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Günter Verheugen, Member of the European Commission Responsible for Enlargement issue in terms of where the borders of the future European Union shall be or the impact of Turkey on the nature of the European integration project. We will have to take these and other concerns seriously and be prepared to discuss them. On its side, the EU will also have to examine whether it is ready for Turkey's accession. It is clear that the accession of a country with the size and population of Turkey would have consequences on the functioning of the European Union. This would fundamentally affect many policy areas and the functioning of the EU institutions. The Commission has started to reflect on how to best meet these challenges. We did the same when we embarked on negotiations with the member states that acceded on 1 May. In conclusion, the process of modernization of the Turkish political system is underway. The Turkish Government continues to shown a steady degree of determination to bring about political reforms, not only for the sake of complying with the Copenhagen political criteria but primarily for Turkey's own sake. I am well aware that there is an impressive degree of consensus in Turkey in favour of joining the EU. In the period immediately ahead of us, the decision to be taken in December, will depend on Turkey's capacity to demonstrate that it fulfils the Copenhagen political criteria, not only in legal provisions, but also in practice. These criteria were not invented for Turkey, but apply equally to all candidates. For our report next October, as in previous years, we will apply the same principles to Turkey as to all other candidate countries. There should be no doubts that the report will be fair and objective. (Extracts from the speech delivered by Günter Verheugen, at a Conference organised by Friends of Europe on June 2004) TURKVEN Evren Ünver co-founder of Turkven: By İlker TEMİR Turkven is an independent private equity firm in Turkey that is committed to supporting the Turkish entrepreneurs for the long term. It has raised USD44 million from a number of international, institutional investors including the IFC (part of the World Bank Group), NBG (National Bank of Greece), FMO (Dutch Development Bank), DEG (German Development Bank), EIB (European Investment Bank) and TTGV (Turkish Technology Development Foundation). We have interviewed Evren Unver; one of the three founders of Turkven. ü How was Turkven founded, could you give some background? ü "Turkven was founded by Seymur Tari, Eren Nil and myself in 2002. We were all classmates in France during our MBA studies in 1997 and decided to raise a private equity fund to invest in promising Turkish companies. We began investigating the interest of corporate investors in 2000, and formally launched our fund in March 2002. Our investors are the IFC, NBG, FMO, DEG, EIB and TTGV. In addition to these institutions, we have a strategic partnership with Advent International, a Boston based private equity fund manager. Turkven is the exclusive co-investment partner of Advent in Turkey, and we source and pursue deals jointly with them. Together we aim to invest around USD 100 million in 8-10 Turkish companies over the next 3-4 years. We take minority or majority positions in companies, and take active board member positions in the companies in which we invest. Last year we invested in UNO, the leading packaged bread manufacturer in Turkey. Currently we are in the final stages of completing our second investment, which will be involved in business services. You can find more information about Turkven at our website: www.turkven.com." ü Most of your shareholders are European Banks. Why do you think they have chosen to invest through Turkven?ü "Our investors are institutions with significant debt and equity portfolios in Turkey. They are familiar with the market and accustomed to the risks. Investing in Turkey through a fund structure such as ours is a safer option for investors, as we tend to be quite involved with our portfolio companies and help with corporate governance."ü How do you interpret the latest economic developments in Turkey? Is the country indeed heading towards greater macro-economic stability and reaching its economic potential? "Turkey is a rapidly evolving economy - things move quickly for the better, as well as the worse. The 2001 financial shock was a huge burden on the country, and we are still just reco-vering from it. I don't believe we have cleared all of the hurdles facing us, but we are certainly on the right track. Issues such as the current account deficit and overall debt level are still alarming, but progress is being made. What we need is a sustained period of no surprises - either economic or political." ü Turkey seems to have difficulties to attract foreign investments when compared to Eastern European countries. Why do you think this is the case? ü "The path to EU integration certainly is a factor. If Turkey is indeed given a positive signal in December to begin formal negotiations this will likely lead to a trickle down effect of increased FDI. However this isn't the only factor - Greece for example, despite being an EU member, received even less FDI." ü What sectors is Turkven interested in? ü "We are looking at many sectors across the board - currently on our list of targets are business services, pharmaceuticals, media, food & beverage, packaging, logistics, automotive spare parts, telecoms, building materials to name a few." ü What are the main advantages and obstacles for foreign investors in Turkey?
ü "Turkey is a large market of 70m people, as well as a strategic location for manufacturing, especially European-destined products with a medium-to-high level of labor required. Electronics, white goods, automotive components all benefit from Turkey's educated work force, customs union with the EU, logistical proximity and established trade ties. Difficulties include the legal framework, high taxes and corruption." ü In the coming years, a high number of state owned companies will be privatized in Turkey. What is Turkven's approach to privatization? ü "It's important to approach state privatization opportunities as "Management Buy-in" scenarios. As a fund manager we do not have the know-how or capability to manage the companies we invest in. Therefore we try to partner with companies and managers that have in-depth knowledge and experience in the relevant sectors. If we can find the right partners that we can trust will successfully lead the management of the privatized company, we are definitely interested. We have explored a few cases like this." ü There has been some recent changes in the foreign investment law. How do you see the current situation from a legal perspective?
ü "It is certainly improving. The approval process in Ankara for FDI has been streamlined quite a bit. However there is still much work to be done. I believe Ireland is a good example of how to attract additional FDI by making the investment climate friendlier to international institutions." ü What impact do you expect on the Turkish economy if EU accession negotiations start?
ü "I believe many of the positive impacts of starting negotiations have already been factored into the Turkish economy. The default scenario in most companies’ planning is that Turkey will get the go ahead in December. We are more worried about a backlash in case this does not happen. However, if everything does go well, I expect we will see an increase in the levels of FDI, as seen in Poland or the Czech republic."