Turkey

Originally published: May-10-2011

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Official Name: Republic of Turkey

Internet Domain: .tr
International Dialing Code: +90

Table of Contents

Location and Size 

Turkey is located in Southeastern Europe and Southwestern Asia. It borders the Black Sea, between Bulgaria and Georgia, and the Aegean and the Mediterranean Seas, between Greece and Syria. Its total area is 783,562 sq km, which is slightly larger than Texas.Turkey is a secular state often viewed as a bridge between East and West.

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Government

Turkey’s government is a republican parliamentary democracy with 81 provinces.

Executive branch:

• Chief of State: President Abdullah GUL
• Head of government: Prime Minister Recep Tayyip ERDOGAN
• Cabinet: Council of Ministers appointed by the president; nominated by the prime minister

Legislative branch:

• Unicameral Grand National Assembly of Turkey (550 seats; members elected by popular vote to serve four-year terms)

Judicial branch:

• Constitutional Court
• High Court of Appeals
• Council of State
• Court of Accounts
• Military High Court of Appeals
• Military High Administrative Court

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Legal System

Turkey has a civil law system derived from various European continental legal systems. It has not accepted compulsory International Court of Justice (ICJ) jurisdiction. (What does this mean?)

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Interesting Facts About Turkey

• Turkey is one of the ten most visited countries in the world.
• Istanbul is the only city in the world located on two continents.
• The oldest known human settlement is in Catalhoyuk, Turkey (7500 BC).
• Turks introduced coffee to Europe and gave the Dutch tulips.
• St. Nicholas, who became popular as Father Christmas, was born in Demre on Turkey's Mediterranean Coast.
• The last meal on Noah's Ark, a pudding with nearly 20 ingredients, is still served throughout Turkey.
• The famous Grand Bazaar, a 540-year-old covered shopping mall of 64 streets, 4000 shops, 22 entrances and 25,000 workers, is located in Istanbul.
• More interesting facts

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Economy

Turkey's economy is increasingly driven by its industry and service sectors, although its traditional agriculture sector still accounts for about 30% of employment.

The financial crisis did have an effect on the growth of the Turkish economy; however, Turkey recovered relatively quickly and grew 3.5% in 2010. The Turkish government foresees a growth rate of 4.3% in 2011. Due to its high dependence on exports and foreign investment, however, the economy remains vulnerable.

Leading Markets (2009): Germany 9.6%, France 6.1%, UK 5.8%, Italy 5.8%, Iraq 5%

Leading Exports-commodities: apparel, foodstuffs, textiles, metal manufactures, transport equipment

Leading Suppliers (2009): Russia 14%, Germany 10%, China 9%, US 6.1%, Italy 5.4%, France 5%

Leading Imports-commodities: machinery, chemicals, semi-finished goods, fuels, transport equipment

Top Industries: textiles, food processing, autos, electronics, mining (coal, chromate, copper, boron), steel, petroleum, construction, lumber, paper

Top Agricultural Products: tobacco, cotton, grain, olives, sugar beets, hazelnuts, pulse, citrus; livestock

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Comparative Economic Indicators – 2010 est.

Economic Data from CIA World Factbook

* July, 2011 estimates
** PPP - Purchasing Power Parity
*** 2010 Corruptions Index: 10=Very Clean; 0=Highly Corrupt
**** 2011 Index of Economic Freedom: 100-80=Free; 49.9-0=Repressed

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Credit and Collections

ABC-Amega’s collection experience in Turkey

Our Turkish legal partner, Zeynep Kanra of TBS Turam & Dönmez, was kind enough to provide an article on collections and the commercial environment in Turkey. Please read “Debt Collection in Turkey” for further information.

Dispute Resolution

Turkey's legal system includes provisions for enforcing property and contractual rights. However, the court system is overloaded, which results in slow decisions. Under certain circumstances, judgments of foreign courts need to be accepted by local courts before they are enforced. Monetary judgments are usually made in the local currency, but there are provisions for incorporating exchange rate differentials in claims.

Turkey is a member of the International Center for the Settlement of Investment Disputes (ICSID), and is a signatory of the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.

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Risk Assessment

Coface Country Rating: A4 – average risk
Coface Business Climate Rating: A4 – average risk

Payments behaviour is expected to remain satisfactory in 2011. Some sectors may, however, suffer from the exchange-rate volatility, including not only automotives, construction, and related sectors (plastics, cement, electric equipment) but also retail, paper, chemicals, and textile/clothing.

Ducroire/Delcredere Political Risk Rating: 3 – relatively low risk (1 lowest risk; 7 highest risk)
Ducroire/Delcredere Commercial Risk Rating: 3 – high risk (A low risk; B moderate risk; C high risk)

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Business Climate

The Turkish business environment has gradually become more streamlined and efficient. The country has a strong and rapidly growing private sector. Still, the state remains dominant in basic industry, banking, transport, and communication.

Further economic and judicial reforms and prospective EU membership are expected to boost Turkey's attractiveness to foreign investors. However, Turkey's relatively high current account deficit, uncertainty related to policy-making, and fiscal imbalances leave the economy vulnerable to destabilizing shifts in investor confidence.

Economic Freedom: Turkey’s economic freedom score is 64.2, making its economy the 67th freest in the 2011 Index of Economic Freedom. Turkey is ranked 30th out of 43 countries in the European region, and its overall score is higher than the world average.

Conversion and Transfer Policies: Turkish law guarantees the free transfer of profits, fees, and royalties, and repatriation of capital.

Regulatory System: The government of Turkey has adopted policies and laws that should foster competition and transparency. However, foreign companies in several sectors claim that regulations are sometimes applied in a non-transparent manner.

Intellectual Property Rights: The intellectual property rights regime has improved, but protection of confidential pharmaceutical test data is insufficient. Piracy and counterfeiting of copyrighted and trademarked materials remain high. Turkey was upgraded to the U.S. Special 301 Watch List from the Priority Watch List in 2008 in recognition of its efforts to improve its IPR regime and remains on the Watch List in 2011.

Corruption: Foreign investors and companies continue to cite corruption as one of the major impediments for business growth in Turkey. Despite many positive developments, corruption in Turkey remains rampant and enforcement of anti-corruption policies remains weak, as suggested by several sources. Turkey ranks 56th out of 178 countries in terms of corruption perception according to Transparency International’s 2010 Corruption Perceptions Index. The country’s actual score was 4.4 which puts it just below the midway mark between Very Clean (10) and Highly Corrupt (0).

Political Violence: The potential remains throughout Turkey for violence and terrorist actions against U.S. citizens and interests, both by transnational and indigenous terrorist organizations. The Bureau of Consular Affairs of the U.S. Department of State, has issued a World Wide Travel Alert which states in part: “Given the uncertainty and volatility of the current situation, U.S. citizens in areas where recent events could cause anti-American violence are strongly urged to limit their travel outside of their homes and hotels and avoid mass gatherings and demonstrations. U.S. citizens should stay current with media coverage of local events and be aware of their surroundings at all times. This Travel Alert expires August 1, 2011.”

For more detailed information on these topics, visit the 2010 Investment Climate Statement – Turkey, of the U.S. Department of State.

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Business Protocol in Turkey

Turks prefer to do business with those they know and respect, therefore foreign business people should spend time establishing a personal relationship. Discussions may start slowly, with many questions that may seem irrelevant to the purpose of your visit. It is extremely rude to insist that your colleagues get to the point. Once a relationship has been established, however, communication will be direct.

Business dress is conservative. You will be expected to wear a suit and tie. Similarly, women should wear smart professional outfits. In the summer, and especially in the cities of Istanbul, Izmir and Ankara, the weather is very hot and humid. At that time, it is acceptable for men to wear a shirt with trousers and no tie.

Although Turks do not practice time keeping and punctuality perfectly, they will expect you to do so.

When addressing a Turk, the most common method is to call a man by his first name followed by 'bey' [pronounced bay]. So, Ertan Gonca would be Ertan Bey. Similarly, a woman's first name would be followed by 'hanim' [pronounced ha-num]. Where professional titles exist, such as Doctor or Professor, always use them either on their own or before the first name.

More information on Business Protocol:

• Kwintessential
• Executive Planet

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Sources for further information on doing business in Turkey

American Turkish Council

Embassy of the United States in Ankara, Turkey

Turkish American Association for Business

Turkish American Business Connection Association

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This information is provided by ABC-Amega Inc. Providing international receivable management and debt collection services for exporters to more than 200 countries including Turkey. For further information, contact info@abc-amega.com.

This report represents a compilation of information from a wide variety of reputable sources.

Comparative Economic Indicators: CIA World Factbook

Risk Assessment information: Coface Country Rating and Ducroire/Delcredere.

Exchange Rates: OANDA.com The Currency Site.

Other information is provided by sites including FITA.