Turkey: The Turkish Economy Explained

Last Updated: 19 March 2019
Article by Seray Özsoy

Historically, Turkey's geographical position has been considered an ideal trading hub by also facilitating access to Europe, Asia, the Middle East and Russia. After decades of remarkable economic performance, the Turkish economy slowed down during 2018—and the lira fell by almost a third against the dollar. Despite this, international investors are now seeing the real value in Turkey— precisely because of the newly depreciated lira.

The World Bank predicts continued Turkish economic growth into 2019, albeit, at a lower annual rate of 2.3% down from 7.4% in 2017. Yet, Turkey's open economy and its youthful and increasingly affluent population of 80 million mean that investors will still see long-term opportunity in the country: Being in a customs union with the EU provides investors with an easy market access into other European countries.

The World Bank notes that impressive macroeconomic and fiscal stability were at the heart of Turkey's economic performance since 2000. As a candidate for the EU membership, Turkey has aligned with many of the EU standards and regulations. These high regulatory standards, combined with investment incentives, make Turkey an attractive place to do business.

Labour costs remain competitive and the government has incentives for investment in industries such as electronics, telecommunications, shipbuilding and services such as health and education. In 2016, a Tl200 billion (or $37 billion) sovereign wealth fund was created to finance investment in infrastructure. There are also particular incentives for investment in various regions, especially in the east of Turkey.

Being a leader in renewable energy, there are also incentives for investment in renewable energy generation in the country. New oil and gas fields have also been discovered in the Black Sea and in Anatolia—and the country already has a modern pipeline network which delivers oil and gas rapidly and efficiently to its Mediterranean ports.

2018 saw the opening of the 1,850 kilometer Trans-Anatolian (TANAP) pipeline which means oil can now be pumped directly from the Caspian to Turkey. The pipeline has been dubbed the "Silk Road of Energy" as it brings vital energy supplies from Asia to Europe's very door. We are working with a company which built TANAP and will connect it directly to continental Europe by 2020. This remarkable project's completion has been welcomed by both the EU, which is actively seeking to diversify its energy sources.

While Turkey welcomes foreign investment, there are a number of regulatory and legal issues which investors need to be mindful of. The Turkish Commercial Code, adopted in 2012, created modern and transparent commercial legislation, compatible with the EU's Acquis Communautaire. There are generally no restrictions on foreign ownership of Turkish companies. However, in particular industries such as civil aviation and media, there can be some restrictions on foreign shareholders.

The most common way to acquire a Turkish company is by means of a share purchase. Although share purchases are generally unrestricted, in certain regulated sectors such as banking, capital markets and energy, regulatory authority approval may be required.

An alternative way to acquire a company is by means of an asset or business purchase. This approach is slightly more complex procedurally, but it does have an advantage to a purchaser: the seller and the purchaser remain jointly liable for certain liabilities relating to the asset or business for two years after the purchase are notified. In a share purchase, all the company's existing liabilities are acquired once the purchase is completed. In either case, the new owners will automatically take over all existing employment contracts. Tax considerations will be relevant in deciding whether to acquire by share purchase or by way of asset or business purchase.

In certain cases, clearance from the Turkish Competition Authority may be required. The authority must be notified of a proposed merger or acquisition if certain turnover thresholds are met. The threshold most relevant for foreign investors is that if an investor's worldwide annual turnover exceeds Tl500 million (or $93 million) and the asset or business being required has a Turkish annual turnover above Tl30 million (or $5.6 million)— the transaction must be notified to the authority. The authority's competition board will then assess whether the business has a dominant position and if the transaction will affect competition in Turkey. The transaction is put on hold until clearance is given.

Turkey has been on a strong upward economic trajectory for decades. It is a land of opportunity for foreign investors. Turkey's developed regulatory and legislative regime, in part, is what makes it attractive, yet investors must be mindful of the compliance issues involved when acquiring or merging with Turkish companies.

This article was published in International Finance Magazine

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions