Linn Proposes Turkey To Revise Its Investment Regulations

ANKARA, Feb 14 (A.A) - World Bank Vice President Johannes Linn proposed on Thursday Turkey to revise its investment regulations in order to attract investments from the European Union (EU).
Linn delivered a speech at the conference on betterment of investment medium and promotion model for Turkey.
The conference is organized by the Union of Chambers and Commodity Exchanges of Turkey (TOBB), YASED and Finans Dunyasi (Finance World) with the contributions of United Nations Development Programme (UNDP) and Treasury Undersecretariat.
Linn said that Mexico modified its investment regulations to attract U.S. investments and said that Turkey could do the same thing to attract EU investments. He sincerely proposed Turkey to do the same as soon as possible.
Turkey could not fully make use of advantages of Customs Union with the EU since it could not attract enough direct foreign investments, Linn noted.
Linn stated that in fact, Turkey had an important position for the global companies that wanted to have a place in the EU market.
But, the majority of those companies made their investments that should have be realized in Turkey, in the EU or other surrounding countries, Linn said.
Linn pointed out that Mexico, which had provided more than annual 10 billion U.S. dollars of direct foreign capital till the end of 1990s by using its free trade agreement with the United States, was an example for Turkey.
Linn said that the World Bank would help Turkey, which has a developing market economy, attract more investments.
Legal arrangements of Turkey in banking, telecommunication and energy was increasing transparency and clarified the rules of the game for the private investors, Linn stressed.
Linn noted that institutional arrangements, liberalization of markets including the agricultural sector of strategic importance, and privatization were creating new opportunities for private enterpreneurs.
Strong measures implemented to fight against corruption and rehabilitate efficient management in line with the public sector reform programme would lift the hidden obstacles before the investment and increase competition, Linn stated.
Linn pointed out that those reforms would help Turkey establish its macro economic stability, re-ensure sustainable growth and reach social targets.
What was important at that point was to provide the maximum benefit from the developments and to reveal Turkey's development potential, Linn said.
Linn noted that Turkey's magnitude, position and dynamic population made it an ideal place for foreign investors. But, he said, the foreign investments in Turkey were lower than the international regional standards.
The direct foreign investment in Turkey was below 0.5 percent of the Gross Domestic Product (GDP) in 1990s, Linn pointed out.
Linn stated that it was very difficult to explain this because Turkey was a country open abroad in many aspects.
Turkey had attributed importance to portfolio investments in the short term and could not attract long term international capital which was more stable and advantegous, Linn said.
Linn pointed out that Turkey missed the opportunity to increase living standards, increase productivity and competition power, and create more business opportunities since it could not fully make use of direct foreign investments.
This situation had an impact on the heavy foreign debt burden and macro economic instability problems of Turkey, Linn said.
Linn stated that Turkey had invited World Bank's Foreign Investment Advisory Service (FIAS) to attract foreign capital and noted that FIAS had prepared a report about the administrative obstacles before the investments together with YASED and other relevant parties.
According to the report of FIAS, many of the arrangements related with working life were considered appropriate by foreign investors, Linn said.
However, the bureaucratic hurdles and lack of coordination were considered as obstacles, Linn noted.
Linn stated that the probability of extension of the period needed for land purchase and arrangement of workplace till four years was another important obstacle. This period lasted only a few months in Mexico and Central European countries, he said.
Linn said that the investors considered complicated tax and encouragement regime and unfair implementation of this regime among the important obstacles and stressed the need for counter corruption activities.
With the action plan prepared for the encouragement of direct investments and rehabilitation of investment medium adopted by the Council of Ministers, the government had started to handle other issues on the agenda, Linn said.
Linn noted that the plan covered various measures from the decrease of bureaucracy in company foundation, investment consent proceedings to the simplification of tax and encouragement regime and protection of intellectual property rights.
The government asked FIAS to help preparation of new investment regulation and carry out feasibility works for an Investment Encouragement Agency, Linn stated.
Linn pointed out that an independent Investment Encouragement Agency should strengthen institutional frame in order to provide better medium for investments and help Turkey's efforts to attract more direct foreign investments.
The government had also decided to set up an Investment Council, Linn stressed.
Linn said that the countries which could attract a great deal of foreign investments achieved this by rehabilitating the medium for both internal and external investments.
The World Bank would help Turkey attract more investments, Linn added.