Turkey investment opportunities

Comparing Turkey's jurisdiction to other countries as a destination for inward investment, it is clear that the country has made significant strides in recent years. Turkey's efforts to join the European Union, as well as its ambition to become a financial hub in the region, have driven a number of important structural reforms within the economy and business culture.

One of the most notable reforms has been the increased role of the private sector in the economy. This has been achieved through aggressive privatization programs, which have significantly reduced state involvement in key sectors. State incentives have also been introduced in a range of areas, from telecommunications to finance, to support these initiatives and drive economic growth.

As a result of these efforts, Turkey's economy is expected to be one of the fastest-growing among the Organisation for Economic Co-operation and Development (OECD) members. The country has also made attracting and maintaining foreign direct investment (FDI) a key focus. According to United Nations Conference on Trade and Development World Investment Reports between 2013 and 2018, Turkey is one of the largest FDI recipients, with annual FDI inflow averaging USD13 billion. Despite a slight decrease in FDI over the past two years, Turkey's potential is clear - in 2015, FDI reached USD17.7 billion, accounting for 25% of total FDI inflow in the West Asia subregion.

Turkey has spent more than thirty years improving its regulatory environment to introduce more business-friendly legislation and encourage FDI. For example, the Investment Support and Promotion Agency of Turkey was established in 2006, and Turkey has concluded four bilateral investment treaties (BITs), making it the most active country in 2017. Additionally, special incentives have been introduced to encourage and facilitate FDI.

Overall, Turkey's efforts to become a more attractive destination for inward investment have been successful. With a supportive regulatory environment and strong state incentives, Turkey has established itself as a significant player in the global FDI landscape.

KEY WORDS

1. Foreign direct investment (FDI)
2. Turkey's economy
3. Business culture
4. Structural reforms
5. Privatization programs
6. State incentives
7. Economic growth
8. Investment Support and Promotion Agency of Turkey
9. Bilateral investment treaties (BITs)
10. Global FDI landscape

#foreign direct investment (FDI) #business culture #economic growth #private sector #investment incentives #regulatory environment #Investment Support and Promotion Agency #bilateral investment treaties (BITs) #financial hub #fast-growing economy

Turkey has seen significant foreign investment across a range of sectors in recent years, with some industries proving particularly attractive to investors. Among the most active sectors are financial services, infrastructure, energy, automotive, real estate (including urban construction), manufacturing, and information and communication technology (ICT). Public-private partnerships (PPP) have also played a key role, particularly in the health sector.

In 2017, the real estate sector proved to be the most popular among foreign investors, followed by manufacturing, financial services, and transportation. The real estate sector alone accounted for around 8.4% of GDP over the last decade, highlighting its significance within the Turkish economy.

It's also worth noting that Turkish branches and subsidiaries of foreign companies are successfully expanding their investments in the country. With a favorable business environment and strong government support, companies across a range of sectors are finding opportunities for growth and success in Turkey.

Turkey's strategic location in a volatile region is one of the primary factors affecting its market development. The recent change in its governance system also adds to the uncertainty. Furthermore, the depreciation of the Turkish Lira and rising inflation are creating concerns. Despite these challenges, Turkey is taking measures to maintain financial stability and mitigate the effects of a slowdown in the global economy.

Real Estate Sector in TURKEY

Turkey's real estate sector has emerged as the best-performing housing market in Europe, driven by urban renewal and mega-projects such as Marmaray, Canal Istanbul, and Istanbul's third airport. In 2017, the real estate sector received almost USD4.2 billion net FDI. The demand for real estate is not only limited to Istanbul, as other regions such as the Gulf of Izmit and the Dardanelles Strait also show increased real estate demand. The country has other projects in the pipeline that will require investment for completion.

Energy Sector

Turkey's significant economic growth and industrialisation have led to a rise in energy demand, increasing approximately 6% annually. To meet its energy needs, Turkey offers a highly competitive investment environment to both domestic and foreign investors. The country offers favourable incentives such as feed-in-tariffs, purchase guarantees, connection priorities, and licence exemptions.

Regulatory Environment

Turkey's regulatory agencies have swift reactions to market needs, which help mitigate the fragility of market conditions. Its heavily regulated banking system and the Turkish Central Bank's measures also aim to maintain the volume of investments in the market. Despite the ongoing challenges, the Turkish market offers various opportunities in sectors such as finance, infrastructure, energy, automotive, real estate, manufacturing, ICT, and PPPs, especially in the health sector.

Turkey's Constitutional Referendum and Transition to a Presidential System Turkish citizens voted on a constitutional referendum on 16 April 2017, which led to a change in the country's government system. Here's what happened:

• 18 proposed amendments to the Turkish constitution were presented in the referendum.
• The referendum passed by a narrow margin, and Turkey transitioned from a parliamentary system to a presidential system.
• Recep Tayyip Erdoğan was elected as the country's president in the 24 June 2018 elections, and he assumed office on 9 July 2018.
• Turkey officially switched to an executive presidency when Erdoğan took the oath of office.

What are the basic human rights and freedoms recognized by the Turkish Constitution?

The Turkish Constitution recognizes a variety of basic human rights and freedoms, including:

• Freedom of speech
• Freedom of the press
• Freedom of residence and movement
• Freedom of thought and opinion
• Freedom of expression and dissemination of thought
• Freedom of association
• Freedom of communication
• The right to privacy
• The right to property
• The right to legal remedies

What is the principle of separation of powers in Turkey's government system?

The principle of separation of powers is recognized in Turkey's constitutional system. Here's how it works:

• The legislative power is vested in the Turkish Grand National Assembly.
• The judicial power is exercised by the independent courts.
• The executive power is exercised by the President and other executive bodies attached to the President.

What kind of legal system does Turkey have?

Turkey has a civil law system, which consists of two types of courts:

• Civil courts, which include courts of first instance, regional courts, and the Supreme Court of Appeals
• Administrative courts, which are structured as a three-tier system and consist of courts of first instance, regional administrative courts, and the Council of State.

How has Turkey amended its laws in line with EU legislation?

Turkey has made significant changes to its laws to align them with EU legislation, including amendments to the Turkish Commercial Code and the Turkish Code of Obligations.

Turkey has laws and regulatory authorities that govern foreign investment, including:

Legislation: The Law on Foreign Direct Investment No. 4875 (FDI Law). 

The Regulation on Implementation of the Law on Foreign Direct Investments (FDI Regulation) and other secondary legislation based on the FDI Law. International and bilateral treaties.

Regulatory authorities: Various regulatory authorities oversee foreign investment in Turkey, depending on the nature of the foreign businesses. These include:

The Ministry of Treasury and Finance. The Ministry of Trade.

Foreign individuals entering Turkey for business purposes are generally subject to work permit and residency permit requirements. To obtain a work permit, foreign individuals must be employed by a Turkish employer and meet certain requirements. 

The work permit application process varies depending on factors such as the investment amount, sector, and the foreign individual's nationality.

In terms of residency permits, foreign individuals are required to obtain a short-term or long-term residency permit depending on the duration of their stay in Turkey. Short-term permits are valid for up to 12 months, while long-term permits are valid for up to two years and renewable thereafter.

Certain exemptions from the general requirement to obtain residency and work permits may apply depending on the position of the foreign individual. It is advisable to consult with a legal professional or relevant authorities to determine the specific requirements for your situation.