PROJECT BLACK SEA TRADENET DOING BUSINESS WITH TURKEY ÖZGÜR OPSAR ZONGULDAK CHAMBER OF COMMERCE AND INDUSTRY WORKSHOP CONSTANTA, ROMANIA / 30 -31 MAY 2012
COUNTRY PROFILE Official name: TURKEY Flag and coat of arms: Legal system: Turkey is a republican parliamentary democracy and constitutional state. The Turkish Grand National Assembly (“TGNA”) forms the unicameral legislature. Geographical location: Turkey is situated in Anatolia and the Balkans, bordering the Black Sea, between Bulgaria and Georgia, and bordering the Aegean Sea and the Mediterranean Sea, between Greece and Syria. Frontiers: The territory of Turkey is more than 1, 600 kilometers long and 800 km wide, with a roughly rectangular shape.
COUNTRY PROFILE Natural resources: The geological structure it is sitting upon, our country is one of the rare countries in the world that can supply a significant portion of its own raw material requirements thanks to the diversity of its minerals. Oficial language: Turkish is the official language of Turkey. Time zone: Turkey is in the Eastern European Time Zone. Eastern European Standard Time (EET) is 2 hours ahead of Greenwich Mean Time (GMT+2) Religion: Turkey is officially a secular country with no official religion since the constitutional amendment in 1924. Islam is the largest religion of Turkey. Around 99. 8% of the population is registered as Muslim (mostly Sunni), followed by other religions. Currency: The Turkish currency is called Turkish Lira (TL 1) Measuring system : The standard metric system has been accepted in 1931 within the law of “Measurements and Adjustments” and being applied since 1933.
COUNTRY PROFILE Administrative organisation : The foundation and principles of the Turkish government are based on Central Administration and Local Administration concepts. Accordingly, the administrative structure of the Turkish Republic is divided into two, namely `Central Administration” and “Local Administrative Institutions”. Socio-economic profile Population and structure of population : Turkey had 78, 785, 548 inhabitants by 2011, July and it’s the 17 th biggest population of the world. The average of the Turkish people is 28. 5 years. 70% of the populations is living in the cities.
LEGAL FRAMEWORK FOR DOING BUSSINESS Types of Companies Incorporated companies such as: Joint‐stock company (A. S) Limited liability company (Ltd. ) Commandite company Collective company Unincorporated companies such as: Joint‐venture Business association Consortium
LEGAL FRAMEWORK FOR DOING BUSSINESS Joint stock company A joint stock company is defined as a corporation having its own trade name and a predetermined amount of capital divided by shares. The liability of the shareholder is limited to their capital. The structure and organisation of joint stock companies is subject to regulation by the Turkish Commercial Code. A minimum of five shareholders, who may be either real persons or legal entities, are required for the formation of a joint stock company. The overall share capital must be a minimum of TRL 50, 000 TL. Limited Company Limited liability companies may be composed of real persons or legal entities and must consist of at least two and no more than 50 partners. The overall share capital must be a minimum of TRL 5, 000 TL. Shares held in a limited liability company are non‐negotiable and may be transferred only with the approval of the other partners. Transfers must be approved by at least a 75% majority vote, with at least 75% of the total capital represented. Commandite Company It is the company established to operate a commercial enterprise under a trade name. Whereas the liability of some shareholders is limited to the capital subscribed and paid by the shareholder (commanditer), for some shareholders there is no limitation of liability. Legal entities can only be commanditer. No minimum capital is required. The rights and obligations of the shareholders are determined by the articles of association.
LEGAL FRAMEWORK FOR DOING BUSSINESS Collective Company It is the company established to operate a commercial enterprise under a trade name and, the liability of none of the shareholders is limited only to the capital subscribed and paid by the shareholder. No minimum capital is required. It is mandatory that all the shareholders be real persons. The rights and obligations of the shareholders are determined by the articles of association. Branches and Liaison Offices Foreign companies may also operate through liaison offices or branches provided that they are established in accordance with the relevant legislation. The income of a branch is taxed in the same way as resident corporations. Liaison offices may be used to establish a presence in Turkey, but cannot be involved in any commercial activity and must be funded by the parent company abroad. Representative offices should not have any commercial activities. The salaries of the employees should be paid from abroad. A simple permission from the Treasury is required to set up a Rep. Office.
LEGAL FRAMEWORK FOR DOING BUSSINESS Joint Ventures or Consortia A joint venture or a consortium may be set up for international contracts to be carried out in Turkey. It is a simple formation of a special contract. It can be freely established based only on the international contract signed. Without any obligation to establish a company, the joint venture or the consortium can carry out the business activities. The only requirement would be registration with the tax office and the Social Security Institution. When the contract is completed, the Turkish joint venture dissolves. Company Establishment procedures To establish a company, the draft Articles of Associations is submitted to the Trade Registry Office. Items of the Articles of Associations are examined and the title screening is conducted for the articles of association. Articles of Associations approved for start‐up shall be notarized an application shall be made to the Trade Registry Office for registration. Registration shall be conducted within 15 (fifteen) days following the notarization.
LEGAL FRAMEWORK FOR DOING BUSSINESS Documents to start-up a business 1) 2) 3) 4) 5) 6) 7) 8) A Letter of Application addressing the Trade Registry Office A letter of Application addressing the Chamber of Commerce and Industry Articles of Association (whose text is already examined and approved) notarized (6 copies) A Letter of Commitment A Declaration of Chamber Registration Certificates of Identity Register, Certificates of Residence and Authorized Signatory Lists of the founding members of the company (if any, also those of managers appointed or proxies) 2 copies Declaration of Establishment Forms (3 copies) A petition on main area of operation Documents and forms required are available for download at www. gumruk. gov. tr
INVESTING IN TURKEY Why Invest In Turkey is a country offering significant opportunities foreign investors with its geographically perfect position to function as a gateway between Europe, Middle East and Central Asia. The opportunities exist not only in the dynamic domestic market, but also throughout the region. Hospitality and tolerance being the traditional cornerstones of the Turkish way of life, the country is open to foreign investors with many attractions to offer. Successful Economy • Booming economy (USD 230 billion to USD 736 billion of GDP from 2002 to 2010) • Sustainable economic growth (4. 8 percent annual average real GDP increase for the last 8 years) • Promising economy with a bright future as it is expected to be the fastest growing economy among the OECD members during 2011‐ 2017 with an annual average real GDP growth rate of 6. 7 percent • 16 th largest economy in the world and 6 th largest economy compared with EU in 2010 • Institutionalized economy fueled by over USD 94 billion of FDI in the last 8 years and ranked as the 15 th most attractive FDI destination for 2008‐ 2010 (UNCTAD)
INVESTING IN TURKEY The Investment Incentive System in Turkey The investment incentive scheme is continuously being amended to encourage investments in manufacturing and services, the energy sector and exports. Local and foreign investors have equal access to: the general investment incentive regime; incentives for large‐scale; investments; region and sector‐based incentives; R&D support; support for SMEs; industrial Thesis (SANTEZ) program ; loans for technology development projects; training support; state aid for exports.
INVESTING IN TURKEY A. General investment incentive regime The general investment incentive regime is mainly a tax benefit program, in some cases with credit possibilities. The implementation of the Turkish incentive regime varies depending on the location, scale and subject of investments. The major incentive instruments are: 1) Exemption from customs duties: Customs tax exemption for imported machinery and equipment for projects with an incentive certificate 2) VAT exemption: VAT exemption for locally purchased or imported machinery and equipment for projects with an incentive certificate B. Incentives for large-scale investments Corporate tax rates between 2‐ 10 percent for investments started before 31. 12. 2011 Social security premium contribution for employers for up to 7 years for investments started before 31. 12. 2011 C. Region and sector-based incentives Corporate tax rates between 2‐ 10 percent for investments started before 31. 12. 2011 Social security premium contribution for employers paid for up to 7 years for investments started before 31. 12. 2011
INVESTING IN TURKEY R&D support The R&D Law provides special incentives for R&D investment projects in Turkey if a minimum of 50 personnel are employed in an R&D center. The incentives within the new law will remain in effect until 2024 and include: 100 percent deduction of R&D expenditure from the tax base if the number of researchers exceeds 500, then in addition to the 100 percent deduction, half of the R&D expenditure increase incurred in the operational year compared to the previous year will also be deducted. Income withholding tax exemption for employees (this item will be effective until December 31, 2023. ) 50 percent of social security premium exemption for employers for a period of 5 years Stamp duty exemption for applicable documents Techno‐initiative capital for new scientists up to TRY 100, 000 Deduction from the tax base of certain funds granted by public bodies and international organizations
INVESTING IN TURKEY Support for Technology Development Zones • The advantages in Technology Development Zones are: Offices ready to rent, and infrastructure facilities provided. Profits derived from software development and R&D activities are exempt from income and corporate taxes until 31. 12. 2023. Deliveries of application software produced exclusively in TDZs are exempt from VAT until 31. 12. 2023. Wages of researchers along with software and R&D personnel employed in the zone are exempt from personal income tax until 31. 12. 2023. 50 percent of the employer’s share of the social security premium will be paid by the government for 5 years until 31. 12. 2024.
INVESTING IN TURKEY TUBITAK (Scientific and Technological Research Council of Turkey) and TTGV (Turkish Technology Development Foundation) both compensate or grant R&D related expenses and capital loans for R&D projects. • Projects eligible for TUBITAK incentives: Concept development Technological research & technical feasibility research Laboratory studies in the translation of a concept into a design Design and sketching studies Prototype production Construction of pilot facilities Test production Patent and license studies • Activities concerning the removal of post‐sale problems arising from product design
INVESTING IN TURKEY Support for SMEs Incentives granted to SMEs include: Exemption from customs duties VAT exemption for imported and domestically purchased machinery and equipment Credit allocation from the budget Credit guarantee support In order to meet financial needs of SMEs, a TRY 1 billion fund was transferred to the Credit Guarantee Fund (KGF) by the Treasury to create credit capacity worth TRY 10 billion. The guarantee limit is TRY 1, 000 per SME and TRY 1, 500, 000 for the risk group that the SME related to. KGF covers up to 80 percent of the loan. KOSGEB support to SMEs (www. kosgeb. gov. tr) • The Small and Medium Sized Industry Development Organization (KOSGEB) makes significant contributions to strengthening SMEs by various support instruments in financing, R&D, common facilities, market research, investment site, marketing, export and training.
EXPORT AND IMPORT ACTIVITIES Foreign trade The Turkish economy has shown remarkable performance with its steady growth over the last eight years. Significant improvements in such a short period of time have registered Turkey on the world economic scale as an exceptional emerging economy, the 16 th largest economy in the world and the 6 th largest economy when compared with the EU countries, according to GDP figures (at PPP) in 2010. Prior to the recent global recession which hit all economies throughout the world, the Turkish economy sustained strong economic growth for 27 quarters consecutively, making it one of the fastest growing economies in Europe. In 2008, Turkey’s exports and imports reached an all‐time high; exports increased by 23 percent, reaching USD 132 billion, while imports rose by 19 percent, hitting USD 202 billion. In 2009, the year of the global financial crisis, Turkey managed to secure USD 102 billion of exports and USD 141 billion of imports. In 2010 exports grew by 12 percent to reach USD 114 billion.
EXPORT AND IMPORT ACTIVITIES Foreign Trade Statistics USD million 2003 2004 2005 2006 2007 2008 2009 2010 Exports (FOB) 47, 253 63, 167 73, 476 85, 535 107, 272 132, 002 102, 143 113, 930 Imports (CIF) 69, 340 97, 540 116, 774 139, 576 170, 063 201, 961 140, 929 185, 493 Foreign Volume Trade 116, 593 160, 707 190, 251 225, 111 277, 334 333, 963 243, 072 299, 423 Foreign Balance Trade ‐ 22, 087 ‐ 34, 373 ‐ 43, 298 ‐ 54, 041 ‐ 62, 791 ‐ 69, 959 ‐ 38, 786 ‐ 71, 563 68. 1 64. 8 62. 9 61. 3 63. 1 65. 4 72. 5 61 Exports / GDP (%) 15. 5 16. 2 15. 3 16. 2 16. 5 17. 8 16. 5 NA Imports / GDP (%) 22. 7 25. 0 24. 3 26. 5 26. 2 27. 2 22. 8 NA Exports Imports (%) / Source: Central Bank of the Republic of Turkey
EXPORT AND IMPORT ACTIVITIES Exports by Economic Activity: USD million 2003 2004 2005 2006 2007 2008 2009 2010 Agriculture and Forestry 2, 121 2, 542 3, 329 3, 481 3, 725 3, 937 4, 347 4, 941 Fisheries 81 103 140 131 158 240 189 156 Mining and Quarrying 469 649 810 1, 146 1, 661 2, 155 1, 683 2, 677 Manufacturing 44, 378 59, 579 68, 813 80, 246 101, 082 125, 188 95, 449 105, 518 Other 204 294 384 531 646 507 474 63 Total 47, 253 63, 167 73, 476 85, 535 107, 272 132, 027 102, 142 113, 929 Source: Turkish Statistical Institute (Turk. Stat)
SOURCES OF FINANCING BUSINESS ACTIVITIES General considerations, types of sources Turkey provides various incentives and grants to the investors for the purpose of facilitating larger investments and capital contributions by the local and foreign investors and eliminating the regional imbalances. Public sources – EU, international, national EU FUNDS ‐ From 2007 onwards, EU is channelling its pre‐accession funding through one single instrument called the Instrument for Pre‐Accession Assistance (IPA). This new instrument is drawn from the European Commission’s experience with previous enlargements and the needs of candidate and potential candidate countries. IPA’s aim is to be a bridge between external assistance and internal policies. IPA objectives are the following: Support Turkey in its bid for membership, including the necessary economic, political and social reforms Help prepare the country for the management of structural funds
SOURCES OF FINANCING BUSINESS ACTIVITIES GRANTS • KOSGEB (Small and Medium Enterprises Development Organization) ‐ www. kosgeb. gov. tr – Entrepreneur Support Programme – Objectives: – SME Project Support Program – R&D, Innovation and Industrial Application Support Program • • • TKDK (Agriculture and Rural Development Support Institution) ‐ www. tkdk. gov. tr Regional Development Agencies (RDA) Turkish Technology Development Foundation (TTGV) – www. ttgv. org. tr • Technology and innovation funding programmes directorate (TEYDEB) • Industrial Thesis (San‐Tez) Program http: //sagm. sanayi. gov. tr
SOURCES OF FINANCING BUSINESS ACTIVITIES • EU Programs • Research and Innovation – – • European Union Framework Programme FP 7 http: //www. fp 7. org. tr/ Eureka Programme http: //www. eureka. org. tr/ Human resources development – ISKUR Skills 10 support Programme http: //bbs. beceri. org. tr/BBS/kurs. do – Life‐Long Learning Programme
ENTREPRENEURIAL CULTURE General considerations Turkey offers quite a sophisticated platform for entrepreneurs. It has a diversified industrial base, a relatively stable political and economic environment, a critical mass of willing early adopters, a considerable talent pool, a strong domestic market and underserved neighbouring markets. Yet, currently only 6 out of 100 people are entrepreneurs – a very low rate given the country’s level of development. Turkey has a lot of work to do to truly tap its entrepreneurial potential and reap the rewards of its investment in R&D (according to the Legatum Prosperity report, Turkish investment in R&D ranks in the top 30 worldwide). The good news is that there is recognition within the government about the urgent need to remove barriers and create incentives. There is a tidal wave of 12 million youth aged 15‐ 24 about to enter the labour market and significant lay‐offs during the economic crisis have spurred new interest in entrepreneurial activity.
LOCAL RESOURCES FOR CROSS BORDER BUSSINESS COOPERATION Infrastructure The Turkish infrastructure sector attracts more and more investors every day, focusing on long‐term business opportunities. The national and local authorities in Turkey have been implementing numerous infrastructure projects through Public and Private Partnership (PPP) and they are also keen to realize further infrastructure projects in education, energy, defense, health, transportation and other public services.
LOCAL RESOURCES FOR CROSS BORDER BUSSINESS COOPERATION The Information and communication Technologies (ICT) The Information and communication technologies (ICT) sector has become an essential part of the economy, in particular social life, since it is directly or indirectly affecting the ever‐changing business world. Turkey has increased its interest in the ICT sector further, and started the necessary studies so as to have a voice in the sector in the future. The greatest indicators of these efforts are the new initiatives and R&D Law issued for the investors.
LOCAL RESOURCES FOR CROSS BORDER BUSSINESS COOPERATION Environmental Technologies Investments in environmental technologies are highly supported by government in Turkey. Attracting environmentally friendly investments is also a key objective of the Investment Support and Promotion Agency of Turkey’s primary energy sources include hydropower, geothermal, wood, animal and plant waste, solar and wind energy. The Renewable Energy Law was enacted in 2005 in order to encourage renewable energy generation in competitive market conditions. Support Centers The fact that companies have started to give importance to customer relations, that retail channels in the market have increased, that the personal banking is developing and that new technologies are being integrated into business processes have, together, led to the development of the call center sector. Within this framework, the number of personnel working in call centers has significantly increased, and the customer relations field has become more professional, with the result that companies are focusing on their primary line of business by outsourcing their customer relations management activities.
LOCAL RESOURCES FOR CROSS BORDER BUSSINESS COOPERATION Energy Turkey has become one of the fastest growing energy markets in the world in parallel to its economic growth registered in the last eight years and is rapidly gaining a competitive structure. The Turkish Electricity Transmission Company estimates that Turkey’s demand for electricity will increase at an annual rate of six percent between 2009 and 2023. Financial Services Turkey’s financial sector is still in the development stage, with financial services ready for further expansion, driven by solid economic growth along with declining interest rates and inflation. According to the Turkish Banking Regulation and Supervision Agency (BRSA), the Turkish financial sector increased by approximately 20 percent of CAGR between 2002 and 2010.
LOCAL RESOURCES FOR CROSS BORDER BUSSINESS COOPERATION Real Estate The Turkish real estate sector, offering ever‐greater opportunities for investors every year, has come to prominence especially in the last decade. While the reduction in demand a downward trend in house prices have been observed all over Europe, according to Turk. Stat statistics the number of apartment units sold in Turkey in the second quarter of 2011 increased by 18 percent compared with the same period of 2010, which shows that the country has huge growth potential in the real estate sector. Machinery The machine manufacturing industry holds strategic significance in the development process of countries creating a multiplier effect in economic development by defining the manufacturing skills of other sectors through investment, intermediate goods and the services it offers. The growth of the Turkish machinery sector is backed by highly competitive and adaptable small and medium‐sized businesses (SMEs), which form the bulk of the industrial production in the country.
LOCAL RESOURCES FOR CROSS BORDER BUSSINESS COOPERATION Healthcare The healthcare system in Turkey has entered a long period of development under the 2003‐ 2013 Health Transformation Program. The purpose of the program is to increase the quality and efficiency of the healthcare system and enhance access to healthcare facilities. Transportation and Logistics Turkey lies between Europe and Asia serving as a bridge geographically, culturally and economically. In Turkey, investments in the transportation system are concentrated on land transportation infrastructure, and the country has developed one of the largest land transportation fleets in Europe. The network of highways has been developed significantly and the highway length now stands at 64, 865 km, of which 2, 080 km are motorways. At present 95 percent of passengers and 90 percent of goods are conveyed by highway transport. Turkey has a competitive advantage in maritime transport since it is surrounded by seas on three sides with the Mediterranean, the Aegean, and the Black Sea, together with the straits of the Dardanelles and the Bosphorus. The length of Turkey’s coastal borders is 8, 333 km.
LOCAL RESOURCES FOR CROSS BORDER BUSSINESS COOPERATION Food and Beverage Turkey’s food industry has registered a steady growth in recent years, with the Turkish consumers becoming increasingly demanding, driven by the multitude of choices offered by mass grocery retail outlets. Rising disposable income and changing consumption patterns, along with the increase in the number of females in full‐time employment, have all led to an increase in interest as regards packaged and processed food, such as ready‐to‐eat meals and frozen food. As the sector is getting more sophisticated, Turkey is becoming one of the largest markets for baked goods with its bread ‐ an important element of the Turkish diet ‐ leading to some of the highest rates of per capita consumption in the world.
LOCAL RESOURCES FOR CROSS BORDER BUSSINESS COOPERATION Agriculture With its favorable geographical conditions and climate, Turkey is considered to be one of the leading countries in the world in the field of agriculture and related industries. This impressive position is best attested by rising exports in almost every kind of agricultural products, placing the country amongst the world’s largest producers. The restructuring efforts that began in the early 1980 s, alongside a series of reforms such as privatizations and the reduction of trade barriers in the agriculture sector, resulted in a domestic market that is an integral part of the world economy today. Subsequently, agricultural exports, excluding processed food, increased to USD 5 billion in 2010, up from USD 1. 7 billion in 2002.
LOCAL RESOURCES FOR CROSS BORDER BUSSINESS COOPERATION Tourism As a country full of traces of various cultures that have influenced their time and geography, Turkey has a cultural heritage with roots going as deep as the first civilizations ever recorded in history. Home to a mosaic of people that have built empires, the country’s riches are so extraordinarily diverse that visitors can experience a modern way of life, while at the same time catching a glimpse of the distant past.
LOCAL RESOURCES FOR CROSS BORDER BUSSINESS COOPERATION FOREIGN TRADE BY INTERNATIONAL INDUSTRY STANDARD CLASSIFICATION Million Dolar Export Agriculture and Forestry Fishing Mining and Quarrying Manufacturing Industry Others TOTAL YEAR 2008 3. 937 240 2. 155 125. 188 507 132. 027 2009 4. 347 189 1. 683 95. 449 474 102. 143 2010 4. 935 156 2. 687 105. 467 639 113. 883 2011 5. 169 186 2. 806 126. 025 786 134. 972 Million Dolar Import Agriculture and Forestry Fishing Mining and Quarrying Manufacturing Industry Others TOTAL Source: Ministry of Economy YEAR 2008 2009 6. 392 41 35. 650 150. 252 9. 628 201. 964 4. 594 31 20. 625 111. 031 4. 648 140. 928 2010 6. 457 33 25. 933 145. 367 7. 755 185. 544 2011 8. 895 49 37. 331 183. 923 10. 636 240. 834
Thank You For Your Attention Özgür OPSAR Zonguldak Chamber of Commerce & Industry E-mail: bilgi@ztso. org. tr
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