In recent years, Turkey has emerged as a dynamic hub for business and innovation, attracting both local and foreign companies.
Strategic Vision for Economic Growth
The strategic geographical position of Turkey, straddling Europe and Asia, gives it a unique advantage for foreign companies. Recognizing this, the Turkish government has implemented a long-term economic vision, centered around infrastructure development, technological advancement, and an open-door policy for investment. The government aims to rank Turkey among the world’s top 10 economies by 2023, setting an ambitious target for economic development.
Financial Incentives and Tax Benefits
One of the key ways the Turkish state is nurturing companies is through various financial incentives and tax benefits. The government offers a comprehensive incentives program that categorizes investments into different regions and sectors, with higher incentives for investments in less developed areas. These incentives include tax reductions, customs duty exemptions, and Value Added Tax (VAT) exemptions.
The incentives are grouped into four main categories:
1. General Investment Incentives:
These incentives are available for investments across all sectors, including VAT exemptions and tax reductions.
2. Regional Investment Incentives :
Specific regions in Turkey are classified into six different zones based on their economic needs. Incentives vary by zone, with more benefits offered to companies that set up in less developed areas.
3. Strategic Investment Incentives:
For investments that reduce Turkey’s dependency on imported goods, the government offers significant support, aiming to boost self-sufficiency and industrial strength.
4. Sector-Specific Incentives:
Sectors such as technology, agriculture, and renewable energy are given special tax exemptions and financing options.
Technological Advancement and Digitalization
The Turkish government recognizes the importance of technology and digital transformation in maintaining a competitive edge. To this end, it has established policies that encourage companies to adopt digital solutions, invest in R&D, and create value-added products. The Technology Development Zones (TDZs) initiative is a cornerstone of this policy, allowing companies to operate in a tech-friendly environment with reduced tax burdens and access to R&D grants.
In addition, Turkey’s government has embraced Industry 4.0 principles, providing support for companies engaged in automation, data exchange, and the Internet of Things (IoT). Through grants and partnerships, the government is helping traditional industries transition to digital platforms, improving productivity and creating new business models.
Startup Support and Entrepreneurial Ecosystem
Turkey has a burgeoning startup ecosystem, and the government has taken active steps to support entrepreneurs and emerging businesses. Programs such as KOSGEB (Small and Medium Enterprises Development Organization) offer financial aid, mentoring, and training for startups. KOSGEB’s initiatives include grants, low-interest loans, and tax reductions, focusing on high-growth sectors like technology, e-commerce, and green energy.
Another important player in Turkey’s entrepreneurial ecosystem is TÜBİTAK (Scientific and Technological Research Council of Turkey). TÜBİTAK funds research and development activities in private companies and provides grants for technology-oriented startups. By prioritizing R&D funding, TÜBİTAK helps bridge the gap between academia and the private sector, fostering innovation and commercialization of new technologies.
Export-Oriented Growth Strategy
The Turkish government has also been keen to promote export-driven growth, providing several programs to help companies expand internationally. Turquality is a unique program designed to support Turkish brands in their efforts to become globally recognized. Under Turquality, companies receive financial support for brand-building activities, such as marketing, overseas offices, and participation in international trade fairs.
Additionally, the Export Development Fund and Export Credit Bank of Turkey (Türk Eximbank) offer export loans and insurance programs, making it easier for companies to enter new markets and manage export risks. The state’s emphasis on exports aligns with Turkey’s goal of achieving a higher volume of trade and increasing the country’s foreign exchange reserves.
Industrial Zones and Free Trade Zones
Turkey’s Organized Industrial Zones (OIZs) and Free Trade Zones (FTZs) provide a structured environment for businesses to operate efficiently. OIZs are strategically located industrial areas equipped with infrastructure, utilities, and services to support manufacturing companies. Companies operating in OIZs benefit from reduced bureaucracy, tax advantages, and lower utility costs.
FTZs, on the other hand, cater specifically to export-oriented companies. These zones offer a customs-free environment, with tax exemptions on profits derived from export activities. Turkey’s FTZs are strategically placed near ports and border points, reducing logistical costs and facilitating smoother access to international markets.
Strengthening Human Capital through Education and Training
The Turkish government is aware that a well-educated workforce is essential for sustaining economic growth. Through public-private partnerships, the government has introduced training programs to improve workforce skills, particularly in technology and engineering fields. Programs like the National Technology Scholarship Program offer scholarships and internships to students, creating a pipeline of skilled workers for technology-driven industries.
Additionally, the government collaborates with universities to design industry-specific curricula, ensuring that students acquire practical skills relevant to the job market. In the context of Industry 4.0, the state has introduced vocational training programs aimed at equipping the workforce with digital skills, allowing companies to adapt more quickly to automation and other technological advancements.
Infrastructure Development as a Catalyst for Business
Infrastructure development is another area where the Turkish government has shown a strong commitment to nurturing businesses. Large-scale infrastructure projects, such as the Istanbul New Airport, the Eurasia Tunnel, and the Trans-Anatolian Natural Gas Pipeline (TANAP), have significantly improved Turkey’s connectivity. These projects not only facilitate trade but also create a favorable environment for businesses to operate efficiently.
By investing in transportation networks, the government has also reduced logistical costs for companies, enabling them to expand their market reach domestically and internationally. Furthermore, the Belt and Road Initiative (BRI) partnership with China places Turkey as a major transit country, which brings additional opportunities for companies looking to engage in global trade.
Financial Assistance and Credit Support
To further nurture businesses, the Turkish state provides various credit facilities to meet the capital needs of companies, particularly small and medium-sized enterprises (SMEs). Organizations like Halkbank and Vakifbank provide loans with favorable terms to SMEs, helping them manage cash flow and grow their operations. During the COVID-19 pandemic, the government introduced additional loan programs with low interest rates and extended payment periods to support struggling businesses.
The Credit Guarantee Fund (KGF) is another significant initiative that provides guarantees to businesses lacking sufficient collateral, making it easier for them to access bank loans. By mitigating the risk for lenders, the KGF has enabled thousands of companies to secure funding that would otherwise have been unavailable to them.
Environmental and Sustainable Business Practices
Turkey has made strides in promoting sustainable business practices, aligning with global environmental standards and positioning itself as an attractive destination for green investments. The government offers incentives for companies investing in renewable energy and environmentally friendly technologies. For instance, the Green Certificate program encourages companies to adopt renewable energy sources by offering reduced tax rates and other financial benefits.
Turkey has also committed to reducing carbon emissions in line with the Paris Agreement, motivating companies to adopt eco-friendly practices. Through subsidies and grants, the government encourages the development of green infrastructure and cleaner production methods, ensuring that economic growth does not come at the expense of environmental sustainability.
Conclusion
The Turkish government’s multifaceted approach to supporting businesses is evident across various policies and initiatives. From financial incentives and infrastructure development to startup support and sustainable practices, Turkey’s state-driven programs are nurturing a robust business environment. By focusing on technological innovation, export-oriented growth, and a skilled workforce, Turkey is positioning itself as a competitive and attractive destination for businesses of all sizes.
As Turkey continues to enhance its policies and create an investor-friendly landscape, companies operating within its borders are well-equipped to navigate global market challenges and capitalize on emerging opportunities. The Turkish state’s commitment to fostering economic growth and innovation ensures a promising future for businesses in Turkey, making it an increasingly appealing option for both domestic and international entrepreneurs.