investment advisory council progress report - 2012

REPUBLIC OF TURKEY 

MINISTRY OF ECONOMY 

General Directorate of Incentive Implementation and Foreign Investment 

Inonu Bulvari No.36 06510 Emek, Ankara/TURKEY 

Tel: +90 312 204 73 12 

Fax: +90 312 212 89 16 

http://www.economy.gov.tr 

http://www.yoikk.gov.tr

INVESTMENT ADVISORY COUNCIL 

PROGRESS REPORT 

2012 

2012

Contents 

3 

Tables..............................................................................................................................5 

Figures............................................................................................................................6 

Abbrevations..................................................................................................................7 

Foreword .......................................................................................................................9 

Introduction ............................................................................................................... 11 

Executive Summary................................................................................................... 13 

I. Macroeconomic Stability 

A. Main Macroeconomic Indicators....................................................................... 21 

1. Growth............................................................................................................. 21 

2. Employment.................................................................................................... 22 

3. Monetary Policy and Inflation...................................................................... 23 

4. Exchange Markets.......................................................................................... 27 

B. Foreign Trade........................................................................................................ 30 

C. Investment............................................................................................................. 34 

1. Foreign Direct Investments and Current Account Balance.................... 34 

2. Investment Incentives.................................................................................... 36 

D. Restructuring of the Public Expenditures and Financial Consolidation..... 37 

E. Deepening Financial Market Development..................................................... 43 

II. Business Environment 

A. Maintaining the Fight Against Informal Economy........................................ 49 

B. Arranging the Legal Framework to Meet the Needs of 

the Business Life.................................................................................................. 52 

C. Increasing the Speed, Effectiveness, Consistency and Predictability of 

the Judiciary........................................................................................................... 55 

D. Developing theInfrastructure............................................................................. 59 

1. Liberalising the Energy Sector..................................................................... 59 

2. Developing the Transportation Infrastructure.......................................... 65 

E. Supporting SME’s................................................................................................ 72 

F. Improvement of the Customs Processes......................................................... 80 

G. Other Suggestions for Improving the Business Environment..................... 83 

1. Improving the Vocational Education System, Strengthening 

the Relationship between Education and Employment........................... 83 

2. Improving the Perception of Turkey.......................................................... 85 

3. Increasing the Efficiency and the Predictability of the Tax System...... 88 

4. Decreasing the Number of Procedures in Administrative 

Permits and Improving Public Administration Practices........................ 95 

5. Strengthening Sustainable Agriculture through Common 

Irrigation Systems................................................................................................ 99

4 

INVESTMENT ADVISORY COUNCIL PROGRESS REPORT 2012 

III. Activationg the Labor 

Market 

IV. Innovations 

A. Increasing the R&D Investments in Private Sector...................................... 107 

B. Developing the Dialogue between Industry and Universities..................... 119 

C. Strengthening the Innovation Centres and Technoparks............................ 121 

D. Improving Infrastructure in Information and 

Communication Technologies......................................................................... 123 

E. Improvement of Intellectual and Industrial Property Rights..................... 127 

Conclusion

Contents 

5 

Tables 

Table 1: Added Value Increase Rate and the Shares of Sectors in GDP........................... 22 

Table 2: Main Labor Force Indicators Adjusted Seasonally (2011)..................................... 23 

Table 3: Monetary Policy Committee Meetings in 2011 and 2012 and 

the Decisions Adopted on the Overnight Interest Rates....................................... 26 

Table 4: Decisions Regarding the Required Reserve Ratio for Turkish Lira (%).............. 27 

Table 5: The CBRT Foreign Currency Interventions and Auctions................................... 28 

Table 6: The Development of Foreign Trade by Years......................................................... 31 

Table 7: The Distribution of Export by Country Group..................................................... 32 

Table 8: Current Account Balance............................................................................................ 36 

Table 9: Public Debt Stock........................................................................................................ 37 

Table 10: Estimations for the 2012-2014 EU Defined General Government 

Gross Debt Stock (%)................................................................................................. 38 

Table 11: The Estimations and Accruals of 2011 Central Government Budget................ 38 

Table 12: 2012-2014 Estimations on Central Government Budget...................................... 39 

Table 13: Net Finance Provided by the International Monetary Fund................................. 40 

Table 14: Public Investments in Turkey (2002-2011)............................................................... 41 

Table 15: Sectoral Distribution of Fixed Capital Investments............................................... 42 

Table 16: Global Competitiveness Index – Subcomponent of the Financial Market 

Development................................................................................................................. 45 

Table 17: The Distribution of Licenses Issued in Natural Gas Market................................ 61 

Table 18: The Type and Number of Licenses Granted in 2011............................................ 63 

Table 19: Length of Divided Highways..................................................................................... 65 

Table 20: Projects planned to be carried out via BOT Model in 2011-2023....................... 66 

Table 21: Total Number of Airports Open to Civil Traffic.................................................... 70 

Table 22: Airway Passenger Traffic............................................................................................. 71 

Table 23: KOSGEB Supports Allocated for SMEs................................................................. 74 

Table 24: Credit Interest Supports.............................................................................................. 75 

Table 25: Credit Guarantee Provided by Both KGF and the Treasury ............................... 76 

Table 26: Global Media Campaign 2010-2011......................................................................... 86 

Table 27: The Tax Payments Made in Tax Administrations and Electronically 

(01.01.2011-12.31.2011).............................................................................................. 91 

Table 28: Double Taxation Prevention Agreements................................................................ 92 

Table 29: Amounts of Grants Provided to the Drip Irrigation and Irrigation by 

Sprinkling Water Projects in Scope of the Support to the Rural 

Development Investments Program.......................................................................100 

Table 30: The Credits Provided by Ziraat Bank and the Number of Beneficiaries..........101

6 


Table 31: The Position of Turkey in the Main Science, Technology and Innovation 

Indicators.....................................................................................................................110 

Table 32: The Amount of R&D Supports Provided under Various Tax Laws.................112 

Table 33: TUBITAK TEYDEB Supports...............................................................................114 

Table 34: Firms and Projects Supported by the TEYDEB Supports.................................115 

Table 35: Amounts of Funds Turkish Partners Receive in the EU 7th FP........................115 

Table 36: Supports Provided within the Scope of San-Tez Program.................................117 

Table 37: Innovation Supports Provided by KOSGEB........................................................117 

Table 38: Figures about TTGV Supports................................................................................118 

Table 39: The Number of Operators According to the Types of Authorization and 

Services........................................................................................................................124 

Table 40: Internet Subscribers According to the Connection Type and Increase Rates..125 

Table 41: Main Indications of the Information and Communication Technologies........126 

Table 42: PCT Applications.......................................................................................................128 

Figures 

Figure 1: Inflation Targets and Realizations (CPI)................................................................ 24 

Figure 2: Developments in Exchange Rates........................................................................... 27 

Figure 3: Foreign Direct Investments by Years...................................................................... 34 

Figure 4: Comparison of the Annual Total Stock Exchange Trade Volume in 

Developing Markets As of February 2012 (USD Million)................................. 44 

Figure 5: Bonds and Bills Operations– February 2012 (USD Million).............................. 44 

Figure 6: The ratio of Declarations Registered via EDI to Total Statements (Export).. 80 

Figure 7: The Ratio of Declarations Adopted Electronically (Export)............................. 81 

Figure 8: The Ratio of Declarations Adopted Electronically (Import)............................. 81 

Figure 9: Ratio of R&D Expenditures to GDP (%)...........................................................108 

Figure 10: Amounts of GDP and Gross Domestic Expenditure on 

R&D (GDERD) on Yearly Bases..........................................................................108 

Figure 11: R&D Expenditures - Sectoral Distribution.........................................................109 

Figure 12: FTE R&D Personnel..............................................................................................110 

Figure 13: Data on Technology Development Zones...........................................................122 

Figure 14: The Number of Patent and Utility Models..........................................................127 

Figure 15: European Patent Applications of EU countries.................................................129 

Figure 16: Brand Applications..................................................................................................129 

Figure 17: Design Applications.................................................................................................130

Contents 

7 

Abbrevations 

AID Promoting Active Involvement in Turkey 

BILGE Computerized Customs Activities 

BOTAŞ Petroleum Pipeline Corporation 

CBRT The Central Bank of Turkey 

CNG Compressed Natural Gas 

CPI 

Consumer Price Index 

DAP East Anatolia Project 

DSI 

State Hydraulic Works 

EDI Electronic Data Interchange 

EDMS Electronic Document Management Systems 

e-DTR e-Transformation Turkey Project 

EES European Employment Strategy 

EIF 

European Investment Fund 

EIS 

Environmental Impact Assessment Report 

EMRA Energy Market Regulatory Authority 

EPO European Patent Office 

EU 

European Union 

FDI Foreign Direct Investment 

FPM Fixed Price Method 

FTA Free Trade Agreements 

FTE Full Time Equivalent 

GAP Southeast Anatolia Project 

GDAA General Directorate of State Airports Authority 

GDERD Gross Domestic Expenditure on R&D 

GDP Gross Domestic Product 

GIB Revenue Administration 

GID Promoting Youth Employment 

GID II Promoting Youth Employment II 

HCJP High Council of Judges and Prosecutors 

IAC 

Investment Advisory Council 

ICT 

Information and Communication Technologies 

IFC 

Istanbul International Finance Center 

IMF International Monetary Fund 

IPA 

Pre-Accession Aid 

ISCED-97 International Standard Classification of Education 

ISE 

Istanbul Stock Exchange 

ISKUR Turkish Employment Agency 

ISPAT Investment Support and Promotion Agency of Turkey 

IVCI Istanbul Venture Capital Initiative 

JAP 

Joint Assessment Paper 

JICA Japan International Cooperation Agency 

KCETAS Kayseri and its Vicinity Electricity Distribution Inc. 

KDVIRA VAT Return Risk Analysis Project Application 

KGF Credit Guarantee Fund Inc.

8 


KID 

KIK 

KOP 

KOSGEB 

MERSİS 

MoLSS 

MoNE 

MTP 

MYO 

NABUCCO 

NCTS 

NES 

NSTIS 

OTV 

PIB 

PPI 

PRODIS 

PTT 

R&D 

RCOP 

SME 

STHC 

STP-IP 

SVET 

TAKBIS 

TAREKS 

TBP 

TDZs 

TEDAS 

TEKNOGIRI- 

SIM 

TEYDEB 

THY 

TPI 

TUBITAK 

TURKSTAT 

UYAP 

VAT 

VPM 

VPN 

WEF 

WFE 

WIPO 

YEK Law 

YOIKK 

YOK 

Promoting Women’s Employment 

Operation of Increasing the Quality of Public Employment Services 

Konya Plain Project 

Small and Medium Sized Enterprises Development Organization 

Online Incorporation Project, Central Registration System 

Ministry of Labor and Social Security 

Ministry of National Education 

Medium Term Program 

Vocational School of Higher Education 

Turkey-Bulgaria-Romania-Hungary-Austria Natural Gas Pipeline Project 

New Computerized Transit System 

National Employment Strategy 

Technology and Innovation Strategy 

Special Consumption Tax 

Project Incentive Bonus 

Producer Price Index 

Project Evaluation and Monitoring System 

Post and Telegraph Organization 

Research And Development 

Regional Competitiveness Operational Program 

Small and Medium Sized Enterprises 

Science and Technology High Council 

Implementation Plan on National Science and Technology Policies 

Strengthening the Vocational Education and Training System 

Land Registry and Cadaster Information System 

Risk Based Control System in Foreign Trade 

Bonds and Bills Market 

Technology Development Zones 

Turkish Electricity Distribution Corporation 

Techno-Entrepreneurship Support Program 

Directorate on Technology and Innovation Funding Programs 

Turkish Airlines 

Turkish Patent Institute 

The Scientific and Technological Research Council of Turkey 

Turkish Statistics Institute 

Project of National Judgment Network 

Value Added Tax 

Variable – Multi Price Method 

Virtual Shared Network 

World Economic Forum 

World Federation of Exchanges 

World Intellectual Property Organization 

Law no: 5346 on the Use of Renewable Energy Sources for Electric Energy Production 

Purposes 

Coordination Council for the Improvement of Investment Environment 

Board of Higher Education

Foreword 

9 

It is a great honor for me to present the sixth volume of the Investment Advisory 

Council Progress Report. The report was prepared with the contributions of all related 

institutions and organizations in line with the recommendations of the members of 

Investment Advisory Council, which was established in 2004 to provide an international 

perspective on the investment environment improvement efforts of Turkey. 

Following the sixth meeting of the Investment Advisory Council, held on June 10, 2010 

under the chair of Prime Minister Mr. Recep Tayyip ERDOĞAN, the Council members 

underlined Turkey’s success in the management of the risks caused by global economic 

fluctuations vis-à-vis the recession in the global economic growth and the decline in the 

capital flows to investments. 

Despite the adverse changes in world economies, Turkey has proved that it has a solid 

governance structure aiming to maintain and strengthen its competitiveness through 

growing by 8.5% in 2011, as a result of the macroeconomic policies and structural 

reforms. As of 2011, Turkey reached USD 375.8 billion of international trade volume 

and FDI inflow of USD 15.9 billion, a 76% increase over the previous year. FDI stock of 

USD 110.7 billion between the years 2002-2011 is the clear evidence of Turkey becoming 

a safe haven for the investors in the last decade. 

Sustaining Turkey’s high economic performance and maintaining coherence between 

investment, production, employment and export policies and the production of raw and 

intermediate materials that are needed in the domestic industry, depend on the transition 

from labor-intensive technology to knowledge-intensive one. With the aim of restructuring 

the Turkey’s industrial seWctor, a new investment incentive system which has four pillars, 

namely general, regional, large scale and strategic investment incentive schemes, has been 

introduced and thereby new investment opportunities have been created. 

On the other hand; boosting the investments and increasing the investor confidence, 

are closely associated with the establishment of an appropriate legal and administrative 

framework for the investors and shaping the investment environment in line with the needs 

of the private sector. The Coordination Council for the Improvement of Investment 

Environment (YOIKK) has been restructured in 2012 according to the suggestions and 

changing priorities of the private sector. The Ministry of Justice, Ministry of Energy 

and Natural Resources, Ministry of Transport, Maritime Affairs and Communication 

which had not been in the system, have also been included into the YOIKK structure. In

10 


the upcoming period, YOIKK will continue to follow its agenda through 10 Technical 

Committees and the Council’s recommendations will remain as top priorities while 

constructing its annual action plans. 

It is a great pleasure for me to share this report, which is prepared with the information 

provided from various institutions and organizations that have a duty and responsibility 

regarding the investment environment in line with the recommendations of the Council. 

I sincerely believe that this seventh meeting of the Investment Advisory Council shall 

be a successful platform for the efforts to improve Turkey’s position as an attractive 

investment destination. 

Zafer ÇAĞLAYAN 

Minister of Economy

Introduction 

11 

During the sixth meeting of the Investment Advisory Council held on June 10, 

2010 under the chair of the Prime Minister Mr. Recep Tayyip ERDOĞAN, the top level 

executives of 17 multinational companies, the International Monetary Fund (IMF), the 

European Investment Bank and the World Bank; the chairmen of four leading business 

associations along with the Cabinet members and related senior government officials, 

gathered to evaluate recent developments since the previous meeting. 

Throughout the meeting, the Council members assessed the aspects that make 

Turkey a global investment destination and developed recommendations on the measures 

necessary for improving Turkey’s attractiveness as a favorable investment destination. 

Council members stressed the success of Turkey in managing the risks caused by the 

global economic turbulence and underlined the importance of sustaining the reforms in 

improving the investment environment reforms to maintain and strengthen the country’s 

competitiveness and productivity. 

In the Declaration of Outcomes document, Council members summarized their 

recommendations on how to boost Turkey’s attractiveness as an investment hub, under 

four main headings: 



a. Fight against informal economy 

b. Harmonizing the legal framework with the needs of business 

c. Improving the pace, effectiveness, consistency and predictability of the 

judiciary system 

d. Developing infrastructure 

e. Support to the SMEs 

f. Increasing the efficiency of custom procedures 

g. Strengthening the vocational training system 

h. Improving the perception of Turkey 

i. Increasing the efficiency and predictability of the tax system, 

j. Reducing the number of regulatory permit procedures for enterprises 

k. Strengthening sustainable agriculture through more efficient irrigation systems

12 


III. Labor Force Market 

IV. Innovation 

a. Increasing private sector R&D investments 

b. Developing the cooperation between university and business world 

c. Strengthening innovation centers and Technoparks 

d. Improving infrastructure in information and communication technologies 

e. Improving intellectual and industrial property rights 

The issues underlined in the Council recommendations are included as priorities into 

the agendas of various institutions and organizations that have duties and responsibilities 

on the investment environment, and have been taken into consideration during the 

preparation of the YOIKK Technical Committee Action Plans. 

As a result of the works implemented by YOIKK in order to improve Turkey’s 

image as an attractive investment destination and to gain the confidence of international 

investors, Turkey’s position has been improving in the international investment indices. 

According to AT Kearney’s FDI Confidence Index, Turkey improved its position by 10 

and ranked as the 13 th attractive investment destination. Likewise, according to the World 

Bank’s Doing Business Report 2012 which is one of the reference publications evaluating 

world economies under 10 different topics such as starting a business, resolving insolvency 

and trading across borders, Turkey ranked 71 st out of 183 countries, representing a 2-step 

improvement when compared to the revised ranking of 2011. 

This Progress Report, which is about the developments on Turkey’s main investment 

environment indicators in line with the Council decisions from the previous meeting, is 

based on the data compiled from approximately 50 public institutions as of March 2012.

Executive Summary 

13 


A. Main Macroeconomic Indicators 

• Despite the negative developments in global economies in 2011, Turkey 

realized a growth rate of 8.5% and maintained a stable growth performance. 

• In 2011, unemployment decreased by 431,000 people compared to last year 

and dropped back to 2,615,000 people. 

• Though the consumer inflation rate remained high during the first two months 

of 2012, the year-end inflation rate in 2012 is expected to be between 5.1% 

and 7.9%, according to the First Inflation Report of the CBRT for 2012. 

• Considering changing global market conditions, foreign exchange buying 

auctions took place until July 2011, and, as of August 2011, the CBRT started 

to execute foreign exchange sale auctions. 

B. Foreign Trade 

• In 2011, export volume registered an increase of 18.5% and reached USD 135 

billion compared to 2010. 

• “Input Supply Strategy,” which was announced on March 23, 2011, ensures that 

the current deficit has a more sustainable structure by accessing the necessary 

inputs more effectively at lowers costs and decreasing the dependence on 

import of intermediate goods. 

• The volume of Turkey’s exports to neighboring and nearby countries increased 

from USD 9.3 billion in 2002 to USD 49 billion as of 2010, a five-time increase. 

C. Investment 

• Foreign direct investment rose by 76% in 2011 compared to the previous year 

and reached USD 15.9 billion. 

• According to the International Monetary Fund (IMF), the ratio of the current 

account deficit to the GDP is expected to be 7.4% in 2012. 

• The new incentive system supports a transition from labor intensive technology 

to information based technology, producing the raw materials and intermediate

14 


goods that our country needs and forming the unity between investment, 

production, employment and export policies. 

D. Restructuring of the Public Expenditures and Financial Consolidation 

• Discipline in public expenditure resulted in a decrease in the ratio of public net 

debt stock to the GDP from 61.5% in 2002 to 28.9% in 2010 and to 22.4% by 

the end of 2011. 

• The ratio of interest expenditures to the GDP, which was 5.3% in 2008 and 

5.6% in 2009, fell back to 4.4% as of the end of 2010 and to 3.3% as of the 

end of 2011. 

• At the end of 2014, the central government budget deficit is desired to be 

decreased to 1%. 

• By increasing the cash domestic borrowing average maturity, which was 9.4 

months in 2002, up to 60.8 months as of March 2012, the liquidity risk has 

been mitigated. 

• In 2012, it is estimated that real private sector fixed capital investments will 

increase by 7.7%. 

E. Deepening Financial Market Development 

• The foreign share in the publicly traded market value of the ISE companies 

was 62% in February 2012. 

• The banking sector which has the most important place especially in the 

finance sector sustains its healthy development process in terms of capital, 

profitability and risk indicators. As of December 2011, the total actives of the 

sector increased by 21% and reached to TL 1,218 trillion. 

• With the impact of drawback in the interest rates, the credit volume for the 

same period increased by 29.9%, and the deposit credit conversion rate was 

approximately 100%. 

• Within the Turkish insurance sector and the individual annuity insurance sector, 

which play important roles in the financial markets, there are 59 insurance and 

retirement companies and 2 reinsurance companies as of the end of March 

2012. 


A. Maintaining the Fight against Informal Economy 

• Informal economy level has backed down to 28.3% as of 2010, from the 

32.7% level in 2003. 

• A Risk Analysis Model has been introduced for the audits of the taxpayer 

groups diversified by sectors, within the 2008-2010 Action Plan of the Strategy 

for fight against the Informal Economy.


15 

• VAT return process has been expedited with the VAT Return Risk Analysis 

Project Application (KDVIRA), implemented since January 2010. 

• The e-invoice system, initiated in 2010, has fastened and secured the billing 

procedures. 

• 47 actions have been determined by the 2011-2013 Action Plan of the Strategy 

for Fight against the Informal Economy, which is published in the Official 

Gazette on December 21, 2011. 

B. Arranging the Legal Framework to Meet the Needs of the Business 

Life 

• The new Commercial Code, No. 6102 was adopted by the Grand National 

Assembly of Turkey on January 13, 2011. 

• Within the framework of national needs and international best practices, the 

new Turkish Code of Obligations, No. 6098 was adopted on January 11, 2011. 

C. Increasing the Speed, Effectiveness, Consistency and Predictability of the 

Judiciary 

• Within the scope of the judiciary reforms, the new Code of Civil Procedure 

No.6100, comprises regulations eliminating the deficiencies caused by 

implementation; making the trials simple, fast, less expensive and effective; 

establishing the infrastructure that will provide and encourage settlement 

or reconciliation procedures and reflecting the developments gained in 

comparative law to the civil justice. 

• Citizens, lawyers, legal experts, law enforcement officers, institutions and 

companies are provided to access judicial processes and to conduct some 

transactions through the Portals prepared for themselves. 

D. Developing the Infrastructure 

• As of March 2012, 13 out of 21 electricity distribution companies are being 

operated by the private sector. 

• As of the end of 2011, tender processes of 55 distribution regions were 

completed and 62 companies were given distribution licenses. 

• Incentives were introduced for the use of domestic components in the power 

plants which will carry out electricity production with the renewable energy 

sources. 

• The total length of highways has reached 65,219 km as of March 2012. 

• Ankara-Konya High Speed Train Project was completed and the High Speed 

Train was put into operation on August 24, 2011. 

• 47 airports are open to civil traffic as of 2011.

16 


E. Supporting SME’s 

• 7 different support instruments were defined with the KOSGEB Support 

Program Regulation aiming to increase the effectiveness of SME supports. 

• The total supports provided by KOSGEB in 2011, reached %86 of the total 

supports provided in the last 6 years. 

• The application period for the Treasury supported credit guarantee system, 

aiming to improve the access to finance conditions of SMEs, was extended 

until July 14, 2013; the guarantee rate was raised to 75% from 65% and the 

maturity date was extended from 4 years to 8 years. 

• By the total amount of TL 1 billion guarantee provided for 3,197 enterprises 

in 2011 from the Treasury and Credit Guarantee Funds, TL 3.07 billion of 

guarantee and TL 4.35 million of credit volume were cumulatively achieved. 

• The studies regarding the adoption and implementation of the basic principles 

of the Small Business Act in Turkey, have been accelerated in 2010 and 2011. 

F. Improvement of the Customs Processes 

• The ratio of customs declarations registered through Electronic Data 

Interchange (EDI), increased since 2006, reaching 93% of the total declarations 

in 2011. 

• Under the studies carried out by Turkey to become a party to the Common 

Transit Convention, the New Computerized Transit System (NCTS) was put 

into practice on a national level on January 1, 2012. 

• Regulations regarding the Risk-Based Control System in Foreign Trade 

(TAREKS) were put into practice and pilot implementations were launched 

by 2011. 

• Single Window system which will establish an efficient management system 

among the relevant bodies and institutions in order to eliminate the time loss 

and decrease the costs for customs has been initiated. 

G. Other Suggestions for Improving the Business Environment 

1. Improving the Vocational Education System, Strengthening the 

Relationship between Education and Employment 

• The “Action Plan for Strengthening Employment and Vocational Training 

Relationship”, comprised of 38 measures under nine priority areas, was 

prepared in 2010. The number of measures adopted by February 2012 is 24. 

• Studies regarding the “Strategy for Vocational Education and Training” 

continued in 2011. 

• Gross school enrollment rate increased to 92.56% in February 2012 and the 

ratio of vocational education in general secondary education reached 47.95%. 

• 249 vocational standards have been promulgated in the Official Gazette by 

February 2012.


17 

2. Improving the Perception of Turkey 

• The Draft Law of Capital Market was prepared in addition to the Turkish 

Commercial Code No 6102. This indicates an important step toward improving 

the judicial infrastructure which is an important component of making Istanbul 

an international finance center. 

3. Increasing the Efficiency and the Predictability of the Tax System 

• With the tax related regulations which went into effect in 2010 and 2011, 

important measures were put into practice to create a more equitable, steady, 

and predictable tax system. 

• In 2011, the ratio of tax payments made online by taxpayers was around 37%. 

• The Double Taxation Prevention Agreements signed by Turkey with 76 

countries are effective so far. 

4. Decreasing the Number of Procedures in Administrative Permits and 

Improving Public Administration Practices 

• With the Regulation Amendment made at the beginning of 2010, the 

opportunity for the applicants to make their applications and the Ministry of 

Labor and Social Security to grant the licenses online has been introduced. 

• With the amendment made in the Turkish Commercial Code No. 6762, the 

legal infrastructure, regarding keeping the trade registries and trade books 

electronically was established. 

• The E-Appointment Project in Healthcare System, was expanded throughout 

the country in 2011. 

5. Strengthening Sustainable Agriculture through Common Irrigation 

Systems 

• 5,312 projects on collective pressurized irrigation have been provided with TL 

139.8 million of grants, in scope of the Support to the Rural Development 

Investments Program. 

• The subsidy rate for the investments and business credits in the area of 

agricultural irrigation was increased from 60% to 100% as of 2011. 

• Significant increase was observed in the sources allocated to the irrigation 

projects within the public investment programs and a quadrupled increase was 

actualized in the agriculture sector investment allowance of the State Hydraulic 

Works (DSİ) through 2008-2012. 

• The Irrigation Unions Law aiming to strengthen the participatory water usage 

management, entered into force on March 22, 2011. 

• 370,418 hectares have been opened for irrigation by the end of 2011 in scope 

of the Southeast Anatolia Project (GAP) Action Plan.

18 


III. Activating the Labor Market 

• The studies launched under the scope of three main operations towards the 

targeted groups who are left out of the labor market and expose obstacles in 

the accession to labor market, are ongoing. 

• The number of people who were employed via the private employment 

bureaus amounted to 27,651 in 2010 and 35,564 in 2011. 

• “Women Employment National Monitoring and Coordination Board” is 

established with the representatives of the public and private sector. 

• The studies carried out to make JAP compatible with both the 2020 EU Strategy 

and the National Employment Strategy (NES) draft, have been completed by 

the beginning of 2012. 


A. Increasing the R&D Investments in Private Sector 

• By 2023, the ratio of R&D expenditures to GDP is expected to reach 3%. 

• The supports received by enterprises in R&D and innovation activities from 

public institutions and organizations, foundations established by law and 

international funds were exempted from Corporate Tax. 

• In terms of TUBITAK’s TEYDEB support programs, in 2010, 1,367 SME 

Projects were granted TL 159 million whereas in 2011, 1,416 SME Projects 

were granted TL 162.7 million. 

B. Developing the Dialogue between Industry and Universities 

• TEKNOGIRISIM Program was initiated in 2007 to improve entrepreneurial 

mindset among technology and innovation companies and promoting the 

transformation of ideas of university students and graduates’ into commercial 

products. In 2011, TL 10 million of allowance allocated annually for the 

Technoentrepreneurship Capital Support has been increased to TL 50 million. 

C. Strengthening the Innovation Centers and Technoparks 

• As of December 2011, 15,822 personnel are employed in 1,800 companies 

operating under 43 active Technology Development Zones (TDZs) throughout 

Turkey. 

• As of December 2011, the total number of R&D projects in progress in TDZs 

was 4,979.


19 

D. Improving Infrastructure in Information and Communication Technologies 

• The number of operators working in the electronic communication sector 

by March 2012 is 362, and the number of authorizations issued for these 

operators are 570. 

• The total number of internet subscribers in Turkey by the fourth quarter of 

2011 is 14.1 million. 

• The number of mobile phone subscribers increased from 27.9 million in 2003 

to 65.3 million by December 2011. 

E. Improvement of Intellectual and Industrial Property Rights 

• The patent and utility model applications increased by 18.5% by the end of 

2011 compared to the previous year and amounted to 13,485; 6,223 of which 

are foreign applications. 

• Turkey ranked top with the 2011 patent applications under the scope of the 

International Patent Cooperation Agreement compared to the 12 countries 

that have become members of the EU after 2004, and 11th in the EU-27 

rankings. 

• In the European Patent Application ranking, Turkey was rated 24th among 

the 114 countries that have applied for European Patents, 12th among EU 

countries and the first among the 12 countries that became members of the 

EU after 2004. 

• With more than 50% increase in brand applications in 2011, Turkey became the 

country receiving the most national brand applications in the Europe region.

20 

INVESTMENT ADVISORY COUNCIL PROGRESS REPORT 2012

Macroeconomic Stability 

21 

I. Macroeconomic 

Stability 

Ensuring macroeconomic stability, which has climbed up in countries’ reform 

agendas due to unfavorable economic conditions worldwide since 2008, is among the 

top agenda items in the reform program being carried out by Turkey. At the 6 th Meeting 

of the Investment Advisory Council (IAC), the members of the Council stressed that 

macroeconomic stability, which is related to sustainable public finance, external balance 

and price stability, is the main element of the long term business plans of the private 

sector in Turkey. The members also highlighted the importance of implementing policies 

in this area in a steadfast manner. 

A. Main Macroeconomic Indicators 

1. Growth 

The financial crisis broke out in the developed economies in 2008 and reached a 

global level in 2009 resulting in a shrinking of the world economy by 0.7%. This process 

changed the focus of international public opinion from “growth” to “sustainable growth,” 

and Turkey started to implement policies parallel to this trend. As a result of measures 

concentrated on increasing domestic demand and production with the aim of mitigating 

the impact of global crisis, the Turkish economy has started to demonstrate a recovery 

trend since the second quarter of 2009 1 . 

 

Gross Domestic Product (GDP), which 

contracted by 11.2% in the first half of the 

2009 when the impacts of the global crises were 

intensely prevalent, registered a recovery in the 

second half of the year and increased by 1.2%. 

 

A dominant upward trend in GDP since 

the second half of 2009 continued to increase 

in 2010, and the growth rate surpassed the 

expectation of 6.8%, reaching 9.2% instead. 

1 

According to seasonally adjusted data.

22 


Despite the negative 

developments in 

global economies in 

2011, Turkey realized 

a growth rate of 8.5% 

and maintained a stable 

growth performance. 

 

 

Despite the negative developments in global economies in 2011, Turkey realized a 

growth rate of 8.5% and maintained a stable growth performance. In the next term, 

the growth rate is expected to slow down slightly to 4% in 2012 2 . 

In terms of shares in growth in 2010, an increase in added values of industrial and 

services sectors was influential. The added value of the industrial sector considering 

industrial production, capacity utilization rate, a continuous improvement in 

consumer confidence as well as the baseline effect, registered a 12.8% increase in 

2010. The increase in services sector was 8.7% in 2010. 

Table 1: Added Value Increase Rate and the Shares of Sectors in GDP 

2008 2009 2010 2011 2012(*) 

At Fixes Prices, % Change 

Agriculture 4.3 3.6 2.4 5.3 3.0 

Industry 0.3 -6.9 12.8 9.2 3.5 

Services 0.3 -5.2 8.7 8.7 4.3 

GDP 0.7 -4.8 9.2 8.5 4.0 

At Current Prices, % Share 

Agriculture 7.6 8.3 8.4 8.1 8.2 

Industry 19.8 19.1 19.4 20.1 19.1 

Services 72.6 72.6 72.1 71.8 72.7 

GDP 100 100 100 100 100 

* Program 

Source: 2012 Program, p. 15 

 

Likewise, increases in industrial and services sectors contributed to growth rates in 

2011. Within this context, the added values of the industrial and services sectors 

were realized as 9.2% and 8.7%, respectively. 

In 2011, unemployment 

decreased by 431,000 

people compared to last 

year and dropped back to 

2,615,000 people. 

2. Employment 

 

Employment increased by 1.31 million, compared to last year, and reached 22.59 

million employees in 2010. Under these circumstances, the unemployment rate 

dropped from 14% to 11.9%, while the labor force participation rate increased by 

0.9 point over the previous year reaching 48.8% in 2010. 

 

In 2011, unemployment decreased by 431,000 people compared to last year and 

dropped back to 2,615,000 people. The unemployment rate was reduced to 9.8% 

by a decrease of 2.1 points, while the labor force participation rate was realized as 

49.9% due to a 1.1 point increase. The sectoral breakdown is 25.5%, 19.5%, 7% 

2 

2012 Program, p.15.


23 

and 48.1% of employees working in agriculture, industry, construction and services 

sectors, respectively, in 2011. 

 

Parallel to envisaged increases in growth rate and investments, it is expected that 

employment will increase in 2012 by 147,000 people with an unemployment rate 

of 10.4%. 

Table 2: Main Labor Force Indicators Adjusted Seasonally (2011) 

Turkey in General Urban Places Rural Places 

2010 2011 2010 2011 2010 2011 

Non-institutional population 

(thousand people) 

71,343 72,376 49,170 49,535 22,172 22,841 

Population at the age of 15 and above 

(thousand people) 

52,541 53,593 36,576 36,973 15,965 16,620 

Labor force (thousand people) 25,641 26,725 17,105 17,594 8,536 9,131 

Employment (thousand people) 22,594 24,110 14,679 15,508 7,915 8,603 

Unemployed (thousand people) 3,046 2,615 2,425 2,087 621 528 

Labor force participation rate (%) 48.8 49.9 46.8 47.6 53.5 54.9 

Employment rate (%) 43 45 40.1 41.9 49.6 51.8 

Unemployment rate (%) 11.9 9.8 14.2 11.9 7.3 5.8 

Unemployment rate apart from 

agriculture (%) 

14.8 12.4 14.6 12.3 15.9 12.8 

Unemployment rate in young 

population (1)(%) 

21.7 18.4 24.8 21.2 15.3 12.7 

Those who are not included in the 

labor force (thousand people) 

26,901 26,867 19,472 19,378 7,429 7,489 

(1) Population between the ages of 15-24 

Note: The figures may not provide the total, due to rounding up. 

Source: Turkish Statistics Institute (TURKSTAT) 

3. Monetary Policy and Inflation 

The Central Bank of Turkey (CBRT) has been governing monetary policies within 

the framework of open inflation targeting since 2006, in order to ensure price stability 

and sustainability. In addition, the CBRT also takes necessary measures to assure stability 

in the financial system. 

 

After consumer inflation reached low levels in 2009, when the impact of the global 

economic crisis was overwhelming, the inflation rate ran parallel to the general 

trend in 2010. The annual increase in Turkish Consumer Price Index (CPI) was 

6.40% and the inflation rate remained under the year-end target as of 2010.

24 


The year-end inflation 

rate in 2012 is expected 

to be between 5.1% and 

7.9%, according to the 

I st Inflation Report of the 

CBRT for 2012. 

 

The inflation rate started to rise in 

the last quarter of 2011, owing to 

developments related to exchange 

rates and import prices as well as the 

adjustments to products, the prices 

of which were managed or directed. 

The CPI recorded an increase of 

10.45% compared to the previous 

year while the Producer Price Index 

(PPI) registered a 13.33% rise over 

the previous year 3 . Though the 

consumer inflation rate remained high during the first two months of 2012, the 

year-end inflation rate in 2012 is expected to be between 5.1% and 7.9%, according 

to the I st Inflation Report of the CBRT for 2012. 

Figure 1: Inflation Targets and Realizations (CPI) 

40% 

35% 

30% 

25% 

20% 

% 

15% 

10% 

5% 

Target 

0% 

Realization 

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 

35.00% 20.00% 12.00% 8.00% 5.00% 4.00% 4.00% 7.50% 6.50% 5.50% 

29.70% 18.40% 9.30% 7.70% 9.70% 8.40% 10.10% 6.50% 6.40% 10.45% 

Target 

Realization 

Source: The CBRT 

 

Parallel to the mitigation of the impacts of the global crisis over the financial 

markets, the “Monetary Policy Exit Strategy by the Central Bank of the Republic 

of Turkey” was announced on April 14, 2010 in order to gradually normalize the 

expanding monetary policy implemented over the course of the crisis. Thus, the 

process to gradually decrease the excess liquidity was initiated. The operational 

3 

www.tuik.gov.tr


25 

 

 

 

 

framework was amended so that the liquidity management strategy could be used 

more efficiently. The weekly repo auction rate was established as a policy interest 

rate while the interest rate corridor system was kept. 

Parallel to the normalization in the global markets, the required reserve ratio for 

foreign exchange was increased by 2 points due to adjustments realized in April, 

July, and September of 2010, reaching the 11% level. Furthermore, brokerage 

operations performed by the CBRT in the Foreign and Effective Exchange Deposit 

Markets were terminated on October 15, 2010. 

In line with the expansion in the credit markets, the weighted average of the required 

reserve ratio for Turkish Lira was elevated to 9.4% by an increase of 0.50 points 

in September and November 2010, 1.4 points during December, and 2 points in 

January 2011. In addition, the practice of interest rate payment to the required 

reserve ratio for Turkish Lira was terminated in September 2010. As of December 

2010, the required reserve ratios were rearranged in decreasing rates in line with 

longer maturity dates. 

However, the policies of the CBRT responded to economic developments both in 

Turkey and the global markets. The policies put into place as of late 2010 aimed to 

guide the Turkish economy progressively toward a healthier growth picture without 

any prejudice to the medium term inflation outlook. Toward the end of 2010, a 

rapidly growing current account deficit and short term capital inflows increased 

the fragility of the economy. In this context, the CBRT pursued policies to deter 

short term capital inflows and slow down the credit expansion so as to control 

macroeconomic and financial fragilities. 

The CBRT concluded in this period that a lower policy interest rate, a wider 

interest rate corridor, and higher required reserve ratio rates was the appropriate 

combination. Within the context of this new policy combination, one week term 

repo interest rate, which is determined as the policy interest rate, was reduced from 

7% to 6.25% on the basis of the decisions adopted in December 2010 and January 

2011. In addition to the reductions in the policy interest rate, in order to deter very 

short term capital inflows from increasing the downward volatility of the short term 

interest, the overnight lending rate was decreased by 450 base points and set back 

to 1.5%. Parallel to the expansion of the corridor between overnight borrowing 

and lending interest rates, short term interest rates were allowed to follow a more 

fluctuated course in line with the economic necessity. 

Given global developments, the Monetary Policy Committee Meeting of August 4, 

2011 decreased the policy interest rate by 50 base points with the aim of reducing 

the risk of stagnancy in domestic economic activities. In addition to the policy 

interest rate reduction, the interest corridor was contracted by an increase of 350 

base points in the overnight lending rate in order to decrease any possible downward 

volatility in short term interest rates.

26 


 

Considering short-term capital outflows alongside deepening concerns about the 

public debt issue in some European countries and potential for extreme depreciation 

of Turkish Lira, the CBRT increased the interest rates for lending and expanded 

the interest rate corridor upwards significantly so as not to affect medium term 

inflation expectations negatively in October 2011. Within this context, the CBRT 

started to adjust funding funneled to the market and allowed the overnight interest 

rates to remain higher than the policy interest rates in the monetary market. 

Table 3: Monetary Policy Committee Meetings in 2011 and 2012 and the Decisions 

Adopted on the Overnight Interest Rates 

MPC Meeting Dates Weekly Repo Rate Overnight Borrowing Overnight Lending 

Jan.20, 11 6.25 1.50 9.00 

Feb.15, 11 6.25 1.50 9.00 

Mar.23, 11 6.25 1.50 9.00 

Apr.21, 11 6.25 1.50 9.00 

May.25, 11 6.25 1.50 9.00 

Jun.23, 11 6.25 1.50 9.00 

Jul.21, 11 6.25 1.50 9.00 

Aug.04, 11 5.75 5.0 9.00 

Aug.23, 11 5.75 5.0 9.00 

Sep.20, 11 5.75 5.0 9.00 

Oct.20, 11 5.75 5.0 12.50 

Nov.23, 11 5.75 5.0 12.50 

Dec.22, 11 5.75 5.0 12.50 

Jan.24, 12 5.75 5.0 12.50 

Feb.21, 12 5.75 5.0 11.50 


 

In the light of new monetary policy, the CBRT started foreign exchange auctions 

in August 2011 and went for gradual cuts in the required reserve ratio as of this 

date. Another measure taken to increase foreign exchange liquidity was decrease of 

lending interest rates for both USD and Euro in transactions executed by the CBRT 

in foreign exchange markets. In line with this policy, the required reserve ratio for 

Turkish Lira was decreased 2 points in terms of weighted average on October 27, 

2011. In addition, the part of the required reserve ratio of Turkish Lira which could 

be kept in foreign exchange was increased to 40% and necessary arrangements were 

also made to keep 10% of the required reserve ratio of the Turkish Lira as gold.


27 

Table 4: Decisions Regarding the Required Reserve Ratio for Turkish Lira (%) 

Date of Decision 

W/o 

Maturity 

Until 1 

Month 

Until 3 

Months 

Until 6 

Months 

Until 1 

Year 

1 Year 

and 

Longer 

Deposit/ 

out of 

participation 

other* 

Oct.16, 2009 5.0 5.0 5.0 5.0 5.0 5.0 5.0 

Sep.23, 2010 5.5 5.5 5.5 5.5 5.5 5.5 5.5 

Nov.12, 2010 6.0 6.0 6.0 6.0 6.0 6.0 6.0 

Dec.17, 2010 8.0 8.0 7.0 7.0 6.0 5.0 8.0 

Jan.24, 2011 12.0 10.0 9.0 7.0 6.0 5.0 9.0 

Mar.23, 2011 15.0 15.0 13.0 9.0 6.0 5.0 13.0 

Apr.21, 2011 16.0 16.0 13.0 9.0 6.0 5.0 13.0 

Oct.6, 2011 16.0 16.0 12.5 9.0 6.0 5.0 11.0 

Oct.27, 2011 11.0 11.0 11.0 8.0 6.0 5.0 11.0 

* According to an arrangement of December 17, 2010, the funds that banks obtain out of repo transactions are included 

into the required reserve ratio, except the ones received from the CBRT or the interbank funds. 


 

4. Exchange Markets 

The CBRT has been implementing the floating exchange rate regime apart from 

inflation targeting. Nonetheless, considering changing global market conditions, 

foreign exchange buying auctions took place until July 2011, and, as of August 

2011, the CBRT started to execute foreign exchange sale auctions. 

Figure 2: Developments in Exchange Rates 

Foreign exchange buying 

auctions took place until 

July 2011, and, as of 

August 2011, the CBRT 

started to execute foreign 

exchange sale auctions. 

2.5 

2 

1.5 

1 

0.5 

0 

2000Q1 

2000Q3 

2001Q1 

2001Q3 

2002Q1 

2002Q3 

2003Q1 

2003Q3 

2004Q1 

2004Q3 

2005Q1 

2005Q3 

2006Q1 

2006Q3 

2007Q1 

2007Q3 

2008Q1 

2008Q3 

2009Q1 

2009Q3 

2010Q1 

2010Q3 

2011Q1 

2011Q3 

2012Q1 

USD 

EURO 

Source: The CBRT

28 


 

 

 

 

Within this scope, the CBRT carried out purchase operations, also in 2010, through 

transparent auctions, rules of which were previously announced, in order to have 

strong foreign exchange reserves. Meanwhile, the CBRT aimed to limit the short term 

capital inflows and prevent overvaluation from November 2010 when CBRT switched 

to new policy framework until August 2011 when uncertainties rapidly increased. 

Within this period, due to appetite for risk and concentration of short term capital 

inflows, the CBRT expanded the interest rate corridor downwards. Thus, by letting 

interest rates in the overnight markets remain lower than policy interest rates, it was 

possible to increase downward volatility in overnight interest rates and reduce very 

short term capital inflows. 

On July 25, 2011, the CBRT decided to suspend foreign exchange buying auctions, 

and decreased the foreign exchange required reserve ratio for long term liabilities. 

Following this decision, the CBRT announced that the policy interest rate was 

decreased and overnight lending rate was increased significantly to contract the 

interest rate corridor and if necessary, the market would be supplied with foreign 

exchange liquidity through foreign exchange selling auctions, on certain days when 

deemed necessary as of August 4, 2011. 

In order to contribute to the escalation of fluidity of currency liquidity in the 

exchange market until the elimination of ongoing uncertainties in international 

markets, the CBRT restarted its brokerage operations in Foreign and Effective 

Exchange Deposit Markets as of November 10, 2011. 

Table 5: The CBRT Foreign Currency Interventions and Auctions 

Year 

Foreign 

Exchange 

Buying 

Auctions 

Foreign 

Exchange 

Selling 

Auctions 

Exchange 

Buying 

Interventions 

Exchange 

Selling 

Interventions 

USD Million 

Total Net 

Exchange 

Buying 

2002 795 - 16 12 799 

2003 5,652 - 4,229 - 9,881 

2004 4,104 - 1,283 9 5,378 

2005 7,442 - 14,565 - 22,007 

2006 4,296 1,000 5,441 2,105 6,632 

2007 9,906 - - - 9,906 

2008 7,584 100 - - 7,484 

2009 4,315 900 - - 3,415 

2010 14,865 - - - 14,865 

2011 6,450 11,210 - 2,390 -7,150 

2012* - 1,450 - 1,006 -2,456 

TOTAL 65,409 14,650 25,534 5,522 82,167 

* Since March 23, 2012 

Source: The CBRT


29 

 

Given lack of any negative observations in the effective functioning of exchange 

market and liquidity flow, the CBRT did not carry out any foreign exchange selling 

interventions. However, excessive volatility and irregularity have just started to be 

observed in the foreign exchange rates in developing countries. Central banks of 

the developing countries have thus started robust and efficient intervention into the 

exchange rates with appropriate tools and methods.

30 


B. Foreign Trade 

Foreign trade plays an important role in a country’s economy establishing sustainable 

growth and not confining production capabilities to domestic markets. In this sense, it 

will be fruitful to elaborate the foreign trade topic under the macroeconomic stability 

heading, raised at the 6th Council Meeting by the Council Members. 

In 2011, export volume 

registered an increase of 

18.5% and reached USD 

135 billion compared to 

2010. 

 

 

Exports rose to USD 132 billion in 

2008 from USD 73.5 billion in 2005. 

Due to the global economic crisis 

in 2009, demand in the EU region, 

which is Turkey’s largest export 

market, diminished significantly 

shrinking Turkish exports by 22% 

in 2009 to USD 102 billion. On the 

other hand, with recovery in the 

world economies and Turkey’s own 

efforts to diversify its foreign trade 

markets, export levels started to rise again, increasing by 11% to USD 111.4 billion 

in 2010. In 2011, export volume registered an increase of 18.5% and reached USD 

135 billion compared to 2010. 

In line with the growth in exports, the import volume exhibited an overall increasing 

trend during 2005 to 2010. While import levels were around USD 117 billion in 

2005, they rose to USD 201 billion in 2008. The demand shrinkage experienced 

by global and domestic markets in 2009 also affected imports negatively. However, 

in 2010, parallel to the recovery observed across economies, imports increased by 

31% and reached a level of USD 185 billion. Imports in 2011 increased by 29.8% 

over the previous year and rose to USD 240.8 billion.


31 

Table 6: The Development of Foreign Trade by Years 

USD Billion 

Years Export Change% Import Change% Ratio of Exports to 

Imports % 

2007 107.3 25.4 170.1 21.8 63,1 

2008 132.0 23.1 201.9 18.7 65,4 

2009 102.1 -22.6 140.9 -30.2 72,5 

2010 113.9 11.5 185.5 31.6 61,4 

2011 135.0 18.5 240.8 29.8 56,0 

2012* 148.5 10 248.7 5 59,7 

2013* 165.7 12 272.5 10 60,8 

2014* 185.1 12 295.9 9 62,5 

* Medium Term Program. 

Source: TURKSTAT, Ministry of Development 

 

In order to increase Turkey’s share in exports and enhance its competitiveness, 

“The Export Strategy for 2023” was made public on March 24, 2011. The Strategy 

targets an export level for Turkey reaching USD 500 billion. To reach this goal, new 

policies were devised to focus on creation of high added value, use of cutting edge 

technologies, innovation and employment support, reduction of raw material and 

intermediate goods costs, enhancement of productivity and access to new markets. 

 

Moreover, the “Input Supply Strategy,” which was announced on March 23, 2011, 

ensures that the current deficit has a more sustainable structure by accessing the 

necessary inputs more effectively at lowers costs and decreasing the dependence on 

import of intermediate goods 4 . 

 

Turkish Eximbank provided USD 6.5 billion of short term export cash credit 

support and USD 5.8 billion of insurance in 2011. Thus, total support of USD 

12.3 billion was provided. 

In the aftermath of the crisis, in addition to support provided to exporters, various 

policies were put into place to diversify export markets. Within this context: 

“Input Supply Strategy”, 

which was announced on 

March 23, 2011, ensures 

that the current deficit 

has a more sustainable 

structure by accessing 

the necessary inputs 

more effectively at lower 

costs and decreasing the 

dependence on import of 

intermediate goods. 

 

As a result of market based efforts, for 2010-2011, the following countries have 

been selected as 15 Target Countries: USA, China, Russia, India, Brazil, Canada, 

Poland, Nigeria, Egypt, Iran, Saudi Arabia, Algeria, Libya, Jordan and Qatar 5 . 

4 

www.ekonomi.gov.tr. 

5 

For the same period, following countries were identified as 27 Top Priority Countries: Mexico, Chile, Peru, South Korea, 

Indonesia, Malaysia, Vietnam, Pakistan, Ukraine, Kazakhstan, Turkmenistan, Georgia, Azerbaijan, Iraq, Syria, Lebanon, Oman, 

UAE, Tunisia, Sweden, Croatia, Kosovo, Republic of South Africa, Kenya, Ghana, Senegal and Tanzania.

32 


 

 

Further Free Trade Agreements (FTA) were signed with various countries in 

order to facilitate the penetration into such markets. FTAs are in effect with the 

following countries: EFTA region, Israel, Croatia, Bosnia Herzegovina, Macedonia, 

Montenegro, Tunisia, Palestine, Morocco, Egypt, Syria, Georgia, Albania, Serbia, 

Jordan and Chile. In addition to those, the FTAs with Lebanon and Mauritius are 

expected to be in effect after the domestic approval processes are complete. A 

Joint Declaration was signed between Turkey and South Korea on March 26, 2012 

aimed at ensuring conclusion of two agreements in the first half of 2012, namely 

the Framework Agreement (the Framework Agreement Establishing a Free Trade 

Area between the Republic of Turkey and the Republic of Korea) and the Trade 

in Goods Agreement (the Agreement on Trade in Goods between the Republic of 

Turkey and the Republic of Korea). Moreover, further negotiations are in progress 

with 13 countries or country blocs. 

While the export toward the EU region, Turkey’s primary export market, 

corresponded to 56% of total exports in 2005, this percentage declined to 46% in 

2011. As a result, Turkey has widened the trade volume with Near and Middle East 

countries, enhancing its share of exports to 21% from 14% in 2007. 

Table 7: The Distribution of Export by Country Group 

Country Group 2007 2008 2009 2010 2011 

The EU-27 56.30 48.01 46.03 46.26 46.21 

North Africa 3.76 4.43 7.26 6.17 4.97 

Africa- Other 1.81 2.43 2.68 1.98 2.69 

North America 4.23 3.64 3.50 3.73 4.05 

South America 0.48 0.68 0.66 1.09 1.36 

Far and Middle East 14.06 19.26 18.79 20.46 20.70 

Source: TURKSTAT 

The volume of Turkey’s 

exports to neighboring 

and nearby countries 

increased from USD 9.3 

billion in 2002 to USD 49 

billion as of 2010, a fivetime 

increase. 

 

Turkey has displayed significant foreign trade performance with neighboring and 

nearby countries. Within this context, the volume of Turkey’s exports to neighboring 

and nearby countries 6 increased from USD 9.3 billion in 2002 to USD 49 billion 

as of 2010, a five-time increase. Export to neighboring and nearby countries was 

USD 57.2 billion in 2011. Likewise, the volume of imports to Turkey from those 

countries increased from USD 12.8 billion in 2002 to USD 60.7 billion in 2010. In 

2011, total volume of imports from these destinations was above USD 78 billion. 

6 

Neighboring and nearby countries are: Afghanistan, Albania, Azerbaijan-Nahçivan, Bahrain, Bangladesh, Belorussia, the 

United Arab Emirates, Bosnia-Herzegovina, Bulgaria, Algeria, Djibouti, Eritrea, Ethiopia, Morocco, Georgia, Palestine, Croatia, 

Iraq, Iran, Israel, Montenegro, Qatar, Kazakhstan, Kyrgyzstan, Kosovo, Kuwait, TRNC, Libya, Lebanon, Hungary, Macedonia, 

Egypt, Mongolia, Moldova, Uzbekistan, Pakistan, Romania, Russian Federation, Serbia, Slovenia, Somalia, Sudan, Syria, Saudi 

Arabia, Tajikistan, Tunisia, Turkmenistan, Ukraine, Oman, Jordan, Yemen and Greece.


33 

 

When 2011 is reviewed, it is clear that exports to Middle Eastern countries increased 

by 18.2% amounting to USD 24.8 billion, while exports to the Balkan countries 

increased by 12.4% or USD 8.6 billion and exports to the Central Asian and the 

Caucasian countries 7 increased by 30.5% reaching USD 6.3 billion. In addition, in 

2011, Turkey’s imports from the Middle Eastern Countries amounted to USD 24.1 

billion; imports from Balkan countries amounted to USD 10.3 billion; and imports 

from the Central Asian and the Caucasian countries reached to USD 6.4 billion. 

 

Actions were also taken in the area of product safety in foreign trade during 2010- 

2011. Within this framework, 368 different products were included into the Risk 

Based Control System in Foreign Trade (TAREKS), the main aim of which is to 

activate the foreign trade controls via risk analysis and to assure product safety by 

focusing on poor quality and unsafe products. The annual trade volume of these 

products is approximately USD 18 billion. Within TAREKS, 10,500 users, who are 

authorized on behalf of 6,300 firms, are actively using the system. As of the end of 

March 2012, the transactions made through the system reached 300,000 (256,563 

export, 47,441 import). 

 

In addition to support development of Turkish brands with competitive capacity 

in international markets, within the framework of Communiqué 2006/4 8 , brand 

activities carried out abroad are being supported by the Ministry of Economy. 

Within this framework, a total of 119 brands of 106 firms; 87 brands of 77 Turkish 

firms within TURQUALITY® Program, 32 brands of 29 Turkish firms within 

the Brand Program are supported. Further, Communiqué 2005/4 9 , which supports 

Turkish brands opening and operating offices or stores abroad and undertaking 

brand promotion, has been replaced with Communiqué 2010/6 10 , which increases 

the rates, periods and limits of support and the number of units to be supported. 

7 

Albania, Bulgaria, Bosnia Herzegovina, Greece, Romania, Moldova, Slovenia, Croatia, Kosovo, Macedonia, Montenegro and 

Serbia. 

8 

Communiqué 2006/4 “Brandization of the Turkish Products, Establishing of the Image of Turkish Products and Supporting 

TURQUALITY®” (Official Gazette 05.24.2006/26177). 

9 

Communiqué 2005/4 Regarding Support activities for opening and operating office-stores abroad and brand promotion 

(Official Gazette 11.25.2005/26004). 

10 

Communiqué 2010/6 Regarding Support activities for Unit, Brandization and Advertising activities abroad (Official Gazette 

8.18.2010/27676)

34 


C. Investment 

1. Foreign Direct Investments and Current Account Balance 

Given the reduction in capital movement following the global economic crisis, 

foreign direct investment (FDI) has become very important for many countries. Within 

this context, this issue also needs to be evaluated under the macroeconomic stability 

heading. 

With the implementation of stable economic policies, Turkey attracted the highest 

FDI level in its history in 2007 with USD 22 billion. However, the global economic crisis 

caused significant shrinkage in global FDI flows. In parallel, there was a reduction in FDI 

flows to Turkey to USD 9 billion in 2010. 

Foreign direct investment 

rose by 76% in 2011 

compared to the previous 

year and reached USD 

15.9 billion. 

 

 

As a result of the recovery process in world economies and Turkey’s positive 

divergence from many countries in terms of basic macroeconomic indicators, FDI 

flows to Turkey have been affected positively. Foreign direct investment rose by 

76% in 2011 compared to the previous year and reached USD 15.9 billion. Of 

capital flows, 71% came from EU countries in 2011. 

In recent years, an increase is observed also in Turkey’s direct investments abroad. 

These were USD 1.5 billion in 2010 and rose by 67% to USD 2.5 billion in 2011. 

Figure 3: Foreign Direct Investments by Years 

25,000 

20,000 

USD million 

15,000 

10,000 

5,000 

0 

2007 2008 2009 2010 2011 

Inflow 

Outflow 

Source: the CBRT


35 

 

 

 

The ratio of current account 

deficit to GDP, which was 6.1% in 2006, 

declined to 5.9% in 2007, 5.7% in 2008, and 

2.3% in 2009 as a result of the decreasing 

imports caused by the crisis. 

 

In spite of the 11.5% increase in 

exports in 2010, as a result of the 31.7% 

increase in imports the Current Account 

Balance had a deficit of USD 46.6 billion. 

The ratio of the current account deficit to 

GDP in this period was 6.3%. The Current 

Account Balance had a deficit of USD 77.2 billion in 2011 and the ratio of Current 

Account Deficit to GDP increased to 10%. 

According to the International Monetary Fund (IMF), the ratio of the current 

account deficit to the GDP is expected to be 7.4% in 2012 11 . The Medium Term 

Program (MTP), which covers the period of 2012 – 2014, anticipates that exports 

in 2012 will be USD 148.5 billion, imports will be USD 248.7 billion, and the ratio 

of the current account deficit to GDP will be 8%. At the end of 2014, it is expected 

that exports will be USD 185.1 billion and the ratio of the current account deficit 

to GDP as of 2014 will be 7%. 

Despite the dramatic drop in capital flows as a result of the decreasing current 

account deficit with the crisis, a rapid recovery was seen in the capital inflows which 

were USD 56.7 billion in 2010 and increased to USD 63.2 billion in 2011. 

According to the 

International Monetary 

Fund (IMF), the ratio 

of the current account 

deficit to the GDP is 

expected to be 7.4% in 


11 

IMF World Economic Outlook Report, September 2011.

36 


Table 8: Current Account Balance 

(USD Billion) 

2008 2009 2010 2011 2012* 

Current Account Balance -41.5 -13.4 -46.6 -77.2 -65.4 

Foreign Trade balance -53.0 -24.9 -56.4 -89.4 -81.8 

Export (FOB) 136.3 104.3 117.9 140.6 152.6 

Export (FOB) 132.0 102.1 113.9 135.0 148.5 

Shuttle Trade and Adjustment 4.3 2.2 4.0 5.6 4.2 

Import -187.7 -132.1 -173.9 -225.2 -232.4 

Import (CIF) -202.0 -140.9 -185.5 -240.8 -248.7 

Freight and Insurance and Practice 14.2 8.8 11.6 15.6 16.3 

Services Balance 17.7 17.3 15.5 18.2 21.5 

Incoming 35.6 33.9 34.7 39.0 42.8 

Outgoing -17.8 -16.6 -19.3 -20.7 -21.3 

Tourism 18.4 17.1 16.0 18.0 21.0 

Incoming 22.0 21.3 20.8 23.0 26.0 

Outgoing -3.5 -4.1 -4.8 -5.0 -5.1 

Incoming Balance -8.4 -8.2 -7.1 -7.7 -6.9 

Incoming 6.9 5.2 4.5 4.0 5.0 

Outgoing -15.3 -13.4 -11.6 -11.7 -11.9 

Investment Income Balance -8.3 -8.1 -7.0 -7.6 -6.8 

Direct Investments -2.6 -2.7 -2.2 -2.8 -2.6 

Portfolio Investments 1.0 0.3 -0.5 -0.9 -0.3 

Other Investments -6.7 -5.6 -4.3 -3.9 -3.9 

Interest Income 2.0 1.7 1.1 1.2 1.4 

Interest Expense -8.7 -7.3 -5.4 -5.1 -5.3 

Long Term -8.0 -6.8 -5.1 -4.5 -4.7 

Current Transfers 2.1 2.4 1.4 1.7 1.8 

* 2012 Program 

Source: the CBRT Balance of Payments Statistics (January 2012) 

2. Investment Incentives 

The new incentive 

system supports a 

transition from labor 

intensive technology 

to information based 

technology, producing 

the raw materials and 

intermediate goods 

that our country needs 

and forming the unity 

between investment, 

production, employment 

and export policies. 

Investment incentives play a significant role in enhancing investments which 

are necessary to attain the permanently high growth rates which Turkey has recently 

experienced. In this context the new incentive system supports a transition from labor 

intensive technology to information based technology, producing the raw materials and 

intermediate goods that our country needs and forming the unity between investment, 

production, employment and export policies. 

In this context, investors can benefit totally or partially from general, regional, 

large scale and strategic investments; VAT exemption, customs duty exemption, tax 

reduction, social security premium support calculated on minimum wage, tax support, 

land allocation and income tax withholding support.


37 

D. Restructuring of the Public Expenditures and 

Financial Consolidation 

Restructuring public expenditures and increasing resources allocated for public 

investment primarily in infrastructure and improved financial consolidation have been— 

just as in previous meetings—among the issues underlined in the sixth meeting of the 

Council members. 

 

 

With the impact of the economic 

recession resulting from global crisis 

and the increase in the budget deficit, 

the ratio of EU Defined General 

Government Nominal Debt Stock to 

GDP rose to 46.1% in 2009; however, 

within the framework of the measures 

taken and the economic program 

implemented, the ratio fell to 42.4% on 

a downward trend by the end of 2010. 

By the end of 2011 the ratio was 39.4%. 

In addition, discipline in public expenditure resulted in a decrease in the ratio of 

public net debt stock to the GDP from 61.5% in 2002 to 28.9% in 2010 and to 

22.4% by the end of 2011 12 . 

Table 9: Public Debt Stock 

(TL Million, %) 

2005 2006 2007 2008 2009 2010 2011 

Central Government Gross 

Debt Stock 

331,520 345,050 333,485 380,321 441,508 473,561 518,343 

Central Government Gross 

Debt Stock /GDP % 

51.1 45.5 39.6 40.0 46.3 43.1 40.0 

EU Defined General 

Government Nominal 342,055 352,835 336,595 380,390 439,338 465,858 510,553 

Debt Stock 

EU Defined General 

Government Nominal 

52.7 46.5 39.9 40.0 46.1 42.4 39.4 

Debt Stock / GDP % 

Public Net Debt Stock 270,287 258,202 248,441 267,992 309,886 317,628 290,459 

Public Net Debt Stock / 

GDP 

41.7 34.0 29.5 28.2 32.5 28.9 22.4 

Source: Undersecretariat of Treasury 

Discipline in public 

expenditure resulted in 

a decrease in the ratio of 

public net debt stock to 

the GDP from 61.5% in 

2002 to 22.4% by the end 

of 2011. 

12 

Undersecretariat of Treasury.

38 


 

Under the MTP, it is expected that the ratio of EU defined general government 

gross debt stock to the GDP will keep on decreasing in 2012-2014 and will fall to 

the level of 32% by the end of 2014. 

Table 10: Estimations for the 2012-2014 EU Defined General Government Gross Debt 

Stock (%) 

2012 2013 2014 

EU defined general government gross debt stock /GDP (%) 37.0 35.0 32.0 


The ratio of interest 

expenditures to the GDP, 

which was 5.3% in 2008 

and 5.6% in 2009, fell 

back to 4.4% as of the 

end of 2010 and to 3.3% 

as of the end of 2011. 

 

Among the 2010 central government budget accruals, the expenses were TL 294,359 

million, the non-interest expenses were TL 246,060 million and the incomes were 

TL 254,277 million. During this period, the ratio of budget deficit to the GDP 

was 3.6%, below the foreseen ratio of 4.9%. The ratio of central government 

budget non-interest surplus to GDP was 0.7%. In the central government budget 

accruals of 2011, expenses were TL 313,302 million, non-interest expenses were 

TL 271,090 million, and incomes were TL 295,862 million. There was significant 

decrease in interest expenditures in 2010 and 2011. In this context, the ratio of 

interest expenditures to the GDP, which was 5.3% in 2008 and 5.6% in 2009, fell 

back to 4.4% as of the end of 2010 and to 3.3% as of the end of 2011. In addition, 

according to the MTP, it is foreseen that this level will fall down to 3.2% as of 2014. 

The share of interest expenditures in budget expenditures has decreased to the 

level of 16.4% as of 2010 and to 13.5% as of 2011 13 . 

Table 11: The Estimations and Accruals of 2011 Central Government Budget 

2011 

Budget 

Law 

End of 2011 

Accruals 

Estimation * 

2011 

Provisional 

Accrual 

2011 

Budget Law 

(%GDP) 

End of 2011 

Accruals 

Estimation* 

(%GDP) 

2011 

Provisional 

Accrual 

(%GDP) 

Budget Expenses 312,573 313,172 313,302 25.7 24.4 24.2 

Non-Interest 265,073 270,562 271,090 21.8 21.1 20.9 

Expenses 

Interest Expenses 47,500 42,610 42,212 3.9 3.3 3.3 

Budget Incomes 279,026 290,941 295,862 23.0 22.7 22.8 

Non-Interest 

13,954 20,380 24,773 1.1 1.6 1.9 

Balance 

Budget Balance -33,546 -22,230 -17,439 -2.8 -1.7 -1.3 

*MTP 


13 

Undersecretariat of Treasury


39 

 

In the 2011 Budget Law, the ratio of central government budget deficit to GDP 

has been foreseen to be 2.8%; however, the relevant deficit has been actualized as 

1.3%. At the end of 2014, the central government budget deficit is desired to be 

decreased to 1%. The ratio of the central government budget non-interest surplus 

was 1.9% as of the end of 2011 and it is expected that this level will increase to 

2.1% as of 2014. 

At the end of 2014, the 

central government 

budget deficit is desired 

to be decreased to 1%. 

Table 12: 2012-2014 Estimations on Central Government Budget 

(%GDP) 

2012 MTP 2013 MTP 2014 MTP 

Budget Expenses 24.6 24.2 23.6 

Non-Interest Expenses 21.1 20.9 20.4 

Interest Expenses 3.5 3.4 3.2 

Budget Incomes 23.1 22.9 22.5 

Non-Interest Balance 2.0 2.0 2.1 

Budget Balance -1.5 -1.4 -1.0 

Source: MTP 

 

With Law 6111 14 , which entered into force in 2011, the opportunity to pay the 

public claims in appropriate terms by restructuring them and in this context, the 

claims of public institutions and professional institutions, primarily those related to 

tax and insurance, were taken into the scope of structuring. 

 

The 19 th Stand By regulation organized with the IMF was completed on May 2008. 

In 2010, a total of SDR 1,508 million (Special Drawing Right) payment was made 

to the IMF, SDR 1,423 million being capital and SDR 85 million being interest. In 

2011, a total of SDR 1,826 million payments were made, SDR 1,780 million being 

capital and SDR 46 million being interest. In this scope, Turkey’s total debt stock to 

the IMF fell back to SDR 1,874 million. 

14 

Law No: 6111 on the Amendment of Restructuring of Some Claims and Social Insurances and General Health Insurance Law 

and Various Laws and Decree Laws (Official Gazette 02.25.2011/27857-Repeating).

40 


Table 13: Net Finance Provided by the International Monetary Fund 

Million SDR 2000-2004 2005 2006 2007 2008 2009 2010 2011 TOTAL 

I, Utilization 23,431 1,666 1,999 749 2,248 0 0 0 30,093 

I, Debt Service 12,524 5,910 5,635 3,741 1,502 582 1,508 1,826 33,229 

Capital 10,232 5,267 5,092 3,373 1,244 458 1,423 1,780 28,868 

Interest 2,292 644 543 368 258 124 85 46 4,361 

(1) (2) 

III, Net Utilization 

(I-II) 

V, Ex Interest Net 

Utilization 

V, IMF Debt (End 

of Period) 

10,907 -4,245 -3,637 -2,992 746 -582 -1,508 -1,826 -3,136 

13,200 -3,601 -3,094 -2,624 1,004 -458 -1,423 -1,780 1,225 

60,745 10,247 7,154 4,530 5,534 5,076 3,654 1,874 

(1) Includes the total of the Undersecretariat of Treasury and the CBRT (Central Bank of the Republic of Turkey). The CBRT’s 

last use of resources was in 2001 and the redemption of debts was completed in 2005. 

(2) USD/SDR rate by 31 December 2011 is 1, 5395. 

Source: Undersecretariat of Treasury Public Debt Management Report, January 2012 

By increasing the cash 

domestic borrowing 

average maturity, which 

was 9.4 months in 2002, 

up to 60.8 months as of 

March 2012, the liquidity 

risk has been mitigated. 

 

In the area of the strategic criteria policy and borrowing strategies which have 

been in practice since 2003, improvements have been seen also in the risk profile 

of the public debt. Within this context, the ratio of foreign exchange type/foreign 

exchange indexed debts within the central government debt stock decreased to 

27.3% at the end of February 2012 while it was 46.3% in 2003. The ratio of 

debt with floating rate interest in the central government gross debt reduced to 

39.8%, while it was 51.1% in 2003. In addition, by increasing the cash domestic 

borrowing average maturity, which was 9.4 months in 2002, up to 60.8 months as 

of March 2012, the liquidity risk has been mitigated 15 . In 2011, except for the local 

administration investments and investment labor costs, 2,534 public investment 

projects are being carried out in our country, with a total of TL 303.7 billion with 

the prices of 2011, whose cumulative expense for the end of 2010 was TL 140.6 

billion and whose initial fund for 2010 was TL 31.3 billion. Within these projects; 

• z Share of the transportation sector was 43.2% 

• z Share of the other public services was 20.7% 

• z Share of education was 11.6% 

• z Share of the agriculture sector was 9.4% 

• z Share of the energy sector was 5.1% 

• z Share of the health sector was 4.2% 

15 

Undersecretariat of Treasury.


41 

Table 14: Public Investments in Turkey (2002-2011) (1) 

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 

Number of Projects 4,414 3,851 3,555 2,627 2,525 2,710 2,759 2 ,332 2, 425 2,534 

Total Project Sum 

(At Current Prices, TL Billion) 

Cumulative Expense Prior to 

the Current Year (At Current 

Prices, TL Billion) 

Total Program Allowance 

(At Current Prices, TL Billion) 

166.8 187.1 196.1 206.7 200.4 209.3 219.0 245.8 273.4 303.7 

66.0 80.4 86.8 84.0 86.5 93.5 102.4 110.9 118.4 140.6 

10.6 12.5 12.0 16.2 17.5 17.1 17.1 21.5 27.8 31.3 

Total Program Allowance 

/ Total Project Sum (%) 

6.3 6.7 6.1 7.8 8.7 8.2 7.8 8.7 10.1 10.3 

(1) Except for the local administration investments, nationalization expenses and investment that are excluded from the 

total in the investment program. 

Source: 2012 Program 

 

 

With the overcoming of the global crisis in Turkish economy, real private sector 

fixed capital investments are expected to rise 22.3% in 2011. During this period, it 

is estimated that the agriculture, mining, manufacturing, energy sectors will increase 

their shares inside the private sector fixed capital investments; however, the shares 

of transportation, tourism, housing, education, health and other service sub-sectors 

will decrease 16 . 

In 2012, it is estimated that real private sector fixed capital investments will increase 

by 7.7%. It is also estimated that within the private sector fixed capital investments 

of 2012, the shares of agriculture and transportation sub-sectors will increase 

compared to the previous year; the share of education will be stable and the shares 

of the other sectors will decrease 17 . 

In 2012, it is estimated 

that real private sector 

fixed capital investments 

will increase by 7.7%. 

16 

2012 Program, p.24. 

17 

2012 Program, p.25.

42 


Table 15: Sectoral Distribution of Fixed Capital Investments (1) 

Sectors 

2010 

2011 

(Accruals) 

2012 

(Planned) 

Public Private Total Public Private Total Public Private Total 

Agriculture 4,635 3,766 8,401 5,348 6,814 12,162 6,883 8,020 14,903 

Mining 879 2,676 3,555 1,611 3,762 5,373 1,240 4,154 5,394 

Manufacturing 384 62,192 62,577 435 90,161 90,596 763 99,173 99,936 

Energy 3,054 9,194 12,248 2,885 16,490 19,376 4,010 18,174 22,184 

Transportation 20,545 33,185 53,730 24,647 45,326 69,973 20,366 60,624 80,989 

Tourism 240 10,320 10,560 359 12,258 12,617 444 13,286 13,730 

Housing 715 27,969 28,684 947 34,235 35,182 1,233 37,914 39,147 

Education 4,873 1,817 6,690 6,624 2,265 8,888 8,323 2,535 10,858 

Health 2,248 5,010 7,258 2,405 5,990 8,396 2,825 6,596 9,421 

Other Services 9,491 7,200 16,691 11,850 8,278 20,129 14,585 9,035 23,620 

TOTAL 47,064 163,330 210,394 57,111 225,580 282,691 60,671 259,511 320,181 

(1) Investment labor is included in the central government budget. 

Source: 2012 Program 

In 2012, besides the sectoral and regional priorities, attention should be paid to the 

following projects: 

• z Projects that can be completed and brought into the economy in 2012, 

• z Projects in which there has been significant physical accrual, 

• z Projects that have to be implemented or completed in connection with or 

simultaneously with other already initiated projects, 

• z Projects of maintenance-renovation, maintenance-repair, rehabilitation and 

modernization for more effective use and for the preservation of the current 

capital stock, 

• z Projects for the reduction of disaster risks, disaster prevention and for the 

compensation of the disaster losses, 

• z Projects required for the realization of the policies and priorities put forward in 

line with EU membership, 

• z Projects compliant with the e-Transformation Turkey Project and the 

Information Society Strategy.


43 

E. Deepening Financial Market Development 

Deepening financial markets 

in a country contributes to increases 

in investments, establishment of 

development and sustainable growth, 

preservation of financial stability and 

stability of macroeconomic indicators, 

primarily inflation. Regarding this issue, 

which was brought up for the first time 

in the third meeting of the Council, there 

have been some significant developments, 

including the annual and daily changes in 

the trade volume of Istanbul Stock Exchange (ISE) and Turkish Derivatives Exchange, 

developments in the insurance sector and the improvements in the legal infrastructure in 

the recent years. 

In spite of the global crisis which had the most impact on fiscal and financial 

markets in 2009 and 2010, the financial markets in Turkey have managed to preserve their 

strong position in 2011 as well. 

 

 

 

The number of publicly-traded companies in the ISE displayed an increase of 

about 7% compared to the same month of the previous year and rose up to 374 as 

of February 2012. Parallel to the recession in the global markets, the stock exchange 

market average daily trade volume on monthly USD basis, decreased approximately 

by 28% compared to the previous year’s same period and fell down to USD 1,564 

billion. The foreign share in the publicly traded market value of the ISE companies 

was 62% in February 2012. 

The ISE, compared to the developing countries regarding stock exchanges total 

volume USD with 58.6 billion, ranked 8 th as of February 2012. 

According to World Federation of Exchanges (WFE); in terms of Bonds and Bills 

trade, the ISE together with its registrations, through the total annual trade of USD 

79,445 billion within the Bonds and Bills Market, ranked 8 th . As of February 2012, 

the average monthly trade volume in the Bonds and Bills Market was approximately 

USD 364.4 million. 

The foreign share in 

the publicly traded 

market value of the ISE 

companies was 62% in 

February 2012.

44 


Figure 4: Comparison of the Annual Total Stock Exchange Trade Volume in 

Developing Markets as of February 2012 (USD Million) 

China-Shanghai 

China-Shenzhen 

Korea 

BM&FBOVESPA 

Taiwan 

India-National 

Johannesburg 

Turkey-IMKB 

Thailand 

India-Mumbai 

Malaysia 

Mexico 

Indonesia 

Warsaw 

Israel 

Santiago 

Columbia 

Phillipines 

Egypt 

Budapest 

59,503 

58,564 

37,149 

24,551 

23,576 

20,010 

17,235 

11,178 

8,953 

8,125 

8,007 

6,776 

2,988 

2,793 

158,322 

139,457 

114,127 

371,281 

327,580 

424,598 

50,000 

100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 

USD Million 

Source: WFE 

Figure 5: Bonds and Bills Operations– February 2012 (USD Million) 

Spain-BME 

London 

NASDAQ 

Johannesburg 

Columbia 

Korea 

Norway-Oslo 

Turkey-IMKB 

Gretai 

MICEX/RTS 

Israel 

Sweden SIX 

Santiago 

India-National 

China-Shanghai 

Irland 

Germany 

Buenos Aires 

India-Mumbai 

152,090 

150,544 

104,188 

79,445 

59,104 

41,472 

41,197 

41,193 

32,674 

26,774 

17,933 

13,767 

7,701 

4,993 

3,437 

489,334 

471,970 

770,220 

424,598 

500,000 1,000,000 1,500,000 2,000,000 2,500,000 

USD Million 

Source: WFE


45 

 

The developments of ISE during 2011 have been placed into the Global 

Competitiveness Index which is published by the World Economic Forum (WEF). 

Within the sub indicator of “Financial Market Development” which contributes 

to the calculation of the index by 17%, Turkey improved 6 steps to 55 th place with 

4.26 points 18 . 

Table 16: Global Competitiveness Index – Subcomponent of the Financial Market 

Development 

Indications Regarding 

the Subcomponent of 

the Financial Market 

Turkey Australia USA UK Bulgaria Greece Hungary 

Development 

Accessibility of the financial 

services 

43 21 13 4 106 68 42 

Cost of the financial services 40 25 18 12 119 86 91 

Financing of the local stock 

market 

42 16 28 19 88 91 110 

Easy access to credits 73 23 24 50 48 111 93 

Presence of the risk capital 82 21 12 23 66 103 117 

Robustness of the banks 33 4 90 111 101 106 75 

Regulation of the stock 

market 

32 10 48 28 102 84 39 

Legal Rights Index 89 8 20 8 20 105 39 

Indications Regarding 

the Subcomponent of 

the Financial Market 

Development 

55 6 22 20 75 110 63 

Source: WEF 

 

 

In addition to the developments regarding trade volume in the ISE in 2011, measures 

have been taken for the development of markets. In terms of public offerings of 

the stock exchange, in addition to the method used in the primary market, two 

new methods were introduced: Fixed Price Offering and Sales Method (Fixed Price 

Method – FPM) and Variable Offering and Sales Method (Variable – Multi Price 

Method – VPM). The operating rules for these methods were announced on March 

11, 2011. With the same announcement, Stock Exchange Market Primary Market 

Session Hours were changed to 10.30 – 12.00. The aforementioned methods and 

primary market hours were put into practice on April 4, 2011 19 . 

Within the Bonds and Bills Market (TBP) of the ISE, the Interbank Repo-Reverse 

Repo Market was established on January 7, 2011. 

18 

World Economic Forum Global Competitiveness 2011-2012 Report. 

19 

Circular on the New Transaction Methods for the First Public Offering in the Primary Market of 03.11.2011 No 366.

46 


As of December 2011, 

the total actives of the 

banking sector increased 

by 21% and reached to TL 

1,218 trillion. 

With the impact of 

drawback in the interest 

rates, the credit volume 

for the same period 

increased by 29.9%, 

and the deposit credit 

conversion rate was 

approximately 100%. 

 

 

 

 

 

 

Due to the lack of effective policies to prevent the problems faced by the European 

Union, the debt issue has been spreading and has been putting pressure on the 

global economy and the financial system. Concerns surrounding these problems 

and prospective outcomes has caused disruption in risk appetite and resulted in 

fluctuation in the markets. As a result of market fluctuation, borrowing potential 

has been restricted and costs of borrowing have risen. However, implementation of 

effective market diversification policies, a total of USD 4.3 billion USD Eurobond 

has been realized in 2011. By the positive atmosphere at the beginning of 2012, 

USD 2.5 billion of Eurobond has been made; and through March, 90 billion 

Japanese Yen (USD 1.1 Billion) was achieved. 

In 2011, the EU based country debt crisis and the recession in the global economies 

affected the financial markets adversely worldwide. During this period, Turkey’s 

finance sector came into prominence in terms of its strong position. The banking 

sector which has the most important place especially in the finance sector sustains 

its healthy development process in terms of capital, profitability and risk indicators. 

As of December 2011, the total actives of the sector increased by 21% and reached 

to TL 1,218 trillion. 

With the impact of drawback in the interest rates, the credit volume for the same 

period increased by 29.9%, and the deposit credit conversion rate was approximately 

100%. When the 4% GDP growth target estimated in the MTP and the interaction 

between the real sector and the financial sector are taken into consideration, the 

recession in the GDP growth rate in 2012 is foreseen to cause a mild recession in 

credit growth. 

In 2011, various measures were taken with the aim of strengthening the institutional 

capacities and financial structures of both the banking sector and non-bank financial 

sectors. Within this scope, amendments have been made regarding the banks’ capital 

sufficiency, equity capitals, independent auditing, institutional management, internal 

systems and regarding the non-banking financial sectors’ capital and managements 20. 

On the other hand, the new capital adequacy regulation drafts of the Turkish Banking 

System in compliance with the Basel II have been published. July 1, 2011 and June 

31, 2012 have been designated in a transition process of parallel implementation. In 

addition, the standards foreseen by the Basel Banking Committee which represent 

the first stage of a series of reforms and which are publicly known as Basel 2.5 have 

been incorporated into the Basel II Regulation Drafts which are subjected to the 

parallel implementation process. 

The annual trade volume of Turkish Derivatives Exchange, with approximately TL 

440 billion in annual volume, was established in 2005 and is the first and only single 

derivative tools stock exchange as of 2011. Within the Turkish insurance sector and 

the individual annuity insurance sector, which play important roles in the financial 

20 

Banking Regulation and Supervision Agency 2011 Activity Report.


47 

 

markets, there are 59 insurance and retirement companies and 2 reinsurance 

companies as of the end of March 2012. The number of total personnel working 

in the Insurance and Retirement Companies as of the end of December 2011 is 

16,571. 

The total premium production of the insurance sector, which has been sustaining 

its stable growth for the last 20 years, was TL 17.16 billion as of December 2011. 

The special insurance premium expense per capita, which was USD 4.5 in 1981, 

has reached up to USD 136.88 at the end of December 2011. Within the insurance 

sector total premium production as of the end of December 2011, the share of 

non-life branches has been 84.34% and the share of life branches has been 15.66%. 

Within the Turkish 

insurance sector and 

the individual annuity 

insurance sector, there 

are 59 insurance and 

retirement companies 

and 2 reinsurance 

companies as of the end 

of March 2012.

48 


Business Environment 

49 

II. Business 

Environment 

A. Maintaining the Fight against Informal Economy 

In the last Meeting, the Council Members stated their support for the government’s 

efforts to control the informal economy, among the main aspects of current economy 

policy. They also highlighted the importance of maintaining the efforts in order to ensure 

fair competition, increase the productivity of enterprises, facilitate access to finance, 

widen the tax base and help protect the social rights of workers. 

 

This effort was captured in the “Action 

Plan of the Strategy for Fight against 

the Informal Economy” 21 in 2008. 

As a result of the intensive studies 

and effective audits, there have been 

significant improvements in informal 

economy levels, which has backed down 

to 28.3% as of 2010, from the 32.7% 

level of 2003. 

Informal economy level 

has backed down to 

28.3% as of 2010, from 

the 32.7% level in 2003. 

 

Within the 2008-2010 Action Plan; 

• z Audits have been increased for the LPG and fuel oil sectors; cooperation has 

been established with the relevant institutions with the aim of carrying out actual 

investigations to prevent losses and illegal activity in the fuel oil sector, as well as 

preventing informality and illicit economy by registering the sector. 

• z A Risk Analysis Model has been introduced for the audits of the taxpayer groups 

diversified by sectors. Risk analysis projects have significantly contributed in the 

fight against the informal economy by assuring voluntary adaptation, revealing 

tax bases and tax differences, as well as decreasing tax losses and evasions. In 

addition, this method provides the opportunity to carry out sectoral and regional 

A Risk Analysis Model has 

been introduced for the 

audits of the taxpayer 

groups diversified by 

sectors. 

21 

Prime Ministry Circular No 2009/3 Regarding the Action Plan of the Strategy for Fight against Informal Economy (Official 

Gazette 02.05.2009/27132); Prime Ministry Circular No 2011/21 (Official Gazette 12.21.2011/28149).

50 


The e-invoice system has 

fastened and secured the 

billing procedures. 

VAT return process has 

been expedited with the 

VAT Return Risk Analysis 

Project Application. 

analysis by determining the size of taxpayer groups according to the sectors, and 

also enables assessment of the tax adaptation behaviors of the taxpayers. 

• z The e-invoice 22 system initiated in 2010, has fastened and secured the billing 

procedures as well as decreasing the labor, time and the costs required for billing. 

3,020 taxpayers have benefitted from the electronic invoice system as of August 

2011. 

• z Legislative arrangements regarding the encouragement of Licensed Warehousing 

have entered into force 23 . Within this scope, the gains acquired from the 

transactions of product bills given to the producer for the product delivered to 

the licensed warehouse, will be exempted from the revenue and corporate taxes 

until 31 December 2014. Likewise, Value-Added Tax (VAT) exemption has been 

brought for the first deliveries of products to the warehouse and their trades in 

the stock exchange. Contracts made with the licensed warehouses and product 

bills are exempt from stamp tax. 

• z With the VAT Return Risk Analysis Project Application (KDVIRA), the VAT 

return process has been expedited, labor and time saving has been maintained, 

and, as a result of concentration on the more risky issues, effectiveness and 

efficiency have been ensured in audits. In addition, with the evaluations of the 

VAT returns by the Data Processing Center, application unity has been assured 

in Turkey. 

• z The informality notifications have started to be taken from a single center 

throughout Turkey via the Tax Communication Center. Within this scope, 

540,056 questions of taxpayers have been answered by the related authority. 

• z For increasing the voluntary adaptation of taxpayers, brochures have been 

published on Internet and sent to the provinces during tax return periods. 

• z Informational activities have been conducted during the action plan period to 

encourage taxpayers to conduct their operations within the legal framework. 

Likewise, 35,000 personnel have been trained to strengthen taxpayer-tax official 

relations. 

• z Training activities have also been organized in primary schools, within the 

framework of the awareness building activities. 

 

Special measures have been taken to increase registered employment within the 

framework of “2008-2010 Action Plan of the Strategy for Fight against the 

Informal Economy”: 

• z The premium burden on the employer has been diminished with the amendment 

towards authorizing Treasury to cover the 5 points of employer’s share of the 

insurance premium 24 . 

22 

General Communiqué on Tax Procedure Law No 397 (Official Gazette 03.05.2010/27512). 

23 

Law No 5904 on the Amendment of the Tax Revenue Law and Some Other Laws (Official Gazette 07.03.2009/27277). 

24 

Law No 5763 on the Amendment of Labor Law and Some Laws (Official Gazette 05.26.2008/26877).


51 

 

 

• z The participation of women and youth in the registered employment has been 

encouraged, by the arrangement on the coverage of the employer’s premium 

share from the Unemployment Fund, for the enterprises which employ women 

and 18-29 year-old young employees 25 . 

• z The cost of employing the disabled has been lowered; and implementation has 

been initiated on paying the whole premium share of the employers who employ 

disabled within the quota; and half of the premium share of the employers who 

employ disabled over the quota or those who employ disabled although not 

obliged to 26 . 

• z The employers with more than 10 employees, has been obliged to pay their employees 

via banks 27 . 

2011-2013 Action Plan of the Strategy for Fight against the Informal Economy, 

have been completed under the coordination of the Revenue Administration (GIB) 

with the contributions of relevant institutions. Within the framework of the Plan, 

47 actions have been determined to; 

• z Increase Voluntary Adaptation, 

• z Strengthen Auditing Capacity, 

• z Increase the Deterrence of Sanctions, 

• z Database Exchange and 

• z Raise Social Awareness 28 . 

The Action Plan will be evaluated by the High Council for the Fight against 

Informal Economy convening under the chair of H.E. Mr. Prime Minister, at 

least once a year. Besides the Monitoring and Steering Council comprising of the 

Economy Coordination Council’s member ministers and the relevant ministers will 

monitor the progress at least every six months and the Executive Board comprising 

of the administrators of relevant institutions with the presidency of the Revenue 

Administration will assess the actions every three months. 

Furthermore, within the scope of the studies the fight against the informal economy, 

effectiveness in the audits has been maintained by increasing the administrative 

fines. In addition, beside the administrative fines, the opportunity to file a criminal 

complaint according to the Turkish Penal Code has been provided for those using 

coercion and violence to prevent audits 29 . 

47 actions have been 

determined under the 

2011-2013 Action Plan 

of the Strategy for Fight 

against the Informal 

Economy. 

25 

Circular No 2009/52 dated 03.25.2009. 

26 

Law No 5763 on the Amendment of Labor Law and Some Laws (Official Gazette 05.26.2008/26877). 

27 

Regulation on the Payment of Wage, Premium, Bonus and Any Other Fees with similar features via Banks (Official Gazette 

11.18.2008/27058). 

28 

Prime Ministry Circular No 2011/21 (Official Gazette 12. 21.2011/28149). 

29 

Law No 5754 on the Amendment of the Social Insurance and General Health Insurance Law and Some Laws and Decree 

Laws (Official Gazette 05.08.2008/26870).

52 


B. Arranging the Legal Framework to Meet the Needs of the 

Business Life 

Developing the legal infrastructure 

in Turkey in line with the changing needs 

of the real sector and the new technologies 

and updating the legislation in conformity 

with the global standards and best practices 

are among the issues on which the Members 

are sensitive. Within this framework, the 

members of the 6 th Investment Advisory 

Council underlined that some of the basic 

legal arrangements, primarily the Turkish 

Commercial Code which has been in force 

since 1950 s have to be renewed. Within this scope, the long-term studies carried out for 

the renewal of some basic laws which will bring significant changes on the investment and 

trade environment have been concluded in 2011. The major improvements of the new 

legislation are as follows: 

The Commercial Code, 

No. 6762 was renewed 

and adopted by Grand 

National Assembly 

of Turkey on January 

13,2011. 

 

The Turkish Commercial Code No. 6762, which has been in force since 1957, 

renewed within the context of national and international developments regarding 

technology and trade law, harmonization obligations of Turkey with the EU and 

the relevant improvements in the capital markets area. The new Code, No. 6102 

was adopted by the Grand National Assembly of Turkey on January 13,2011 and 

will enter into force on July 1, 2012 30 . The major improvements regarding the 

investment and trade environment are as follows: 

• z The opportunity of establishing joint-stock and limited liability companies with 

a single shareholder or partner in addition to the formation of the board of 

directors with a single-person, 

• z Allowing the board and General Assembly meetings to be held in the electronic 

media, 

• z Signing the board resolutions with electronic signature, 

• z Introducing an obligation for the equity capital companies to found a web site 

and to announce the relevant reports and financial statements which should be 

legally made by the company, thus providing transparency within the company 

operations, 

• z Introducing a new auditing system in accordance with the Turkish Auditing 

Standards which are identical with International Auditing and Reporting 

Standards; while providing facilitations to prevent additional burden for the 

Small and Medium Sized Enterprises (SMEs), 

30 

The new Turkish Commercial Code, No: 6102 (Official Gazette 02.14.2011/27846).


53 

• z Strengthening the corporate governance principles, 

• z Strengthening the rights of the shareholding groups and minority shareholders. 

The law also envisages the establishment of a databank under the trade registries in 

which the issues of the companies subject to registration and announcement are restored 

and are presented to users electronically. 

 

 

Likewise, the Code of Obligations which had been in force since 1926 has been 

revised within the framework of national needs and international best practices 

and the new Turkish Code of Obligations, No. 6098 has been adopted on January 

11,2011 31 . One of the major pertinent improvements introduced by the new Code 

is the execution of agreements with the electronic signature. Thus, the contracts 

signed by the secure electronic signatures will be valid and binding. The law also 

comprises regulations in the private contracts area that will reinforce the balance 

of interests between the parties, primarily in the sales contracts. Furthermore, the 

law enables the adaptation of the contracts to the changing conditions and also 

regulates ordinary partnerships within the context of contemporary requirements. 

With the aim of reducing the burden of private sector debts within the global crisis 

environment, implementing the financial and monetary policies more effectively, 

and supporting employment and economic development; the Law No: 6111 on The 

Restructuring of Some Debts, the Amendment of Social Insurances and General 

Health Insurance Law and Some Other Laws and Decree Laws was adopted by the 

Grand National Assembly of Turkey on January 13 ,2011 32 . With the enforcement 

of this law; 

• z Various debts of private sector to public administrations have been restructured 

or the existing disputes have been terminated via the facilitation in the payment 

conditions, 

• z Arrangements have been made regarding the extension of the tax base, 

• z Measures to eliminate the deficiencies and defects identified throughout the 

implementation of the social security reform have been introduced, 

• z Apprentices, workers receiving vocational training, trainees and interns of the 

Turkish Employment Agency have been provided with the opportunity to 

benefit from social insurance schemes ; and the practical training opportunities 

for the students who receive vocational training have been expanded, 

• z To increase the employment of disadvantaged groups such as women, the young 

and the disabled, the social security premium reduction has been rearranged and 

• z Measures and arrangements aiming at expanding the implementation of flexible 

working conditions have been accepted. 

Turkish Code of 

Obligations, No. 6098 

was renewed and 

adopted on January 

11,2011. 

31 

The new Turkish Code of Obligations, No: 6098 (Official Gazette 02.04.2011/27836). 

32 

Official Gazette 02.25.2011/27857, 1. Repeated Version.

54 


 

With the aim of providing and updating arrangements in compliance with 

the international accounting and auditing standards, the Laws on the “Turkish 

Accounting Standards Board” and “Turkish Auditing Standards and Public 

Supervision Institution” have been drafted in consultation with the relevant 

parties. The discussions on the Drafts have been continuing within the relevant 

Commissions of the Grand National Assembly of Turkey. The major aims of the 

Drafts are the abolition of different auditing implementations in the independent 

external audits of the businesses, to provide standardization in the financial tables 

and to strengthen the current institutional infrastructure.


55 

C. Increasing the Speed, Effectiveness, Consistency and 

Predictability of the Judiciary 

Increasing the speed, effectiveness, consistency and predictability of the judiciary 

system has been one of the important emphasized priorities since the first Council 

meeting. Within this framework, significant improvements have been achieved in recent 

years with the efforts put forward by the coordination of the Ministry of Justice. 

 

 

Within the scope of the judiciary 

reforms, the new Code of Civil Procedure 

No:6100, which repealed the Code of 

Civil Procedure of 1927, comprises 

regulations eliminating the deficiencies 

caused by implementation; making the 

trials simple, fast, less expensive and 

effective; establishing the infrastructure 

that will provide and encourage settlement 

or reconciliation procedures and reflecting 

the developments gained in comparative 

law to the civil justice 33 . The Code which entered into force on October 1, 2011, 

also regards the dissemination of arbitration which has significant importance 

for investors as an alternative solution method; and the promotion of arbitration 

culture. Within this context, the procedures and principles on arbitration have been 

restructured within the framework of the International Arbitration Law No: 4686 

which was enacted based on the UNCITRAL Model Law. As a result, the national 

and international rules on arbitration have been harmonized and the national 

arbitration rules have been formulated within the framework of UNCITRAL rules. 

Furthermore, it is foreseen that the proliferation of alternative judicial procedures 

will contribute to the speed and effectiveness of the judiciary system. 

The Law which has been drafted by the Ministry of Justice with the aim to increase 

the effectiveness and efficiency of the judiciary system and reduce the burden on 

the courts has been enacted 34 . With the Law in question: 

• z In order to reduce the burden of the high courts, the fee implementation for 

legal applications has been introduced 35 , 

• z Notaries are authorized to carry out some ex parte proceedings such as granting 

inheritance document or invitation of the wife/husband who has left to the 

communal residence 36 , 

The new Code of Civil 

Procedure No. 6100, 

comprises regulations 

eliminating the 

deficiencies caused by 

implementation; making 

the trials simple, fast, less 

expensive and effective. 

33 

Code of Civil Procedure, No: 6100 (Official Gazette 02.04.2011/27836). 

34 

The Amendment Law Concerning the Acceleration in Judgement Services, (Official Gazette 04.14.2011/ 27905). 

35 

Charges Law No. 492, an amendment in the tariffs (1) and (2). 

36 

An amendment in the Article 71 of the Notary Law.

56 


 

 

 

• z In order to prevent the investigation file to be delayed and the prosecution process 

to be prolonged due to the foreign plea given by the chief public prosecutors, 

the Code of Criminal Procedures have been amended 37 , 

• z In order to reduce the workload of the regional courts of justice and the Supreme 

Court of Appeals, a monetary limit has been imposed for legal proceedings 

applied against the punitive fine rulings given directly 38 , 

• z In order to provide effectiveness in the investigations carried out by public 

prosecutors, their obligation to be present in some cases has been removed 39 , 

The Draft Law establishing an independent Istanbul Arbitration Center has 

been referred to the Prime Ministry. The Law has been prepared with the aim of 

providing fast and effective arbitration or alternative dispute resolution methods 

for the disputes arising from private law relations and for the areas where parties 

could freely dispose. 

The Draft Law 40 which aims for a fast and effective presentation of public services 

and also for transferring the paper work process to the electronic environment, 

has been referred to the Prime Ministry. With the enactment of the mentioned 

Draft, any kind of procedures in case, enforcement and bankruptcy proceedings, 

administrative suit and tax case proceedings and proceedings regarding criminal 

procedure law are to be carried out electronically through the National Judiciary 

Network Project (UYAP). Expediting the public services via the usage of 

technological tools is expected to boost the judiciary processes. Within this context, 

the Draft Law: 

• z Provides visa and passport applications to be made and concluded via the 

electronic environment, 

• z Provides notarial procedures to be made via the electronic environment, 

• z Determines the conditions for the evaluation of personal health data obtained 

through the presentation of health services, 

• z Provides the necessary coordination in e-State projects and 

• z Envisages the use of secure electronic signature in the financial sector, primarily 

in banking and finance 

To enhance the speed and efficiency of judiciary services provided by High Courts, 

relevant regulations have been entered into force with the enactment of the Law 

no 6110 41 . The Law has increased the number of members of High Courts and 

enabled the chambers of these Courts to work with more than one commission. In 

37 

An amendment in the Article 161 of the Code of Criminal Procedures, No. 5271. 

38 

Administrative Procedure Act, No: 2577, Article 45. 

39 

The Enforcement and Implementation Law of Criminal Procedure Code, Provisional Article 3. 

40 

The Draft Law Amending Some Laws and Decree Laws for Expediting Public Services. 

41 

Law no 6110 on the Amendment of Some Laws (Official Gazette 02.14.2011/27846)


57 

 

 

 

 

this context, the number of chambers of the Supreme Court of Appeals increased 

from 32 to 38 and the number of members from 250 to 387. Furthermore, the 

number of chambers of the Council of State increased from 12 to 15 and the 

number of members increased from 87 to 156. 

As a third package law drafted to enhance the efficiency of judicial services, “The 

Draft Law Amending Some Laws and Postponing Lawsuit and Punishments 

Regarding Crime Committed through Press”, was sent to the Grand Natıonal 

Assembly of Turkey as of January 30, 2012. 

With the Decree Law no 650 42 , effective measures have been taken in order to 

enhance the number of judges and prosecutors. Moreover, a total 5,642 personnel 

have been employed including permanent and contract staff in 2011. With the new 

established 293 courts, the total number of courts reached to 6,223 in 2011. 

In order to save from time and costs within judicial processes, UYAP which enables 

all kinds of judicial and administrative procedures to be done electronically, was 

opened up for use in all jurisdiction units as of the end of 2009. Under this scope, 

the communication and integration studies have been ongoing among public and 

private institutions. 

In line with the judgment 43 of the High Council of Judges and Prosecutors (HCJP) 

and the decision 44 of Ministry of Justice, the number of regional courts increased 

from 9 to 15 and the assignments of attorneys general have been completed 45 . 

Following the completion of relevant infrastructure, these courts are expected to 

be operational within 2013. 

 

Upon the restructuring of 13 th article of Judicial Records Code (No: 5352), 

public institutions, professional organizations qualified as public institutions and 

real persons, are provided with the opportunity to reach criminal record system 

electronically and to use queries for their own business and transactions. In order to 

launch the project regarding the establishment of the infrastructure of this access, 

related funding regulations were completed in 2012. 

 

In order to boost productivity in enforcement proceedings and to increase the 

institutional capacity of enforcement offices, “The Project on Increasing the 

Capacity of Enforcement Offices” has been launched by the Ministry of Justice. 

The main purpose of the Project which has been formed as an EU Twinning 

Project and has been at its initial stage, is to provide more productive and the 

swift operation for enforcement offices, to reduce complaints, and to increase the 

confidence of citizens in those offices. 

42 

Decree Law Amending the Law Regarding Organization and Functions of Ministry of Justice and Some Laws and Decree 

Laws ((Official Gazette 08.26.2011/28037). 

43 

Judicial Decision No: 187/ 06.07.2011 dated. 

44 

Minister’s Approval, 06.13.2011 dated. 

45 

Decree of HCJP No: 1035/ 06.19.2011 dated.

58 


Citizens, lawyers, legal 

experts, law enforcement 

officers, institutions and 

companies are provided 

to access judicial 

processes and to conduct 

some transactions 

through the Portals 

prepared for themselves. 

 

 

 

 

 

 

Within the best practices of the EU, the Ministry of Justice has commenced 

the second stage of the project called “the Project to Strengthen the Court 

Management System” in order to reduce the workload of the judiciary, to prevent 

the prolongation of trial proceedings, to obtain more effective outcomes from the 

legal applications and to establish a technical infrastructure to build and operate a 

court management system. In line with the purposes of the project, the system 

which has been established in some courts within the context of the first stage is 

envisaged to be implemented to 20 more courts within the second stage. 

In order to provide conformity with the European Standards in criminal justice 

system and to improve the human right standards, “the Project on Development 

of Criminal Justice System” will be started in 2012 in cooperation with the EU. 

The main purposes of the Project are to increase the confidence of citizens in 

the criminal justice and to form a faster operating criminal court system which is 

completely compatible with the case law of the European Court of Human Rights. 

Following the completion of the required judicial and administrative procedures, 

HCJP, Council of State and Supreme Court of Appeals Prosecutor’s Office started to 

use UYAP system, UYAP Document Management System and the Internet service. 

With this improvement, an important step has been taken for providing an effective 

and a rapid exchange of information in electronic media among judiciary units. 

Citizens, lawyers, legal experts, law enforcement officers, institutions and companies 

are provided to access judicial processes and to conduct some transactions through 

the Portals prepared for themselves. Besides, in order to ensure the simplification 

for the bureaucratic procedures and to decrease red tape within judicial process; the 

number of e-signature authorizations provided to judges, public prosecutors and 

other judicial staff reached 48,761, and Virtual Shared Network (VPN) certificates 

have been identified for judges and prosecutors for their accession to UYAP off-the 

court house. 

The relevant legislative works, which will enable access to the statements of people 

via video conference system throughout the Sound and Image Informatics System, 

when the public prosecutor, the judge or the court consider necessary within the 

examination and prosecution processes, have been completed. 46 

To react instantly in cases of emergency and disaster, The Project of National 

Judgment Network (UYAP) Emergency Center has entered into operation. Studies 

to ensure the protection of information and documents in UYAP in accordance 

with the judicial independence and personal data protection rules, to harmonize 

UYAP with the Information Security Management System Standard ISO 27001 

against possible threats, and to attain to international standards in the management 

system have been ongoing within the Ministry of Justice. 

46 

Regulation on the Usage of Sound and Image Informatics System in the Criminal Procedure (Official Gazette 

09.20.2011/28060).


59 

D. Developing the Infrastructure 

Proceeding with the liberalization in the 

fields of energy, transportation, information 

technologies sectors and strengthening the 

current infrastructure in order to meet the 

increasing demand are among the strategic 

priorities of Turkey. Important works were 

carried out in 2011 for establishing a strong 

transportation infrastructure and decreasing 

the level of dependency to abroad in energy 

as crucial components of sustainable 

economic development. 

 

 

 

 

1. Liberalizing the Energy Sector 

Electricity Market 

By the end of 2011, the approximate electricity supply of Turkey was 228 billion 

kWh, and the consumption was 229 billion kWh. Based on the figures regarding 

the share of energy resources in electricity production, 45% belongs to natural gas, 

18% belongs to domestic coal, 23% belongs to hydraulic sources, 10% belongs to 

imported coal, 2% belongs to petroleum derivatives and the remaining 2% was 

produced from other sources such as wind and geothermal energy. 

The Energy Market Regulatory Authority (EMRA), with the aim to supply the 

electricity produced by the private sector to consumers freely in a competitive 

environment, has been reducing the independent consumer level since 2002, and 

this limit is designated as 30,000 kWh for 2011. Thus, consumers with more than 

30,000 kWh consumption per year were provided the possibility to access the 

wholesale markets directly and the way for consumers to meet their needs freely 

by making bilateral agreements with the suppliers, has been paved. It is aimed to 

decrease the limit of independent users and make all the consumers, except for 

households, free users by the end of 2012, and make all consumers free users by 

2015 47 . 

With the amendments made on the Regulation on Electricity Market Balancing 

and Reconciliation, the process for independent users to change their suppliers has 

been simplified 48 . 

In addition, with the Regulation on Non-Licensed Electricity Production 49 , the 

natural persons and legal entities who build a cogeneration facility only to meet 

their own needs and carry out production in production facilities which are based 

47 

The Strategy Paper on Electricity Market and the Supply Safety, 2009. 

48 

Regulation on Amending the Regulation on Electricity Market Balancing and Reconciliation (Official Gazette 11.06. 

2010/27751). 

49 

Regulation on Non-Licenced Electricity Production (Official Gazette 12.03.2010/27774).

60 


As of March 2012, 13 

out of 21 electricity 

distribution companies 

are being operated by the 

private sector. 

As of the end of 2011, 

tender processes of 55 

distribution regions 

were completed and 62 

companies were given 

distribution licenses. 

 

 

 

 

 

 

on renewable energy sources with maximum 500 kW of installed power, are held 

exempt from the requirement to receive license or establish a company. 

With the Electricity Sector Reform and Privatization Strategy Paper, Turkey was 

divided into 21 distribution areas in 2004 by taking into consideration the geographical 

proximity, administrative structures, energy demand and other technical and financial 

aspects. The 20 regions under the Turkish Electricity Distribution Corporation 

(TEDAŞ) were included in the privatization program. The only region left out is 

Kayseri, the operation rights of which were transferred to Kayseri and its Vicinity 

Electricity Distribution Inc. (KCETAŞ) in 1990. Among the newly established 20 

regional electricity distribution companies under TEDAŞ; transfer of shares of 

Başkent, Sakarya, Meram, Osmangazi, Çamlıbel, Uludağ, Yeşilırmak, Çoruh, Fırat 

and Trakya Electricity Distribution Inc. were made, and the privatization processes 

were completed as of January 1, 2012. The transfer process for Dicle, Van gölü, 

Ayedaş and Toroslar Electricity Distribution Inc. is ongoing. As of March 2012, 13 

out of 21 electricity distribution companies are being operated by the private sector. 

The privatization process of 101 power plants is being carried out by the 

Privatization Administration. Out of these 101 power plants; there are 18 thermal, 

27 hydroelectric and 56 river plants. Among these power plants, the 52 river plants 

were gathered into 19 groups and the tenders were completed in 2010. As of the 

end of February 2012; out of the 19 groups, 10 of them were transferred and five 

of them are in the transfer process. 

Natural Gas Market 

The importance and the share of natural gas in meeting Turkey’s increasing energy 

demand are rising. As of the end of 2011, tender processes of 55 distribution 

regions were completed and 62 companies were given distribution licenses. These 

companies made more than TL 2.5 billion investment within the distribution 

regions and the number of subscribers has reached 2 million. 

As of the end of 2011, the natural gas transmission lines of 71 provinces were 

completed. With the expanding area, in 2011, 39.2 billion Sm3 and as of the end of 

February 2012, 8.2 billion Sm3 of natural gas was imported. In addition, in 2011, 

714 million Sm3 and as of the end of February 2012, 55 million Sm3 of natural gas 

was exported. 

Through the works to improve the present natural gas pipeline, the length of the 

pipelines constructed by Petroleum Pipeline Corporation (BOTAŞ) amounted to 

12,215 km by the end of 2011. 

In 2011, 31 licenses were issued. Among them, 8 licenses are for import (spot LNG), 

3 for wholesale, 6 for transmission of Liquefied Natural Gas, 6 for transmission 

and distribution of compressed natural gas (CNG) and 6 for sale of CNG and 2 

for distribution. As a result, the total number of licenses increased to 243 by the 

end of 2011.


61 

Table 17 : The Distribution of Licenses Issued in Natural Gas Market 

License Type 

Number 

Import 12 

Import (Spot LNG) 30 

Export 4 

Wholesale 37 

Storage 4 

Transmittal 1 

Transmittal (LNG) 22 

CNG Sales 46 

CNG Transmittal and Distribution 25 

Distribution 62 

TOTAL 243 

Source: EMRA 

 

 

 

The public shares of the Ankara Metropolitan Municipality which is equivalent to 

80% share of the Başkent Natural Gas Distribution Inc, have been taken into the 

scope of privatization within the framework of the decisions of the Privatization 

High Council dated July 2, 2009 and June 28, 2011; on July 26, 2011, the tender 

notice process was completed. The privatization of the 20% share of the Ankara 

Metropolitan Municipality owned by the municipality, the institutions affiliated 

to the municipality and its subsidiaries, is carried out by the Ankara Metropolitan 

Municipality and the tender is planned to be made in 2012. 

Within the scope of the projects implemented for storing the natural gas underground 

and thus meet the seasonal demands, the tender of Tuz Gölü Underground Storage 

Project was completed on September 20, 2010 and the works were initiated on June 

15, 2011. 

65% of the oil and 71% of the natural gas reserves of the world are in Caspian 

Basin, the Middle East and Russia which surround Turkey. Consequently, Turkey, 

with its geographic and geopolitical position, is a bridge and terminal for transfer 

of the production of the Middle East and Central Asia to the world markets. In 

this regards, many projects are being developed in Turkey on East-West and North- 

South axes: 

• z Within the context of the Caspian-Turkey-Europe Natural Gas Pipeline Project 

which aims to transfer the natural gas produced in Caspian Region countries to 

Turkey and to Europe via Turkey; through the Azerbaijan-Turkey Natural Gas 

Pipeline, natural gas has been supplied since July 2007. Approximately 19.9 billion 

Sm3 of natural gas was purchased from the pipeline by the end of February 2012. 

• z From the Turkey-Greece part of Turkey-Greece-Italy Natural Gas Pipeline 

Project which was initiated in 2007, 2.6 billion Sm3 of natural gas was exported 

to Greece by the end of February 2012.

62 


• z The Intergovernmental Agreement, which was signed on July 13, 2009 regarding 

the Turkey-Bulgaria-Romania-Hungary-Austria Natural Gas Pipeline Project 

(NABUCCO), entered into force as of August 1, 2010. The Project Support 

Agreements were signed among Ministries of Energy of each involved country 

and the NABUCCO International Company, on June 8, 2011. The line which 

will have a 31 billion Sm3 capacity is planned to be operational in 2017. 

• z Egypt-Syria part of the Arab Gas Pipeline Project, which aims to transport 

Egyptian and Syrian natural gas to Turkey and from Turkey to Europe, has 

been completed. The target is to connect the Turkey-Syria natural gas networks 

as well in 2012. In this context, the Agreement for Kilis Natural Gas Pipeline 

Construction Project was signed on March 15, 2011. 

• z The intergovernmental agreement and the trade agreement package regarding 

the transit transmission of annually 10 billion Sm³ of Phase II gas that will 

be produced by Azerbaijan’s Shah Deniz Consortium, via the BOTAŞ natural 

gas transmission system to Europe through the Bulgaria and/or Greece border, 

was signed on October 25, 2011; and the intergovernmental memorandum of 

understanding was signed on December 24, 2011. 

 

 

 

Oil Market 

As of the end of 2011, 1,457 dealerships, 7 distribution licenses, 6 storage licenses, 

7 bunker fuel 50 delivery licenses, 4 transmission licenses, 67 mineral oil licenses, 16 

independent user licenses, 38 transportation licenses (railway and maritime) were 

granted within the oil market. As of the end of 2011, the number of valid licenses 

reached to 13,658. 

In 2011, 257 million barrels and as of the end of February 2012 43 million barrels 

of crude oil were loaded from the Baku-Tbilisi-Ceyhan Crude Oil Pipeline. 

The Kirkuk-Yumurtalık Crude Oil Pipeline Agreement, the term of which expired 

on March 2010, was renewed on September 19, 2010. The amount of crude oil 

transmitted through the Kirkuk-Yumurtalık Crude Oil Pipeline in 2011 was 163 

barrels and as of the end of February 2012 it was 23 million barrels. 

LPG Market 

 

A total of 1,267 licenses were granted in the LPG sector in 2011. Thus, the total 

number of licenses in the market reached 9,739. 

50 

The fuel oil and mineral oil that is provided to the vessel within and/or next to the territorial waters of the country or to the 

domestic of foreign aircrafts in the air fields, with tax or without tax.


63 

Table 18: The Type and Number of Licenses Granted in 2011 

License Type 

Number of Licenses 

Granted in 2011 

Number of Licenses 

in Force 

LPG Distribution License 7 71 

LPG Storage License 3 78 

LPG Transportation License 

(15 Highway, 6 Maritime, 24 Pipeline) 

11 45 

LPG Cylinder Inspection, Repair and Maintenance License 4 116 

LPG Cylinder Manufacturing License 10 

LPG Auto gas Dealership License 1,242 9,419 

TOTAL 1,267 9,739 

Source: Energy Market Regulatory Authority (EMRA) 

 

In 2011, 3,746,025 tons of LPG was consumed. The total import realized in 2011 

by the Turkish Petroleum Refineries Corporation (TÜPRAŞ) and by the LPG 

distributor firms was 3,047,948 tons; and the total export amount was 105,159 tons. 

 

Enhancing the Use of Renewable Energy Sources 

In the renewable energy domain, the Law 

no 5346 on the Use of Renewable Energy 

Sources for Electric Energy Production 

Purposes (YEK Law) which entered into 

force on May 18, 2005, has increased the 

interest on especially wind power and 

hydroelectric power. Comprehensive 

amendments were made in the YEK Law 

via the Law No 6094 which entered into 

force on January 8, 2011 51 . Within this 

context; 

• z Incentives were introduced for the use 

of domestic components in the power 

plants which will carry out electricity production with the renewable energy 

sources. The administrative works on the implementation of the incentives for 

the production of electricity by using solar energy are continuing. 

• z A requirement was introduced to buy the electricity produced by the suppliers 

who sell electricity to the consumers using renewable energy sources within the 

Incentives were 

introduced for the use of 

domestic components in 

the power plants which 

will carry out electricity 

production with the 

renewable energy 

sources. 

51 

Law No 6094 on the Amendment of the Law on the Use of Renewable Energy Sources for Electricity Production Purposes 

(Official Gazette 01.08. 2011/27809).

64 


 

 

 

first 10 year of the operation. Purchase guarantee was provided to the electricity 

produced in such a way from the price level that was determined based on the 

source. 

As of the end of 2011, the electricity produced from wind and geothermal energy, 

has reached 2.4% of the total electricity production. 

As of the end of 2011, 46% of the new power plants of 3,527 MW are intended 

for the use of renewable energy sources. Within this context, throughout 2011, 

372 MW of wind, 1,249 MW of hydroelectric and 20 MW of geothermal based 

electricity power plants were taken into operation. 

As of the end of 2011, the wind energy installed power which had been 1,320 MW 

as of the end of 2010 reached the level of 1,729 MW with more than 30% rise. By 

the end of 2011, 6,860 MW of wind power plant licenses were granted. 

 

As of the end of 2011, the landfill gas energy installed power which had been 53.21 

MW by the end of 2010, reached to the level of 60.43 MW with more than 13% 

rise. 

 

 

 

 

Until the end of 2013, 600 MW installed power of solar power plant is envisaged 

to be connected into the transmission system. 

As of January 12, 2012, there are approximately 18,164 MW of licensed projects 

for hydroelectric power plants; and with the implementation of these projects, the 

share of renewable energy within Turkey’s installed power is foreseen to be 30% 

by 2023. 

It is aimed to increase the level of solar and wind installed power to 20,000 MW 

until 2023 and to increase the electricity obtained from geothermal energy to 600 

MW until 2013. 

In 2012, the efforts on making more use of renewable energy sources, identifying 

the energy efficiency potential, improving the legislation and introducing new 

practices will be carried on. In this context, using and developing the clean coal 

firing technologies; privatizing the production and distribution of electricity; 

increasing the natural gas storage capacity; providing the oil market to operate in a 

healthy and reliable way, establishing a National Oil Stock Agency are among the 

works to be implemented in the next period with the aim to establish a legal and 

institutional infrastructure to provide an independent regulation and supervision in 

nuclear energy 52 . 

52 

2012 Annual Program.


65 

2. Developing the Transportation Infrastructure 

The works for strengthening the strategic position of Turkey as a transportation 

corridor by developing the highway, railway, airway and maritime transportation 

infrastructure were sustained also in 2011. 

Highway Transportation 

The total length of highways, which had 

been 65,167 km as of the end of 2011, 

has reached 65,219 km as of March 

2012. The length of divided highways 

reached 21,227 km as of December 

2011 and is planned to reach 22,500 km 

by the end of 2012. 

The total length of 

highways has reached 

65,219 km as of March 


Table 19: Length of Divided Highways 

(km) 

State and Provincial Roads Motorways Total 

2002 4,387 1,714 6,101 

2003 1,323 39 1,362 

2004 1,765 26 1,791 

2005 2,045 5 2,050 

2006 1,240 241 1,481 

2007 1,082 1,082 

2008 1,477 14 1491 

2009 2,002 114 2,116 

2010 2156 72 2,228 

2011 1,514 11 1,525 

TOTAL 18,991 2,236 21,227 

Source: General Directorate of Highways 

 

Build-operate-transfer (BOT) model is planned to be used for the financing of 

the projects that will improve the physical infrastructure of the highways and that 

are planned to be implemented in the next period. The total cost of the projects is 

estimated as approximately TL 221 billion.

66 


 

The total cost of the 5,550 km of motorway projects that will be carried out with 

the use of the BOT model in 2011-2023 is expected to be TL 86 billion. With the 

realization of these projects, the total length of Turkey’s motorway network will 

reach 7,827 km. 

Table 20: Projects planned to be carried out via BOT Model in 2011-2023 

Project Name 

Length (km) 

Gebze-Orhangazi-Izmir Motorway 421 

Northern Marmara Motorway Project (Including the 3rd Bosporus Bridge) 414 

Sabuncubeli Tunnel Project 4 

Ankara-Niğde Motorway Project 342 

Ankara- Kırıkkale- Delice Samsun Motorway Project 472 

Aydın-Denizli-Burdur Motorway Project, Aydın-Denizli part 175 

Aydın-Denizli-Burdur Motorway Project, Denizli- Burdur part 155 

Kınalı-Tekirdağ-Çanakkale-Balıkesir Motorway Project 359 

Ankara-İzmir Motorway Project 535 

Afyonkarahisar-Antalya-Alanya Motorway Project 490 

Sivrihisar-Bursa Motorway Project 202 

Şanlıurfa-Habur Motorway (Including the Diyarbakır connection) Project 445 

Gerede-Merzifon-Gürbulak Motorway Project, Gerede- Merzifon part 357 

Gerede-Merzifon-Gürbulak Motorway Project, Merzifon- Gürbulak part 919 

Yalova- İzmit Motorway (Excluded from the scope of privatization) 81 

Mersin- Silifke (Taşucu) Motorway (To be carried out in scope of privatization) 98 

Çiğli- Aliağa- Çandarlı Motorway (To be carried out in scope of privatization) 81 

Total 5,550 

Source: General Directorate of Highways 

 

The North-South Axis Project aims to connect the Black Sea region to the Southeast 

and the Mediterranean region with high standard highways. Within this context, as 

of March 15, 2012, the physical and geometrical improvements on the 8,511 km 

part of the 11,797 km long North-South highway corridor was completed. The 

North-South highway corridors are expected to be completed until 2015 totally.


67 

Railway Transportation 

With the aim of developing freight and passenger transportation, various high speed 

train projects and infrastructure works are being carried out via public-private partnership. 

 

 

 

 

 

 

 

The Turkish State Railways has a total of 8,770 km long conventional lines. Of this, 

8,324 km is main line and 446 km is secondary line. With the 2,342 km long sidelines, 

the total length of the conventional lines increases to 11.112 km. In addition, the 

length of the High Speed Train line is 888 km. Consequently, as of end of 2011, 

total length of the conventional and high speed train lines is 12,000 km. 

With the completion of the “Ankara-Istanbul High Speed Train Project” which 

aims to decrease the travel time between Ankara-Istanbul and increase the share 

of railway sector in transportation by providing a fast, comfortable and safe 

transportation, the distance of Ankara-Istanbul is estimated to be lowered from 

576 km to 533 km and the travel time to be lowered to 3 hours. Ankara-Eskişehir 

part of the High Speed Train project was put into operation with 8 services daily 

on March 13, 2009; within the core network which is composed of the corridors 

of Istanbul-Ankara-Sivas, Ankara-Afyonkarahisar-İzmir, Ankara-Konya, Ankara- 

Bursa, Ankara-Sivas-Erzincan. Because of the increasing passenger demand, the 

number of services reached 20. 

Between March 2009 and the end of 2011, 4.9 million passengers were transported 

through the Ankara-Eskişehir line. On the İnönü-Vezirhan and Vezirhan-Keseköy 

parts, which is the 2nd Stage of the Project, construction works are continuing. 

The Ankara-Istanbul High Speed Train project is planned to be completed in 2013. 

The “Ankara-Konya High Speed Train Project”, the construction of which was 

initiated on April 2006, was completed and the High Speed Train was put into 

operation on August 24, 2011. With the reduction in travel time between Ankara 

and Konya to 1 hour and 30 minutes, 408,328 passengers were transported in the 

time period of August 24, 2011 and December 31, 2011. Following the completion 

of the Ankara-Istanbul High Speed Train project, the travel duration between 

Istanbul and Konya will be reduced to 3 hours 30 minutes. 

The tendering process was initiated for the Polatlı-Afyon part of the Ankara-Izmir 

High Speed Train Project and bids were taken on December 28, 2011. The works 

for the tendering of Uşak (Eşme)-Izmir project is continuing. 

Ankara-Sivas and Bursa-Bilecik High Speed Train Projects are among the high 

speed train projects that are ongoing. 

In those regions close to the organized industrial zones and which have high 

freight potential, works to establish logistic centers that will develop the combined 

transportation integrated with other transportation systems are being carried out. 

Works are in progress to establish logistic centers primarily in 19 centers; namely 

Istanbul, Izmit (Köseköy), Samsun (Gelemen), Eskişehir (Hasanbey), Kayseri 

Ankara-Konya High 

Speed Train Project was 

completed and the High 

Speed Train was put into 

operation on August 24, 

2011.

68 


(Boğazköprü), Balıkesir (Gökköy), Mersin (Yenice), Uşak, Erzurum (Palandöken), 

Konya (Kayacık), Denizli (Kaklık), Bilecik (Bozüyük), İstanbul (Halkalı), Istanbul 

(Yeşilbayır), Mardin, Kahramanmaraş (Türkoğlu), Kars, Izmir ( Kemalpaşa), Sivas 

and Habur. In this regards, Samsun (Gelemen) logistic center was completed and it 

started operations. Works for the first stage of Denizli (Kaklık) and İzmit (Köseköy) 

logistic centers were finalized and project and expropriation works are proceeding 

in other logistic centers. 

With the aim of developing combined transportation and increasing the share of 

the railways within transportation; 

 

 

 

 

 

 

Construction works for the Tekirdağ-Muratlı Railway project, which aims to connect 

the Tekirdağ Port to the current railway network and preventing the congestion in 

the Derince and Istanbul ports; reduce the distance by approximately 600 km at 

the connection point of the Aegean region to Europe and reduce the traffic in the 

straits, have been completed. 

Work on the “Railway Connection of the Adapazarı-Karasu Port and Industrial 

Plants and Station Facilities Infrastructure Construction,” planned with the aim of 

connecting the Karasu Port to the current railway network, is in progress. 

Work on the Marmaray Project to provide an uninterrupted submarine railway 

connection between Asia-Europe is continuing. 

Work is in progress on the Turkey-Georgia-Azerbaijan Railway (Kars-Ahılkelek- 

Tbilisi-Baku) Project, which will connect Europe to Caucasia and the Central Asia 

Republics via Turkey. 

The construction work of the Kemalpaşa Organized Industrial Zone Railway 

Connection Line is planned to be completed in 2012. 

As a continuation of the Ankara-Istanbul High Speed Railway project, work for 

Halkalı-Bulgaria Border Railway Project and Engineering Services was completed 

on October 2008 with the aim to establish a high standard railway line that will be 

integrated with Europe; the project is included in the 2012 investment program. 

With regard to the 2023 targets that were proposed in the 10 th Transportation 

Forum and determined by the Ministry of Transportation with the aim of increasing the 

share of the railways in the freight and passenger transportation; 

 

Completing the 10,000 km core network by prioritizing the high speed railway 

network, 

 

Increasing the length of the total railway network to 25,940 km by 2023 and 28,376 

km by 2035, 

 

Increasing the share of the railways in passenger transportation to 10% and to 15% 

in freight transportation 

are aimed.


69 

Maritime Transportation 

Within the context of the works carried out to develop the maritime transportation; 

 

 

 

 

 

 

The Coastal Buildings Master Plan Study and the Tourism Coastal Buildings Master 

Plan Study was completed in 2010; and the Fisheries’ Coastal Buildings Diagnostics 

Study was completed in 2011. The aim of these studies is to effectively plan the 

infrastructural facilities and additional capacities to be constructed in the coastal 

regions in order to serve the needs of transportation, tourism and fisheries sectors. 

With the aim of connecting the main ports to the highways and railways and 

providing the ports to become logistic centers where combined transportation 

could be done; 

• z The Çandarlı Port in the Aegean Sea, 

• z The Mersin Container Port in the Mediterranean and 

• z Implementation n projects for the construction of the Filyos Port in the Black 

Sea have been completed. 

For prioritizing railways in the hinterland transportation of the ports; 

• z The Aydın-Güllük Port Connection and Ereğli, Filyos, Zonguldak, Bartın Port 

Connection implementation projects and the preliminary project works of the 

Erzincan-Trabzon railway connection have been completed. 

• z The implementation project of the Kırıkkale-Samsun Railway connection is 

ongoing. 

In scope of the works implemented with the aim of establishing the necessary 

infrastructure for the maritime transportation and yacht tourism via the BOT 

model; 

• z Turgutreis, Didim, Çeşme, Sığacık, Yalova, Alanya, Mersin and Kaş Yacht Ports 

projects have been completed. 

• z Gazipaşa, Kumkuyu, Muğla Ören and Datça Yacht Ports and the Dalaman Yacht 

Port and the Seabus Berth projects are under construction. 

• z The superstructure construction works of the Karasu Port and the tender works 

of Izmir Karaburun, Izmir Yenifoça, Balıkesir Avşa Island (Türkeli), Silivri, 

Trabzon, Izmir Seferihisar Ürkmez, İzmir Çeşme Şifne and Tekirdağ Yacht Ports 

are ongoing. 

In the context of the privatization of the current public ports via the transfer of 

operating rights; the operating right of the Iskenderun Port was transferred to 

LIMAK Investment Energy Production Operation Services and Construction Inc. 

for 36 years on December 2011. 

As a result of the increase in Izmir Port’s share in the cruise tourism, in order 

to provide terminal services with international standards to cruise passengers and

70 


 

provide the opportunity for tourists to receive maximum benefit from port back 

area, the Turkish State Railways Izmir Port has been divided into two parts as the 

cruise port and the freight port. The zoning plan of the cruise port is in the final 

stage; and the privatization tender is planned to be completed in 2012. 

The zoning plan works for renewal of the Istanbul Salıpazarı Port, the only cruise 

port of Istanbul owned by Istanbul’s Turkey Maritime Organization Inc., by 

emphasizing the historical and natural background, is in progress. 

Airway Transportation 

There have been significant improvements in the airway transportation as a result of 

the works on infrastructure facilities, modernization and additional capacity implemented 

with the competitive market established in the airway transportation sector. 

47 airports are open to 

civil traffic as of 2011. 

 

The number of airports operated by the General Directorate of State Airports 

Authority (GDAA) has reached 43. With the Eskişehir Anadolu Airport operated 

by Anadolu University and the Istanbul Sabiha Gökçen, Zonguldak Çaycuma and 

Antalya Gazipaşa Airports operated by the private sector, 47 airports are open to 

civil traffic as of 2011. 

Table 21: Total Number of Airports Open to Civil Traffic 

Number of Airports Open to Civil Traffic Number of Airports with International Status 

2003 37 24 

2004 37 24 

2005 37 24 

2006 39 25 

2007 42 28 

2008 44 32 

2009 45 35 

2010 46 35 

2011 47 36 

Source: General Directorate of State Airports Authority 

 

Compared to the previous year, as of the end of 2011 the domestic flight passenger 

traffic reached 58 million, a 15.3% increase; international flight passenger traffic 

reached 59 million, a 13% increase; the total passenger traffic reached 118 million, 

a 14.4% increase.


71 

Table 22: Airway Passenger Traffic 

Domestic Flights 

Passenger Traffic 

International Flights 

Passenger Traffic 

Transit Passenger 

Traffic 

No. of Passengers 

Total Passenger 

Traffic 

2003 9,147,439 25,296,216 - 34,443,655 

2004 14,460,864 30,596,507 - 45,057,371 

2005 20,529,469 35,042,957 547,046 56,119,472 

2006 28,774,857 32,880,802 616,217 62,271,876 

2007 31,949,341 38,347,191 418,731 70,715,263 

2008 35,832,776 43,605,513 449,091 79,887,380 

2009 41,226,959 44,281,549 492,935 86,001,443 

2010 50,575,426 52,224,966 736,121 103,536,513 

2011 58,329,262 59,018,318 671,531 118,019,111 

Source: General Directorate of State Airports Authority 

Within the efforts put forward regarding the development of the airway 

transportation infrastructure; 

 

 

 

 

 

 

The tender for the Kütahya-Afyon-Uşak (Zafer) Airport has been concluded via 

the BOT model and the application contract has been signed on December 23, 

2010. Furthermore, the site delivery was made on April 21, 2011. 

The transfer of operation of current international flights terminal, CIP, domestic 

flights terminal and supplements of the Izmir Adnan Menderes Airport was made 

on January 2, 2012. 

The implementation contract for the Çukurova Regional Airport was signed on 

January 25, 2012. 

Tender preparations to lease or transfer the operating right of the Nevşehir 

Kapadokya and Samsun Çarşamba Airports to the private sector were initiated. 

Within the works carried out by the General Directorate of Infrastructure; 

• z The construction works of Balıkesir Körfez Airport, the construction works for 

broadening the runway of the Ağrı Airport and developing the runway-ramptaxi 

fields of the Eskişehir Airport and infrastructure works of Iğdır Airport 

were completed. 

• z Construction works of Bingöl Airport and Hakkari (Yüksekova) Airport are in 

progress. 

• z Construction works of the superstructure and miscellaneous works of Iğdır 

Airport, Elazığ Airport and Şırnak Airport are planned to be completed by the 

end of 2012. 

In order to carry out flight applications faster, more accurate and easier, the 

“PERSIS” automation system was initiated.

72 


E. Supporting SME’s 

Enhancing financing opportunities 

for SMEs 53 , which are responsible for 60.1% 

of total exports and 42% of total imports 

in Turkey 54 , as well as encouraging their 

growth, executing policies to improve their 

management capacity and strengthening 

production-supply chains are among the 

issues on which Council members have 

put emphasis since the establishment of 

the Investment Advisory Council (IAC) in 

2004. This issue, often discussed in various international publications especially in terms 

of strengthening access to finance and enhancing of SMEs’ growth capacities, is also 

among the priorities of the Turkish government. 

7 different support 

instruments were defined 

with the KOSGEB Support 

Program Regulation. 

 

In line with the amendments on the Law on Establishment of the Small and 

Medium Sized Enterprises Development Organization (KOSGEB) 55 in 2009, the 

KOSGEB Support Program Regulation entered into force on 15 June 2010 56 , 

to meet the diversified needs of the SMEs according to their region, sector and 

scale parameters. Within the framework of the relevant regulation which aims to 

increase the effectiveness of SME supports, seven different support instruments 

were defined: 

• z SME Project Support Program 

• z Thematic Project Support Program 

• z Cooperation-Leaguing Support Program 

• z R&D, Innovation and Industrial Application Support Program 

• z General Support Program 

• z Entrepreneur Support Program 

• z Emerging Enterprises Market SME Support Program 57 

53 

In accordance with the “Regulation on the Definition, Qualifications and Classification of the Small and Medium Sized 

Enterprises”, enterprises with less than 250 employees and less than 25 million TL of annual sales revenue or financial 

balance are defined as SMEs. The enterprises which have more than 25% of their capital of voting right in control of the 

public institutions or organizations, even if they are within the mentioned limits, would not be counted as SME. 

54 

Foreign trade statistics according to entrepreneurship features -2010. 

55 

By the Law Amending the Establishment Law of the Small and Medium Sized Enterprises Development Organization 

(Official Gazette 05.05.2009/27219) KOSGEB has been enabled to support the sectors besides manufacturing and the target 

level of KOSGEB has reached 3 million SMEs, 10 times of the previous level. (Please refer to the Investment Advisory Council 

Progress Report 2009, for detailed information). 

56 

Regulation on the Support Programs of the Small and Medium Enterprises Development Organization (Official Gazette 

06.15.2010/27612). 

57 

Detailed information regarding the KOSGEB Supports could be maintained from the website www.kosgeb.gov.tr.


73 

 

 

Following the KOSGEB Support Programs Regulation, in the second half of 

the year 2010, TL 11.14 million of support was provided by the new support 

instruments. In 2011, the effectiveness of the relevant support instruments was 

increased and TL 170.28 million of support, 15 times more than the figures of 

2010, was provided for SMEs. 

In 2010, together with the other support instruments, the total KOSGEB support 

increased by 73.7% compared to 2009 and the total amount of support provided 

by KOSGEB through 2005-2010 reached TL 205 million. Besides, the total amount 

of support in 2011 surpassed the total support in 2010 by 3.6 times and reached TL 

177.5 million. As a result, the total support provided by KOSGEB in 2011, reached 

%86 of the total support provided in the last six years. 

The total supports 

provided by KOSGEB in 

2011, reached %86 of the 

total supports provided 

in the last 6 years.

74 


Table 23: KOSGEB Supports Allocated for SMEs* 

Support Instruments 2005 2006 2007 2008 2009 2010 2011 

Consultancy and 

Training Supports 

5,720,501 1,588,763 934,897 141,036 944,607 926,962 20,197 

Informatics Supports 507,948 1,778,947 1,054,721 543,701 449,074 1,370,936 127,277 

Technology 

Improvement and 12,483,852 5,457,501 4,418,588 6,819,782 6,631,706 5,606,972 1,303,100 

Innovation Supports 

Quality Improvement 

Supports 

574,161 243,459 348,558 507,057 616,075 570,993 137,404 

Market Research and 

Export Enhancement 3,551,425 2,551,933 2,529,504 5,072,667 8,499,340 10,685,716 1,711,921 

Supports 

International 

Cooperation 

Development 

44,728 22,043 23,024 21,691 26,352 195,898 10,292 

Supports 

Regional 

Development 

18,274,982 5,715,913 5,406,457 5,983,925 6,668,285 7,337,313 3,305,129 

Supports 

Entrepreneurship 

Development 

1,960,823 644,374 398,995 982,458 1,352,027 643,172 266,802 

Supports 

SME Project Support 

Program 

293,319 20,540,659 

Thematic Project 

Support Program 

- 197,611 

Cooperation- 

Leaguing Support 

1,364,636 12,451,150 

Program 

R&D, Innovation and 

Industrial Application 

4,161,762 43,294,757 

Support Program 

General Support 

Program 

4,959,644 67,538,532 

Entrepreneur Support 

Program 

358,292 26,252,955 

Other (Partnerships- 

Projects-IVCI**- 

National/International 

Relations) 

1,217,222 5,816,309 2,628,408 23,097,753 2,686,162 9,938,184 302,847 

Total 44,335,642 23,819,242 17,743,152 43,170,070 27,873,628 48,413,799 177,460,633 

* The new support instruments in scope of the KOSGEB Support Program, which entered into force on 15 June 2010, are 

shown in red color. Although the Emerging Enterprises Market SME Support Program, which is another instrument defined 

within the scope of the same regulation, has been initiated, no support has been provided yet, the assessment process is 

ongoing. 

** Istanbul Venture Capital Initiative 

Source: KOSGEB 

TL


75 

 

In terms of the Credit Interest Supports, implemented in accordance with the 

Decree of the Council of Ministers 58 accepted in 2004 for providing short-term 

finance towards SMEs, TL 7.3 billion of zero-interest credit support was provided 

for SMEs and interest of TL 464 million was covered by KOSGEB, following the 

amendment of the KOSGEB Foundation Law 59 . Therefore, 52.1% of the TL 892 

million of interest that was covered by KOSGEB since 2004 was related to the 

credits provided between 2009 and 2011. Also, 78.9% of the 203,736 enterprises 

have benefitted from the support through the same period. 

Table 24: Credit Interest Supports 

CREDIT TYPE 

SME Export Financing Support Credit 

(02.27.2009-12.31.2009) 

Diyarbakır Province Zero-Interest 

Business Capital Support Credit 

(10.19.2009-12.24.2010) 

100.000 SME Support Credit 

(11.02.2009-07.31.2010) 

Emergency Support Credit 

(11.20.2009-12.24.2010) 

GAP Region Machinery Equipment 

Credit (11.20.2009-12.24.2010) 

Scale Indexed Growth Support Credit 

(11.22.2010-12.31.2011) 

SME Export Financing Support Credit 

2010 

(11.22.2010-12.31.2011) 

Emergency Support Credit 2011 

(09.23.2011-12.31.2011) 

Van Province Business Capital 

Support Credit 

(12.09.2011-12.31.2011) 

Number of 

Enterprises 

Amount of Credit 

Disposed 

(TL Million) 

Interest Covered 

by KOSGEB 

4,838 1,210.54 28.60 

2,008 58.31 8.27 

84,155 2,019.73 148.33 

1,449 127.35 20.27 

631 137.18 22.31 

62,118 2,408.32 206.9 

4,625 1,268.21 16.63 

964 84.38 12.75 

3 0.09 0.02 

TOTAL 160,791 7,314.11 464.08 


 

The SME Support Program for Emerging Companies Market, which entered 

into force in order to support the costs 60 for the first public offerings of those 

SMEs offering their shares to the public to be traded in the Emerging Companies 

58 

Decree of Council of Ministers No: 2004/7131. 

59 

Between the dates May 2009- October 2011. 

60 

ISE, Capital Market Board and Central Registry Agency registration fee, introduction fee, independent audit fee, market 

advisor fee etc.

76 


The application period 

for the Treasury 

supported credit 

guarantee system was 

extended until July 14, 

2013; the guarantee rate 

was raised to 75% from 

65% and the maturity 

date was extended from 4 

years to 8 years. 

By the total amount of 

TL 1 billion guarantee 

provided for 3,197 

enterprises in 2011, TL 

3.07 billion of guarantee 

and TL 4.35 million of 

credit volume were 

cumulatively achieved. 

 

Market, is also expected to contribute to strengthening institutional capacity and the 

transparency of the SMEs. 

Significant amendments have been carried out in 2010 and 2011, in order to increase 

the effectiveness of the credit guarantee institutions which play a significant role in 

improving the access to finance conditions of SMEs, one of their most important 

challanges: 

• z Under the legal amendments in 2010, the application process was facilitated 

for the SMEs which will benefit from Treasury supported guarantee system. 

In addition, under the amendments in 2011, the application period for support 

was extended until July 14, 2013 in order to allow more firms to benefit from 

the Treasury supported guarantee system. Furthermore, the guarantee rate was 

raised to 75% from 65%, and the maturity date was extended from four years 

to eight years for SME credits, to increase the number of enterprises benefiting 

from the system 61 . 

• z Within this context, with the total guarantee of TL 938.92 million, provided via 

the funds of Treasury and Credit Guarantee Fund (KGF) in 2010, 65% increase 

in credit volume was maintained compared to 2009 and TL 1.3 billion of credit 

volume was created as of the end of 2010. In addition, by the total amount of 

TL 1 billion guarantee provided for 3,197 enterprises in 2011, TL 3.07 billion 

of guarantee and TL 4.35 million of credit volume were cumulatively achieved. 

Table 25: Credit Guarantee Provided by Both KGF and the Treasury * 

Number of 

Guarantees 

Amount of 

Guarantees 

(TL Million ) 

Credit 

Volume 

(TL Million) 

1994-2006 2007 2008 2009 2010 2011 TOTAL 

Treasury 

Support 

KGF 

Support 

Treasury 

Support 

KGF 

Support 

2,529 305 1,138 2,605 708 2,382 1,363 1,834 12,864 

185.63 52.99 284.59 565.35 275.9 663.02 441.4 601.4 3,070.28 

280.86 75.45 402.58 790.65 434.1 868.31 681.2 812.5 4,345.65 

* Treasury guarantees for non-SMEs operating in the shipping and maritime sector have not been included in the table. 

Within this scope, by the TL 80.9 million of guarantee provided for 10 SMEs in the shipping and maritime sectors during 

January-December 2011, TL 128.5 million of credit volume was created. 

Source: Credit Guarantee Fund 

61 

Decision Regarding the Amendment of the Decision on the Procedures and Principles Regarding the Treasury Support 

to be Provided to Credit Guarantee Institutions No: 2010/263 (Official Gazette 04.10.2010/27548), Decision Regarding the 

Amendment of the Decision on the Procedures and Principles Regarding the Treasury Support to be Provided to Credit 

Guarantee Institutions no 2011/2016 (Official Gazette 07.03.2011/27983).


77 

• z Under the European Union Competitiveness and Innovation Framework 

Program, the Credit Guarantee Fund Inc. (KGF) and Finansbank signed a credit 

guarantee agreement with the European Investment Fund (EIF). Within the 

framework of the “Competitiveness and Innovation (CIP) Program” signed 

between the KGF Inc. and the EIF, a total of Euro 112.5 million of credit 

volume has been targeted. Within this context, through the “One SME for 

Every Village” Project implemented by the KGF Inc., 670 demands of 523 

SMEs have been responded to as of the end of 2011; and a credit volume of TL 

107.7 million was created with the TL 86.1 million of support provided. 

• z In terms of the EU Instrument for Pre-Accession Aid (IPA), the “Greater 

Anatolia Credit Facility (BAKK) Project” is under implementation as of 

October 2010 and the goal is creation of Euro 500 million of credit volume 

within the target region 62 . By the end of 2011, a total of Euro 180 million of 

credit was provided to 2,700 SMEs. In addition, with the TL 2.5 million of 

guarantee provided to 181 SMEs within the scope of “Micro Credits for Micro 

SMEs Project”, a credit volume of TL 3.2 million was created. 

• z Moreover, with the “G43 Anatolian Venture Capital Fund” Project, initiated 

in 2011 within the IPA with a budget of Euro 16.3 million Euros, there are 

plans to establish a new venture capital fund targeting the SMEs within the 

underdeveloped regions of Turkey and investing in SMEs that operate in the 

innovative sectors with the cooperation of the EIF and the Istanbul Venture 

Capital Initiative (IVCI). 

 

Significant projects have been carried out for strengthening the production-supply 

chains of the SMEs, an issue on which the Council members placed special emphasis 

during the 6th Investment Advisory Council Meeting. Within this context, in the 

framework of the Development of a National Clustering Policy Project which was 

initiated in 2007; 

• z 32 cluster categories were identified and road maps for 10 pilot business clusters 

have been prepared 63 . 

• z Clustering analysis has been completed for 11 pilot clusters 64 within the Regional 

Competitiveness Operational Program (RCOP) 65 and the current situation of 

these 11 pilot clusters with the basic needs in terms of clustering have been 

assessed. 

62 

43 provinces in the NUTS II region, hosting 25% of the SMEs in Turkey; however, to which only 10% of the SME credits reach, 

and those below 75% of Turkey’s average per capita income. 

63 

Mersin Processed Food Business Cluster, Ankara Software Business Cluster, Ankara Machinery Business Cluster, Denizli-Uşak 

Home Textile Business Cluster, Konya Automotive Supplier Industry Business Cluster, Muğla Yacht Production Business 

Cluster, Eskişehir-Bilecik-Kütahya Ceramic Business Cluster, İzmir Organic Food Business Cluster, Manisa Electric Electronic 

Equipment Business Cluster, Marmara Automotive Business Cluster. 

64 

11 Pilot Cluster; Kayseri-Furniture; Gaziantep-Machinery Carpet; Kahramanmaraş-Textile; Sivas-Natural Stones; Yozgat- 

Furniture; Trabzon-Tree Business; Samsun-Foreign Trade Transactions; Malatya-Apricot; Erzurum Kars-Winter Tourism, 

Mardin-Tourism, Çorum-Machinery. 

65 

In scope of BCOP according to the Nomenclature of Territorial Units for Statistics support can be provided to 43 provinces 

in the NUTS-II region.

78 


• z A Clustering Portal has been launched for the use of all stakeholders in the 

clustering studies. 

With the completion of the clustering studies, the SMEs within the clusters will 

be able to benefit from the KOSGEB supports and consultancy services more 

effectively and efficiently. 

 

 

 

Also, in order to increase the cooperation between the firms, as part of the EU 

supported “Network Structuring and Regional Cooperation Development Project”, 

initiated within IPA, measures will be implemented in the provinces of Samsun, 

Trabzon, Çorum, Gaziantep and Kahramanmaraş in order to; 

• z Increase the cooperation, efficiencies and values of the companies, 

• z Diversify the support services provided by the local actors such as export unions 

and the chambers of industry in the region, 

• z Facilitate the firms’ access to technology, 

• z Enhance the university-industry cooperation and 

• z Increase the firms’ international competitiveness. 

In addition, with the Communiqué 66 published on October 2010, an integrated 

SME support mechanism was designed, in which project based or foreign marketing 

focused training and consultancy services could be implemented for SME groups, 

with a clustering perspective and project approach. Besides, implementing diversified 

training and consultancy programs for SMEs, grouped according to their needs, 

scale and equipment, is aimed to enhance the international competitiveness of the 

enterprises. 

The consultancy system has significance in terms of increasing the institutional 

capacity of SMEs and delivering the supports to SMEs quickly. This issue is also 

emphasized in the various international publications on the SMEs in Turkey. Within 

this context; 

• z “The Project Study of SME Consultation System in Turkey” has been initiated 67 

with the cooperation of the Japan International Cooperation Agency (JICA) 

and KOSGEB in order to improve and develop the consultancy services that 

SMEs need on a sectoral basis. The Project, within which identification of 

the standards and increasing the quality of the SME consultation services are 

included, is planned to be completed in 2012. In addition, within the context of 

the project, the Professional Competency Board is conducting studies, in order 

to establish professional standards regarding “SME Consultation”. 

• z Likewise, under the Enterprise Europe Network operating in 50 countries, 

training is provided on intellectual property rights, technology and business 

66 

Communiqué on Supporting the Development of International Competitiveness No 2010/8 (Official Gazzette 

09.23.2010/27708). 

67 

Project, entered into force as an International Agreement in accordance with the Council of Ministers Decision No: 

2011/1274 (Official Gazzette 02.18.2011/27848).


79 

 

analysis, EU based finance and other related areas, by seven consortiums and 33 

Centers established in Turkey. 

Various initiatives are also ongoing in Turkey, regarding the adoption and 

implementation of the basic principles of the Small Business Act, which is widely 

used especially by the EU countries. Within this framework: 

• z A workshop was organized on June 30, 2010, with the participation of public 

and private sector representatives in order to introduce the Small Business Act 

for Europe and to raise awareness and consciousness for the relevant parties. 

Also, an event called “Small Business Act for Europe: Introduction and Turkish 

Implementations” was organized in Istanbul on October 7, 2011 within the 

scope of the European SME Week. 

• z In the framework of the “Think Small First Principle” of the Law, provisions on 

the protection of the creditor in late payment have been placed on the Turkish 

Commercial Code, published in the Official Gazette on February 14, 2011 68 , in 

order to create a solution to the finance problems of SMEs. 

• z Likewise, in order to ensure that the principles of the Small Business Act are 

reflected within any kind of policy, strategy, action plan, implementation etc., 

and to enhance the effectiveness of the works to be implemented within the 

scope of the Act, Prime Ministry Circular has been published 69 . 

The studies regarding 

the adoption and 

implementation of 

the basic principles of 

the Small Business Act 

in Turkey, have been 

accelerated in 2010 and 

2011. 

 

The Communiqué which aims to support the promotion activities of the firms 

that participate in foreign exhibitions and in force since 2005 has been revised in 

line with the changing conditions 70 . Within this context, the scope, rates, terms 

and limits of the support and the number of units to be supported have been 

rearranged. 

 

Within the framework of the efforts on the support of entrepreneurship; 1,404 

entrepreneur training programs were organized in 2011 and approximately 48,000 

participants, 2,400 of which have established their own enterprises, benefitted from 

the programs. 

68 

Turkish Commercial Code No: 6102 (Official Gazette 02.14.2011/27846). 

69 

Prime Ministry Circular on “Small Business Act for Europe Principles” of June 5, 2011 No:2011/6 

70 

Communiqué on the Support to the Foreign Unit, Brand and Promotion Activities No:2010/6 (Official Gazette 

08.18.2010/27676).

80 


F. Improvement of the Customs Processes 

The ratio of customs 

declarations registered 

through Electronic 

Data Interchange (EDI), 

increased since 2006, 

reaching 93% of the total 

declarations in 2011. 

As in previous meetings, Council Members 

expressed in the last IAC meeting that the 

improvement of the customs processes holds the key 

for strengthening the relationship between companies 

and the world markets. Within this context, members 

have stressed that harmonizing the customs 

infrastructure to international standards would help 

reduce expenditures for exporters and importers. 

Thus, they drew attention to further pursuit of efforts 

toward increasing transparency and the pace of 

customs processes. In line with the suggestions of the 

Council members, the efforts to improve the customs processes were decisively pursued 

both in 2010 and 2011. 

 

The ratio of customs declarations registered through Electronic Data Interchange 

(EDI), which make it possible for custom brokers and import and export companies 

to transfer their information of declaration via internet, increased since 2006, 

reaching 93% of the total declarations in 2011. 

Figure 6: The ratio of Declarations Registered via EDI to Total Declarations (Export) 

100 

90 

80 

70 

76 

83 

86 87 

90 

93 

60 

50 

% 

40 

30 

20 

10 

0 

Source: Ministry of Customs and Trade 

 

2006 2007 2008 2009 2010 2011 

Customs Counselors and import and export companies can submit declarations 

either via the Computerized Customs Activities (BILGE) system or the Electronic 

Data Interchange (EDI) from their own offices. In recent years, the number of 

customs counselors and import and export companies submitting declarations 

by EDI, recorded an increase. Throughout the year 2011, 93% of the export


81 

declarations were submitted via EDI, and 7% via data entry room; 92% of the 

import declarations were submitted via EDI and 8% via data entry room in 2011. 

Figure 7: The Ratio of Declarations Adopted Electronically (Export) 

100 

90 

80 

70 

60 

50 

83 

88 

90 

89 

91 

93 

% 

40 

30 

20 

10 

0 

17 

12 10 11 9 7 

2006 2007 2008 2009 2010 2011 

Data Entry Room 

EDI 


Figure 8: The Ratio of Declarations Adopted Electronically (Import) 

100 

90 

80 

70 

% 

60 

50 

70 

78 

84 

85 

88 

92 

40 

30 

20 

10 

0 

30 

22 

16 15 

12 8 

2006 2007 2008 2009 2010 2011 

Data Entry Room 

EDI 


 

For the import declarations which fall under the category of blue line, paperless 

declaration implementation was put into practice by January 2012 71 . 

71 

Blue line is a line for the people with A and B class approved person status in import and exports, and also for C class 

persons in exports under “1000” regime code, in which the goods are not subjected to document control or examination.

82 


Under the studies carried 

out by Turkey to become 

a party to the Common 

Transit Convention, 

the New Computerized 

Transit System (NCTS) 

was put into practice on a 

national level on January 

1, 2012. 

Regulations regarding 

the Risk-Based Control 

System in Foreign Trade 

(TAREKS) were put 

into practice and pilot 

implementations were 

launched by 2011. 

“Single Window” system 

which will establish an 

efficient management 

system among the 

relevant bodies and 

institutions in order to 

eliminate the time loss 

and decrease the costs 

for customs has been 

initiated. 

 

 

 

 

 

A Customs General Communiqué, prepared with an aim to increase the efficiency 

of postal and fast cargo transportation, went into effect in January 2010 72 . The 

technical infrastructure works were completed and activated by March 7, 2011. With 

the Communiqué, fast cargo companies and The General Directorate of Post and 

Telegraph Organization (PTT) are now able to follow and complete the transactions 

of non-commercial goods within the specified limits without any power of attorney 

from the recipient of the good. Thereby, it is aimed to accelerate the transactions, 

and decrease the paperwork and the costs. 

Within the efforts to regulate export by using e-signature to decrease the cost in 

customs proceedings and to shorten the time, a pilot implementation in Directorate 

of Customs in Ankara was initiated by November 2010. Work is underway to 

expand this system to all custom administrations. 

Under the studies carried out by Turkey to become a party to the Common Transit 

Convention, the New Computerized Transit System (NCTS) was put into practice 

on a national level on January 1, 2012. Besides the NCTS, by the beginning of 2012, 

Entry Summary Declaration (by maritime and air ways) studies on risk management 

and evaluation--for the sake of safety and security--were also launched. Over the 

rest of 2012, under the scope of both implementations, efficient and selective risk 

analyses and evaluations will be carried out. 

Regulations to put a Risk-Based Control System in Foreign Trade (TAREKS) 

into practice 73 to carry out export, import and domestic market’s cotton audits 

electronically, use e-signature, and so enable companies to carry out transactions 

24/7 were established in November 2010. TAREKS 74 targets make foreign trade 

audits more efficient by risk analyses, focusing on poor quality and unsafe products 

and diminishing the bureaucracy and the costs. Within this framework, in December 

2010, a pilot implementation was designated for agricultural products. Following 

agricultural products, further pilot implementations were made applicable for 

designated import of industrial products 75 , export of agricultural goods 76 , domestic 

market cotton 77 and import of battery and accumulators audits 78 . 

The Ministry of Economy has initiated studies for “Single Window” system which 

will establish an efficient management system among the relevant bodies and 

institutions in order to eliminate the time loss and decrease the costs for customs 79 . 

72 

General Customs Communiqué (Post and Fast Cargo Transportation)(Series No:1)( Official Gazette 01.28.2010/27476). 

73 

The pilot implementation was initiated on 08.12.2010. Communiqué No 2010/42 on the Standardization of Foreign 

Trade Pertaining to the Foreign Trade Data System of Importation Audits of Some Agricultural Products (Official Gazette 

12.03.2010/27774). 

74 

Detailed information on TAREKS is available at the chapter of I/B. 

75 

The pilot implementation was initiated on 01.01.2011. Communiqué No 2010/43 on Standardization of Foreign Trade 

Pertatining to the Foreign Trade Data System of Importation Audits of Some Personal Protective Equipment (Official Gazette 

12.25.2010/27796). 

76 

The pilot implementation was initiated on 02.09.2011. Communiqué No 2011/22 on the Standardization of Foreign Trade 

Pertatining to the Foreign Trade Data System of Exportation Audits of Some Agricultural Products under the Commercial 

Quality Audit Certification (Official Gazette 01.30.2011/27831). 

77 

Approval No 48324 of the Director General of Economic Researches and Assessment, Undersecretariat of Foreign Trade on 

12.31.2010. 

78 

The pilot implementation was initiated on 03.13.2011. Communiqué no 2011/29 on Standardization of Foreign Trade on 

Using the Foreign Trade Data System for Import Controls of Batteries and Accumulators (Official Gazette 03.03.2011/27863). 

79 

Prime Ministry Communiqué No 2012/6 on Single Window System in Custom Services (Official Gazette 03.20.2012/28239).


83 

G. Other Suggestions for Improving the Business Environment 

1. Improving the Vocational Education System, Strengthening the 

Relationship between Education and Employment 

Revision of vocational and technical education in line with the needs of the labor 

market is one of the main components of the investment environment. For instance, at 

the 6 th Meeting of the IAC, the members reiterated the importance of strengthening the 

relationship between education and employment in order to ensure the creation of new 

and better qualified employment fields. 

 

With the aims of developing the vocational and technical 

training in line with the business market’s demands, increasing 

the employment of the labor force by eliminating the problem 

of lacking a profession and making labor force policies more 

efficient by taking a lifelong learning approach, the “Action 

Plan for Strengthening Employment and Vocational Training 

Relationship” was prepared in 2010 80 . The action plan is 

comprised of 38 measures under nine priority areas. The number 

of measures adopted by February 2012 is 24. 

 

Studies were undertaken in 2011 related to the “Strategy for Vocational Education 

and Training” which aims to let the business world have a role in management, and 

to increase the level of adaptation between the vocational education and training and 

the business market; to enhance the quality of education; to diversify the financial 

sources under the scope of 2010 Program. Under the scope of 2012 Program, 

the regulations are to be made in order to increase the quality and the share of the 

vocational education, and to include the private sector and the trade bodies actively 

in the vocational education process in both financial and administrative means. 

 

According to the Strategic Plan of Ministry of National Education (MoNE) (2010- 

2014), prepared within The Ninth Development Plan, Government Program, 

Council’s Decisions and Middle Term Program, the gross school enrollment ratio 

is expected to exceed 90% until the end of the planned term and the general share 

of the vocational education is expected to reach 50%. Gross school enrollment 

rate increased to 92.56% in February 2012 and the ratio of vocational education in 

general secondary education reached 47.95%. 

 

Within the scope of the Country Program Action Plan signed by the Government 

of the Republic of Turkey and UNICEF, which covers the 5 years period of 2011- 

2015, the 2011-2012 Work Plan is being carried out. Under the framework of 2011- 

2012 Work Plan, two sets of research are conducted in order to determine the 

reasons for school drop-out and class repetition, and the characteristics, needs and 

expectations of 14-18 aged children of formal education in order to turn the results 

The “Action Plan 

for Strengthening 

Employment and 

Vocational Training 

Relationship, comprised 

of 38 measures under 

nine priority areas, was 

prepared in 2010.The 

number of measures 

adopted by February 

2012 is 24. 

Studies regarding the 

“Strategy for Vocational 

Education and Training” 

continued in 2011. 

Gross school enrollment 

rate increased to 92.56% 

in February 2012 and 

the ratio of vocational 

education in general 

secondary education 

reached 47.95%. 

80 

Decision Pertaining to the Action Plan on Strengthening the Employment and Vocational Education (Official Gazette 

07.15.2010/27642).

84 


 

 

 

 

 

into policies. The outcomes of the research are expected to be finalized and made 

public by the end of 2012. 

There is a significant increase both in the number of Vocational School of Higher 

Education (MYO) and the number of students attending MYOs. Within the last 

5 years, the number of MYOs increased by 30% and amounted to 687, and the 

number of students increased by 22.5% and reached to 614,873 (except for the 

open university students). The share of the MYO students among the total Higher 

Education students rose to 29.24% by the 2010-2011 academic year. 

“Labor Market Need Analyses” carried out since 2006 for the development of a 

vocational education system and to strengthen the relationship between training 

and employment provides periodical and trustworthy information about the labor 

market, determines the sectors and professions which are expected to have an 

expanding or decreasing need of employment in the short term, and designates 

the skills and abilities required in these professions thus being able to contribute 

the emergence of the employment policies. As a result of the policies shaped by 

the results of the questionnaires, the number of students attending the schools of 

MoNE under the Directorate of Vocational and Technical Education is 1,547,935 

and the ratio of vocational and technical education within the general secondary 

education reached 48%. Further, the number of students under the Directorate of 

Vocational and Technical Education recorded a 12% increase in the last year. 

As a result of the requests from schools and the studies focusing on the expectations 

of the trade and tourism sectors; the lesson load of the vocational high schools is 

gradually decreased from 2010-2011 academic and training year, in order to let 

students spare more time for their internships. 

With an intention to improve foreign language knowledge of the vocational and 

technical education students, the “vocational foreign language lesson” was included 

in the formal education program curriculum. The educations under this scope 

started in 2011. 

In cooperation with the Council of Higher Education (YÖK) and MoNE, in 8 pilot 

provinces 81 in Eastern and Southeastern Anatolian Regions, in 8 pilot sectors 82 16 

vocational secondary schools, 5 vocational training centers and 8 Vocational Schools 

of Higher Education, a total of 29 education institutions; “Project for Developing 

Human Resources Through Vocational Education (IKMEP)” was completed in 

2010. IKMEP realizes these studies in line with the lifelong learning approach 

within the non-formal education programs. As a result of the studies undergraduate 

programs for 20 vocations and education standards paper; 52 education programs; 

64 vocation programs and 19 certificate programs were completed and are 

applicable since the 2010-2011 academic year in the higher education institutions. 

81 

Diyarbakır, Elazığ, Erzurum, Gaziantep, Kahramanmaraş, Malatya, Şanlıurfa, Van. 

82 

Information Technologies, electric-electronic, food, machine, metal works, automative, textile, tourism.


85 

 

 

 

As the IKMEP programs were put into practice in Vocational Schools of Higher 

Education, the distant education program was also made applicable; and contact 

points were established with 60 distant education center and 300 locations. 

Besides the “Strengthening the Vocational Education and Training System” (SVET) 

Project, the “Secondary Education Project” is being carried out by the support of 

World Bank since 2005 with the aim of supporting the development of human 

resources by the modernization of the vocational education. Under the framework 

of the mentioned project, the program unity among the secondary and higher 

education programs was achieved; the need analyses and tables of competencies 

were completed in the vocation of justice and the necessary equipment was prepared 

for the schools. The formal education programs were adapted to the International 

Standard Classification of Education (ISCED-97) and by the end of 2011, 60 fields 

and 226 branches were prepared. 

Amendments on the Law No 25544 on Vocational Qualifications Authority 83 were 

made regarding the accreditation of education and training centers in 2011. As a 

result of these adjustments, it is stipulated that the graduates from the accredited 

education and training institutions will be presented with Vocational Qualifications 

Certificate appropriate to their earned vocational competencies. 

249 vocational standards have been promulgated in the Official Gazette by February 


2. Improving the Perception of Turkey 

The members of the Council have 

reiterated in 6 th Meeting in 2010 that harmonizing 

the perception of Turkey as an investment 

destination to the reality is an important aspect 

of improving the investment environment. In 

this regard, various activities were carried out 

since then in order to promote the investment 

environment, history, culture and touristic value 

of Turkey. 

249 vocational standards 

have been promulgated 

in the Official Gazette by 

February 2012. 

Investment Promotion Activities 

The Investment Support and Promotion Agency of Turkey (ISPAT) which has 

operated since 2006, continued to conduct in 2011 a variety of activities to promote the 

investment environment of Turkey in 2011. 

83 

Vocational Qualifications Authority Law No: 5544 (Official Gazette 10.07.2006/26312) was amended by Statutory Law No 

665 on 10.11.2011.

86 


 

 

 

To support promotion of the investment environment of Turkey, 3,500 booklets 

and 656,000 brochures were distributed in 2011; 720 booklets and 2,200 brochures 

were distributed in the first three months of 2012. 

In cooperation with Turkish Airlines (THY), approximately 529.000 brochures 

were disseminated in 2011, and approximately 70.000 brochures were disseminated 

in the first three months of 2012 in THY flights. 

Within the framework of 2010-2011 Global Media Campaign, contracts were 

signed with media institutions such as CNN, Emirates Open Skies Magazine, The 

Economist and Bloomberg Businessweek. 

Table 26: Global Media Campaign 2010-2011 

TV 

AL Jazeera 

CNN International 

Lufthansa Inflight TV 

Skynews 

Magazine 

Bloomberg Businessweek 

British Airways High Life Magazine 

Emirates Open Skies Magazine 

Lufthansa Magazine 

Singapore Airlines Silverkris Magazine 

The Economist 

The Turkish Perspective 

Newspaper 

Financial Times 

Source: Investment Support and Promotion Agency of Turkey 

Publications 

1,000 sec. 

100,000 sec. 

12 months 

36,000 sec. 

12 publications 








 

Work is being done to strenghten the foreign representation network of the 

Ministry of Economy with the aim of promoting Turkey’s trade and investment 

potential more efficiently in international fora. In this context, while the number of 

foreign commercial counselors of the Ministry of Economy was 115 in 100 centers 

in 77 countries and 3 international organizations in 2010; this number rose to 195 

counselors in 136 centers in 89 countries and 3 international organizations in 2011. 

2012 plans for the foreign organization of the Ministry of Economy are to perform 

the activities with 250 counselors in 159 centers in 105 countries and 3 international 

organizations.


87 

Developing International Image of the Country 

Among the activities carried out by the Ministry of Culture and Tourism to improve 

the image of Turkey in 2011: 

 

 

 

Promotional films about Turkey were broadcasted on CNN’s America, Europe, 

Middle East, Africa, Asia Pacific programs between January-March of 2011. 

Within the context of the Living Izmir Project, approximately 66 media members 

from 25 different countries were hosted in Izmir on May 14-19, 2011. 

World renown artists, literary figures and fashion designers came together in 

Istanbul on May 27-29, 2011 as a part of the Istancool Festival. 

Istanbul International Financial Center Project 

One of the steps taken towards developing Turkey’s international image and 

improving the perception of Turkey is the work carried out to establish an Istanbul 

International Finance Center (IFC). The steps taken in this direction will strengthen the 

physical, institutional and legal infrastructure of the economic framework. Further, the 

results gathered from the promotional activities of the finance center will not be limited 

only to Istanbul and finance, but they will also contribute to strengthening the perception 

of Turkey as a global brand. 

 

In the IFC Strategy and Action Plan which entered into force on October 2, 2009, 

priorities and actions were designated in order to establish a legal infrastructure 

which will operate within international standards, increase financial goods and 

services diversity, facilitate the tax system and make it more efficient, improve 

the regulatory and auditory framework, strengthen the physical and technological 

infrastructure, ensure an education background that will meet the need of qualified 

human resources, and establish an organizational structure which will promote and 

monitor on a worldwide scale 84 . 

 

 

With the Prime Ministry Communiqué published on May 1, 2010, the administrative 

structure of IFC was created. Under this organization, the High Council of IFC, 

National Advisory Board of IFC, IFC Coordinatorship, 8 Working Committees 

and an International Advisory Council of IFC which will make suggestions to the 

High Council were established. 

Of the 71 actions included in the IFM Strategy and Action Plan, 12 were concluded, 

and significant steps were taken in 24 actions by February 2012. Within this scope: 

• z The Draft Law of Capital Market was prepared in addition to the Turkish 

Commercial Code No 6102. This indicates an important step toward improving 

84 

The Action Plan of Istanbul International Finance Center Strategy, http://bit.ly/I1QXqj

88 


The Draft Law of Capital 

Market was prepared in 

addition to the Turkish 

Commercial Code No 

6102. This indicates an 

important step toward 

improving the judicial 

infrastructure which is an 

important component 

of making Istanbul an 

international finance 

center. 

 

the judicial infrastructure which is an important component of making Istanbul 

an international finance center. 

• z Through the legislative amendments which were made with the aim of enabling 

foreign currency securities to be traded in domestic markets, the requirement for 

foreign companies to get permission from the Ministry of Finance for quotation 

to the stock Exchange was terminated and the necessary infrastructure was 

established. 

• z The infrastructure of Takasbank and Central Registry Agency on the issue of 

record keeping procedure of shareholders was consolidated. The preparations 

regarding the use of dematerialized partnership rights electronically which was 

introduced by the Turkish Commercial Code No 6102 was completed; the 

electronic general assembly services within Central Registry Agency were enabled. 

Plans for 2012 include clarification of the legal statutes of the stock exchanges to 

be structured as incorporated companies thus excluding them from general public 

administration; transfer of the Draft Law on Individual Participation to Capital 

Market to TGNA; and completion of work toward encouraging companies to 

become public and providing incentives for increasing the rates of public taking. 

3. Increasing the Efficiency and the Predictability of the Tax System 

Following the previous IAC meeting, studies aimed at solving the structural problems 

facing in the tax system, providing a contemporary and effective tax administration 

structure, and using opportunities arising from economic and technological developments 

in tax system were pursued decisively; in this context, the fight against the illegal economy 

has gained momentum 85 . 

With the tax related 

regulations which 

went into effect in 2010 

and 2011,important 

measures were put into 

practice to create a more 

equitable, steady, and 

predictable tax system. 

 

With the tax related regulations 

which went into effect in 2010 86 

and 2011, important measures were 

put into practice to create a more 

equitable, steady, and predictable tax 

system: 

• z The third and fourth brackets of 

the income tax tariffs were divided 

into two, to differentiate the 

wage income from other income 

aspects. Thus, it is enabled those who earn wage income to enter respectively 

later the 35% bracket than the ones who generate income with other means 87 . 

85 

The developments under the scope of fight against illegal economy is reviewed under II/A for detailed info. 

86 

Law no 6009 on Amendment to the Income Tax Law and Some Other Laws and Decree Laws (Official Gazette 

08.01.2010/27659). 

87 

The income amounting to TL 76,200 and more in income wages are assessed in the 4. bracket, for the other means of 

income 3. bracket’s upper limit is TL 50,000.


89 

• z The differentiation between full-fledged taxpayers and limited taxpayers in terms 

of withholding tax was terminated 88 and the tax cut rate of banks and other 

intermediary institutions regarding the revenues stemming from security issuance 

and other capital markets was re-designated as 0% for the stock corporations 

(including the investment funds). 

• z It is ensured that the investment allowance which cannot be decreased due to 

inadequate income and is transferred to subsequent years will continue without 

any year limit; and it is stipulated that the amount which is subject to discount 

should not exceed 25% of the related income amount. 

• z As the exemption provided for the credit guarantee institutions that give loans 

to SMEs were regulated, it is now ensured that the large scale enterprises with 

needs of loans are also provided with credit guarantee, to increase economic 

efficiency. 

• z The late charge imposed on the public claims in order to facilitate the payment 

of tax delinquencies is stepped down from 1.95% to 1.40% 89 monthly, valid 

from October 19, 2010; and the annual deferment interest rate is decreased from 

19% annually to 12% 90 , valid from October 21, 2010. 

• z In line with the developing technology, the facility to notify the taxpayers via 

e-mail addresses has been introduced. 

• z The exemption from bank and insurance transaction tax is introduced, due to 

the remaining amounts stemming from the derivatives and option contracts 

realized in future and options markets established in Turkey. 

• z The bank and insurance transaction tax rate is reduced from 5% to 1% levied on 

acquiring or selling the securities released on TL with the commitment of 

repurchase and back selling and on the money which is sold before maturity 91 . 

• z The bank and insurance transaction tax rate is reduced from 5% to 1% levied on 

acquiring or selling the rent certificates which are released by asset rental 

companies with the commitment of repurchase and back selling and on the 

money which is sold before maturity 92 . 

• z With the entry into effect of Law No 6111 on February 25, 2011, various 

tax related measures are taken as following: restructuring of the receivables; 

terminating the controversial of the disputed receivables; rearrangement of the 

88 

The Turkish citizens settled in Turkey, who are subject to official Directorates or institutions or who are subject to 

directorates, institutions, or organizations the centres of which are in Turkey, but who reside in abroad due to the works 

of the mentioned works are considered full-fledged taxpayers and they are levied upon all the income they generate from 

both Turkey and abroad. The natural people who do not reside in Turkey are considered limited taxpayers. Those people are 

only levied upon the income and revenue they generate from Turkey. The Turkish citizens working abroad are considered 

as limited taxpayers. In terms of institutions, the legal institutions and the ones who do not have their centres in Turkey are 

considered as limited taxpayers. 

89 

Decree of Council of Ministers No 2010/965 (Official Gazette 10.19.2010/27734). 

90 

According to the article 48 of the Law No 6183 on Collection Procedure of Public Claims, the power vested in the Ministry 

of Finance is used. 

91 

Decree of Council of Ministers No 2010/1182 dated 12.20.2010 (Official Gazette 12.29.2010/27800). 

92 

Decree of Council of Ministers No 2011/1854 dated 04.26.2011 (Official Gazette 06.29.2011/27979).

90 


VAT rates of raw material used in the products to be exported and increasing 

the discount rate of corporate tax of the investments 93 . 

• z With a regulation conducted in 2011, investors with Incentive Certificate are 

subjected to the discount rate in renting the machinery and equipment by the 

financial renting companies and delivery of the machinery and devices which are 

subject to depreciation on customs tariff; and the rental and delivery of these 

goods by the financial companies 94 . 

 

 

 

 

The number of incorporated and limited companies which benefit voluntarily from 

the e-bill implementation was 262 by the end of 2011 and the number of bills issued 

amounted to 347,669. Through e-billing, the transactions are carried out faster, in 

a more secured way and thus, important amounts were saved from time of the 

labor force and billing costs. In addition, follow-up and estimation of economical 

sizes of commercial activities in certain sectors were made possible; rapid, easy and 

processable data flow was provided for the audit units. 

The works on the electronic record were completed by the end of 2011 95 . The 

content of the web site “www.edefter.gov.tr” was prepared and initiated. E-defter 

guides are also prepared and posted on the web site. 

Shifting to automation systems in taxes and expanding the electronic tax payment 

efforts are still ongoing. As of February 6, 2011, 24 banks started to use the 

e-collection system. Within the implementation process of e-collection, collections 

are processed on the tax administration records of the taxpayer without any other 

transaction. 

With a regulation conducted in order to adjust and update the accounting and 

audit standards with the international accounting and audit standards, the current 

institutional infrastructure is strengthened 96 , by bringing standards for the financial 

tables on a national level and eliminating the differences among audit processes and 

techniques used in external audits within enterprises. Regarding the transactions 

carried out on the Internet Tax Administration: 

• z Since February 2011, the entry of intermediation/intermediation and 

responsibility agreements related to the declarations and notifications of the 

taxpayers intermediated by the Certified Public Accountants can be carried out 

electronically in the Internet Tax Administration. 

93 

The Law No. 6111 on the Restructuring and Rescheduling of certain Outstanding Public Debts and on Amendments and 

Revisions to the Law on Social Security and Public Health Insurance and to some other Laws and Governmental Decrees in 

Force of Law (Official Gazette 02.25.2011/27857). 

94 

With the provisions added to Bylaw No 2011/2604 promulgated in the Official Gazette No 28155 dated 12.27.2011 by the 

Bylaw Annex No 2007/13033. 

95 

General Communiqué No 1 on e-Records (Official Gazette 12.13.2011 / 28141). 

96 

Statutory Decree No 660 on Public Supervision, Account and Audit Standard Institution’s Organization and Duties (Official 

Gazette 02.11.2011/28103).


91 

• z Since January 2011, tax payers are able to make the banderole notifications 

online by the Internet Tax Administration. 

• z Since March 2011, the notifications to the documents and records affirmed by 

notaries or those who are responsible for the notaries’ performance can be sent 

electronically via the Internet Tax Administration. 

• z Since May 2011, the tax plates of the taxpayers can be acquited from Internet 

Tax Administration electronically. 

• z Since 1 November 2011, the Special Consumption Tax (ÖTV) Declarations are 

made electronically via Internet Tax Administration. 

 

In 2011, the ratio of tax payments made online by taxpayers was 37%. The increase 

rate was around 24% in 2003, indicating that the habits of the taxpayers have 

improved significantly in benefitting from the electronic payment opportunities. 

Table 27: The Tax Payments Made in Tax Administrations and Electronically 

(01.01.2011-31.12.2011) 

In 2011, the ratio of tax 

payments made online 

by taxpayers was around 

37%. 

Type of Collection Number of Payment Rate (%) 

Amount of Collection(TL 

million) 

Rate (%) 

Tax Administration 

Collection 

89,636,821 62.90 71,335.59 30.54 

Bank Collection 52,864,787 37.10 162,279.71 69.46 

Source: Revenue Administration 

 

With the tax regulations introduced in 2012: 

• z The taxpayers who posses the necessary qualifications are enabled to enjoy the 

investment allowance without any limits on year or rates 97 . 

• z Regarding taxation on incomes generated by derivative products, in order to 

eliminate the doubts of the taxpayers and provide ease of use, the General 

Communiqué on Corporation Tax is promulgated on Official Gazette 98 . 

 

The Double Taxation Prevention Agreements enable incomes to be taxed separately 

in the countries where income is generated and in the income earner’s country. 

Thus, investors that bring technology and deliver services to another country are 

prevented from paying more taxes than the full-pledged taxpayer of the other 

country. From the perspective of the foreign investments or other entrepreneurs, 

the taxation is connected to certain principles; and the disadvantages which may 

arise due to the variability of the domestic legislation for the long term planning is 

eliminated. 

97 

The Decree of Constitutional Court No:2012/20 Docket No: 2010/93 dated 02.09.2012 Cancellation Decision is adopted a 

Motion for Stay of Execution and promulgated in the Official Gazette dated 02.18.2012 and No 28208. 

98 

Corporate Tax Communiqué Serial 5 (Official Gazette 01.19.2012/28178)

92 


 

The Double Taxation Prevention Agreements signed by Turkey with 76 countries 

are effective so far and the related table can be found below. 99 

The Double Taxation 

Prevention Agreements 

signed by Turkey with 76 

countries are effective 

so far. 

Table 28: Double Taxation Prevention Agreements 

Contracting State Date of Signature Date-No of Official Date of Effect Applicable Since 

Gazette 

1) Austria 11.03.1970 08. 01.1973 – 14612 09.24.1973 01.01.1974 

Austria (revision) 03.28.2008 06. 26.2009 – 27270 10.01.2009 01.01.2010 

2) Norway 12.16.1971 12.21.1975 – 15445 01.30.1976 01.01.1977 

Norway (revision) 01.15.2010 05.28.2011 – 27947m. 06.15.2011 01.01.2012 

3) South Korea 12.24.1983 10.02.1985 – 18886 03.25.1986 01.01.1987 

4) Jordan 06.06.1985 07.15.1986 – 19165 12.03.1986 01.01.1987 

5) Tunisia 10.02.1986 09.30.1987 – 19590 12.28.1987 01.01.1988 

6) Romania 07.01.1986 08.21.1988 – 19906 09.15.1988 01.01.1989 

7) Netherlands 03.27.1986 08.22.1988 – 19907 09.30.1988 01.01.1989 

8) Pakistan 11.14.1985 08.26.1988 – 19911 08.08.1988 01.01.1989 

9) England 02.19.1986 10.19.1988 – 19964 10. 26.1988 01.01.1989 

10) Finland 05.09.1986 11.30.1988 – 20005 12. 30.1988 01.01.1989 

11) TRNC 12.22.1987 12.26.1988 – 20031 12.30.1988 01.01.1989 (1) 

12) France 02.18.1987 04.10.1989 – 20135 07.01.1989 01.01.1990 

13) Germany 04.16.1985 07.09.1986 – 19159 12. 30.1989 01.01.1990 (2) 

14) Sweden 01.21.1988 09.30.1990 – 20651 11.18.1990 01.01.1991 

15) Belgium 06.02.1987 09.15.1991 – 20992 10.08.1991 01.01.1992 (3) 

16) Denmark 05.30.1991 05.23.1993 – 21589 06.20.1993 01.01.1991 

17) Italy 07.27.1990 09.09.1993 – 21693 12.01.1993 01.01.1994 

18) Japan 03.08.1993 11.13.1994 – 22110 12.28.1994 01.01.1995 

19) UAE 01.29.1993 12.27.1994 – 22154 12.26.1994 01.01.1995 (4) 

20) Hungary 03.10.1993 12.25.1994 – 22152 11.09.1995 01.01.1993 

21) Kazakhstan 08.15.1995 11.08.1996 – 22811 11.18.1996 01.01.1997 

22) Macedonia 06.16.1995 10.07.1996 – 22780 11.28.1996 01.01.1997 

23) Albania 04.04.1994 10.05.1996 – 22778 12.26.1996 01.01.1997 

24) Algeria 08.02.1994 12. 30.1996 – 22863 12.30.1996 01.01.1997 

25) Mongolia 09.12.1995 12.30.1996 – 22863 12.30.1996 01.01.1997 

26) India 01.31.1995 12.30.1996 – 22863 12.30.1996 01.01.1994 

27) Malaysia 09.27.1994 12.30.1996 – 22863 12.31.1996 01.01.1997 

28) Egypt 12.25.1993 12.30.1996 – 22863 12.31.1996 01.01.1997 

29) PRC 05.23.1995 12.30.1996 – 22863 01.20.1997 01.01.1998 

99 

The double taxation prevention agreement signed on 12.30.1989 with Germany is terminated and is not effective for the 

taxing periods after the date of 01.01.2011. The DTP Agreement revising the mentioning Agreement is signed on 09.19.2011 

but is not effective yet.


93 

Contracting State Date of Signature Date-No of Official 

Gazette 

Date of Effect 

Applicable Since 

30) Poland 11.03.1993 12.30.1996 – 22863 04.01.1997 01.01.1998 

31) Turkmenistan 08.17.1995 06.13.1997 – 23018 06.24.1997 01.01.1998 (5) 

32) Azerbaijan 02.09.1994 06.27.1997 – 23032 09.01.1997 01.01.1998 

33) Bulgaria 07.07.1994 09.15.1997 – 23111 09.17.1997 01.01.1998 

34) Uzbekistan 05.08.1996 09.07.1997 – 23103 09.30.1997 01.01.1997 

35) USA 03.28.1996 12.31.1997 – 23217 12.19.1997 01.01.1998 

36) Belarus 07.24.1996 04.22.1998 – 23321 04.29.1998 01.01.1999 

37) Ukraine 11.27.1996 04.22.1998 – 23321 04.29.1998 01.01.1999 

38) Israel 03.14.1996 05.24.1998 – 23351 05.27.1998 01.01.1999 

39) Slovakia 04.02.1997 10.03.1999 – 23835 12.02.1999 01.01.2000 

40) Kuwait 10.06.1997 11.28.1999 – 23890 12.13.1999 01.01.1997 

41) Russia 12.15.1997 12.17.1999 – 23909 12.31.1999 01.01.2000 

42) Indonesia 02.25.1997 02.15.2000 – 23965 03.06.2000 01.01.2001 

43) Lithuania 11.24.1998 05.10.2000 – 24045 05.17.2000 01.01.2001 

44) Croatia 09.22.1997 05.10.2000 – 24045 05.18.2000 01.01.2001 

45) Moldova 06.25.1998 07.25.2000 – 24120 07.28.2000 01.01.2001 

46) Singapore 07.09.1999 07.18.2001 – 24466 08.27.2001 01.01.2002 

47) Kyrgyzstan 07.01.1999 12.12.2001 – 24611 12.20.2001 01.01.2002 

48) Tajikistan 05.06.1996 12.24.2001 – 24620 12.26.2001 01.01.2002 

49) Czech Republic 11.12.1999 12.15.2003 – 25317 12.16.2003 01.01.2004 

50) Spain 07.05.2002 12.18.2003 – 25320 12. 18.2003 01.01.2004 

51) Bangladesh 10.31.1999 12.15.2003 – 25317 12.23.2003 01.01.2004 

52) Latvia 06.03.1999 12.22.2003 – 25324 12.23.2003 01.01.2004 

53) Slovenia 04.19.2001 12.23.2003 – 25325 12.23.2003 01.01.2004 

54) Greece 12.02.2003 03.02.2004 – 25390 03.05.2004 01.01.2005 

55) Syria 01.06.2004 06.28.2004 – 25506 08.21.2004 01.01.2005 

56) Thailand 04.11.2002 01.08.2005 – 25694 01.13.2005 01.01.2006 

57) Sudan 08.26.2001 09.17.2003 – 25232 01.31.2005 01.01.2006 

58) Luxembourg 06.09.2003 01.08.2005 – 25694 01.18.2005 01.01.2006 

59) Estonia 08.25.2003 07.04.2004 – 25512 02.21.2005 01.01.2006 

60) Iran 06.17.2002 10.09.2003 – 25254 02.27.2005 01.01.2006 

61) Morocco 04.07.2004 06.22.2005 –25853 07.18.2006 01.01.2007 

62) Lebanon 05.12.2004 08.17.2006 – 26262 08.21.2006 01.01.2007 

63) R.S. Africa 03.03.2005 11.20.2006 – 26352 12.06.2006 01.01.2007 

64) Portugal 05.11.2005 12.15.2006 - 26377 12.18.2006 01.01.2007 

65) Serbia- 

10.12.2005 08.08.2007 - 26607 08.10.2007 01.01.2008 

Montenegro 

66) Ethiopia 03.02.2005 08.09.2007 - 26608 08.14.2007 01.01.2008 

67) Bahrain 11.14.2005 08.21.2007 - 26620 09.02.2007 01.01.2008

94 


Contracting State Date of Signature Date-No of Official 

Gazette 

Date of Effect 

Applicable Since 

68) Qatar 12.25.2001 02.05.2008 - 26778 02.11.2008 01.01.2009 

69) Bosnia- 

02.16.2005 04.08.2007 - 26487 09.18.2008 01.01.2009 

Herzegovina 

70) Saudi Arabia [*] 11.09.2007 02.03.2009-27130 m. 04.01.2009 01.01.2010 

71) Georgia 11. 21.2007 02.10.2010 - 27489 02.15.2010 01.01.2011 

72) Oman 05.31.2006 03.13.2010 - 27520 03.15.2010 01.01.2011 (6) 

73) Yemen 10.26.2005 03.13.2010 - 27520 03.16.2010 01.01.2011 

74) Ireland 10.24.2008 08.10.2010 - 27668 08.18.2010 01.01.2011 

75) New Zealand 04.22.2010 07.04.2011 – 27984m. 07.28.2011 01.01.2012 

76) Canada 07.14.2009 04.29.2011 – 27919m. 05.04.2011 01.01.2012 

(1) According to the article 5 of the paragraph 2 of clause (h), article 11 of paragraph 3 of clause (c), and article 14 

paragraph 2; the agreement goes into effect for the incomes and revenues which will not be taxed in a Contracting 

State from 1.1.1987 onward taxation periods. 

(2) The clauses of the agreement on sea and air transport went in to effect on 1.1.1983. However, the mentioned 

Agreement has been repealed, and is not applicable for the taxation terms after 01.01.2011. The revision agreement is 

signed on 19.09.2011 but it did not enter into effect yet. 

(3) The agreement of taxes shall be levied on revenues generated from the operation of planes in international traffic from 

1.1.1987 onwards. 

(4) The agreement will be applicable from 1.1.1988 on for the interest rates generated from the revenues and revenues 

generated from the bank deposits of the revenues generated from air transportation. 

(5) The clauses of the agreement shall be applicable from 8.17.1995 in terms of construction business; and for other clauses 

from 1.1.1998 on. 

(6) The agreement shall be applicable for the revenues generated from the vehicles operated in air transportation in 

international traffic and the disposition of related movables from 1.1.1987 on. 

[*] On the other hand, “The Agreement between The Republic of Turkey and the Kingdom of Saudi Arabia on Bilateral 

Exemption of Taxes Levied upon the Activities of Air Transportation Undertakings from both Contracting States” is 

signed on 11.01.1989. It went into effect on 08.09.1990; the clauses are effective since 01.01.1987. The mentioned 

Agreement covers only the taxes levied on the air transportation activities. 

Source: Revenue Administration


95 

4. Decreasing the Number of Procedures in Administrative Permits 

and Improving Public Administration Practices 

Rationalization of the administrative licensing procedures and improvement of the 

public administration practices are important in terms of the quality of the investment 

environment; and there have been significant developments in the recent years. 

 

 

Decreasing the Number of Procedures in Administrative Permits 

With the Regulation that entered into force on October 6, 2010 100 , the documents 

asked from the applicants for property and real rights possession have been revised. 

Within this context, some documents requested by the governorates and/or those 

in which submission is seen necessary within the practice 101 were included into the 

application documents; however, the documents which were not seen necessary 

within the practice were excluded 102 . Thus, in cases where the application is 

intended for establishing limited real rights or hypothecs, the opportunity to apply 

with fewer documents were introduced. With the same Regulation, there were also 

arrangements regarding procedures for the facilitation of the application process. 

With the Amendment made on the Law on Work Permits of Foreigners 103 , in order 

to facilitate the licensing process, a system of granting a prior authorization up to a 

one-year period throughout the completion process of the procedure on academic 

and professional competency has been introduced for foreign engineers and 

architectures who will work in scope of vocational services. With the mentioned 

Amendment, the number of days required for the conclusion of the applications 

that are in compliance with the procedures has been reduced from 90 to 30. 

 

With the Regulation Amendment made 

at the beginning of 2010, the opportunity for the 

applicants to make their applications and the MoLSS 

to grant the licenses online has been introduced 104 . 

As of August 2, 2010, the Automation Project on 

Work Permits of Foreigners which was prepared 

with the aim of concluding work permit procedures 

of foreigners in a more speedy way and operating 

the procedures online, has been initiated. With this 

Project, the work permit applications of foreigners are accepted through Ministry’s 

online applications and information regarding the whole process is provided 

through the Internet. Through this system: 

With the Regulation 

Amendment made at 

the beginning of 2010, 

the opportunity to make 

online applications 

for work permits was 

introduced. 

100 

Regulation on Property of Foreign Capital Companies and Limited Real Rights Acquisition (Official Gazette 06.10.2010/27721). 

101 

Sample of the diameter with coordinates, authorized signatory list and the document retrieved from the Vocational 

Qualifications Authority. 

102 

The tax office and tax number which the company is affiliated to, company balance, information on the administrators and 

identity cards of the partners or activity document. 

103 

Article 12 of the Law No: 4817 (Amendment Date 02.05.2010). 

104 

Regulation on the Amendment of the Implementation Regulation on Working Permits of Foreigners (Official Gazette 

01.21.2010/27469).

96 


• z Beneficiaries are able to make their electronic permit applications and follow the 

application process 24 hours a day. 

• z The decision processes are expedited and the permit procedures are finalized in 

a more agile manner. 

• z Establishment of a database in compliance with the international and professional 

standards of the EU provides a security and sustainability aspect for the database. 

• z Through protocols on the terms of information exchange between institutions, 

cooperation is to be maintained and procedures are to be followed electronically. 

• z All notifications, such as fee and missing documents for the beneficiaries, are 

carried out through e-mail, preventing delays that can be caused by the use of 

postal service. 

 

 

Following the Constitutional Court revocation of some articles of the Mining 

Law 105 , the amendment on the Mining Law entered into force on June 24, 2010 106 ; 

and the Mining Activities Implementation Regulation prepared parallel to this 

entered into force on November 6, 2010 107 . Within this framework; 

• z In the process for issuing an exploration license, a technical and financial 

competence condition has been introduced by taking the reserve security into 

account. Thus, international standards have been put into practice for the 

processes on issuing and using mineral exploration and operation licenses. 

• z In order to be able to grant a license in special zones, the condition for obtaining 

a permit from relevant institutions in a year has been introduced, thus providing 

a security measure for the investments. 

• z The permit received from the landowner for mining activities has simplified the 

process of obtaining Environmental Impact Assessment Report (EIS), business 

and operating license and other required licenses 108 . 

• z An implementation for the evaluation of the exploration license application 

documents and the announcement of the results on the very same day at www. 

migem.gov.tr and at the notice board of the General Directorate of Mining 

Affairs has been initiated. 

With the Amendment on the Law on Radio and Television Foundation and Broadcast 

Services 109 , the validity terms of licenses have been prolonged and the procedures 

of license applications have been simplified. Within this scope, the term of license 

granted to the media service provider institutions was raised from 5 years to 10 

years; the opportunity has been given for the broadcast license fee and broadcast 

communication authorization fee that is taken from these institutions, to be paid in 

equal installments following the grant of license or authorization document. 

105 

Paragraphs one and eight of Article 7 and paragraph six of Article 10. 

106 

Law on the Amendment of Some Articles of the Mining Law and Some Articles of Other Laws (Official Gazette 06.24.2010/ 

27621). 

107 

Mining Activities Implementation Regulation (Official Gazette 11.06.2010/ 27751). 

108 

Easement, usufruct, renting, purchasing, forest permit, etc. 

109 

Law on the Radio and Television Foundation and Broadcast Services No: 6112 (Official Gazette 03.03.2010/27863).


97 

 

 

 

 

As of February 17, 2011, the governorates were given the authorization for licensed 

private hospitals to appoint or make changes regarding managing directors and 

deputies 110 . 

Improvement of the Public Administration Practices 

The service inventory database, public data inventory and the State Organization 

Database which were established in scope of the Regulation on Procedures and 

Principles to be Respected in the Presentation of Public Services 111 were put into 

practice on January 3, 2011. Trainings and data entry process were started as of the 

aforementioned date. 

With the aim of regulating the principles regarding the use of e-signatures in 

official correspondence with Electronic Document Management Systems (EDMS), 

the process of receiving opinions from institutions on the Draft Regulation on the 

Procedures and Principles to be Respected in Official Correspondence is ongoing. 

In the scope of the e-State Reform Package, 11 projects were prepared: 

• z Within the e-Environment Licensing Project in practice since July 1, 2010, the 

single license implementation about environment has been adopted and the 

applications can be made online with e-signature. In 2010, the Project won the 

first prize in the public to the business category of the e-Transformation Turkey 

Project (e-DTR). 

• z The application on “Second-Hand Vehicle Sales” which was put into practice on 

May 2, 2010 as a part of the Online Vehicle Registration Project, won the e-DTR 

first prize in the from public to citizens e-services category in 2010. 

• z The preparations for the technical infrastructure regarding the realization of the 

Judicial Records Project have been completed as of April 2010 and the Project 

is expected to be put into practice following the enactment of the First e-State 

Reform Package. 

• z Within the scope of the Online Incorporation Project, Central Registration 

System (MERSİS) has been put into practice in Mersin as a pilot project and 

the dissemination of the project is ongoing. Within this framework, various data 

on the business corporations, unlimited companies, liaison offices of foreign 

companies in Turkey, equity companies and cooperatives which are registered 

in the 237 trade registries, will be transferred to the database. Efforts on the 

transfer of data are ongoing in other 80 trade registries. The project is expected 

to be implemented throughout the country in 2012. 

• z Within the scope of the e-Tendering Project, a pilot project has been initiated in 

the healthcare sector. Within this context, on March 7, 2011, the first paperless 

tender was carried out in Hacettepe University Hospital; and the secondary 

110 

Order of the Ministry of Health of 02.17.2011 No: 2228. 

111 

Regulation on the Procedures and Principles to be respected in the Presentation of Public Services (Official Gazette 

07.31.2011/27305).

98 


The E-Appointment 

Project in Healthcare 

System, was expanded 

throughout the country 

in 2011. 

 

 

 

 

legislation works of the Project will be made following the enactment of the 

First e-State Reform Package. 

• z Within the scope of the Project on Online Case Procedures, the pilot scheme 

has been initiated with the “Online Notification Procedures” 112 and the Project is 

expected to be disseminated following the enactment of the First e-State Reform 

Package. Since March 16, 2011, lawyers have been able to file a suit from their 

offices within the framework of “Online Litigation Procedures” and following 

the enactment of the First e-State Reform Package, citizens will also be able 

to benefit from the system, the technical infrastructure of which is prepared. 

Furthermore, the technical infrastructure of the “E-Notification Procedures” 

project has been completed; and it will be finalized for the civil cases following 

the entry into force of the Code of Civil Procedure. For the project to be put 

into practice fully, the secondary regulations within the scope of the Law on 

e-Notification 113 are expected to enter into force. 

The website www.tuketici.gov.tr which was established to inform the citizens in 

scope of the Consumer Portal Project completed on April 26, 2010 and it has been 

integrated into the e-State Portal. The www.tubis.gov.tr website which integrated 

the arbitration delegations and the consumer courts is in the testing phase. 

With the Amendment on the Export Regulation 114 regarding the e-Trade Abroad 

Project, the opportunity to send goods abroad via e-trade has been provided. 

Through the http://www.e-ticaret.gov.tr website, information on e-trade is 

presented from a single source. 

The E-Tax Project in Municipalities has been integrated with the e-State Portal and 

declaration interfaces for 4 different tax types 115 have been prepared. Within this 

scope, integration; with the pilot municipalities and the Revenue Administration, 

General Directorate of Civil Registration and Nationality, General Directorate of 

Land Registry and Cadastre, Administration for Disabled People and the Social 

Security Institution, has been provided by TÜRKSAT. 

In scope of the E-Appointment Project in Healthcare System, the opportunity 

to make appointments via live operators has been provided in 10 provinces 116 . 

Following the completion of the integration of this system between the e-state 

Portal, the system was expanded throughout the country in 2011. Currently, “Green 

Card Information System”, “National Organ Waiting List” and “Who is My Family 

Physician” services are provided through the e-State Portal 117 . 

112 

https://vatandas.uyap.gov.tr/login.uyap. 

113 

Notification Law No: 6099 and Law on the Amendment of Some Laws (Official Gazette 01.19.2011/27820). 

114 

Regulation on the Amendment of the Export Regulation (07.12.2008/26934). 

115 

Real Estate , environment, notice-advertisement and entertainment. 

116 

Pilot schemes were initiated in Yalova on 1 June 2010, in Eskişehir on 1 July 2010 and in Bilecik, Çanakkale, Edirne, Kırklareli, 

Sakarya and Tekirdağ on 26 July 2010. 

117 

“Greencard Information System” since 2010, “National Organ Waiting List” since 2008 and “Who is My Family Doctor” since 

2005, has been in service. Establishing these three projects with integration via TÜRKSAT was initiated in 2010.


99 

 

With the amendment made in the Turkish Commercial Code No: 6762 118 : 

 

 

• z The legal infrastructure, regarding keeping the trade registries and trade books 

electronically and keeping an electronic copy of any kind of document submitted, 

has been prepared. 

• z The opportunity has been provided for the Commercial companies and other 

real and natural person traders to carry out all the procedures necessary in scope 

of the Law No: 6762 by e-signature. 

Within the scope of the dissemination activities for the Land Registry and Cadaster 

Information System (TAKBİS) in the land registry directorates, which aims at 

producing and presenting property information in a speedy, accurate and up-to-date 

manner, 945 land registry directorates, 32 cadaster directorates have been included 

in the TAKBİS as of March 28, 2012. The project is expected to be completed in 

the first half of 2012. In 10 pilot provinces, citizens can conduct sale-purchase 

transactions from different land registry directorates. 

The Geographical Information Systems Infrastructure Project, which aims at 

establishing standards on content and exchange for geographical data and presenting 

the geographical information of various public institutions through a Portal, is 

planned to be finalized before 2014. 

With the amendment 

made in the Turkish 

Commercial Code 

No: 6762, the legal 

infrastructure, regarding 

keeping the trade 

registries and trade 

books electronically was 

established. 

5. Strengthening Sustainable Agriculture through Common Irrigation 

Systems 

Lack of irrigation in agricultural lands arising from the disintegration of lands in 

Turkey by inheritance, as well as the enterprises’ small scale and lack of organization, are 

the elements establishing the need for a serious transformation in the agriculture sector 

which constitutes 8.5% of the national income. This issue was put into the agenda by 

the Council members in 2010, especially with the dimension of strengthening common 

irrigation systems. 

 

The agriculture sector which has a significant 

place in the economic and social structure of Turkey, 

has gained more importance with the recent global 

food crisis and the food safety strengthening sensitivity. 

Especially in the recent period, the use of advanced 

technology has increased in the agriculture sector which 

has a structure dependent to the natural conditions, and 

stability has been assured in the agricultural production. 

Except for the drought observed in Turkey in 2007, the 

agriculture sector which has been sustaining its growth 

for the last 8 years grew by 2.4% in 2010. 

118 

Law on the Amendments of Some Laws (Official Gazette 04.12.2011/27903).

100 


5,312 projects on 

collective pressurized 

irrigation have been 

provided with TL 139.8 

million of grants, in 

scope of the Support to 

the Rural Development 

Investments Program. 

 

 

 

In spite of the decline in the share of the agriculture sector within the GDP through 

2002-2007, it was on the rise through 2008-2010 and achieved to 8.4% by the year 

of 2010. 

However, the need to overcome the disintegration of land which poses a problem 

especially in terms of irrigation is an essential issue for increasing agricultural 

production and efficiency. Within this scope, the efforts for amending the Turkish 

Civil Code and the Soil Conservation and Land Use Law with the aim of preventing 

disintegration by inheritance for overcoming the multipartite structure of the 

enterprises are ongoing. 

Annually 69 thousand hectares of area has suffered from the lack of irrigation as 

a result of insufficient water supplies during 2006-2010, which brought forward 

the need for increasing the efficiency of the irrigation systems. Yet, with the aim 

of inciting the use of more effective irrigation methods, 50% to 75% grants are 

provided to the projects on collective pressurized irrigation in scope of the Support 

to the Rural Development Investments Program. Within this Program 5,312 

projects have been provided with TL 139.8 million of grants. 

Table 29: Amounts of Grants Provided to the Drip Irrigation and Irrigation by Sprinkling 

Water Projects in Scope of the Support to the Rural Development Investments Program 

Supported Institution/ 

Organization 

Projects Beneficiaries Provided Grant 

(TL Million) 

Area of Irrigation 

(hectare) 

Ministry of Food, 

Agriculture and Livestock 

5,312 59,484 139.8 55,800 

Source: Ministry of Food, Agriculture and Livestock 

The subsidy rate for the 

investments and business 

credits in the area of 

agricultural irrigation 

was increased from 60% 

to 100% as of 2011. 

 

The subsidy rate for the investments and business credits provided by the T.C. 

Ziraat Bank Inc. and Agricultural Credit Cooperatives in the area of agricultural 

irrigation since 2007 was increased from 60% to 100% as of 2011 119 . Within this 

scope, 25% increase has been observed in the number of farmers benefiting from 

the Ziraat Bank credits. 

119 

Decree of Council of Ministers No: 2011/1240 (Official Gazette 01.06.2011/27807).


101 

Table 30: The Credits Provided by Ziraat Bank and the Number of Beneficiaries 

Beneficiaries 

Provided Credits 

(TL Million) 

2007 6,371 80 

2008 28,458 368 

2009 17,200 236 

2010 16,854 258 

2011 21,080 277 

Total 89,963 1,219 

The number of beneficiaries and the amount of credits since the beginning of the project as of 2007 until 12.31.2011, 

towards providing subsidized credits for Pressurized Irrigation Investments. 


 

 

 

 

With the process that started following the declaration of the GAP Action Plan in 

2008, there has been a significant increase in the sources allocated to the irrigation 

projects within the public investment programs, primarily in the Southeast Anatolia 

Project (GAP) 120 , East Anatolia Project (DAP) 121 and Konya Plain Project (KOP); 

and agriculture sector investment allowance of the State Hydraulic Works (DSİ) 

which had been around 1 billion TL at the beginning of 2008, reached to TL 4 

billion by a quadrupled increase in the 2012 budget. 

The perspective for more effective use of the irrigation water has been adopted with 

these studies, besides the target of a rapid increase in the irrigation investments. 

The irrigations systems especially in the new planning and project designing studies, 

are mainly designed as closed systems that provide savings; and as well, closed 

systems are preferred for the studies towards rehabilitation of the old and worn-out 

irrigation networks. 

The Irrigation Unions Law which entered into force on March 22, 2011 and 

strengthens the participatory water usage management aims to provide more 

effective and rational use of water assets and supplies in agriculture. 

In scope of the GAP which was initiated with the aim of contributing to 

the development of the region by making good use of the resources that the 

Southeastern Anatolia Region has, 15 dams have been completed and water that 

will irrigate 1 million hectares of land has been stored. Following the completion 

of the GAP Action Plan which aims for the completion of main canal and network 

constructions in prioritized projects which have available water supplies, 1.06 

million hectares are planned to be opened for irrigation; while, 370,418 hectares 

have been opened for irrigation by the end of 2011. With the completion of main 

Significant increase was 

observed in the sources 

allocated to the irrigation 

projects within the public 

investment programs. 

The Irrigation Unions 

Law entered into force on 

March 22, 2011. 

370,418 hectares 

have been opened for 

irrigation by the end 

of 2011 in scope of the 

Southeast Anatolia 

Project Action Plan. 

120 

Southeast Anatolia Project Provinces: Adıyaman, Batman, Diyarbakır, Gaziantep, Kilis, Mardin, Siirt, Şanlıurfa, Şırnak. 

121 

East Anatolia Project Provinces: Ağrı, Ardahan, Bayburt, Bingöl, Bitlis, Elazığ, Erzincan, Erzurum, Gümüşhane, Hakkari, Iğdır, 

Kars, Malatya, Muş, Tunceli, Van.

102 


 

 

 

canal constructions and irrigation projects, tenders of which are ongoing in scope 

of the GAP Action Plan, a significant increase in irrigation areas is expected. 

Training programs aiming to raise the awareness for the more effective use of 

irrigation sources have been continued in 2011. In scope of the “Agricultural 

Mechanization in Irrigated Agricultural Lands Training Center Project” 122 which 

was put into practice in cooperation with Germany in 1993, irrigation trainings 

have been given to the Ministry of Food Agriculture and Livestock Personnel as the 

irrigation experts and to farmers. Since the initiation of the project, 1,419 irrigation 

experts have been trained in 81 main training courses and 970 personnel were 

provided technical education especially on drip irrigation and sprinkling irrigation 

through 75 courses. Also, with the aim of providing the necessary information 

and skills on irrigation to the farmers in areas to be opened for irrigation, “GAP 

Agricultural Training and Publication Project” was put into practice by the GAP 

Region Development Administration on April 2011. 

The provisions of the Soil Conservation and Land Use Law 123 on private land 

consolidation which is of vital importance in the effective use of irrigation sources, 

gained functionality with the secondary legislation 124 published in 2009. Efforts for 

the amendments on the relevant laws with the aim of limiting the disintegration of 

agricultural lands by inheritance are ongoing. 

The use of renewable energy sources for the development of agricultural irrigation 

systems also has a significant importance on the sustainability and development 

of agricultural activities. Within this framework, in scope of the “Increasing the 

Use of Renewable Energy Sources and Energy Efficiency in Southeastern Anatolia 

Region Project”, important improvements are expected to be maintained in making 

the use of solar cell technology in agricultural irrigation more prevalent in the GAP 

region. The cost of energy used in irrigation constitutes a significant amount of 

the production cost; and the annual cost of the electricity used for agricultural 

irrigation in GAP provinces is TL 160 million. With the use of solar cell technology, 

irrigation would be provided to areas where electricity or oil powered pumps cannot 

reach; and savings on energy cost, one of the most important cost factors, will be 

accomplished. 

122 

In scope of the project, irrigation experts are being trained to provide trainings for farmers. The irrigation publishers, 

convey to the farmers the important issues of economic and modern irrigation techniques, land leveling, drainage, 

irrigation water quality, saltiness, pump features and pump selection; and contribute to the dissemination of use of more 

effective irrigation techniques. 

123 

Soil Conservation and Land Use Law No: 5403 (Official Gazette 07.19.2005/25880). 

124 

Regulation on the Protection and Use of Agricultural Lands and Land Consolidation (Official Gazette 07.24.2009/27298).

Activating the Labor Market 

103 

III. Activating the Labor 

Market 

The reforms that are going to 

increase the efficiency of the labor force 

are important in the creation of new and 

more qualified business fields. Decreasing 

the costs of registered employment 

while preserving financial discipline, 

strengthening the relationship between 

education and employment, and increasing 

the flexibility of the labor market are 

all significant steps needed in this area. 

Therefore, the labor market issues were 

stressed by the members of the Council in the last meeting, as they had been previously. 

Within the context of employment-oriented sustainable growth, the policies 

supporting the disadvantaged groups in the labor market continue to exist in a way to 

improve the market 125 . Within this framework, efforts for creating an effective labor 

market are under way to maintain equilibrium between flexibility and security, to form 

a price system based on productivity, to offer equal rights for everyone where gender 

equality is especially respected, and to create employment opportunities which can adapt 

to technological developments and changes. 

 

Under the framework of Instrument for Pre-Accession Assistance-IPA (2007- 

2013) provided to Turkey in the process of EU accession, three main operations 

which contribute to development of human resources are ongoing towards the 

target groups which expose obstacles in the accession to labor market and left out 

of the labor market. These are: 

• Operation of Increasing the Quality of Public Employment 

Services (KİK): 

The studies launched 

under the scope of three 

main operations towards 

the targeted groups 

who are left out of the 

labor market and expose 

obstacles in the accession 

to labor market, are 

ongoing. 

The aim of the operation is to strengthen the administrative capacities of ISKUR 

(Turkish Employment Agency), Ministry of Labor and Social Security (MoLSS), Boards 

of Provincial Employment and Vocational Education and the social parties, aiming to 

increase the employment service qualities and the efficiency. 

125 

2011 Program p.190–191.

104 


Within the scope of the operation, the implementation of “Model Office Concept” 

is planned to be extended among various provinces(15 centres of attraction and 43 

provinces covering the vicinities) including the 12 NUTS II level. 

After the assessment process of the operation, completed in November 2011, 

the assessment report was submitted to the European Union Turkish Delegation. It is 

predicted that the report will be approved in 2012. 

• Promoting Women’s Employment (KID) Operation: 

The aim of the operation is to increase in particular the participation of women 

in the labor market, thus enabling the employment of more people and increasing the 

current capacity by developing policies towards providing to keep them in employment. 

Under the framework of Promoting Women’s Employment Operation, 131 projects 

were entitled to receive grants by July 2010 by the time, the Grant Assessment process 

ended. Yet, the monitoring processes of the applied projects are still in progress. 

• Promoting Youth Employment (GID) Operation: 

The operation prepared under the 2008 IPA programming is applied in 12 NUTS II 

regions. The aim of the operation is to increase the employability of the youth via active 

labor programs. 

Under the grant component, 127 grant projects started in the last quarter of 

2010 and completed by the end of 2011 which were directed towards increasing the 

employability of youth aged from 15-29. 

 

There are 2 more Operations the preparations of which are on-going under the IV. 

Component of IPA and are predicted to start in the next period. These are: 

• z Promoting Youth Employment II (GID II) Operation and, 

• z Promoting Active Involvement in Turkey (AID) Operation. 

The number of people 

who were employed via 

the private employment 

bureaus amounted 

to 27,651 in 2010 and 

35,564 in 2011. 

 

 

Under the framework of “Improving Labor Market Intermediation Activities 

for the Benefit of Employability of Long Term Unemployed People Project” 

which was initiated in January 2008 and carried out by ISKUR and the state of 

Netherlands and MATRA, various training programs and documents are prepared, 

and the studies will further go on in 2012. 

With the enactment of Turkish Labor Institution Law No 4904 126 , it is now possible 

for private employment bureaus to carry out intermediary activities to find jobs and 

to place appropriate workers who seek jobs both on a national and international 

level other than the public bodies and institutions. In addition to these they can 

provide consultation services in the fields of human resources and perform 

activities which increase the employability and productivity of the labor force. In 

126 

Turkish Labour Institution Law No 4904, article.17.

Activating the Labor Market 

105 

 

 

 

 

this context, from 2004 when implementation began until 2011, 250,542 people 

were recruited in total. The number of people who were employed via the private 

employment bureaus amounted to 27,651 in 2010 and 35,564 in 2011. 

The premium incentive implemented since 2008 to young people older than 18 and 

younger than 29 is rearranged 127 . This regulation stipulates an insurance premium 

incentive lasting from 6-54 months especially for women and youth for those who 

work in various categories or unemployed. If the beneficiaries of these incentives 

are employed from the unemployed list of ISKUR, they will continue to benefit 

from these incentives for an additional six months. Yet, with the regulation of 

Law No 6111, the opportunity to benefit simultaneously from the 5 scores of the 

premium discount and other insurance premium incentives for the same insured 

person and within the same period is introduced. 

In addition to that the Law No 6111 128 , in order to increase and expand the 

application of flexible work types; 

• z For the insured workers who work with partial duration working agreements, 

the facilitation of incurring debt retrospectively in the next years regarding the 

missing duration belonging to the months in which they partially worked is 

provided. 

• z In the context of voluntary insurance conditions for those who work with partial 

duration agreements, it is enabled to pay for the unemployment insurance 

premium and to reach the necessary number of premium payment days to get 

unemployment insurance compensation. 

• z In order to achieve success and combat unemployment in globally rising 

competition, the flexible models of work such as “on call working”, “work at 

home” and “distant work” are provided with legal foundation. 

With the aims of empowering women socioeconomically, detecting the problems 

related to the women’s employment, providing equality among women-men in 

social life, reaching the sustainable growth and social development, a Prime Ministry 

Communiqué 129 was published. Under the scope of the project the “Women 

Employment National Monitoring and Coordination Board” is established with the 

representatives of the public and private sector in its structure. The Board had 218 

meetings in 70 provinces with the participation of NGOs in 2010 and 2011. 

After Turkey’s candidacy for EU membership was finalized and in the interest of 

participating in the European Employment Strategy (EES), the “Employment 

Situation Report” was prepared. Following that, work began on the “Joint 

127 

It was regulated with the Law No 6111 promulgated in the Official Gazette on February 25, 2011. 

128 

The Law No. 6111 on the Restructuring and Rescheduling of certain Outstanding Public Debts and on Amendments and 

Revisions to the Law on Social Security and Public Health Insurance and to some other Laws and Governmental Decrees in 

Force of Law (Official Gazette 02.25.2011/ 27846). 

129 

Prime Ministry Circular No 2010/14 on Increasing the Women’s Employment and Providing Equal Opportunities (Official 

Gazette 05.25.2010/27591). 

“Women Employment 

National Monitoring and 

Coordination Board” 

is established with the 

representatives of the 

public and private sector. 

The studies carried out 

to make JAP compatible 

with both the 2020 

EU Strategy and the 

National Employment 

Strategy (NES) draft, have 

been completed by the 

beginning of 2012.

106 


Assessment Paper of Employment Policy Priorities (JAP),” a policy document in 

which critical problems for employment policy are being analyzed and commitments 

are made in terms of actions to be undertaken by the candidate country in line with 

the European Employment Strategy regarding the labor market and employment. 

For JAP to be restructured in a way to make it compatible with both the 2020 EU 

Strategy and the National Employment Strategy (NES) draft, work was initiated 

involving the related bodies and institutions in 2011; and it was completed by the 

beginning of 2012. NES mainly aims to solve the structural problems in the labor 

market and thereby provide a permanent solution for the unemployment problem 

by increasing the contribution of growth to employment both in middle and long 

term.

Innovations 

107 


A. Increasing the R&D Investments in Private Sector 

Expanding R&D and innovative 

activities has been a high priority for Turkey 

since the beginnings of the 2000s. Important 

policies were put into practice with an 

intention of increasing the R&D investments 

to strengthen the competitiveness of the 

economy and thus significant improvements 

were achieved both in R&D investments and 

expenditures. 

 

At the 23 rd meeting of the Science and Technology High Council (STHC) on 

December 27, 2011, it was decided that in order for Turkey to be among the top ten 

economies of the world and achieve other national targets (domestic automobile, 

domestic plane, domestic helicopter etc.), National Innovations System 2023 

Targets are set as follows 130 : 

 

• z R&D Expenditure/GDP: 3% 

• z Private sector R&D expenditure/GDP: 2% 

• z Number of Full Time Equivalents (FTE) researchers: 300,000 

• z Number of private sector FTE : 180,000 

In line with the target taken on increasing the rate of R&D expenditures to GDP 

by 2023 to 3%, R&D expenditures increase rate achieved a momentum in the last 

period and TL 9.8 billion R&D expenditures ratio to GDP in 2010 was recorded 

as 0.84%. 

By 2023, the ratio of R&D 

expenditures to GDP is 

expected to reach 3%. 

130 

STHC 23 meeting, Decision No 2011/101 “National Innovations System 2023 Targets”

108 


Figure 9: Ratio of R&D Expenditures to GDP (%) 

% 

0.9 

0.8 

0.7 

0.6 

0.5 

0.4 

0.3 

0.2 

0.1 

0 

0.85 0.84 

0.72 0.73 

0.59 0.60 

0.54 0.53 

0.52 

0.48 

0.48 

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 


R&D expenditures kept rising recently and in 2010 the Gross Domestic Expenditure 

on R&D (GDERD) was recorded a 15% high compared to the previous year, and with 

the fixed prices of 2011 it amounted to TL 9.8 billion and tripled compared to the start 

of the 2000s. 

Figure 10: Amounts of GDP and Gross Domestic Expenditure on R&D (GDERD) by 

Years 

12000 

10000 

896 

935 

1051 1056 

1008 

1168 

1200 

1000 

( million) 

8000 

6000 

4000 

667 

556 

610 

699 

764 

5,296 

5,647 

7,591 7,660 

8,560 

9,805 

800 

600 

400 

( billion) 

2000 

3,193 

2,989 3,209 3,377 

3,960 

200 

0 

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 

0 

GDERD ( million) GDP ( billion) 

Source: TURKSTAT

Innovations 

109 

 

In terms of increasing the share of private sector R&D expenditures in total GDP 

to 2%, the share of the private sector expenditures was 0.36% in 2010 and its share 

in the total R&D expenditures rose to 42.5%. 

Figure 11: R&D Expenditures - Sectoral Distribution 

80 

70 

60 

50 

60.4 

58.9 

64.3 

66.3 

67.9 

54.6 

53.2 

48.2 

44.2 

47.4 46.0 

% 

40 

30 

33.4 

33.7 

28.7 

23.2 

24.2 

33.8 

35.6 

41.3 

43.8 

40.0 

42.5 

20 

10 

6.2 7.4 7.0 

10.4 

8.0 

11.6 11.2 10.6 12.0 12.6 11.4 

0 

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 

Universities 

Private 

Public 


 

In line with the target of increasing the number of FTE researchers to 300,000 by 

2023, a target designated at the December 27, 2011 meeting of STHC, the numbers 

of FTE R&D researchers amounted to approximately 82,000 and the numbers of 

FTE researchers to 64,000 in 2010. In addition, Turkey increased the number of 

FTE R&D personnel and FTE researchers in the 2003-2010 by 100% and 84%, 

respectively. Turkey is among the countries with the most rapid increases on these 

grounds. While the number of FTE R&D personnel was 38,000 in 2003 in Turkey, 

this number rose to 74,000 in 2009 and Turkey ranked as 13 th.

110 


Figure 12: FTE R&D Personnel 

90 

82 

in thousand 

80 

70 

60 

50 

40 

30 

20 

10 

27 28 29 

23 23 24 

38 

40 

33 34 

49 

39 

54 

43 

63 

50 

67 

53 

74 

58 

64 

0 

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 

FTE R&D Personnel 

FTE Researcher 

Source: TUBITAK 

 

In recent years, Turkey have achieved significant improvement in international 

rankings regarding the R&D expenditures, number of FTE R&D personnel and 

various main indicators related to the scientific publications. 

Table 31: The Position of Turkey in the Main Science, Technology and Innovation 

Indicators 

VALUES OF TURKEY 

Indicator 2002 2003 2004 2005 2006 2007 2008 2009 2010 Target 

2023 

GDERD Expenditures 

3.0 2.8 3.6 4.6 5.4 7.1 7.7 8.7 9.4 - 

(Billion current account PPP $) 

GDERD/GDP % 0.53 0.48 0.52 0.59 0.60 0.72 0.73 0.85 0.84 3 

Total Researchers(Thousand) 24 33 34 39 43 50 53 58 64 300 

Total R&D Personnel 

29 38 40 49 54 63 67 74 82 - 

(Thousand FTE) 

Scientific Publication 

11 13 16 17 20 24 25 28 28 - 

(Thousand) 

GDERD carried out by Private 28.7 23.2 24.2 33.8 35.6 41.3 44.2 40.0 42.5 67 

Sector / Total GDERD % 

GDERD carried out by Public 7.0 10.4 8.0 11.6 11.2 10.6 12.0 12.6 11.4 - 

Sector/ 

Total GDERD % 

GDERD carried out by Higher 

Education Sector / 

Total GDERD % 

64.3 66.3 67.9 54.6 53.2 48.2 43.8 47.4 46.0 - 

Source: TURKSTAT, MSTI 2011/1, ISI Database

Innovations 

111 

 

The Implementation Plan on National Science and Technology Policies (STP- 

IP) which creates a common ground for scientific, technological and innovations 

towards 2023 targets, in order to maintain the momentum achieved in 2005-2010, 

the Technology and Innovation Strategy (NSTIS) 2011-2016 was adopted in the 

22 nd meeting of SCST on December 15, 2010. 

 

 

R&D Supports 

Support Provided in scope of the Law on the Support for R&D Activities 

In scope of the Law No 5746 131 which entered into force on July 31, 2008, for 

those enterprises which benefit from Cooperation Prior to Competition Projects, 

Technology Center Enterprises and Techno-Entrepreneurship Capital Support: 

• z With 100% tax base reduction in R&D costs, exception in Corporate Tax was 

made. 

• z Except for the public personnel, 80% of the income tax which is derived from 

the payments to R&D personnel and 90% for those who have a PhD degree 

were included in the exception. 

• z Except for the public personnel, half of the employer’s share on insurance 

premium which is derived from the payments of R&D personnel, coverage for 

5 years from the budget was arranged. 

• z Stamp tax exception was made for the papers arranged for these activities. 

• z The arrangement was made for granting up to TL 100,000 Techno- 

Entrepreneurship Capital Supports to those who would like to realize their 

original ideas in the high tech area and who have completed or about to complete 

their technical training. 

• z The supports received by enterprises in R&D and innovation activities from 

public institutions and organizations, foundations established by law and 

international funds were exempted from Corporate Tax. 

The amount of incentives and the number of taxpayers in scope of the Income Tax 

Law No: 193, Corporate Tax Law No:5520 and Law on the Support for Research 

and Development Activities No: 5746 have been presented below: 

The supports received 

by enterprises in R&D 

and innovation activities 

from public institutions 

and organizations, 

foundations established 

by law and international 

funds were exempted 

from Corporate Tax. 

131 

Law no: 5746 (Official Gazette 03.12.2008/26814).

112 


Table 32: The Amount of R&D Supports Provided under Various Tax Laws 132 

Number of 

Taxpayers 

Amount 

(TL million) 

R&D Support (According to Income Tax Law) 48 4 

Income Tax 

R&D Support (According to Law No 5746) 12 2 

2008 

Total R&D Support 60 6 

R&D Support(Corporate Tax Law Art. 10/1-a) 237 509 

Corporate Tax 

R&D Support(Law No 5746 Art. 3) 162 76 


R&D Support(According to Income Tax Law) 46 4 

Income Tax 

R&D Support(According to Law No 5746) 24 4 

2009 


R&D Support(Corporate Tax Law Art. 10/1-a) 280 770 

Corporate Tax 

R&D Support(Law No 5746 Art. 3) 265 515 

Total R&D Support 545 1,285 

R&D Support (According to Income Tax Law) 51 3 

Income Tax 

R&D Support(According to Law No 5746) 27 7 

2010 


R&D Support (Corporate Tax Law Art. 10/1-a) 250 482 

Corporate Tax 

R&D Support (Law No 5746 Art. 3) 377 1000 

Total R&D Support 627 1,482 

2011 

Income 

Advance Tax 

Corporate 

Advance Tax 

R&D Support 107 5 

R&D Support (Corporate Tax Law Art. 10/1-a) 320 572 

R&D Support (Law No 5746 Art. 3) 717 1,137 

Total R&D Support 1,037 1,709 

Source: Ministry of Finance 

132 

Income Tax Law No 193, Corporate Tax Law No 5520 and the Law No 5746 on Support to Research and Development 

Activities.

Innovations 

113 

 

With the aim of providing incentive for private sector R&D projects, The Scientific 

and Technological Research Council of Turkey (TUBITAK)’s Directorate on 

Technology and Innovation Funding Programs (TEYDEB) provides support 

under four different programs: 

• z 1501 Industrial R&D Projects Support Program: Grant support has been 

provided since 1995 with the establishment of the program in order to contribute 

to providing incentive for the R&D activities of the institutions that create 

added value on a company base and by doing so to elevate the R&D skills of the 

Turkish industry. With the legal Amendment made in 2010, the grant supports 

that used to be given by TUBITAK and the Ministry of Economy are now being 

fully covered by the TUBITAK budget 133 . With the arrangement, the aim was 

to decrease bureaucracy by having only one institution as the grant provider. 

Within the scope of the program, in 2011; 524 projects were decided to be 

supported, 404 projects were finalized and a support payment of TL 191.15 

million was made. Furthermore, during the 1995-2011 terms, 4,084 projects 

have been concluded, a total of TL 1.74 billion grant support has been provided 

for 5,119 projects. 

• z 1505 TUBITAK Technology Transfer Support Program in Favor of 

the SME: In scope of the program designed for strengthening the role of 

SMEs within the National Innovation System, the aim is to contribute to the 

commercialization of the knowledge within the university/public research 

institutions by transforming it to product or process and transferring it to the 

SMEs in line with their needs. 

The amount of support will be identified according to the quality of the project 

and 75% of the project budget will be covered by TUBITAK and 25% by the 

SME. The upper limit for the project budget is TL 300,000 and the term of 

support has been determined as maximum of 18 months for each project. In 

addition to the project budget, Project Incentive Bonus (PIB) and 5% of the 

budget of the project taken into the scope of support as the Institution Share 

on Project is paid to the executive organization by TUBITAK. 

As of August 1, 2011, project applications are to be submitted only through an 

online application called Project Evaluation and Monitoring System (PRODIS) 

on the website http://eteydeb.tubitak.gov.tr. In 2011, 5 project applications were 

made and 2 projects were rejected because of failing to meet the criteria. As of 

the year end in 2011, the evaluation process for 3 projects is ongoing. 

• z 1507 SME R&D Preliminary Support Program: The implementation of 

the program which aims for making SME scale enterprises more competitive, 

develop an institutional research and technology development mindset and take 

more effective role in the national/international support programs, was initiated 

on March 16, 2007. Within the program, grants up to 75% of the project cost 

133 

The Communiqué No. 2010/7 on the Amendment of the Communiqué No. 98/10 R&D Support (Official Gazzete 

09.23.2010/27708).

114 


 

have been provided; a total of 1,113 projects have been granted support in 2009 

and 2010 and TL 145 million of grant have been provided to 933 finalized 

projects. In 2011, 512 projects were decided to be supported, 399 projects were 

finalized and a support payment of TL 74 million was made for the supported 

projects. Between the initiation year 2007 and 2011, 2,836 projects were decided 

to be supported, 1,385 projects were finalized and a total of TL 237 million 

grant was provided 134 . 

• z 1509 International Industrial R&D Projects Support Program: The 

Program has been initiated on July 8, 2007 with the aim of providing support 

to the research, technology development and innovation projects of institutions 

which take part in the international joint support programs such as EUREKA 

and EUROSTARS 135 and create permanent value added projects in Turkey. The 

grant support rates for the Large Scale enterprises are 50%-60%, and 75% for 

the SMEs. Within the scope of the program, 34 projects were decided to be 

supported, 15 projects were finalized and TL 13 million of grants were provided 

to the projects in 2011. During the 2007-2011 period, 129 projects were decided 

to be supported, 25 of them were finalized and a total of TL 20 million of 

grants were provided. 

Within the scope of TUBITAK TEYDEB supports, 1,848 projects were taken 

into consideration and 1,075 of these (58%) were found suitable for the supports 

in 2010. In 2011, 1,690 projects were taken into consideration and 1,070 of these 

(63%) were found suitable for the supports. In this framework, in 2010, 1,348 firms 

were provided with a total of TL 288.3 million of grants. In 2011, TL 278.6 million 

of grants was provided to 1,402 firms. 

Table 33: TUBITAK TEYDEB Supports 

2009 2010 2011 

Number of Project Applications 2,001 1,755 1,688 

Number of Firms Applying for the Projects 1,495 1,350 1,338 

Number of New Firms Applying for the Projects 926 741 717 

Number of Projects Decided to be Supported 1,185 1,075 1,070 

Number of Projects in Force 1,792 1,654 1,804 

Number of Projects Concluded 901 1,107 828 

Number of Projects Provided with Grant Support 1,892 1,847 1,938 

Number of Firms Provided with Grant Support 1,378 1,348 1,402 

Amount of Grant Support (TL Million) (current) 412.10 288.3 278.6 


 

In 2010, 1,367 SME Projects were granted TL 159 million whereas in 2011, 1,416 

SME Projects were granted TL 162.7 million. 

134 

Since 2011. 

135 

EUREKA which is an international cooperation platform of 18 countries, including Turkey and EU, offers supports for R&D 

projects that are innovative and close-to-market. EUROSTARS which is a joint program dedicated to R&D performing SMEs 

by European communities and 33 EUREKA member countries, including Turkey.

Innovations 

115 

Table 34: Firms and Projects Supported by the TEYDEB Supports 

Number of Firms Number of Projects Amount of Grant (TL thousand) 

2009 2010 2011 2009 2010 2011 2009 2010 2011 

SME 1,203 1,169 1,190 1,400 1,367 1,416 195,930 159,000 162,700 

Large Scale 

Enterprise 

175 179 212 492 480 522 216,170 128,700 115,900 

TOTAL 1,378 1,348 1,402 1,892 1,847 1,938 412,700 288,300 278,600 


In terms of TUBITAK’s 

TEYDEB support 

programs, in 2010, 

1,367 SME Projects were 

granted TL 159 million 

whereas in 2011, 1,416 

SME Projects were 

granted TL 162.7 million. 

 

With the start of the Project Monitoring and Evaluation System (PRODIS) on July 1, 

2008, which was initiated with the aim of increasing the effectiveness and facilitating 

application procedures of TUBİTAK Support Programs and application have been 

started to be submitted online. The works on transferring all the stages of project 

monitoring processes to the electronic environment was completed on November 

2010. As of August 2011, the applications for “1505 Technology Transfer in Favor 

of the SME Support Program” can be made via PRODIS. Furthermore, during 

this period, the improvement of the evaluation and monitoring processes of the 

projects also continued. 

7 th Framework Program (FP) of the European Union (EU) 

 

Within the scope of the 7th Framework Program of EU, which has a fund capacity 

of Euro 53.2 billion for 2007-2013, TL 8.5 million of funds was transferred to 110 

Turkish partners in 2010 136 . Within the framework of the program, a total fund of 

TL 82.4 billion has been transferred to 442 projects of the Turkish partners and the 

total portfolio amount of the projects in which Turkish partners are a part, reached 

to Euro 1.1 billion. 

Table 35: Amounts of Funds Turkish Partners Receive in the EU 7th FP 

Grant 

Coefficient 

(Million €) 

National 

Resource 

(Million €) 

TOTAL 

Contribution 

(Million €) 

Amount of Funds 

Received by Turkish 

Partners (Million €) 

Number of 

Turkish Partners 

Supported 

2007 12.5 9.9 22.4 27.4 147 

2008 4.5 26.3 30.8 19.9 128 

2009 16.6 24.6 41.2 28.8 173 

2010 34.3 19.8 54.1 27.3 207 

2011 12.3 50.2 62.5 17.8 (*) 88 

TOTAL 80.2 130.8 211 121.2 (**) 743 

Total portfolio size of the projects Turkish partners are in 2 Billion € 

* The results of 9 calls closed in 2011 have not been published and 42 calls which were still open in 2011 have not been 

closed yet. 

** The material mistakes in the database of the European Commission have been corrected by TUBITAK. 


136 

The results of the 44 application in 2010 have not been announced yet.

116 


 

 

 

 

 

With the aim of improving the competencies of the universities, research centers, 

SMEs and other private sector organizations in Turkey about the 7th FP, TUBITAK 

conducted several organizations. Within this context, in 2010, 4,000 researchers 

and private sector representatives attended to 108 organizations and in 2011, 7,500 

researchers and private sector representatives attended to 131 organizations. 

In addition to that, with the aims of promoting and facilitating the participation to 

the 7 th FP, several incentive packages such as EU Support to the Participation of 

Framework Program Rewards, and the Support Programs of Travel Abroad with 

the Intention of Establishing Consortium and Project Suggestion Pre-evaluation 

are being carried out by TUBITAK. Within the framework of these support 

programs, in 2009, approximately 74 researchers and representatives of the private 

sector were provided with TL 174,627 in 2009, and in 2010 approximately 94 and 

representatives of the private sector were provided with TL 263,860 support thus 

their participation to several 7th FP was facilitated. 

Within the framework of the Marie Curie Research Programs and Scholarships, 

Turkey’s success is increasing in the reverse brain drain supporting program. Turkey 

was the most preferred country in 2011 for the applicants outside Europe. 

The sub-program of 7th FP, the “Researches for the Benefit of SMEs” which 

supports the SMEs that have inadequate skills in R&D in producing technology 

based products and processes and make use of them; Turkish SMES, SME Unions 

and universities were entitled to receive 4.8 million Euro funds in 2010 calls. Turkish 

partners provided 12.6 million Euro funds for this sub-program for the period of 

2007-2010. 

In 2010 calls of EU 7th FP Research Infrastructure Field, the research centers of 

Turkey were entitled to receive 2.1 million Euro funds. For the period of 2007- 

2010, 46 partners in 33 projects were entitled to receive 9.2 million Euro funds. 

Apart from that, thanks to the opening of the centers funded in this context to the 

international access enabled Turkish researches to finalize their researches in the 

most prestigious centres of Europe for duration of 2 weeks to 4 months. 

 

 

R&D Supports of the Ministry of Science, Industry and Technology 

Within the scope of Industrial Thesis (San-Tez) Program which aims to institutionalize 

the partnership between industry-universities and public, and provide incentive for 

SMEs to use technological products and production techniques, a total of 1,180 

applications for received for the period of 2006-2011 and 509 of them were found 

worthy to support. 

Among the projects which will be supported, the contract was signed with 350 one 

of them by September 28, 2011; and the pre-contract processes are ongoing with 

the others. The cyclical payments of the signed contracts are covered 75% by the 

Ministry and 25% by the project partner company.

Innovations 

117 

Table 36: Supports Provided within the Scope of San-Tez Program 

2006 2007 2008 2009 2010 2011 TOTAL 

Supports (TL Million) 5 10 15 20 22 30 102 

Realized Ministry Payments (TL Million) 0 6.2 9.9 13.5 18,73 3.9 52.2 

Number of Project Applications 42 183 120 174 241 420 1,180 

Number of Supported Projects 17 68 45 76 111 192 509 

Support Percentage % 40.5 37.2 37.5 38.0 46.0 46.0 43 

Source: Ministry of Science, Industry and Technology 

 

Within the framework of R&D Law which went into effect in 2008, a total amount 

of TL 100,000 grant can be provided to the projects which are found appropriate 

by the Ministry of Science, Industry and Technology under the Technoenterprise 

Capital Support 137 . 

 

Under the Techno-Enterprise Capital Support Program which was initiated in 2009 

to bring the qualified youth to the business life besides and to increase the awareness 

of information intensive and innovative entrepreneurship, 859 entrepreneurs 

submitted applications in 2011 and 288 were found worthy to support. 

 

R&D Supports of SME Development Organization (KOSGEB) 

The R&D, Innovation and Industrial Application Support Program was initiated in 

June 2010 under the new support framework developed by KOSGEB in 2010 138 . 

In this context the R&D and Innovation Projects will be supported through two 

complementary but separate programs: R&D and Innovation Program, Industrial 

Implementation Program. 

Table 37: Innovation Supports Provided by KOSGEB 

TL 

Technology Development and 

Innovation Supports 

R&D, Innovation, Industrial 

Implementations Support Program 

2007 2008 2009 2010 2011 

4,418,588 6,819,782 6,631,706 5,606,972 1,303,100 

4,161,762 43,294,757 

TOTAL 4,418,588 6,819,782 6,631,706 9,768,834 44,597,857 


137 

Yearly allowance is TL 10 millon. 

138 

Regulation on the Support Programs of the Small and Medium Enterprises Development Organization (Official Gazette 

06.15.2010/27612).

118 


 

 

 

R&D Supports of Technology Development Foundation of Turkey (TTGV) 

TL 39 million support was provided to 160 projects in 2009 and 2010 under the 

scope of capital support no 130 with the condition of providing a payment in 

return 139 . 

The supports were covered by TTGV’s budget and continued to be given to the 

past projects and to the ones that continued in 2011. In this context, a total payment 

of USD 11.1 million was made to ongoing projects of the companies. 

On the other hand, within the scope of Advance Technology Projects Support 

Program (ITEP) which is more flexible than the previous support structure, the 

application process was initiated in 2011 and 7 project applications were submitted 

and with 3 of which had contracts signed. As of 2011, the aforementioned projects 

were supported with USD 0.8 million. 

Table 38: Figures about TTGV Supports 

2009 2010 2011 

Number of Submitted Projects 228 162 7 

Number of Supported Projects 113 47 3 

Amount of Contract (USD million) 33.1 12.7 6.9 

Supply Amount (USD million) 24.8 14.2 11.9 

Number of Completed Projects 95 98 90 

Source: TTGV 

 

In addition to that, Commercialization Projects Support aimed to support the 

launching needs following the outcomes of R&D works of the companies which 

completed the prototype development phase in the TDP and within this context, 

11 pilot programs were supported for 2006-2008. The work towards generalization 

of the pilot implementation is ongoing. 

139 

Communiqué No 98/10 on R&D Supports (Official Gazette 11.04.1998/23513), the protocol signed by Undersecretariat of 

Treasury and TTGV on June 17, 2005.

Innovations 

119 

B. Developing the Dialogue between Industry and Universities 

 

 

 

Project Markets Support Program 

A special emphasis is given to the establishment of cooperation between private 

sector, universities and research centers under TUBITAK’s TEYDEB Support 

Programs and in this context the Project Markets Support Program is developed, 

to support these kinds of works. 

Project markets which are designed to create a network for people, who have 

reliable R&D or project ideas but require different expert opinions, conduct market 

research or contribute technologically or financially, are the national or international 

organizations with the active participation of the representatives of universities, 

research centers and private sector enterprises. 

The program provides a maximum support of TL 20,000 for the activities organized 

to create a technological cooperation environment for universities, research 

institutions and industrial enterprises; and if the activity has an international scope, 

a maximum support of TL 25,000 is provided. 

 

In 2010, Kocaeli University, Giresun 

University, General Secretariat of Union 

of Uludağ Exporters, Eskişehir Chamber 

of Industry, Erciyes University, Sakarya 

Chamber of Trade and Industry, Ege 

University, Middle Eastern Technical 

University, Hacettepe University, 

Gaziantep Chamber of Industry and 

Selçuk University submitted a total of 13 

project market applications and granted a 

support of TL 177,100. 

 

 

Techno-Entrepreneurship Support Program (TEKNOGIRISIM) 

TEKNOGIRISIM which was initiated in 2007 to improve entrepreneurial mindset 

among technology and innovation companies and promoting the transformation 

of ideas of university students and graduates’ into commercial products; provides 

supports up to a year for an amount of 75% of the project expenditures after 

entrepreneurs establish their companies. 

Within the scope of the Program; a total fund of TL 20 million is allocated: 

TL 10 million for 2009 and TL 10 million for 2010. With the legal Amendment 

on April 12, 2011 140 , TL 10 million of allowance allocated annually for the 

Technoentrepreneurship Capital Support has been increased to TL 50 million. 

The amount of annual 

funds allocated to 

TEKNOGIRISIM Program, 

which has been in effect 

since 2007, increased 

from TL 10 million to TL 

50 million. 

140 

Law no: 6215 Article 5 (Official Gazette 04.12.2011/27903)

120 


 

Within the scope of the Program, during 2009-2010 a total of 180 graduates’ or 

entrepreneurs’ projects were found worth supporting and a support of TL 15.2 

million was provided. In the 2011 period, 288 projects were accepted.

Innovations 

121 

C. Strengthening the Innovation Centers and Technoparks 

 

 

R&D Centers 

Within the scope of the Regulation 

on the Implementation and Audit 

of Supports on R&D Activities 141 , 

the condition of possessing an R&D 

Center Document was introduced to 

the ones who want to benefit from 

the incentive on withholding of 

income tax and insurance premium 

thus R&D Center establishments 

were promoted. R&D Centers 

creates the necessary infrastructure 

while creating a nurturing environment for R&D companies to produce their own 

technology and institutionalize the R&D activities, thus increasing the share of 

R&D expenditures to GDP ratio of Turkey. 

Especially in Marmara Region where the industry is intense, throughout 87 R&D 

Centers, R&D and innovation projects are being carried out, and 12,599 R&D 

personnel are employed. The R&D expenditure of these enterprises was to be TL 

1.67 billion for 2009 and TL 1.96 billion for 2010. 

Technology Development Zones 

Towards improving the Technology Development Zones (TDZs), in line with the 

measures included in 2010 Program, works were carried out by the Ministry of Science, 

Industry and Technology with the contributions of other relevant institutions: 

 

The Law No 6170 on TDZs, which was entered into force on March 12, 2011 142 , 

designed to improve the R&D and innovation activities to create an extra value 

for the economy and wealth of the society. According to the Law, solutions were 

designed for the implementation problems, legislation on region establishments 

were simplified; the loop holes in the permit procedures of construction plans 

and the licenses were covered and permissions for the construction of facilities 

to be made; the results emanating from the R&D and innovative activities to be 

developed towards contributing the country’s economy and social wealth. 

 

As of December 2011, 15,822 personnel are employed in 1,800 companies operating 

under 43 active TDZs throughout Turkey. 

141 

Regulation on the Implementation and Audit of Supports on R&D Activities (Official Gazette 07.31.2008/26953) 

142 

Law No 6170 Amending the Law on Technolgy Development Regions(Official Gazette 03.12.2011/27872).

122 


Figure 13: Data on Technology Development Zones 


15,822 personnel are 

employed in 1,800 

companies operating 

under 43 active 

Technology Development 

Zones (TDZs) throughout 

Turkey. 

number 

18000 

16000 

14000 

12000 

10000 

8000 

6000 

4000 

50 

45 

40 

35 

30 

25 

20 

15 

10 

Number of TDZs 

2000 

5 

0 

2003 2004 2005 2006 2007 2008 2009 2010 2011 

0 

Number of Companies 

Employment 

Number of TDZs 

Source: Ministry of Science, Industry and Technology 


the total number of R&D 

projects in progress in 

TDZs was 4,979. 

 

 

There are innovative companies in the Technology Development Zones focusing 

predominantly on software development, informatics, electronic and advanced 

material technologies; and they also focus on the issues of design, nanotechnology, 

biotechnology, automotive, medicine technologies and renewable energy. As of 

December 2011, the total number of R&D projects in progress was 4,979. 

301 patent applications of the companies that are operating in the Technology 

Development Zones were approved.

Innovations 

123 

D. Improving Infrastructure in Information and 

Communication Technologies 

 

 

Information and Communication Technologies (ICT) play a significant role in 

providing the appropriate environment for the improvement of private sector 

based innovations. In this regard, work towards strengthening the information and 

communication technologies infrastructure have been carried out and significant 

steps have been taken to increase the rate of broadband internet and personal 

computer use. 

 

One of the important regulations 

that went into effect which has a significant 

role in the increase of usage of broadband 

internet and personal computers is the 

Authorization Regulation on Electronic 

Communication Sector 143 . With this 

regulation and the Information and 

Communication Technologies Authority 

Decision of May 7, 2009, operators could 

establish WLAN (Wireless Local Accession 

Network- Wi-Fi) systems and provide 

wireless internet connection to internet users both indoors and outdoors. Through 

another Information and Communication Technologies Authority Decision taken 

in February 2011, a further 5470- 5725 MHz band was added to the bands which 

were allowed to use Wi-Fi frequencies in order to provide a more widespread, 

efficient and productive internet service. 

The number of operators working in the electronic communication sector by March 

2012 is 362, and the number of authorizations issued for these operators are 570. 

The number of operators 

working in the electronic 

communication sector 

by March 2012 is 362, 

and the number of 

authorizations issued for 

these operators are 570. 

143 

Authorization Regulation on Electronical Communication Sector (Official Gazette 05.28.2009/27241).

124 


Table 39: The Number of Operators According to the Types of Authorization and 

Services 

Authorization Type Services 

Number of 

Authorization 

Service Contract Satellite and Cable TV services 1 

Contract of 

Concession 

Operators providing 

service within the 

scope of notification 

Operators providing 

service within the 

scope of usage 

rights 

Establishment of GSM PAN Europe Mobile Phone System of 

Operation and Installation of IMT-2000/UMTS Infrastructure 

and Operation and Providing Services 

3 

Various Communication Services 1 

Satellite Communication Services 23 

Satellite Platform Service 4 

Infrastructure Operation Service 69 

Internet Service Provision 146 

Fixed Phone Service 61 

Cable Cast Service 14 

GMPCS Mobile Phone Service 6 

GSM 1800 Mobile Phone Service in Aircrafts 1 

Virtual Mobile Networking Service 37 

GMPCS Mobile Phone Service 2 

Shared Wireless Service 63 

Infrastructure Operation Service 4 

Fixed Phone Service 115 

Guidance Service 14 

Virtual Mobile Networking Service 6 

TOTAL 570 

Source: Information and Communication Technologies Authority 

The total number of 

Internet subscribers in 

Turkey by the fourth 

quarter of 2011 is 14.1 

million. 

 

 

According to the results of the Questionnaire on the Use of Information 

Technologies by Households, conducted in 2011, the rate of computer and internet 

users among those age 16-74 rose to 46.4% and 45%, respectively, in the last three 

months. The internet access rate of households is 42.9% in 2011, and 91.5% of 

the households benefit from internet access using broadband system. According 

to the results of the Questionnaire on the Use of Information Technologies in 

Enterprises, conducted in 2011, the rate of enterprises using computers is 94% and 

the rate of enterprises with internet access is 92.4%. 

The total number of internet subscribers in Turkey by the fourth quarter of 2011 is 

14.1 million, an increase of 6.9% over the previous three month period; this upward 

trend continued to increase by the rise in number of fibre, cable and especially 

mobile internet subscribers. The annual growth rate of total number of internet 

subscribers accelerated and realized as 62.8%.

Innovations 

125 

Table 40: Internet Subscribers According to the Connection Type and Increase Rates 

No of Subscribers (%) 

2010-4 2011-3 2011-4 

Quarter Growth 

Rate (2011-3 - 

2011-4) 

Annual Growth 

Rate (2010-4 - 

2011-4) 

xDSL 6,640,911 6,792,013 6,776,036 -0.2 2.0 

Internet via 

Mobile Computer 

Internet via 

Mobile Phone 

1,448,020 

1,344,540 

1,547,421 

4,310,904 4,907,380 

14.1 345.8 

Cabled Internet 273,908 407,502 460,451 13.0 68.1 

Fibre 154,059 220,777 267,144 21.0 73.4 

Other 155,478 129,858 159,383 22.7 2.5 

IN TOTAL 8,672,376 13,205,594 14,117,815 6.9 62.8 

Source: Information and Communication Technologies Authority 

Note: The records of internet via mobile computers and internet via mobile phones are being kept separately since the third 

quarter of 2011. 

 

Of the Information and Communication Technologies (ICT) market, 70% 

comprises the telecommunication sector and the remaining 30% comprises 

information technologies as of end 2010. In the information technologies market, 

composed of hardware, package software and services subsections, the biggest 

share belongs to hardware market with USD 6.08 billion. The size of the software 

market is USD 584 million and the size of services market is USD 909 million. 

According to expectations regarding 2011 figures; 34% of the information and 

communication technologies sector will belong to information technologies and 

66% will belong to telecommunications sector 144 . 

 

The number of mobile phone subscribers increased from 27.9 million in 2003 to 

65.3 million by December 2011. With the provision of 3G service starting in July 

2009, the number of 3G subscribers amounted to 31.4 million. 

The number of mobile 

phone subscribers 

increased from 27.9 

million in 2003 to 65.3 

million by December 

2011. 

144 

2012 Annual Program.

126 


Table 41: Main Indications of the Information and Communication Technologies 

Mobile Phone Subscribers (Thousand 

people) 

Mobile Phone Subscribers Concentration 

(%) 

Number of Broadband Subscribers 

(Thousand people) 

2009 2010 2011* 

62,800 61,800 65,300 

86.6 83.9 88.6 

6,783 8,562 14,050 

Broadband Subscribers Concentration (%) 9.4 11.6 19.1 

ICT Market Size 

22.2 25.4 24.2(*) 

(billion US dollars) 

- Telecommunication 15.5 17.8 16.0(*) 

- Information technologies 6.7 7.6 8.2(*) 

Source: Information and Communication Technologies Authority, Ministry of Development 

* Estimation

Innovations 

127 

E. Improvement of Intellectual and Industrial Property Rights 

The protection of intellectual and industrial property rights and further strengthening 

the legislation in harmony with the international standards are among the significant issues 

highlighted by the Council members since the first meeting. The increased investor trust 

which has been ensured by the crisis exit policies, structural studies towards improving 

the industrial property system, and activities toward creating awareness, gave momentum 

to innovative projects by 2010 and significant improvements have been observed in 

industrial property rights applications since this period. 

Within this context, the momentum in the 

applications of patent and utility models, 

gained by 2003, was maintained in 2010 

and 2011. The patent and utility model 

applications increased by 18.5% over the 

previous year and amounted to 13,485 by 

the end of 2011, 6,223 of which are foreign 

applications. The 21% increase observed 

in the international patent applications is 

a clear sign of the increased interest of 

the foreign investors and industrialists in 

Turkey. 

The patent and utility 

model applications in 

Turkey, increased by 

18.5% by the end of 2011 

compared to the previous 

year. 

Figure 14: The Number of Patent and Utility Models 

8,000 

7,262 

Number of Patent and Utility Models 

7,000 

6,000 

5,000 

4,000 

3,000 

2,000 

1,000 

6,244 

5,430 

6,223 

5,132 

4,693 

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 

Domestic 

Foreign 

Source: Turkish Patent Institute (TPI)

128 


Turkey ranked first, 

with the 2011 patent 

applications under the 

scope of the International 

Patent Cooperation 

Agreement compared 

to the 12 countries that 

became members of EU 

after 2004. 

 

Significant increases were also achieved in the international patent applications 

under the scope of the International Patent Cooperation Agreement in 2011. 

The 12.7% rise over the last year recorded in Turkey-originated PCT applications 

was above the 10.7% world average. In addition, Turkey has ranked top with the 

2010 and 2011 PCT applications compared to the 12 countries that have become 

members of the EU after 2004 145 , and 11th in the EU-27 rankings. 

Table 42: PCT Applications* 

Ranking Country 2007 2008 2009 

2010 

2011 Change (%) 

1 USA 54,042 51,642 45,627 45,008 48,596 8.0 

2 Japan 27,743 28,760 29,802 32,150 38,888 21.0 

3 Germany 17,821 18,855 16,797 17,568 18,568 5.7 

4 China 5,455 6,120 7,900 12,296 16,406 33.4 

5 Korea 7,064 7,899 8,035 9,669 10,447 8.0 

6 France 6,560 7,072 7,237 7,245 7,664 5.8 

7 UK 5,542 5,467 5,044 4,891 4,844 -1.0 

8 Switzerland 3,833 3,799 3,672 3,728 3,999 7.3 

9 Netherlands 4,433 4,363 4,462 4,063 3,494 -14.0 

10 Sweden 3,655 4,136 3,568 3,314 3,466 4.6 

11 Canada 2,879 2,976 2,527 2,698 2,923 8.3 

12 Italy 2,946 2,883 2,652 2,658 2,671 0.5 

Turkey 359 392 389 480 541 12.7 

Other Countries 12,236 13,334 12,267 12,866 13,848 7.6 

TOTAL 159,926 163,240 155,406 164,316 181,900 10.7 

*2011 data is by the date 03.05.2012. 

Source: World Intellectual Property Organization (WIPO) 

In the European Patent 

Application ranking, 

Turkey was rated the first 

among the 12 countries 

that became members of 

EU after 2004. 

 

The European Patent Applications made from Turkey in 2011 exhibit a 16% 

increase compared to 2010. Within this context, Turkey was rated 24 th among the 

114 countries that have applied for European Patents, 12th among EU countries 

and the first among the 12 countries that became members of the EU after 2004. 

145 

Poland, Czech Republic, Slovenia, Hungary, Malta, Letonia, Lithuania, Southern Cyprus, Estonia, Slovakia, Bulgaria, Romania.

Innovations 

129 

Figure 15: European Patent Applications of EU countries 

35,000 

30,000 

Number of Patent Applications 

25,000 

20,000 

15,000 

10,000 

5,000 

- 

Germany 

France 

United Kingdom 

The Netherlands 

Italy 

Sweden 

Finland 

Belgium 

Spain 

Avustria 

Denmark 

Turkey 

Irland 

Poland 

2010 2011 

Luxembourg 

Czech Republic 

Slovenia 

Hungary 

Greece 

Portugal 

Slovakia 

S. Cyprus 

Estonia 

Romania 

Letonia 

Lithuania 

Bulgaria 

Malta 

Source: European Patent Office (EPO) 

 

Recent years have seen dynamic brand applications. With more than 50% increase 

in brand applications in 2011, Turkey surpassed France and became the country 

receiving the most national brand applications in the Europe region. Under the 

framework of the Madrid System, under which international brand application 

processes are carried out, Turkey ranked 13 th with 983 applications in 2011. 

Figure 16: Brand Applications 

With more than 50% 

increase in brand 

applications in 2011, 

Turkey became the 

country receiving the 

most national brand 

applications in the 

Europe region. 

120,000 

100,000 

103,744 

80,000 

73,142 

60,000 

40,000 

20,000 

- 

1995 

1996 

1997 

1998 

1999 

Domestic 

2000 

2001 

2002 

2003 

2004 

Foreign 

2005 

2006 

2007 

13,960 

5,132 

2008 

2009 

2010 

2011 

Source: TPI

130 


 

The Turkish Advisory Design Council, which was established in 2009 in order to 

make Turkish designers and designs desirable in world markets and to create a 

“Turkish Design” image, completed the “Design Strategy Paper and Action Plan” 

in 2011. In line with these studies, 20% increase was observed in design applications 

of Turkey by 2011 and Turkey was placed among the first three countries with 

France and Germany. 

Figure 17: Design Applications 

40,000 

35,000 

30,000 

25,000 

20,000 

15,000 

10,000 

29,467 

35,451 

5,000 

- 

1995 

1996 

1997 

1998 

1999 

Domestic 

2000 

2001 

2002 

Foreign 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

2010 

974 

1,127 

2011 

Source: World Intellectual Property Organization (WIPO) 

 

The recent studies also had significant effects in the upward trend observed in 

industrial property submissions in 2010 and 2011: 

• z Under the framework of “Dissemination of Industrial Property Information in 

Universities Project,” awareness raising activities were conducted in 2011 toward 

the universities which have the potential to make high value added inventions. 

Also the studies towards establishing an international master program on 

industrial property rights in Bilkent University are ongoing. 

• z Moreover, studies towards establishing an Intellectual Property Academy with 

the cooperation of TPI and WIPO were continued in 2010. 

• z Hezarfen Technology and Design Project, initiated in 2007 in order to increase 

the innovation capacity of SMEs, was implemented in Kocaeli in 2011. The 

companies operating in Kocaeli were delivered consultancy services in R&D 

engineering, product development engineering, business development 

engineering, R&D establishment and management, one to one design 

development efforts, industrial property rights and the importance of patent

Innovations 

131 

research. Besides, Ankara Hezarfen Medical Project was initiated by the year 

2011 in order to provide training and consultancy services for medical companies 

in Ankara. 

• z A draft law harmonizing the industrial property legislation with international 

agreements to which Turkey is a party, providing solutions to the problems rising 

in the implementation and organizing the clauses of crime and punishment in 

the industrial property legislation is expected to enter into force by 2012.

132 


Conclusion 

133 

The Investment Advisory Council (IAC) Progress Report features the developments 

in line with the issues in the Declaration of Outcomes document, which was publicized at 

the end of the Council meeting held on June 10, 2010 under the chair of Prime Minister 

Mr. Recep Tayyip ERDOĞAN. 

This report which is a comprehensive publication about the developments of 

Turkey’s investment environment is based on data from approximately 50 institutions that 

have direct responsibilities on the investment climate issues. The developments are listed 

under four main themes: macroeconomic stability, business environment, labor market 

and innovation. 

Despite all the negative developments in the world economy, Turkey displayed a 

stellar performance in FDI by achieving an inflow of USD 15.9 billion in 2011 and a stock 

of USD 110.7 billion in 2002-2011. This FDI stock performance of Turkey implying a 

10 fold increase when compared to the previous decade outpaces the 2-fold performance 

of the global economies and is 3-fold performance of the emerging economies. Turkey, 

with an economic growth rate of 8.5% is becoming a favorable investment destination 

with its dynamic structure. 

As a result of the macroeconomic policies and financial stability, the fiscal discipline 

has been maintained. The ratio of the public net debt stock to GDP decreased to 28.9% 

by 2010 while it was 61.5% in 2002 and to 22.4% by the end of 2011. The ratio of interest 

expenditures to GDP was 4.4% by 2010 and 3.3% by 2011 whereas it was 5.3% in 2008 

and 5.6% in 2009. 

The new Turkish Commercial Code, adopted on January 13, 2011 by Turkish Grand 

National Assembly and the Turkish Code of Obligations, amended within the framework 

of national needs and international best practices are the two main rectifications carried 

out to harmonize the legal framework with the needs of business environment. 

In line with the target of increasing the R&D expenditures to GDP ratio to 3% in 

2023, which marks the Centennial of the Republic of Turkey, various public institutions, 

primarily TUBITAK employ several support mechanisms for R&D and innovations. 

Within the scope of TUBITAK TEYDEB’s supports, TL 159 million of grants were 

provided to 1,367 SME projects in 2010 and TL 162.7 million of grants were provided to 

1,416 SME projects in 2011.

134 

TÜRKİYE YATIRIM DANIŞMA KONSEYİ İLERLEME RAPORU 2012 

Increasing the global competitiveness and maintaining economic performance of 

Turkey is directly associated with the increase in investments. New investment incentive 

scheme which will make it much more attractive to invest in Turkey, aspires to create an 

integrity among investment, production, employment and export policies; to stimulate 

production of the raw and intermediate materials and to enable the transition from labor 

intensive technology to information intensive technology that Turkey needs. 

Improvement of investment climate and increasing competitiveness of Turkey 

constitute one of the main aspects of policy documents such as development plans and 

annual programs. Within this scope, the recommendations raised by the IAC to provide 

an international perspective on investment environment improvement, are of utmost 

importance in terms of their inclusion into the agendas of the institutions in charge of 

investments as high priority items and guidance to the works of the Coordination Council 

for the Improvement of Investment Environment (YOIKK).

investment advisory council progress report - 2012

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