Safak Herdem and Altug Atilkan on Turkey | Herdem and Co

Transcript

Having weathered the global financial crisis better than most, Turkey is now seen as a promising emerging market with large scope for investment. Safak Herdem and Altug Atilkan from Herdem and Co Attorneys at Law, an Istanbul-based corporate law firm which deals with multinational transactions, discuss the role Turkey plays in the global economy, its approach to foreign direct investment, and the country’s economic and political outlook.

World Finance: Safak, what role does Turkey play within the global economy?

Safak Herdem: I think Turkey put a new face on the attractiveness of investments. They changed the laws very quickly, and they are very well arranged for the economic infrastructure, both on the legal and operational side. There are many companies who are interested in Turkey just for the locations and using it as a hub, but nowadays, beyond the fact that it’s geographically a well located country, it’s much more important for them how they can develop their business to the regions. Turkey today is of value in the region, and it’s time to benefit, to penetrate the market as quickly as possible, as long as the sustainability continues.

Turkey has put a new face on the attractiveness of investments

World Finance: How does Herdem and Co fit into this?

Safak Herdem: We are actually a combination of business skills and legal practices. We are mostly a transactional law firm and focus on the sectors and industries that affect the economy in Turkey. Together with the financial aspect and the legal aspect, we advise the client on how to manage, how to structure, and how to exit their policies in their business.

World Finance: And how does Turkey approach foreign direct investment?

Safak Herdem: When you set up your company in Turkey, it’s a Turkish company and you can benefit from the incentives if the laws and all the infrastructure are ready, and you can join all the tenders, there is no legal obstacle to run your business as a foreign direct investor.

World Finance: Altug, a third of Turkey’s top 500 companies have already been approached by international investors. What makes Turkey such an attractive point?

Altug Atilkan: When you look at the last decade, the Turkish government have changed a lot of legislation and presented new incentives in the scope of foreign direct investments. As an example, since January 1 2012, the new foreign direct investment laws have been revealed, and after these regulations the ministry of the economy has separated foreign direct investments into four parts. In the scope of these parts, they are looking for the largest scale incentives, the strategic incentives, regional incentives and general incentives. Now the foreign investors are usually interested in the strategic and regional incentives, because when you look into the tax incentive benefits of Turkey, they can benefit from the custom due to tax exemptions, corporate tax reliefs, and also VAT exemptions. Another part I would like to emphasise is from 2013 the Turkish government will try to focus on angel investments in Turkey, and after February 2013 the Turkish government made a new regulation to encourage angel investments in Turkey. I predict that this will mainly provide and encourage the stocked up projects in Turkey and that new potential investment opportunities will arise after these regulations.

The Turkish government have changed a lot of legislation and presented new incentives in foreign direct investments

World Finance: Which sectors have the greatest opportunity for investors and why?

Altug Atilkan: When we analyse the Turkish economy in the last years, the Turkish government will mainly focus on some industries and sectors because they are looking for the near privatisation and liberalisation opportunities in this market. As an example, if you ask me the sectors, I would give you the energy infrastructure and the cost reduction industries. Energy is one of the most important issues in Turkey, because generally Turkey is an import-dependent country in terms of energy, and after that they have decided to change the policies and try to provide new opportunities for energy investors. They are mainly focusing on electricity, renewables, and oil and gas markets. Another circumstance about Turkey is the new stock exchange will be established next year, and after that investors will find some potential to get good pricing opportunities on the electricity market.

World Finance: And finally, there is an election looming in 2014. Tell me a bit more about how this will reflect on the stability?

Altug Atilkan: When you look into the 2014 election, I don’t predict any change in the scope of the government and I strongly believe that the political and economic stability will continue in Turkish markets.

Safak Herdem: Considering the way that investment grew up to it, because especially after 2002 the same one party government followed and the projects followed, and they dominated. Today the FDI in Turkey is about $12.5bn, but last week the Prime Minister announced that there are projects values at $250bn within 10 years, so this shows how the government stability is going to be vital to the market and how the government is eager for this. So this is quite important for the foreign investors.

World Finance: Safak, Altug, thank you very much.

Safak Herdem: Thank you.

Altug Atilkan: Thank you.