The Political Economy of Regulation in Turkey
Contents:
Industry continues to play an important role, as does agriculture. Manufacturing accounts for a large proportion of Turkish exports to Europe in the form of household goods e.
Turkey is an important energy transit country and aims to become a European energy transit hub. Turkey has the capacity to transport million tons of oil to the world markets per year, typically from the Middle East and Caspian to EU markets.
The development of Islamic banking in Turkey: regulation, performance and political economy
Turkey is also important for natural gas transit. More information on political risk, including political demonstrations is available on FCO Travel Advice. There are a significant number of business links between the UK and Turkey. As well as its large domestic consumer market of 81 million, Turkey is also a springboard to the markets of Central Asia and the Middle East.
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Given the existence of the Customs Union, a prerequisite for EU accession, EU companies do not experience the same obstacles they face in other high growth markets. However regulatory hurdles, decision-making paralysis and sudden changes to legislation and regulations can be frustrating. Additional duties, applied to protect domestic industry, can apply to EU companies if their products are manufactured outside the EU.
Investors have expressed concern at frequent regulatory changes that occur with short implementation timeframes and insufficient evaluation of the wider consequences for the sectors concerned. Some have expressed concern over rule of law, including independence and impartiality of state institutions. Feedback from some Turkish companies shows that British companies are perceived as risk-averse, over cautious and slow to make decisions.
Although requisite due diligence is advised, UK business does need to demonstrate a commitment to the market, either by having a visible presence here or building and maintaining strong relationships.
Overseas Business Risk - Turkey
This means regular visits to the market; and a willingness to commit to projects or business opportunities early on. This could include demonstrating a key product- or skill-set and capability to fulfill Turkish requirements with an indication that they are prepared to discuss and tailor the final solution to Turkish needs. In doing so, British companies will need to be in a position to react to short tender timelines in Turkey and be well-placed to provide defined specifics later.
Turkish companies are often interested in partnerships and knowledge transfer, rather than a purely transactional commercial relationship. Turkey stands at 78 among economies on the ease of starting a business. Turkey ranks 61st out of in the Global Competitiveness index compiled by the World Economic Forum.
In Turkey was ranked in the Transparency International corruption indicators as 81 out of countries. Turkey placed higher than Brazil, and at the same level as India. The New Turkish Commercial Code which came into force on 1 July goes some way to addressing the need for greater transparency and reduced bureaucracy in Turkish business as well as flexibility in directorship.
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Turkish companies increasingly have strong corporate governance and social responsibility structures in place. Turkish companies are now subject to Corporate Governance Compliance legislation and in due course conformity to international financial reporting standards IFRS , which should ensure increased international confidence in the market. The UK continues to encourage human rights reforms in Turkey to ensure that democratic and justice standards as set out in international law are met.
The UK supports bilateral projects in partnership with Turkish government institutions and civil society that aim to strengthen rule of law and rights protections. But it described backsliding in some areas of fundamental freedoms.
The Political Economy of Regulation in Turkey brings together leading international scholars and experts on Turkey and regulatory reform to provide essential. Editorial Reviews. From the Back Cover. The Political Economy of Regulation in Turkey brings together leading international scholars and experts on Turkey and .
Under the UK Bribery Act, bribery is illegal and it is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world. In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.
In recent years, the reform process on anti-corruption has declined, as amendments to the legal system framework have weakened rather than strengthened the NIS. Visit the Business Anti-Corruption portal page providing advice and guidance about corruption in Turkey and some basic effective procedures you can establish to protect your company. Read the information provided on our Bribery and corruption page. Please read the information provided in the Terrorism section of the Foreign Office travel advice for Turkey.
The Centre for the Protection of National Infrastructure also provides protective security advice to businesses. IP rights are territorial, that is they only give protection in the countries where they are granted or registered. If you are thinking about trading internationally, they you should consider registering your IP rights in your export markets. IP rights have been protected under the general rules of Turkish law since the beginning of the Turkish Republic. Turkey is a party to a number of international agreements, conventions and treaties related to intellectual property rights.
Under Turkish law, the main intellectual property rights that are capable of protection are patents, trademarks, registered and unregistered designs, copyrights and confidential information. The Turkish Patent Institute registers trademarks, patents, license agreements and such rights upon application. The protection starts when the application is lodged with the Turkish Patent Institute. Read the information provided on our [Intellectual Property https: Turkey is now viewed as a source, transit and destination country for Organised Immigration Crime.
The majority of irregular migrants that are attempting to reach the EU are non-Turkish nationals transiting Turkey.
The economy has been in some difficulty. How have the markets responded to this new government? Markets have responded quite positively: The euphoria derives from the facts that: Are interest rates likely to be under any new pressure and will Turkey's borrowing position change under this new government? If the new government fulfils its early promise and announces a robust economic programme, so that markets are not disappointed, the downward movement we have already seen in interest rates should continue.
This would then set up a "virtuous circle" whereby government interest payments decline sharply, making the achievement of fiscal targets that much easier while also eventually allowing some leeway for social spending which the government has promised to its electoral base. If, on the other hand, major mistakes are made in economic management, past experience shows that markets would quickly punish the government with high real interest rates and a consequent grave risk of the debt spiraling out of control. How might the OECD economic forecast for Turkey be affected and what signs will you be looking for in three-six months time?
If financial market confidence continues to improve, real interest rates will decline steadily, allowing for moderate growth over the next two years with monetary and fiscal policies remaining very tight in accordance with the needs of economic stabilisation. A too-rapid fall in interest rates market overshooting could be detrimental, however, as happened in when it led to overheating and balance of payments difficulties. But conversely, in the case of policy mis-steps, a renewed rise in interest rates combined with real exchange rate depreciation leading to inflation pressure, would be extremely alarming.
What about regulatory reform; are there specific areas you would ask the government not to backtrack on or to pay special attention to? It is critical that the government not backtrack on the progress that has been made over the past two years in terms of the establishment of independent sectoral regulators in banking, energy, and telecommunications.
They have also been beneficial with regard to relations with local government or to the formation of subcontracting relations with larger firms operating at the national level. Combined with extraordinarily high inflation and interest rates, lack of proper regulation in the financial sector, and instability in the political system, the s and early s were characterized by economic and financial crises in Turkey. Towards the end of the s, capital controls, too, were eliminated with full financial liberalisation. A survey Tax challenges, disruption and the digit Established big business figures who refused to provide their unqualified support to the AKP faced serious threats of marginalisation and, at times, punitive tax inspections. Agriculture was thus left out of the tax system and subsequent governments, even in the planned economy period between and , have never followed a strategy of using the surplus extracted from agriculture to support industrial development.
These new institutions need to be kept free of political influence and indeed strengthened in this respect to enable markets to function well in Turkey. Similarly, the newly independent central bank must be allowed to stay independent to help eliminate high inflation once and for all.
Turkey's new political economy
It is likewise important to pursue privatisation, which was a major weak point of the previous programme, notably regarding the above mentioned sectors. Is there any contradiction between these two situations? Turkey, it is true, is on a slower track in its candidature for EU membership in part because it has long suffered from high inflation, chronic budget deficits, and economic instability.