Makale

Why you should choose to invest in Turkey?

Turkey is a dynamic and growing G20 economy that links east and west in a unique way. In addition to being one of the world’s largest economies, Turkey also supports international investors’ growth via a business-friendly agenda and through access to a large domestic market and neighboring international markets. Strong market fundamentals, such as a young and dynamic population with an average age of 32, a well-educated work force, increasing rates of employment over the years, a growing middleclass, and a unique geographical location, have all helped transform Turkey into one of the fastest growing and outstanding economies in the world. As of end-2018, Turkey is the 13th largest economy (GDP at PPP) in the world, with an average annual growth rate of 5.5 percent in the 2003-2018 period. Turkey’s location, at the crossroads of Europe, Central Asia, and the Middle East, provides easy access to the European, Middle Eastern, North African, Central Asian, and Gulf markets. These markets comprise more than 1.5 billion people and account for a total GDP of USD 24 trillion. More than half of the world’s trade takes place within a four-hour light radius of Turkey – a key reason why multinational companies have chosen Turkey as a strategic regional hub for their operations. Furthermore, the legal environment in Turkey has progressed in an investor-friendly fashion in recent years thanks to the reforms implemented, particularly in the tax system and judiciary. In addition to that, the Istanbul Arbitration Centre (ISTAC) has started serving companies that prefer to utilize the arbitration process. The ISTAC combines a world-class set of standards and rules with its unique geo-political location, thus providing an excellent, more afordable, and quicker-to-respond alternative to the oftenbacklogged courts. We hope this guide will beneit all those corporations, individuals, and business executives who are interested in investing, working, or doing business in Turkey.

At the crossroads of Europe and Asia, Turkey’s geography has much to ofer to investors. Turkey is an essential transport corridor, ofering excellent access to global trade routes by air, land and sea. Bordered by the Marmara, Black, Aegean and Mediterranean Seas, in addition to various land boarders, Turkey ofers convenient access to Europe, Asia and North Africa. Air travel is also easy with Istanbul ofering two well connected international airports meaning you are
no more than 4 hours away from most European and Middle Eastern destinations. As of 31 December 2018, Turkey had a population of 82 million
people with a median age of 32. Therefore, in contrast to Europe, Turkey’s population is young and continuing to grow. The labour
market is also considered to be highly skilled, and with 68 percent of the population currently of working age, Turkey’s population is a
dynamic and highly lucrative resource. With such an advantageous geographical position and the availability of a young and highly skilled workforce, many investors
choose to have their regional head oices or manufacturing facilities located in Turkey.

Turkey’s economy has performed remarkably well with its steady growth over the past 16 years. A sound macroeconomic strategy,
prudent iscal policies, and major structural reforms have all contributed to the integration of Turkey’s economy into the
globalized world while also transforming the country into one of the major recipients of FDI in its region.

These reforms have increased the role of the private sector in Turkey’s economy, enhanced the eiciency and resiliency of
the inancial sector, and placed public inance on a more solid foundation. The reforms also strengthened the macroeconomic
fundamentals of the country, allowing the economy to grow at an average annual real GDP growth rate of 5.5 percent from 2002 to
2018.

Turkey’s impressive economic performance over the past 16 years has encouraged experts and international institutions to make
conident projections about Turkey’s economic future. For example, according to the OECD, Turkey is expected to be one of the fastest
growing economies among OECD members during 2019-2029, with an annual average growth rate of 4.5 percent.

Together with stable economic growth, Turkey has also reined in its public inances; the EU-deined general government nominal debt
stock fell to 30.4 percent from 72.1 percent between 2002 and 2018. Turkey has been meeting the “EU’s 60 percent Maastricht criteria”
for public debt stock since 2004. Similarly, during 2003-2018, the budget deicit decreased from more than 10 percent to less than 2
percent as a ratio to GDP, which is one of the EU Maastricht criteria for the budget balance.

As the GDP levels increased to USD 784 billion in 2018, up from USD 236 billion in 2002, GDP per capita soared to USD 9,632, up from USD
3,581 in the given period.

The visible improvements in Turkey’s economy have also boosted foreign trade. Exports reached USD 168 billion by the end of 2018,
up from USD 36 billion in 2002, while tourism revenues, which were around USD 14 billion in 2003, exceeded USD 29.5 billion in 2018.
Signiicant improvements in such a short period of time have registered Turkey on the world economic scale as an exceptional
emerging economy. It is the 13th largest economy (GDP at PPP) in the world and the 7th largest economy when compared with the EU
countries, according to GDP igures in 2018.

Summary fact about Turkish economy:
Institutionalized economy fueled by USD 209 billion of FDI in the
past 15 years.
13th largest economy (GDP at PPP) in the world and 7th largest
economy compared with EU countries in 2018 (GDP, Eurostat).
Robust economic growth with an average annual real GDP growth of
5.5 percent during 2002-2018.
GDP reached USD 784 billion in 2018, up from USD 236 billion in
2002.
Sound economic policies with prudent iscal discipline.
Strong inancial structure that is resilient to global inancial crises.

The Turkish legal system is based on a codiied civil law system.
Under Turkish law, courts are either categorised as judicial courts or administrative courts. Within these two categories, sub-categories
exist. For instance, the judicial courts, which constitute the broadest part of the Turkish judicial system, are sub-divided into 2 branches
consisting of the civil courts and the criminal courts, whereas the administrative courts are sub-divided into administrative courts and
tax courts.

Turkey’s judicial system has a multipartite structure. Consequently, within each of the sub-divisions described above, diferent levels
exist. Turkey has recently abandoned its two-tier system by introducing a three-tier-system. As a result, all courts consist of 3
levels as follows: irst instance courts, district courts and supreme courts. The supreme courts of Turkey consist of the Constitutional
Court, the Court of Appeals, the Council of State and the Court of Jurisdictional Disputes.

Since Turkey is a civil law country, legislation is the primary source of law. There is a certain order of priority for the implementation
of the applicable legislation in which the Constitution prevails over international treaties followed by the codes and regulations,
statutory decrees, and by-laws.

As a candidate country for accession to the European Union, Turkey is harmonizing its legislation with the European Union legislation
under the supervision of the Ministry of Foreign Afairs. To that end, Turkey has, among others, introduced the Competition Law and
the Consumer Protection Law, and repealed its civil code, code of obligations and commercial code and replaced them with the new
Turkish Civil Code, the new Code of Obligations and the new Turkish
Commercial Code. These laws are based on the Swiss Civil Code and Swiss Code of Obligations and follow the principles of European
Union laws and regulations and the principles set out in Turkish and Swiss courts’ decisions.

The Repealed Turkish Civil Code was introduced in 1926 right after the proclamation of the Republic and remained in force until its
replacement by the Turkish Civil Code in 2002. As in other civil law countries, the Turkish Civil Code governs the law of persons (e.g.
birth, capacity and similar matters), family law, property law and the law of inheritance. The law of contracts and torts are the subject
of the Code of Obligations. Finally, the Turkish Commercial Code regulates matters relating to merchants, trade, business entities
(especially companies), commercial contracts and other matters such as negotiable instruments and insurance. In addition, customary law
is also considered as a complementary source of law and guidance, especially if written sources are silent on a particular matter.

The Turkish administrative system and law is highly inluenced by the French administrative system and law. Public administration
in Turkey consists of the central administration and local administrations. Within the central administration, there are (i)
the executive branch and its regional divisions, (ii) autonomous bodies (i.e. regulatory authorities); (iii) 81 provinces (il) and (iv) 1,000
districts (ilçe), being sub-divisions of provinces. In each province and district, there is a governor (vali) and a district governor (kaymakam),
respectively, appointed by the central administration. The governor and the district governor act as the representatives of the central
administration within the province and district, respectively.