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Advertisers Ceylan Inter-Continental Istanbul ITKIB - Istanbul Textile and apparel Exporters Associations Organik Holding Group of Companies
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A better environment for foreign investors
Situated at the crossroads where two continents meet, Turkey is ideal for investors looking for a location in the heart of Euro-Asia: The country has a dynamic and growing economy, a large domestic market and a competitive and skilled labor force. Of particular interest to venture capitalists are Turkey’s foreign investment laws, which are considered among the most liberal in the world. The guiding principle of these laws is “national treatment,” wherein foreign companies are subject to the same legislation, rights and obligations as local companies. However, until recently a major impediment remained: limits imposed on foreign investors seeking arbitration. Earlier this year, the Turkish government finally removed this last hindrance to attracting foreign investment when it adopted a constitutional amendment allowing international arbitration. During the early 1980’s, the Turkish government recognized that private capital was essential to meet rapidly growing investment needs in all its infrastructure sectors. Infrastructure development efforts particularly targeted for foreign venture capital were so-called “build-operate-transfer” (BOT) projects. But BOT-type projects were surrounded by legal uncertainty, particularly for foreigners, and failed to attract much interest. Prior to this year’s passage of new arbitration laws, all concession arrangements for public services fell under the responsibility of the Supreme Administrative Council (the Dani¾tay), which retained the right to review any such contracts, approve them, supervise them for the duration of the concession, and modify and control them without any possibility of arbitration. In short, the Council had total control over the disposition of the contract and how it was implemented. Early efforts to reform how concessions were contracted were aimed a shifting financial risk from the Government to the private sector. But the legal challenges resulting from these moves stalled dozens of potential BOT projects, and imposed costly delays on projects already underway. New arbitration laws limit the role of the administrative court. Their involvement is now consultative, and the court is now obliged to render decisions within two months. Now, with this final roadblock removed, reassured foreign investors are showing significant interest in working in Turkey, particularly in the energy and telecommunications sectors. |
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Table of Contents A better environment for foreign investors
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