Conflicts in the region and the ongoing political turbulence are increasing concerns in Turkey. "This is not good," sighs Cerrahoglu Partner Sezin Dundar. "Our clients, especially foreign investment companies are closely monitoring the situation. This could affect the economy in the long run."
The Turkish Government has recently increased taxes, Dundar reports, with the newly-adopted "Law 7194," introducing a new digital service tax, accommodation tax, and property tax on high-value residences. "This has caused chaos," she says. As a result of the outcry, she says, "the Government had to amend the law in terms of the property tax on high-value residences."
Dundar reports that Turkey's "11th Development Plan," includes detailed information about the activities planned for 2019-2023. The plan identifies a number of projects, particularly in energy, mining, health, infrastructure, defense, law, and IT, which attract the attention of foreign investors. Blockchain-based digital central bank money will be implemented in line with the 11th Plan as well, facilitating foreign investment in that sector. In addition, she says, the Government plans to launch the "Channel Istanbul Project" — an artificial sea-level waterway connecting the Black Sea to the Sea of Marmara, and thus to the Aegean and Mediterranean seas. Unfortunately, Dundar says, although the project has great economic potential, it has gathered significant criticism from the public due to its perceived environmental hazard, and numerous lawsuits against the project are expected.
Despite significant recent deals, including the acquisition by Chinese investors of a 20% stake in Istanbul's Yavuz Sultan Selim Bridge from Astaldi S.p.a. and ongoing activity in the real estate market, primarily from European, Middle Eastern, and African investors, Dundar reports that the ongoing recession is effecting the private sector, meaning that most major projects involve the State. Some sectors, she says, like construction, are suffering more than others. On the bright side, she says, the weak Turkish lira has led some foreign investors to resume investments they started years ago, but did not complete.
"In general, the Rule of Law and political stability are now the essential issues that need to be established in order for investors to be able to invest safely and freely in the Turkish market," Dundar says. She's optimistic, she says: "I still think though, concerning our population of around 80 million and reserves of natural resources and its dynamism, Turkey introduces a very serious growth potential for the foreign investors."