20 Jan

The global economic uncertainties surrounding the apprehensive expectations of Fed’s future monetary policies have already coalesced with the ongoing political crisis in Turkey. Some of the economic pundits have already aired their concerns about the future shape of the Turkish economy and the possible ill effects of this political crisis for the foreign investments to Turkey.

Strong Macro Economics

Even though the Turkish market responded, quite naturally, by a fall to this crisis the decline should be seen as a momentary reaction due to the solid foundations of the Turkish economy. An economy that has already implemented the structural macro economic reforms which were necessary to base the economy on solid foundations might experience some temporary problems but it is obvious that it will manage to bounce back. Such confidence to the Turkish economy stems from the numbers. Turkey has managed to sustain its economic throughout the course of the entire last decade. It has cut its inflation down to single digit numbers which currently stands around 7.7%, its budget deficit to GDP ratio is 2% which is below the criteria of 3% that has been set by the Maastricht Treaty for the EU member states, its debt to GDP ratio is 36.2% which is way below the 60% criteria which was set by the Maastricht Treaty for the member states of the EU and its GDP grew by 4.4% during the last quarter of the year 2013. A clear indication that Turkey had deduced important lessons from previous economic crisis is the level of Turkish Central Bank foreign reserves that stands around USD$ 130 billion as of January 2014. This is an important measure especially during the periods of exchange rate fluctuations.

Favorable Legal Framework

Apart from the strong macro economic foundations Turkey also provides legal guarantees for the foreign investors. The Foreign Direct Investments Law includes the article that assures the foreign investors that their investments will legally be held as equal with the investments of the Turkish nationals. Apart from the assurance for equal treatment the bureaucratic procedures have been reduced to minimum as well. By the latest reforms it is possible to establish a business in Turkey in mere 6 days. Moreover the most recent investment incentives scheme in Turkey provides certain benefits to the foreign investors to Turkey. The incentive scheme divides Turkey to six different regions and providing different kinds incentives for each region. The latest amendment introduced an additional advantage for the would be investors which will have the opportunity to benefit from the tax cuts and custom duty exemptions when the initial 10% of the total investment has been made by the foreign investor.

In addition to the legal framework that favors foreign investment Turkey also offers a well educated qualified labor force which stands as one of the most skilled in South Eastern European region. Its geographic location that locates Turkey in between Asia and Europe provides the investors great benefits especially in terms of the regional market access and cost effective solutions for the transportation needs.

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