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YASED the organisation of foreign investors in Turkey Şaban Erdikler Chairman of YASED By Sofie Brutsaert "Even at world standards, new legislation represents
important improvements" ü Is Turkey an attractive country for foreign investors? "Yes it is. Turkey is the 17th largest economy in the world worth nearly $490 billion. Half of its 70 million population is between 15 and 25 years old! Turkey is neighbouring important markets such as the EU, Russia, Central Asia, the Middle East and the Mediterranean region. It is located at the crossroad of energy roads, has a strong industry, possesses local entrepreneurial investors and has a work force of 23 million people. Turkey is listed 8th in the FIAS (Foreign Investment Advisory Service) report for middle level manager staffing and has an urbanization level of 71.2%. Our country signed agreements with nearly 50 countries preventing double taxation - with Belgium in 1987 - and other regional and bilateral trade agreements, such as the Customs Union. Turkey also signed the International Arbitration Agreement and is working hard to implement the EU 'acquis communautaire'. The actual reforms will obviously give results in 2005-2006." ü What are the most frequent complaints coming from foreign investors? ü "Foreign investors used to complain mostly about the economic and political instability. However, they now have confidence in the government and its policies. In order to maintain this trust, we must keep on implementing these new policies. On the other hand, the problems of Intellectual Property Rights must be eliminated, pirating must be hindered, non-tariff barriers must be reduced, laws must be implemented so as to become valid, and the informal economy must definitely be tackled. The government is aware of these problems and shows goodwill towards eliminating them. However, the new laws must also be successfully implemented. Currently, one of Turkey's main problems is not to have fulfilled the much needed amendments on data protection. As a result, Turkey risks sanctions from the EU. Within the framework of the Trade Barrier Regulation execution, Turkey should comply with the data protection agreements that it has signed, especially on pharmaceuticals, and should rapidly start their implementation." ü Can you give some examples of recent reforms that improved the investment climate?
ü "With the new Foreign Investment Law, minimum investment limit of $50.000 and the requirement of permission from the General Directorate of Foreign Investment have been removed. Accordingly, the equality principle that already existed in the old law has been underlined in the new one. This states that there will be no discrimination between foreign and local investors. Another law supporting this idea is the law that simplifies company establishments. With this new law, the number of documents have been reduced to eight forms and the procedure has been centralised to one office. Even at world standards these are substantial improvements. Another novelty regarding the employment of foreign employees is that 'key personnel' who will be working in specified investments can now be able to obtain work permits within fifteen days. Additionally, the long-awaited inflation accounting law has finally been passed. Some laws on e-signature and data reach have been adopted and will soon be implemented. All of these are major steps and Turkey should be given some time to get results." ü Istanbul is the economic heart of Turkey. Would you advise potential investors to also choose Istanbul, or to broaden their horizon instead and consider other regions?ü "Istanbul is at the centre of investments in Turkey. Unfortunately, there is almost no free space available for new investments in the Istanbul area. In addition to the shortage of space, its infrastructure is also growing inadequate. However, other developing axes are available in Turkey: the Aegean-Marmara and the Aegean-Mediterranean Axes offer sufficient space and they are suitable for investments with a similar infrastructure to the Istanbul region. On the other hand, several investment locations are available within the scope of the GAP project. GAP is a region which provides some incentives and in which major Turkish investors such as Koç and Sabanci Holding have recently invested. Thanks to the latest incentive law, Turkey is offering various incentives to investors planning to invest in 36 different cities. Cities like Bursa, Izmir, Gaziantep, Antalya, Mersin and the surrounding cities, which have shown some progress as an investment area, will become attraction centres for investors in the near future." ü How do you see the evolution of the Turkish market? ü "Almost all sectors are open to investment, especially IT, infrastructure, energy, production, tourism and telecommunications all of which show growth opportunities. Additionally, some sectors like the car industry have reached a certain level of saturation. Privatizations, especially the privatization of Turk Telekom, will bring a certain revival to the telecommunications industry. Taking the latest developments into account, we can say that we are rather positive about starting the negotiations with the EU. Turkey and the EU have a common history of more than 50 years. During this time, a Customs Union agreement has been signed which is unprecedented between the EU and a candidate country. Almost 80% of its exports are directed to the EU countries. Over 60% of its foreign investments come from the EU countries. These exchanges have already created a union and continuous cooperation between Turkey and the EU. The next step should be the start of the negotiations as soon as possible and we do believe that Turkey will do it this year. Regarding Turkey's membership to the EU, there is no insurmountable barrier for Turkey. A strong government is governing Turkey. By carrying out reforms, this government demonstrates that it is determined to harmonize its regulations so as to conform to the EU 'acquis communautaire'." Günter Verheugen, Member of the European Commission Responsible for Enlargement Turkey is a candidate country. This was confirmed by the heads of states and Governments in Helsinki in December 1999. The issue we face is therefore not whether Turkey can be a member of the EU, but whether and when negotiations on the accession of Turkey can begin. The Copenhagen political criteria sets out the conditions that needs to be met. The sequence is clear. First meeting the political criteria and then negotiations. The prospect of EU accession has proved to be a robust catalyst of political transformation in Turkey. Since December 1999 Turkey embarked upon a process of far-reaching constitutional and legislative reforms. This process was substantially accelerated and deepened with the taking up of office of the AKP Government in November 2002. Political reforms have introduced changes ranging from improving civil liberties and human rights to the role of the military. The reform process has clearly addressed major issues and more importantly, highlight a growing consensus in favour of liberal democracy. One result of these reforms has been a noticeable change of climate. Taboos have been broken. Civil society is getting stronger and more organised. New channels have been set up to allow people to report about cases of human rights violations and the population appears to be more aware of its rights. Issues whose mention could previously trigger criminal proceedings, such as the role of the military, the Kurdish language, or cases of torture and ill-treatment, are now freely debated. There is public debate about equipping Turkey with a new and modern constitution enshrining the basic values on which the EU is based. In short, the reform process has brought a new mood of openness and freedom in public debate in Turkey. We don't under-estimate the scale of the challenge for a country of the size and complexity of Turkey. The changes to the Turkish political and legal system over the past years are part of a longer-term process. It will take time before the spirit of the reforms is fully reflected in the attitudes of executive and judicial bodies, at all levels and throughout the country. But what matters is the steady determination to overcome hurdles and bureaucratic bottlenecks, and to establish a clear track record of progressive implementation of the reforms.
If the European Council decides to open negotiations with Turkey accession is not a formality, and not for tomorrow. The negotiations will take time, reflecting the scale of the difficulties in many sectors faced by such a large and complex country. At the same time, a decision to open accession negotiations does not mean that the political criteria will no longer be on the agenda.
We will have to continue to monitor very closely further progress achieved in this area as we did with all other candidate countries. Turkey's candidature for EU membership leaves nobody indifferent. There will and should be a debate in Turkey and in the EU. There are those who are concerned about the capacity of the Union to integrate a country of the size and with the demography of Turkey. Others see the