Doing Business in Türkiye in its ninth edition
Latest insights providing a comprehensive understanding of the Turkish business environment.
Norton Rose Fulbright and Pekin Bayar Mizrahi are pleased to announce the 2024 update of the Doing Business in Türkiye legal guide.
Beyond outlining the general legal framework in Türkiye, the legal guide aims to help businesses understand the Turkish market. It covers crucial regulatory aspects of key sectors and provides essential information about the prevailing investment climate in the country.
Ranked as the ninteenth largest economy globally, Türkiye boasts a free-market economic structure characterized by a blend of modern industry, a dynamic services sector and traditional agriculture. Widely recognized for its expansive, skilled and cost-effective workforce, Türkiye holds the sixth position globally and the third among European countries in the OECD's assessment of labor pool size.
Robust manufacturing in Türkiye is propelled by key sectors like automotive, textile, and consumer goods. The services industry, led by financial services, digital payments, telecommunications, tourism and healthcare, contributes significantly to the economy. Türkiye's consistently expanding economy fuels a rising demand for energy, stimulating recent growth in domestic renewable energy investments.
Key updates in the 2024 edition
This edition includes FinTech as a new sector highlight, in addition to energy, mining, infrastructure, privatization and healthcare.
Doing Business in Türkiye offers updated chapters on corporate environment, protection of foreign investments, property rights, banking and finance, capital markets, labor law, competition law, anti-corruption, environmental law and environmental, social and governance (ESG) featuring developments in renewable energy and green finance.
Since the last edition of this guide, a number of new regulations have been introduced addressing environmental concerns, such as the new Control of Waste Electrical and Electronic Equipment Law and also the second Draft Climate Law has been made public. Following the developments in the EU in terms of the net zero emission target of the Green Deal, Türkiye is preparing to adopt its own carbon pricing mechanism and enact legislation to fight against climate change through a climate law.
Other changes include; increases in certain tax rates, data protection penalty limits and some of the monetary limits under the Regulation on Measures Regarding Prevention of Money Laundering. A new necessity for approval by the Turkish Competition Board in technology acquisitions and other changes are also included in this new edition, which are crucial while making business decisions going forward.
Reflections on 2023 and prospects for Türkiye's path ahead in 2024
2023 has been a significant year as it marked the 100th anniversary of the Republic of Türkiye. As this milestone indicated a century since the establishment of the modern Turkish state, it turned the year into a momentous occasion for celebrations, with various commemorative activities across the country. In an effort to chart economic pathways, Türkiye began its Medium-Term Economic Program, a comprehensive plan set to span until 2026. Challenges that the country had to grapple with in the economy necessitated more strategic measures to be taken to overcome high inflation, devaluation of the Turkish lira and other causes of volatility. Nevertheless, amid economic fluctuations, Türkiye continued to attract foreign direct investment, especially in renewable energy, technology, FinTech and healthcare, with expected increase in M&A developments in energy, technology and logistics in 2024.
The following trends are expected to continue shaping the Turkish business ecosystem in 2024:
Developments in FinTech
Türkiye has positioned itself as a dynamic hub for fintech innovation, undergoing a noteworthy transformation in its financial landscape in recent years. Driven by technological advancements, evolving consumer preferences and proactive regulatory initiatives, the fintech sector in Türkiye, especially in payment services, e-money and digital banking, has experienced substantial growth. Despite limited regulation, the crypto assets sector has also emerged as an emerging force, adding another dimension to the country's evolving fintech narrative.
Growth in Banking
Banking sector in Türkiye is growing in turnover as well as profitability, but the banks need to deal with a wide range of developments such as IBOR transition, net zero targets and ESG considerations that require special expertise. An increased number of Turkish banks are also securing sustainability loans to extend to Turkish businesses.
Public offerings
There is expectation that the IPO activity in Türkiye will continue. Some of this activity is related to growth in retail and manufacturing while others are related to meeting longer term capital needs.
Mining
Türkiye benefits from a highly varied geology: it holds 2.2 percent of the world’s industrial mineral resources and produces approximately sixty different metals and minerals that are commercially viable for exploitation. Healthy commodity prices and changes in the Turkish investment regime, together with a series of amendments to the mining legislation have resulted in an increase in mining and mineral exploration activity in the country with a particular emphasis on copper, gold, manganese and chrome ore.
Regulations and procedures were streamlined and laws governing the economics of mining joint ventures with foreigners were improved. These more favorable laws created an attractive atmosphere for foreign investors.
Energy Transition
Parallel to the developments in the world, energy transition is becoming more important in Türkiye every day. In addition to increasing the total installed capacity of renewable energy plants, integrating new resources, such as green hydrogen, in the Turkish energy mix and promoting the rapid integration of new energy-efficient and greener technologies is a hot topic in Türkiye.
Environmental, Social and Governance
Turkish stakeholders continue to embrace the importance of ESG topics as a way to monitor and control their responsibility towards the domestic and global community. An understanding continues to strengthen of how long-term success, including financial performance, depends on the integration of sustainability and ESG matters into key business decision-making and operation processes. Sustainable finance products have become popular and an incremental growth in terms of deals is expected. In addition, EU’s “Carbon Border Adjustment Mechanism” creates adaptability necessities for Turkish companies doing business with European countries. There is also ongoing interest from foreign investors in key renewable energy assets in Türkiye to diversify their portfolios.
Changing Trends in Healthcare Services
In addition to further infrastructure investments and digitalization efforts on the public side, medical and health tourism is on the rise and new regulations target to set out international standards for foreign patients.
For more information, read the full legal guide, Doing Business in Türkiye.
