, and R&D
13 Customs Union with the European Union
14 Accession process for the European Union
15 Free Trade Agreements with more than 20 countries
16 Strong export performance
17 Substantial know-how in Med-Hi-tech industries
18 Major potential in services
19 Rapid increase in foreign direct investments
20 Strong positive expectations regarding medium-long term
Source: Istanbul Chamber of Commerce, Competition Development Coordinator
LAW FOR FOREIGN DIRECT INVESTMENTS
Turkey implemented structural reforms to ensure better support for foreign investments, through the "Foreign Direct Investments Law". The most important change was the adoption of the tracking system rather than the screening regime, and the introduction of notification requirement instead of the preliminary permit requirement. Furthermore, Investment Consultation Council and coordination committees were set up.
In this context, the following opportunities are offered to potential foreign direct investors:
* Liberal economy and business environment
* Free entry to and exit from the market
* Ability to set up a company on an average of 6 days (OECD average: 11 days)
* Equal treatment of all investors
* Domestic investor treatment for foreign investors
* Opportunity to set up firms with 100 percent foreign capital
* Opportunity to set up a firm without obtaining any permit
* State guarantees for foreign investments
* Guarantee for the transfer of profits abroad
* Opportunity to set up new firms, branches, or offices
* Opportunity to employ foreign personnel in key positions
* Equal treatment in all subsidies and support opportunities
* Opportunity to purchase real estate, for foreign investors.
MINIMUM WAGE IN TURKEY
Gross: TRY 1,071 (USD 487)
Net: TRY 846 (USD 385)
Employer's share of Social Security Premium: 15.5%
Employer's share of Employment Insurance Fund Premiums: 2%
Total cost for the Employer: TRY 1,258.43 (USD 572)
EMPLOYMENT AND CAPITAL SHARE
For each foreigner for whom a work permit is to be obtained, at least 5 Turkish nationals should be employed. The capital share of foreign shareholders should be at least 20 percent, and TRY 40,000. The paid in capital of the enterprise should be at least TRY 100,000, whereas the gross sales should be at least TRY 800,000. In case of 'eligible' Foreign Direct Investments, the foreign shareholder and key personnel would be exempted from these requirements.
ELIGIBLE INVESTMENTS
In order to qualify for this group, the capital share held by foreign nationals should be at least TRY 1,062,691, whereas the company's turnover in the last year should be at least TRY 79.8 million. Provided that the abovementioned capital share requirement is met, the company's exports in the last year should be worth at least USD 1 million. The company should employ a staff of at least 250 registered with the Social Security Agency (SGK). In case of actual investments, the minimum fixed investment figure should be at least TRY 26.6 million.
ORGANIZED INDUSTRY
There are more than 180 Organized Industrial Zones (OSB) in Turkey. OSBs offer infrastructure in the form of roads, water, natural gas, electricity, communication, and waste treatment utilities. VAT exemption for land purchases in OSBs, and other advantages regarding water, natural gas and communication expenses are available. Relevant Agencies: Supreme Agency of Organized Industrial Zones (www.osbuk.org); Organized Industrial Zones Association (www.osbder.org).
TECHNOLOGY DEVELOPMENT
There are 34 active Technology Development Zones in Turkey. 5 of these special investment zones which aim to attract high-tech investments are located in Istanbul. The enterprises to invest in Technology Development Zones are offered VAT, employment premium, and operating advantages. Relevant Agencies: General Directorate of Science and Technology; Technology Development Zones Association.
FREE ZONES
Free zones are special investment zones which are kept outside the customs area of Turkey. There are 20 free zones in Turkey. These offer 100 percent exception for customs duties, as well as corporate income tax exemptions, VAT and special consumption tax exemptions for manufacturing firms, as well as income tax for employees. Relevant Agency: Ministry of Economy, General Directorate of Free Zones
TURKEY IN 2014
GDP: USD 800 billion
Per Capita: USD 10,822
Growth: 2.9%
Inflation: 8.17%