Investment Opportunities at
the Crossroads of Europe and Asia

The east-west expansion of the world's geopolitical horizons has ushered in a new era for Turkey - with many promising opportunities for investors.

Izmir Sewerage ProjectBuild-Operate-Transfer (BOT's) New Economic Development Program in Southeast Turkey Agribusiness Opportunities for Foreign Investors

Strategically located at the crossroads of Europe and Asia, Turkey offers an excellent basis for international business for three main reasons:

• Superb access to a wide diversity of markets ranging from Western Europe, the Middle East, and the Gulf to the Commonwealth of Independent States, the countries of Central and Eastern Europe, the Black Sea region, and the Turkic-speaking republics of Central Asia
• A convincing record of development as an emerging economy, set to become a model commercial and a financia center for the region.
• Demonstration of political stability backed by solid commitments to international cooperation and development.

The opportunities to invest in Turkey are particularly attractive in the framework of Turkey's ongoing privatization program. To promote strong, market-oriented development and safeguard Turkey's substantial economic gains, the government is speeding up the privatization of state-owned enterprises. This portfolio covers a range of product and service industries and includes some of the country's biggest businesses, e.g., the crude oil refining operations of TUPRAS (1993 Revenues: US$ 7.1 billion) and the airlines THY (1993 Revenues: US$ 0.9 billion).

To acquaint a wider audience with the many possibilities Turkey offers as a basis for business, it is important to understand why it makes sense to invest in Turkey currently, how the privatization program operates, investment opportunities that are available and how privatization is planned in the medium term.

The restructuring and the sale of Turkey's state-owned enterprises is currently being managed by the Privatization Administration (PA) under the supervision of the Privatization High Council (PHC), chaired by the Prime Minister. The PA actively encourages inquiries from individual investors or purc hasingroups interested in acquiring or expanding their stake in Turkey'developing economy.

For further information contact:

External Relations Department Head
Phone: 00-90-312-4411500
Fax: 00-90-312-440 3271

• Click here for information on Turkey's Foriegn Investment Legislation
   

  Agribusiness Opportunities for Foreign Investors

  By Hasim Ogut, Agricultural Counsellor, Turkish Embassy and Joe Lukitsch, Chairman, ATC Agribusiness Committee Agriculture in Turkey is as old as the history of the country itself and comprises a major sector of the Turkish economy. Because of diverse climatic conditions, Turkey is capable of growing most temperate and subtropical crop species, and Turkey is listed among the few countries of the world that are agriculturally self-sufficient. Turkey has important livestock and poultry production, ranking first in the Middle-East region; and, with temperate sea waters on three sides, fisheries are becoming an important subsector of the agricultural economy.
  The agricultural sect or remains a driving force in the Turkish economy. It employs nearly one-third of the population and generates nearly one-fifth of the gross domestic product (GDP). Of total exports, agricultural products account for over 15 percent and total 2.3 billion. Turkey has 24 million hectares of arable land under cultivation, of which one-sixth is now under irrigation. Upon completion of the Southeastern Anatolia Project (GAP), an additional 1.7 million hectares of land will be irrigated.
  Rising incomes, the growing Turkish population, and brand new awareness among Turkish consumers have created a rapidly growing demand for processed foods and high-value products. The private sector has responded to this growing demand and expanded its agribusiness activities. A favorable foreign investment climate coupled with recent government policies has provided further impetus to private sector investments such as, for example: the Sabanci Group, which has formed a joint venture with Kraft General Foods of Philip Morris; the Yasar Group, which is investing $20 million in the agroindustry; the Carre Four French Supermarket Group, which has recently entered the Turkish market; Unilever (Anglo-Dutch), which has announced plans to invest in automation, quality improvement and waste management; and the MacDonald's fast food restaurant chain, which reportedly has plans to expand its chain of restaurants in Turkey's largest cities.
  The share of agribusiness in total foreign capital investments in Turkey has increased from 10.6% to l9% during the past four years. This upward trend is expected to continue. However, while the Germans, Dutch, Danes and Italians are accessing the Turkish markets and establishing joint partnerships across the industry, U.S. agribusiness companies, for the most part, are under-represented in Turkey and the Black Sea and Central Asia region.
  In spite of Turkey's increases in agricultural production, the food processing, packaging, storage and distribution industries remain in a nascent state. There are good business opportunities for American, Turkish and other business interests in the agribusiness industries, as well as in the fields of water-saving irrigation technology in Turkey, the countries of the Black Sea region, and the Turkic Republics of Central Asia.
  Moreover, the political environment in the Central Asian Republics has attracted Turkish agribusiness and several Turkish companies have already entered into business in these new markets. ln the view of business experts, agribusiness opportunities for manufacturers and joint partners exist in the following sectors: irrigation equipment, fruit and vegetable processing equipment, cold storage and shipping, food packaging, textile milling, dairy and milk processing, meat and sausage processing, and plant protection.
  To address the needs of the Turkish and U.S. agribusiness interests the American Turkish Council (ATC) Agribusiness Sub-Committee was established. We believe that the agribusiness workshops conducted during the ATC Annual Conference and our Agribusiness Sub-Committee can play a prominent role in bringing together U.S. and Turkish agribusiness interests to promote and enhance further cooperation and facilitate the growth of exports and the agribusiness sector.

  Build-Operate-Transfer (BOT's)

  Immediate opportunities exist for U.S. businesses interested in the highly profitable Build-Operate-Transfer (BOT's) and other revenue-sharing projects. BOT is a method of using revenues to repay investment and operating costs. This method is currently being used to finance new power plant construction, airports, bridges, telecommunications services and other projects.

  New Economic Development Program In Southeast Turkey

  Turkey's ongoing struggle against separatist terrorism in the Southeastern provinces has been extensively documented. What is less well known to Western audiences, however, is that the Turkish Government, while determined to respond to armed attacks in the Southeast, is equally committed to addressing the area's underlying needs in order to bring peace and prosperity to the region. This summer, the Government unveiled a sweeping economic development program in the Southeast region that encompasses the following:

  The new initiative is a TLS.6 trillion ($186 million) economic aid and development program for ten southeastern provinces.

  The primary objective of the program is to stimulate a recovery in the region --where economic activity has been hard hit by terrorism and the 1990 closure of border trade with Iraq.

  One component of the project is an intensive agricultural project. In its initial phase, the project aims to improve agricultural systems by:

  Encouraging farmers to shift to more suitable crops (at this time, a switch from growing tobacco to growing sunflower seeds is being considered); and developing intensive farming schemes to bring water and infrastructure to the farmer, similar to those in Israel.

  A second component of the project is a timely housing project, introduced at the same time a state-owned agency for housing development introduced plans for a new housing initiative in the area. Plans for a mass housing project include:

  Construction of 2,200 homes in Diyarbakir and 450 in both Batman and Hakkari; land made available for housing by the Turkish Treasury; and

  A construction program (already in operation) to build new homes for villagers made homeless by PKK attacks.

  January 1995

  Foreign Investment Legislation

  Foreign investment in Turkey is within the scope of the authority of the Under secretariat for the Treasury and Foreign Trade, General Directorate of Foreign Investment (FID). All foreign investment applications pass through this governmental body and is subject to its approval. Any foreign investment coming into Turkey by means of a company formation, participation in an existing company, establishing a branch office of liaison office; granting licensing, know-how, technical assistance or royalty rights are all subject to the approval of the FID.
  The FID gives permission on condition that the business in which the investment will be made is useful for the economic development of the country, is in a field of activity open to Turkish private enterprise and does not entail any monopoly or any special concession.
  Once FID permission is granted and a foreign investor is active in Turkey in a company with foreign capital, as per the regulations, all rights, exemptions and privileges granted to local companies are available to foreign capital companies working in the same field in Turkey and the foreign shareholders may freely repatriate their profits, share transfer values and liquidation proceeds abroad. Except for, unlike in local companies, certain corporate actions of the foreign capital company such as capital increases, obtaining of medium and long term loans from abroad, share transfers from a local shareholder to a foreign shareholder and vice-versa, certain amendments to Articles of Association are all subject to the FID's approval. The obtaining of incentives are also subject to approvals in both local and foreign companies with the difference hat FID is responsible for reviewing applications made by foreign investment companies.
  The forms of foreign investment available in Turkey are limited liability companies (L.S.) or joint stock companies (A.S.) the latter being more commonly preferred by the foreign investors due to the fact that the provisions of the Turkish Commercial Law governing A.S. are more established and specific in comparison with those related to L.S. The minimum capital required per foreign shareholder in such companies is $50.000 US Dollars, however, the FID by exercising its discretion may grant conditional permissions and determine higher capital requirements based on a case-by-case analysis. It is also possible to establish a branch office of a foreign company the minimum capital allocation requirement of which is $50.000 US Dollars and a liaison office which does not have a minimum capital requirement. While A.S., L.S. and branch may all conduct commercial activities, the liaison office is not allowed to do so and may only engage in activities such as gathering information, conducting market research, taking orders and making travel arrangements.
  by Aleve Gurel TOPSAKEL
  Cerrahoglu Consulting Services Inc.