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Review of the Investment Climate and Market Structure in the Energy Sector of Turkey

Published in 2007


Foreign direct investment is playing a major role in Turkey's economic development and prosperity, and - as highlighted in this report from the Energy  Charter - the Turkish authorities have taken major steps in recent years to create a favourable and non-discriminatory investment climate.

Alongside a new Law on Foreign Direct Investment, the Government of Turkey has established a Coordination Committee for the Improvement of the Investment Climate to help remove remaining administrative obstacles to investment, and set up a well-funded Investment Promotion Agency.

Many recent legislative changes seek to harmonise Turkish legislation with European Union law in view of Turkey's future accession. In some instances, Turkish legislation already exceeds the minimum requirements of the acquis. A snapshot of reforms within the framework of recent efforts to improve the investment climate would include the following:

  • Tax policy reforms were introduced aimed at creating a simpler and more stable tax regime, more consistent with the European Union norms;
  • Corporate governance of companies in Turkey was strengthened, to increase their global competitiveness and enable linkages between local and foreign firms;
  • Continuous reduction of administrative and bureaucratic barriers to investment, including streamlining work permit procedures;
  • Increased efficiency and accelerated pace of court procedures;
  • Reform of the social security system was accelerated;
  • Intellectual property rights were protected more effectively.

However, all investors - regardless of nationality - still face a number of challenges, including excessive bureaucracy, weaknesses in the judicial system, regulatory risk. Historically, investment has also been discouraged by high inflation and political and macroeconomic uncertainties.

The material for this review was prepared by the Energy Charter Secretariat in cooperation with the Turkish authorities. The examiners in the peer review, conducted by the Energy Charter's Investment Group, were representatives of the Netherlands and the Russian Federation. Policy conclusions were adopted by the Energy Charter Conference.

The Review of the Investment Climate and Market Structure in the Energy Sector of Turkey is available in English and Russian.