Turkish Investment Advisory Council Meeting Ends

ISTANBUL - The 4th Meeting of the Turkish Investment Advisory Council ended on Monday. CEOs from 21 multi-national companies attended the meeting at Istanbul`s Swissotel. At the end of the meeting, American International Group (AIG) Deputy President Jakob A. Frenkel read out the Declaration of Outcomes.
The declaration read, "since the first meeting of the Council in 2004, we have made a number of key recommendations for achieving a better business climate in Turkey. The last three years have seen a clear effort to translate policy into real improvements in the business environment as demonstrated by local and international investment figures. The record figure of 20 billion USD foreign investment inflow in 2006 is a sign of Turkey`s increasing promise.
Sustained macroeconomic stability and the successful implementation of the competitiveness agenda continue to underpin an optimistic growth outlook. A coherent approach to investment climate is in place with strong involvement of all stakeholders and a well functioning Coordination Council for the Improvement of the Investment Environment (YOIKK). Progress has been made to improve protection of Intellectual Property Rights and facilitate patent applications. Turkey`s investment in its people through education and training is rising.
The establishment of the Investment Support and Promotion Agency of Turkey (TISPA) is an important step in boosting Turkey`s investment promotion capacity. The reduction of the corporate tax rate to 20 from 30 percent is a promising step to lower informality and increase productive investments. The privatization drive since 2004 has been one of the most successful in the world, helping increase productivity levels and attract foreign direct investment.
We agreed that next year the government while continuing strong macroeconomic policies and structural reforms, should focus on some important priorities.
Further progress should be made in reducing inflation through the vigilant implementation of the inflation targeting regime, while ensuring the proper functioning of the foreign exchange market through the continuation of the freely floating exchange rate policy.
Further progress should be made in fiscal consolidation which will yield reduction in the debt to gross domestic product (GDP) ratio, and strengthening efforts to restructure expenditures in order to create more space for priority investments, in particular in public infrastructure.
The skills of the labor force should be aligned with the needs of the private sector. Increasing opportunities for the participation of women and youth in the labor market should also be supported.
Flexibility of the labor market should be increased and non-wage labor costs should be contained to cope with rapid technological progress and increasing competition stemming from globalization.
A revised package for pension and universal health insurance reform should be adopted and started to implement.
Innovation, technology, adoption and the use of quality standards by firms should be supported by fostering the right framework for innovation and strengthening the links between firms, universities and research centers with a view to convert Research & Development activities into products and services.
Further progress should be made in the implementation of the legislation on intellectual property rights in particular regarding date exclusivity and patent linkage.
Informality should be reduced and corporate governance should be improved through further strengthening tax enforcement and increasing firms` financial transparency.
Efforts in land management and planning should be strengthened.
Permanent mechanisms should be established to reduce administrative burdens on businesses in all their activities.
Turkey should be further transformed into a bold strategic hub in terms of transportation and energy corridors by further developing logistics and information technology infrastructure and liberalizing and restructuring the energy sector and increasing energy efficiency.
Further efforts should be exerted to develop infrastructure in areas such as energy and transportation, by involving the private sector with a clear and predictable legal framework.
A long-term strategic communication program should be developed and implemented for Turkey to progressively build its image in Europe and the world so as to ensure that public perceptions on the country catch up with its changing reality.
In parallel to those, the Council endorses the continuation of the political reforms following Copenhagen political criteria including improving the quality of democracy, rule of law and implementation of fundamental rights and freedoms.
Setting up appropriate benchmarks to systematically assess Turkey`s progress in each of these areas is an equally important challenge that should be addressed soon. Progress in these areas will enhance the consistency of the various investment climate reforms. It will also generate greater synergies between policies, thus helping to maximize their benefits. Implementation of those policy actions should improve the economic performance of Turkey including external balances and strengthen its standing in the international capital markets.
We support Turkey`s continued commitment to political and economic reforms including harmonization with EU acquis. Turkey is moving in the right direction and should use the progress achieved so far to encourage swifter and deeper reforms. The improved economic situation should be viewed as an opportunity to do more and to integrate Turkey in the global supply chain. We are confident that Turkey will continue to make good use of this opportunity as we have witnessed in recent years."