This document is a special 30th anniversary issue of INSIGHT YASED, the magazine of the International Investors Association of Turkey (YASED). It contains messages and articles from current and former Turkish government officials, business leaders, academics, and executives from YASED member companies. The publication looks back at the history of foreign investment in Turkey over the past 30 years and its contributions to the country's economic development. It aims to highlight YASED's role in promoting Turkey as an attractive destination for international investment.

2. INTERNATIONAL
INVESTORS ASSOCATION
OF TURKEY
INSIGHT YASED
30th YEAR SPECIAL ISSUE

3. Publisher
Piraye Antika
Barbaros Bulvarı Morbasan Sokak Koza İş
Merkezi B Blok K:3 Beşiktaş-İstanbul
Chief Editor
Mustafa Alper
Barbaros Bulvarı Morbasan Sokak Koza İş
Merkezi B Blok K:3 Beşiktaş-İstanbul
Yayın Kurulu / Publication Board
Dilek Yardım,Tamer Haşimoğlu, Adnan Nas, Atilla Yerlikaya
Günseli Özen Ocakoğlu, Ahter Kutadgu, Burak Tezcan
Publication type
Periodical
Date of publishing
November 2010
Head Office
YASED
Barbaros Bulvarı Morbasan Sokak
Koza İş Merkezi B Blok K: 3 Beşiktaş-İstanbul
Tel: (0212) 272 50 94 • www.yased.org.tr
Our member companies who have provided support
Editors
Serpil Kaya, Hande Akkaş, Savaş Batmaz
Serpil Işıldar, Pınar Karaman (YASED)
for this 30th year special issue
Design
Pınar Yıldız THANK YOU
Visual Application
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Contact Address
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Barbaros Bulvarı Morbasan Sokak
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INSIGHT YASED magazine supplement.
All of the photos in the magazine article and
INSIGHT YASED or part of the consent can not be used in any way.

4. Content Bülent Eczacıbaşı - Chairman, Istanbul Foundation for Culture and Arts (İKSV)
Investors helped to establish the concept of CSR in our country .......................................................................................................................................................43
Rifat Hisarcıklıoğlu - President, Union of Chambers and Commodity Exchanges of Turkey (TOBB)
Building a greater Turkey, hand on hand.................................................................................................................................................................................................................44
MESSAGES Tuğrul Kutadgobilik - President,Turkish Confederation of Employer Associations (TİSK)
Turkey’s need for foreign direct investment indisputable.............................................................................................................................................................................46
Piraye Antika - Chairman YASED ................................................................................................................................................................................................................................6 Ümit Boyner - President,Turkish Industry and Business Association (TÜSİAD)
Mustafa Alper - Secretary General............................................................................................................................................................................................................................8 It is crucial for Turkey to accelerate the policies to improve investment climate .........................................................................................................................48
Ali Babacan - Deputy Prime Minister and Minister of State..................................................................................................................................................................10 Mehmet Büyükekşi - Chairman,Turkish Exporters Assembly (TİM)
Egemen Bağış - Minister of State and the Chief Negotiator for EU Affairs.................................................................................................................................12 Foreign capital means new investments, new employment, new exports .......................................................................................................................................49
Süleyman Demirel - 9th President of the Republic of Turkey ................................................................................................................................................................14 Murat Coşkunkan - Chairman,Young Businessmen Association of Turkey (TÜGİAD)
Turkey is a bright and safe haven for foreign investors.................................................................................................................................................................................50
CURRENT AND FORMER REPRESANTATIVES OF THE PUBLIC SECTOR
MEMBER COMPANIES
Durmuş Yılmaz - Governor, Central Bank of the Republic of Turkey
The role of investments in economic development and the Turkish economy .............................................................................................................................18 Can H. Suphi - BP Turkey President
İbrahim Çanakçı - Undersecretary of the Treasury of Turkey BP, contributing to Turkey’s economy for 100 years .......................................................................................................................................................................................52
Liberalization of foreign capital and changes witnessed in the Turkish economy ..........................................................................................................................20 Mustafa Sayınataç - Executive Board Member, Cargill Turkey
Berrin Bingöl - Advisor to the Undersecretariet of Treasury of Turkey We are responsible for the future ............................................................................................................................................................................................................................53
Turkey’s foreign investment journey: From 1980 to 2010, and to the future..................................................................................................................................22 Atilla Yerlikaya - External Relations Director, CCI
Hüsnü Doğan - Former Minister of Agriculture Forestry and Village Works, State, National Defense, Energy and Nature Resources We have become a regional Turkish company ..................................................................................................................................................................................................54
Foreign investment in the 1980s ................................................................................................................................................................................................................................24 Serdar Urçar - General Manager, HP Turkey
Namık Kemal Kılıç (PhD) - Former Undersecretary of Treasury and Foreign Trade of Turkey We brought the newest products and solutions to Turkey .......................................................................................................................................................................55
Foreign investment in the last 30 years ................................................................................................................................................................................................................26 Aylin Erdem - Manager of Accounting Dept., Mercedes-Benz Türk
Ali Tigrel - Former Undersecretary of the State Planning Organization of Turkey YASED has led the public to understand the importance of international capital ......................................................................................................................56
Investors need to be convinced of the transperancy of the politics and bureaucracy..............................................................................................................28 Müjdat Altay - General Manager, Nortel Netaş
We need to transform the historic Silk Road into the technology road...........................................................................................................................................57
FORMER CHAIRMEN AND THE FIRST SECRETARY GENERAL OF YASED Andrea Pirondini - General Manager, Türk Pirelli
YASED has a tradition of promoting communication between existing and new investors..................................................................................................58
Erdoğan Karakoyunlu - First Chairman of YASED (1980-1987) Süha Topaloğlu - General Manager, Roche Turkey
YASED’s contribution to Turkey’s economy .......................................................................................................................................................................................................30 YASED successfully serves as a bridge in the integration of Turkish economy.............................................................................................................................59
Yavuz Canevi - Former Chairman of YASED (1992-1997) Ahmet Erdem - Shell Turkey Country Chairman
International capital is no longer a stranger in Turkey ...................................................................................................................................................................................31 Shell:Turkey’s pioneering investor ..............................................................................................................................................................................................................................60
Christoph Urban - Former Chairman of YASED (1997-1998) Tamer Haşimoğlu - Head of Strategic Planning, Koç Holding
YASED should continue contributing to improve Turkey’s competitiveness ....................................................................................................................................32 We should take advantage of Turkey’s potential...............................................................................................................................................................................................62
Faruk Yöneyman - Former Chairman of YASED (1998-2003) Orhan Özer - General Manafer and CEO,Toyota Turkey
YASED undisputedly contributed to the development of the country ..............................................................................................................................................33 Turkish employees undersign Toyota’s success ...................................................................................................................................................................................................63
Şaban Erdikler - Former Chairman of YASED (2004-2007) Erdem Koçak - President and CFO,Türk Henkel
YASED between 2004–2007; during my chairmanship ................................................................................................................................................................................34 YASED has a prestigious position..............................................................................................................................................................................................................................64
Tahir Uysal - Former Chairman of YASED (2007-2009)
Taking office at YASED is like running in a never-ending relay race.......................................................................................................................................................36 ACADEMICIANS AND COLUMNISTS
Birsen Midillili
In memory of Atilla Midillili, Former Chairman of YASED (1987-1992) ...........................................................................................................................................37 Prof. Dr. Erdoğan Alkin - Ph.D. Professor and Department Head İstanbul Ticaret University Department of International Trade
Ayşe Semiha Baban - First Secretary General of YASED (1983-1991) Contribution of foreign capital to economy and society.............................................................................................................................................................................66
YASED became a reliable source of information for potential investors ...........................................................................................................................................38 Prof. Dr. Şükrü Kızılot - Gazi University Faculty of Economics and Administrative Sciences - Head of Public Finance Department
Foreign direct investment and Turkey......................................................................................................................................................................................................................67
BUSINESS WORLD AND NGOs Mahfi Eğilmez - Columnist
Foreign investors believe Turkey will become a member of the EU ....................................................................................................................................................68
Rahmi M. Koç - Honorary Chairman, Koç Holding
Contribution of international investment to organizational culture .....................................................................................................................................................42 MAJOR ACTIVITIES IN YASED’s HISTORY

5. Message of the Board
As the Chairman of the current term of YASED International Investors Association celebrating its 30th anniversary, I greet all our readers with
most sincere feelings on behalf of myself and the Board of Directors of this term.
Our Association was founded 30 years ago by 14 international companies, which interpreted Turkey’s development potential and prospective
vision correctly, and took a step which should be considered as a giant one under the conditions of that time. Thankfully, with 212 members,
YASED is now the leading representative of international investors operating in Turkey. Our vision as YASED is; to contribute to the efforts given
for making Turkey as one of the most attractive countries for international investment and building a stable business environment for investors.
Our mission, established on this vision, is to promote proactively a business environment which matches the best global practices, and to
encourage free trade of goods and services, a free competition environment, the freedom of investment and free movement of capital.
We are determined to develop our collaboration, communication and coordination with other organizations, which represent the business world,
strengthen the awareness of the public on the improvement of the investment environment in our country, and increase the consciousness of all
our stakeholders on the importance of international investment in our country. Developing the arrangements to be made in order to harmonize
the legislation in force in Turkey and our business life practices with international standards, ethical values and the principles of corporate
governance, are among our most important priorities. After the turbulent period experienced in the world’s economy, caused by the adverse
impacts of the global crisis, we have gradually entered a recovery period. I believe that all actors of the economy should take the most accurate
strategic steps in this period and aim to take advantage of the opportunities of the post-crisis period. I believe that our country’s existing potential
has increased on account of being one of the countries which have demonstrated a fast economic recovery after the crisis, and in case further
steps for improving the investment environment are taken, Turkey will become a center of attraction in investors’ eyes. Today we all know that
international direct investment generate countless constructive developments in a country, such increasing employment opportunities, adoption
of corporate governance principles, and attraction of know-how to the country. The fact that our country has grasped the importance of
international direct investment and started taking the proper steps in this connection, is very satisfying for us. We envisage a future where Turkey
has, as a result of our intensive efforts of today; established the rule of law on all areas, secured a competitive tax and incentive system for
attracting international direct investment and a predictable economic and business environment, won its struggle against informal economy,
removed the bureaucratic barriers which stand as one of the most important problems faced by investors, risen to a regional base position for
world’s giant corporations, established intellectual and industrial property rights by means of its legal infrastructure, brought up all its university
graduates as a qualified workforce oriented to meet the requirements of the industry and the business world, become a full EU member. I would
like to repeat and underline that we as YASED will always be ready to contribute our share and give all the efforts we can for this vision.
Our Association, which supports every step taken for the improvement of Turkey’s investment environment and leads constructive developments,
will continue to serve the making of a much better investment environment for many years yet to come, thanks to the valuable contributions of
our members, the positive feedback of the public and cooperation of state authorities. Relying on its strong foundations and its background, which
is full of accomplishments, we strongly believe that YASED will continue to act as a driving force for the improvement of Turkey’s investment
environment.The momentum generated by YASED’s accomplishments and our members’ vision will ensure the subsistence of our Association as
a powerful and indispensable organization in Turkey and in the international business world - today and in future.
I heartily celebrate the 30th anniversary of YASED, and express my earnest gratitude to all our members, who have not spared their contributions
since the day our Association was founded; to YASED Secretariat, which carries out YASED’s operation with success, and to all our business
partners in the public and private sector.
Piraye Antika
Chairman, YASED

6. Message of the Secretary General
We are most happy to share this special issue we have prepared on the occasion of the 30th founding anniversary of our Association with you.
We aspired to prepare a publication that would leave a mark on history on both YASED’s 30th anniversary and the development of foreign
investment in Turkey from yesterday to our day. We, therefore gave efforts to give place to persons having many different experiences, views and
evaluations in this publication. We are most pleased for having benefited from the contributions of former Chairmen, Secretary General and
members of YASED, who have witnessed the past 30 years of the Association, and the persons who have witnessed to and served for the
development of foreign investment in Turkey, our politicians who are currently in office, the valuable names of the business world, NGOs, academic
circles and the press. We owe thanks to all who have contributed.
We would like to express our special thanks to our esteemed Ministers Ali Babacan and Egemen Bağış and the doyen of politicians, our Esteemed
9th President Süleyman Demirel for their courtesy of sending their special messages for this publication.
We believe that the views and evaluations of our high level bureaucrats who are providing exceptionally important services at the public offices,
which are in direct relationships with foreign investment; namely Central Bank Governor Durmuş Yılmaz, Undersecretary of Treasury İbrahim
Çanakçı, and Berrin Bingöl who has been holding the office of the Director General of Foreign Investment since many years, have enriched this
work.
We are additionally pleased to welcome our former ministers and bureaucrats who have taken office at very critical times as regards the
development of foreign investments, in this special publication.We believe that you will read the evaluations of the Minister responsible for foreign
capital during Turgut Özal period, Hüsnü Doğan, Former Undersecretary of Treasury and Foreign Trade Namık Kemal Kılıç and the Former
Undersecretary of the State Planning Organization (SPO) Ali Tigrel at the time when the Foreign Investment Department was established under
the roof of SPO, with keen interest. We give our most sincere thanks to our former Chairmen, namely Erdoğan Karakoyunlu, Yavuz Canevi,
Christoph Urban, Faruk Yöneyman, Şaban Erdikler and Tahir Uysal, the first Secretary General of the Association Semiha Baban and to Birsen
Midillili, who contributed in memory of our former Chairman Atilla Midillili as his wife, who have handed over to us their valuable notes concerning
YASED’s quest from the past until today, by means of this publication.
We are honored to receive the evaluations of one of the most distinguished names of the business world, Rahmi Koç, who has rich partnership
experiences with international companies. The evaluations of Bülent Eczacıbaşı as the Chairman of İstanbul Foundation for Culture and Arts, on
the impacts of international investors on culture and art life have added a different color to our work. The evaluations of the Chairmen of the
notable organizations of the business world; Rifat Hisarcıklıoğlu (TOBB), Ümit Boyner (TÜSİAD), Tuğrul Kutadgobilik (TİSK), Mehmet Büyükekşi
(TİM) and Murat Coşkunkan (TÜGİAD) have been very consequential for having put forth the impacts of international investors to Turkey’s
business life from different perspectives.
Again, we are pleased to present the evaluations of the valuable names of the press and the academic world, Erdoğan Alkin, Şükrü Kızılot and
Mahfi Eğilmez in this special work. And finally the contributions which came from our member companies, which were willing to participate in
this special work, by sharing their journey in Turkey on the occasion of our 30th anniversary, have made up the indispensable parts of this
publication. In addition to the special page we have allocated in the preface section, we would like to express our thanks here once more to our
member companies, which in addition to the contributions they have made to our content, have given material support for the realization of this
publication.
We aimed to create a memorable journal, worthy of YASED’s 30th anniversary and I hope that you all enjoy reading it.
Mustafa Alper
Secretary General, YASED

7. Message of the Deputy Prime Minister
and Minister of State Ali Babacan
YASED’s contributions to the efforts to build a better investment environment in Turkey and to make the country an attractive investment center
for global investors are extremely important. At the same time, YASED is successfully continuing its mission to increase social awareness of the
benefits of international direct investments in the country’s economy.
Considering the needs and expectations of the private sector while designing public policies, diagnosing investors’ problems correctly, and
generating quick and concrete solutions to these problems are all essential for private sector-focused growth aiming at increases in productivity
and employment. YASED plays an important role in establishing a constructive environment for dialogue among international investors, policy
makers and public institutions involved in the implementation of government policies. We expect YASED to continue these activities in the coming
term, contributing to the success of structural reforms.
On the occasion of the 30th anniversary of its founding, I congratulate YASED management and members for their devoted efforts. As
representatives of our international investors, they have sought solutions to investors’ problems on every platform and have directly contributed
to the improvement of the investment environment with a proactive approach since the day YASED was founded.

8. Message of the Minister of State and
the Chief Negotiator for EU Affairs Egemen Bağış
As the debate heats up about how to recover from the global economic crisis, foreign investment has become even more important for all countries
affected by the crisis. Because of the contraction in global trade, economic recovery strategies exclude exports as an option to support growth, at
least in the short-term. Consequently, countries today include foreign investment inflow in their recovery strategies in order to create the positive
effect that exports fail to provide under existing conditions.
In Turkey, considered an “emerging market", foreign investment is vital if it is to live up to its growth potential. In addition to the primary benefits of
foreign capital, it will be a catalyst to strengthen our economy in terms of technology transfer, training of the labor force, access to international
markets, and competitive power and also in terms of integration into the global economy. Turkey’s strong economic structure, qualified work force,
easy access to raw material and energy resources, vast domestic market, and strategic geographic location offer attractive oppotunities for foreign
direct investments. However, for many years, our country was able to attract investments far below its full potential.
Foreign investment inflow to Turkey was boosted by the liberal economic policies of the 1980s. It reached a cumulative level of USD12 billion by the
end of the 1990s, under the impact of 1996 Customs Union. However, the real breakthrough was in the period from the year 2000 to 2004, when
the structural reforms in the economy led to greater macroeconomic stability and predictability, the legal framework for foreign direct investments
was improved, and Turkey became an EU accession country. During this period, inflows totalled USD10 billion and foreign direct investments increased
by nearly 350%, surpassing the gross amount of 20 years in just 5 years.Today,Turkey is the 6th largest economic power in Europe and the 16 th in
the world with its robust and stable developing economy.Turkey’s economic stability and he beginning of EU membership talks have made the country
an attractive and reliable destination for foreign direct investments like never been before. As the EU talks progress and reforms continue in all areas,
Turkey is becoming a stronger, more reliable and more investable economic power. Consequently, in the 5-year period from 2005 to 2009,Turkey
received a historically high level of nearly USD80 billion foreign direct investment inflow. Corresponding with the increase in foreign direct investments,
following the 2001 national economic crisis, Turkey enjoyed a period of unbroken economic growth and stability (except for 2009, with its severe
global economic crisis), and was the 15th most attractive destination for foreign direct investments for 2008-2010 period. As one of a handful
countries weathering the global crisis with minimal damage,Turkey has reinforced its standing as an attractive destination for investors seeking stability
and a strong base. In order to activat this potential and attract even more foreign direct investment,Turkey must develop a strategy that gives priority
to foreign investments in the growing sectors of the information age and to investments that generate employment.This strategy must be formulated
with the participation of all parties concerned, and must take into account both the country’s subjective conditions and international trends. In this
process,YASED has made invaluable contributions with its active role in improving Turkey’s investment environment, molding public opinion, and liaising
with international capital circles ever since its foundation. YASED acts with an innovative and contemporary mindset, well aware of the shifts in the
world economic system and in global dynamics. Founded 30 years ago, when globalization was still an emerging concept, YASED was created by
visionary and entrepreneurial business people and investors.YASED has made valuable contributions to Turkey’s full EU-membership talks and remains
an indispensible player in the negotiation process.We believe YASED’s EU Working Group, founded to ensure Turkey’s proactive participation in the
EU membership process and to coordinate EU-related efforts, will continue its actvities. The more individuals, organizations, and enterprises who
believe in the work being done Turkey, the more we as politicians continue to work with enthusiasm and determination.We have always believed in
the European Union Project, and our ultimate goal is to be a full member. In this tough and long process,YASED's support is an important motivation
for us.
I would like to thank YASED and all of its prominent members for their support of our EU membership process, and wish all of them success in their
future endeavors.

9. Message of the 9th President of the Republic of Turkey
Süleyman Demirel
The first motto adopted by the United Nations, founded in the aftermath of World War II, was “Peace and prosperity are indivisible”. Peace is
the fundamental requirement of humanity.The humanity is obligated to establish peace.This can be done only with prosperity, which is achieved
by getting rich.The road to richness actually runs through the entire development of nations, and this development is very closely related to the
individual and joint efforts of nations.
Rich countries produce more than they need. This surplus production turns into savings. On the other hand, countries in need of development
require resources beyond their own. This necessity brings about the issue of international borrowing and international debts. The solution for
countries in need of development is to invest by depending on strong resources and in sound projects. Countries which need financial support
can find resources in proportion to their repayment capabilities.
The essential factor here is investing the savings that accumulate all over the world in sound projects, and then recouping the investment.This in
turn serves ‘International Development’.
Capital accumulation which could be used for international purposes started in the 1950s and 60s, and has continued since. Capital started moving
across borders.The country where the investment is made lost its significance to the investor; the criterion became a ‘quest for credible countries’.
Correspondingly, countries that needed to develop lost interest in who the investor (domestic or foreign) was, and started looking at the resulting
benefits. Consequently, ‘Foreign Direct Investment’ and ‘International Investor’ concepts developed and ‘International Cooperation’ spread
throughout the world.
In fact, in today’s globalized world, everybody produces for the ‘World Market’, and buys from and sells in this market. Capital as well has turned
into a commodity. Foreign capital, which was considered a tool of imperialism only yesterday, is now sought everywhere. Investors are also sought
everywhere. Investments with competitive power will be made wisely and will survive in the world’s markets. To do this requires knowledge,
experience and technology.
The countries which benefit from Foreign Direct Capital, such as the USA, China and the Russian Federation, actually have large economies.Turkey
is a country in need of resources. It has a large balance-of-payments deficit, and is ranked 19th in the world in terms of development. It depends
on ‘International Capital’ and ‘International Investors’ to maintain its economy. As well, Turkish capital and Turkish investors, provide services in
various countries.
International Investors serve both ‘International Prosperity and ‘Global Peace’.

10. CURRENT AND FORMER
REPRESANTATIVES OF
THE PUBLIC SECTOR

11. INTERNATIONAL INVESTORS ASSOCIATION
The role of investments in economic such as growth, productivity and competitive power. As a result,
Turkey has rapidly converged toward developed economies both in
terms of nominal and real indicators and the reform process has
development and the Turkish economy increased the credibility of the Turkish economy. It is possible to
evaluate the increase in the foreign capital investments after 2004 as First Foreign Capital Companies
a major indicator of this credibility. As a matter of fact, direct in Turkey
investments which were less than USD 1 billion on an annual basis Company Years
F
oreign direct investments play a significant role in from this opportunity, the countries need to establish a suitable in the past period have increased to USD 8.5 billion dollars in 2005
the development process of countries. These production or investment climate. In this respect, factors such as and to 19.1 billion dollars in 2007. In addition to the banking sector,
investments have supported many countries in establishing macroeconomic and political stability, bringing legal foreign capital investments have taken effect in industrial sectors as Fiat 1954
gaining on rapidly with the level of welfare of and corporate infrastructure to the global standards, improving well, especially in automotive and in this sector, Turkey has become Sandoz 1956
developed countries through their contribution to the capital stock human and physical infrastructure, have major importance. one of the major production bases in the world.
Pfizer 1957
on one hand, and through
transfer of technology from In the world, foreign capital investments have accelerated Although the foreign capital investments have declined due to the Roche 1958
developed countries to especially from the 1990s onwards. However, our country could not global crisis environment, I believe that in the coming term our Pirelli 1960
other countries, on the benefit from this opportunity sufficiently. Although the efforts in country will be a major center of attraction for these investments.
The basic reason behind this opinion is mainly the fact that as a Goodyear 1961
other hand. Although bringing foreign capital to our country have become more
accessing the markets of prominent in 1980s, these efforts remained inconclusive due to result of the structural transformation policies that were Bayer 1962
other countries and regions inadequacies in certain critical areas such as macroeconomic successfully applied in 2000s, our economy has become more robust BMC 1964
is an important spur in stability and characteristics of legal and corporate infrastructure. toward external shocks, the economic structure became more
flexible and strengthened its capability of adaptation to changes. Coca-Cola 1964
foreign capital investments,
the fundamental and Following the low and unstable growth period in 1990s, Turkish This structure has importance in enabling Turkey to achieve Siemens 1964
significant factor in these economy has encountered deep economic crisis in 2000 and 2001. sustainable and high growth rates. As a matter of fact, the robust Pepsi 1964
investments is the level of Above all, this situation that has emerged showed that the growth rate portrayed by our economy both after 2001 and
following the global crisis verifies this evaluation. However, this AEG 1964
efficiency of the continuing structural problems in the Turkish economy prevent
investments. In fact this attaining sustainable and high growth rates. Based on this opinion does not mean that the Turkish economy does not have MAN 1966
evaluation, which has a evaluation, comprehensive economic reform process has been structural problems. On the contrary, the need for structural reform Tuborg 1967
Durmuş Yılmaz
Governor, Central Bank of the significant place in initiated. The basic aim of the reforms was to prepare the on a wide range from unregistered economy to increasing the well-
educated human power still continues. In this respect, I believe that Mercedes 1967
Republic of Turkey economics literature, is the macroeconomic frame that would establish a robust ground for
basic dynamic that explains production activities. On the other hand, the establishment of renewing the economic structure through structural reforms has Renault 1969
the capital flows between the countries. As a result of this political stability and the initiation of EU accession negotiations in vast importance; and this is not a requirement for one time or Bosch 1970
dynamics, the capital moves from developed countries, where the 2004 have supported the reform process. Turkish economy has specific to one period, but has a continuous nature depending on
productivity is low, towards countries with higher productivity. It is responded strongly to the reform efforts in a considerably short the changing global and domestic conditions. In this context, I see
evident that this situation creates a significant opportunity for time. While the process has produced its fruits in terms of nominal the steps we shall take in the field of structural reforms as the most
countries like Turkey, which are in need of rapid development, but indicators such as inflation and interest rates, comprehensive critical factor that would determine the level and composition of
have inadequate domestic savings. However, in order to benefit improvements were recorded in terms of real indicators as well foreign investments oriented toward our country.
The foundations of the collaboration between Turkey and
Siemens were laid with the decision of the Ottoman
Empire to establish a telegram system in the country. Nestle, one of the oldest foreign capital companies
Siemens Halske laid the first telephone lines in Istanbul in in Turkey, made the acquaintance of the Turkish
market in 1875, eight years after its establishment.
1856 1881. In the first years after the declaration of the 1875 Nestle opened its first sales point in 1910. In 1927,
Republic, Siemens Electric Turkish Company was engaged
in importing radios. With the commencement of radio Nestle established Turkey’s first chocolate factory at
broadcasts in 1927, the Siemens name entered the homes. Feriköy.
20

12. INTERNATIONAL INVESTORS ASSOCIATION
Liberalization of foreign capital and process of 150 years. Equal treatment of international capital and
domestic capital policy was first applied at the pre-republic period in
improvement of the investment environment also had a significant
contribution. 1980s onwards, international direct investment trends
have also considerably diversified in terms of sectors. In the first years
1830s. Again, the first direct investments with international capital in
changes witnessed in the Turkish economy Turkey were realized at the same period. However, at that period,
investment amounts were quite limited since international investment
of the Republic, international investments were mostly tended toward
industry, textile, food, cement and electricity industries, in 1980s it
concept was considerably new in the world and the industry was not centered around tourism and defense industry fields and in 90s around
developed yet. At the post-republic period, generally protectionist telecommunication, automotive and infrastructure (such as energy,
I
n the economic history of Turkey, 1970s recorded a period an instable macroeconomic environment which can be pictured with policies were applied toward international investments until 1950s and roads, dam construction) sectors. Whereas in 2000s, sector based
marked with external shocks that emerged due to petrol elements such as high public deficits, high inflation, and floating the first attempt for the encouragement of these investments came with diversity was achieved in international investments and significant
crisis, in which macroeconomic stability was considerably growth structure. the “Encouragement of Foreign Capital Law”, adopted in 1954. amounts of international direct investment flows have entered almost
low and the country has faced significant deficit balance and However, due to the ambiguous and complex permit procedures every field. One of the major characteristics of 2000s was the increase
foreign exchange gap problems. This period was followed by another With the economic policies applied from the beginning of 2000s, stipulated by the mentioned Law and the negative public approach of international direct investments in sectors with high added value
period in 1980s, in which an significant steps were taken to enable structural transformation towards international investments, the liberty prescribed in the Law and the significant development that has emerged with the spillover
outward-oriented economic oriented towards establishing the macroeconomic stability and could not be attained at that period as well. effects of the know-how brought by the international investors in the
structure was adopted. implementing market mechanisms in a healthy way. At the preceding industry. Investments in the energy sector, which have recorded a
During the 1980s, significant term prior to the effect of the global financial crisis over the Turkish As a matter of fact, Turkey’s opening to international investments was rapid increase in the recent 3 years, and major investment projects in
steps were taken in the economy through various channels, Turkish economy has attained a realized in 1980s together with the 24th January decisions. The food-chemistry and automotive sectors have been the driving forces of
liberalization process of the stable and high growth performance. At this period, Turkey has Decree numbered 32 and dated August 7, 1989 has revoked amount this period.
Turkish economy. Turkey’s integrated with the world economy both in terms of commerce and limitations over the international capital and foreigners were permitted
growth axis has shifted from trade and foreign direct investments. to trade in the stock exchange of Turkey and the privatization As for the sectoral breakdown of international investments, with the
an import-substitution model programs were accelerated. Together with the Foreign Direct contribution of the developments to be achieved through the Istanbul
in which the local production One of the most important gains of Turkey in this period was the Investments Law numbered 4875, which came into effect in 2003, Finance Center Project, it is expected to register increases in financial
was protected by high improvement of the investment environment and establishment of a permit and approval obligations of international investors was sectors in the coming period, which has the capacity to produce
customs wall to a model in dynamic economic structure under the leadership of the private replaced by declaration obligation, amendments were brought to the services with high added value. Investments in these fields will create
which the import is liberated sector. In this process, constant increase in the international direct definitions of investment and investors in order to ensure new areas of employment and at the same time, contribute to the
and the export is investments tagged along many other benefits in addition to economic harmonization with the international standards, the minimum capital Turkish economy by means of service export.
encouraged. Liberalization growth such as; technology transfer, employment, increase in export condition was revoked and equal treatment principle was reinforced.
İbrahim Çanakçı in the financial sector and and tax revenues, and it has played a key role in Turkey’s fight against In the past 30 years, significant changes took place in the Turkey Turkey shall continue its resolved and consistent growth in the coming
Undersecretary of the Treasury of Turkey
capital movements were poverty, unemployment and income inequality. As of today, perception of international investors and as of today, Turkey has taken term as well and it is anticipated to register international direct
realized and flexible international direct investments have a significant share in many its place among the preferred investment centers. While international investment inflows in increasing amounts in various sectors due to the
exchange rate policy was adopted. Public finance management was economic factors in Turkey such as; production, export, import, direct investments inflows of Turkey in 1980s were below USD 500 structural reforms continued to be applied in order to render the
taken in hand with a new approach and steps were taken towards employment. Similarly, these investments that contribute to million level, in 2000s these inflows have exceeded USD 20 billion investment environment more attractive for local and international
increasing the effectiveness of the public sector. increasing our global competitive power also play an important role in level. In this process, in addition to the macroeconomic stability investors as well as to strengthen the macroeconomic equilibriums.
financing the current deficit in Turkey. achieved through the private sector centered growth strategy and Turkey’s persistence in its investor friendly applications even in the
Unfortunately, the reform and transformation progression initiated in structural reforms put into effect in Turkey, policy measures put into global crisis environment, when many countries have opted for
1980s could not be sustained during 1990s and Turkey has drifted to The history of international direct investments in Turkey covers a practice in line with the expectations of the private sector for the protectionist policies will be very effective on this increase.
In 1886, the first Singer sewing machine was sold in
Turkey. Singer opened its first shop on Istiklal Avenue in
1904. From 1930 onwards, Singer started organizing
free training courses in Turkey. Singer was the first Ericsson, one of the first foreign companies to
invest in Turkey, laid telephone line in Dolmabahçe
1886 establishment to use “direct marketing” and “permitted 1890 Palace in the 1890’s.
marketing” methods, to prepare user instructions, to
start the “guarantee coupon” application, and to
provide sewing and embroidery training.
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13. INTERNATIONAL INVESTORS ASSOCIATION
by the investments in the supplier industries have laid the and energy sector, on-going investments for manufacturing new
Turkey’s foreign investment journey: foundation of the sector’s current level of development. models in automotive sector, R&D investments reaching significant
amounts with incentives have been the leading FDI investments of
Again in the 1990s, FDIs also took an interest in infrastructural that period.
From 1980 to 2010, and to the future investments such as energy, transportation, communication,
however the FDI inflows failed to reach the expected levels. Reforms to improve the investment climate are continuing
successfully. However, some other countries around the world are
The long awaited development in FDI came with the USD 1.7 moving up faster in the indexes by being even swifter with the
P
assed in 1954 and embraced a liberal stance that was most remarkable projects of that period was the restoration of billion inflow in 2003. In the following years, FDI inflow followed reforms. Turkey should continue its efforts tenaciously, resiliently
far ahead of its time, “Law on Encouragement of Çırağan Palace in Istanbul to reintroduce it back to the tourism a significant upward trend: USD 2.8 billon in 2004, USD 10 billion and persistently. Our country has got everything to be one of the
Foreign Capital” number 6224 had been interpreted industry. Also, initial and replacement investments of in 2005 and USD 20 billion in 2006. With USD 22 billion FDI most popular destinations, a shining star of the future with respect
and implemented with a rather conservative manner pharmaceuticals industry, F-16 war aircraft investment and inflow received in 2007, suddenly international investors turned to FDI.
until 1980. A more liberal implementation of the same law was opening of the first foreign brand (franchising) hamburger their eyes to Turkey. Political and economic stability coupled with
made possible with the cabinet restaurant coincides with this period. the initiation of EU membership accession talks, and more YASED has always been a prominent player in Turkey’s
decrees issued as part of the importantly, worldwide publicity for the international investor international investment journey of 30 years. Always constructive
Economic Stability Package dated While one-stop office for foreign direct investors was still an friendly approach are the most central elements that have and in close cooperation with the public, YASED continues to
January 24, 1980. unfamiliar concept for many countries, Turkey partially created this contributed to this outcome. work on offering solutions to international investors’ problems and
structure through Foreign Capital Authority and this unit handled improving the investment climate in Turkey. I would like to
Intended to oversee the various procedures such as investment permits, incentives, foreign The 2000s have witnessed the worldwide FDI inflows to reach congratulate the management and members of YASED on its 30th
implementations within the context personnel work permits for those companies with foreign partners trillion dollars. Countries have intensified the competition to anniversary.
of the said package, Foreign Capital at that time. increase their share of the pie, making serious reforms in their
Authority (later, restructured as policies and corporate structures. As efforts to improve investment
General Directorate) was formed Throughout the 1990s, Turkey couldn’t somehow manage to climate have turned into a competition among the countries,
within the State Planning surpass USD 1 billion psychological threshold for FDI inflows. international organizations have set out to create indexes to reflect
Organization and continued its Unfortunately, economic and political instability impeded the the rankings. In this competition Turkey took a critical step,
operations by adhering to solution- development of an attractive investment climate sought by making a right decision at the right time, to create an optimal
Berrin Bingöl oriented, constructive, positive and international investors. During that period, Foreign Capital climate for investors and founded the Improvement of the
Advisor to the Undersecretariat of Treasury expeditious working principles. General Directorate first served under Treasury and Foreign Trade Investment Environment Coordination Board (IIECB). This
of Turkey (2006-2010 Director General for
Foreign Capital) Undersecretariat but after Treasury and Foreign Trade platform, on which public and private sector get together to
In the 1980s, foreign direct Undersecretariat split into two separate divisions as Treasury produce solutions, has been conducive to materialization of many
investment (FDI) permits issued in Turkey were hovering around Undersecretariat and Foreign Trade Undersecretarat, the agency reforms for the improvement of the investment climate to this day.
USD 500 million and mainly tourism, pharmaceuticals, defense began to serve under the former. Additionally, the international platform, which was founded to
industry etc. sectors were receiving the majority of the FDI inflow. serve to the same purpose as the Investment Advisory Council,
Turgut Özal formed his single party government after the 1983 elections,
Started in the 1980s, the tourism investments drive gained the The early 1990s witnessed an increase of investments in the formed the other strong leg of this structure. and brought a new approach to the Turkish economy.The most noticeable
country numerous world-class touristic resorts and significant automotive sector in Turkey. Arrival of new investors into the decision of Özal’s government was about foreign exchange regime.
number of international investors has been involved in those country, investment initiatives of the then-existing investors to In the 2000s, billion dollar worth projects have come to the fore in International Investors Association’s (YASED) advertisement published in
Dünya Newspaper on 25 July 1983.
projects in the capacity of partner, owner or operator. Among the manufacture new models and main industry investments followed Turkey’s the FDI portfolio. Gigantic projects in communications
MAN Company started the construction of
Galata Bridge in 1910, and opened it to service in
1912. In 1966, MAN Türkiye founded the MAN
Deutsche Bank opened one of its first branches outside Truck and Bus Company (MANAŞ) in partnership
1909 Germany in Istanbul in 1909.
1910 with the Ercanlar Company that had been carring
out import and sales of MAN vehicles.
24

14. INTERNATIONAL INVESTORS ASSOCIATION
extension. I immediately called the related associate and instructed million. Some decisions deadlocked at the government formed after
him. When the visitors left, the said associate came in again and asked the 12 September coup. The problem was solved by a letter addressed
Foreign investment in the 1980s “Sir, the request is for two years. Should we grant a one year
extension?” I replied, “No, give him two years.” This incident repeated
to President Kenan Evren by Deputy Prime Minister Turgut Özal.
The constructive steps taken in the foreign investment area in due
two more times. He was inclined to give only half of what the foreign course paved way to the foundation of YASED.
executives were requesting. On the third occasion I asked, “Why do
you always want to give only the half of the extension period asked 30 years later
B
efore 1980, foreign investment permits were issued by Undersecretary of the Prime Ministry and the Undersecretary of the for?” and got a “But sir, we have always done it like this so far” reply. Now it is 2010… A long time has passed since then. Turkey
a decree of the Council of Ministers. The secretarial State Planning Organization Prime Minister - in the preparation of the I instructed, “We will not do that anymore. It is not our business to accomplished great reforms between 1983 and 1991, particularly in
works of the permit procedure was carried out by a “Foreign Capital Decree”, which can be regarded as the most decide on who will manage those companies.” the period Özal was the Prime Minister. A great transformation was
department under the State Planning Organization. In important milestone in Turkey’s foreign capital policy. The draft decree made and an enormous modernization leap was taken. China, now an
case of a permit application, this branch first asked for the views of the was put on paper by my hand writing. This decree was one of the most In May 1980, the government decided to utilize the non-guaranteed economic superpower, was in its infancy in the 1980s. The Soviet
Ministry of Finance and the critical constituents of the “Economic Stability Measures” package commercial debt in foreign capital investments. Trading of these debts block crashed in the 90s.
Ministry of Industry, which was unveiled on 24 January 1980. The newly established between companies gradually increased in the following years. More
Technology and Commerce, Foreign Investment Department was authorized for issuing foreign than USD 600 million of the cumulative non-guaranteed commercial Globalization has changed lots of things. Information and
and then prepared a draft investment permits and the foreign investment permit procedure was debts, which were estimated to be around USD 1.5 billion in early communication technology has made great developments. Computers
decree, provided that these streamlined by a Framework Decree. 1980 were used in the portfolio and new direct investments of foreign and the internet have opened up the doors of a new era. Nano
views and its own were capital companies. Until that time, the purchasing or sales value of technology heralds new horizons. In spite of its risks, GMO
positive, and presented it to I worked as the head of this Department from its date of establishment portfolio investments and stock sales of foreigners were determined by technology gives hopes for our world’s ever increasing population.
the Council of Ministers for in February 1980 until I entered politics in May 1983. In May 1980, I the specialists of the Ministry of Finance. The process and the related Significant developments can be expected in energy technologies in
signing. Any revision in the drew up a draft amendment with the purpose to fix the problems faced communications were very time consuming; it sometimes took six the coming decades. Competition in R&D is fierce.
decree concerning a foreign in the implementation of the decree, which had come into force four months to reach a decision. In some cases the whole process became
capital company, which was months ago. Once Turgut Özal forwarded this draft to the Council of futile, if foreign exchange rates changed during this period. In 1980, The political and economic balances of the world are changing. China
already in operation in Ministers, State Minister Ekrem Ceyhun called me and asked; stock value determination authority was delegated to the Foreign and India, each with populations of over one billion, are rapidly
Turkey, was also subject to “Hüsnü, we issued this decree only four months ago. Why do you need Investment Department. In early 1981, I developed a simple improving. The world’s center of gravity is shifting eastward.
the same procedure. On this change?” My answer was; “If we do not make this amendment, I calculation method. With this method, the present values of company Compared to the past, capital movements are very fast. The US dollar
account of the severe will have to sign the important decisions while the Council of Ministers stocks were assessed by taking into account the approved balance is not as strong as it used to be, but foreign investment movements are
Hüsnü Doğan
Former Minister of Agriculture Forestry and bureaucracy and its will sign the trivial ones.” sheets of the related companies and the inflation rates during the last voiced as billion dollars - not million dollars as before.
Village Works, State, National Defense,
Energy and Natural Resources unfavorable approach 5-year period. The method was permitting sales prices to be fixed 30% All aside, democracy, human rights, peace and social justice are very
towards foreign capital, the The early months of 1980 were really hard times. The government was below or above the set value, thus leaving a bargaining margin important. Compared to the previous terms, Turkey has started
unwillingness of governments for foreign investment and their lack of giving efforts to put an end to shortages and queues. We were far off between the seller and the buyer. We discussed the method at a attracting significant amounts of foreign investment inflows. Turkish
efforts, and particularly the economic problems Turkey was from an environment where foreign capital would show some interest committee we established within the Department for two weeks, and entrepreneurs’ investments overseas are also growing. The
experiencing; the cumulative amount of foreign investment inflows to in Turkey. A short time after I took office, the general managers of a gave it its final shape. The value determination process, which took up continuation and increase of these developments depend on economic
Turkey was only USD 228 million until the end of 1979. number of foreign capital companies located in İstanbul came to my to six months previously, could thus be completed in one day. This and political stability. The road ahead for Turkey is clear, as long as
visit. Some of them had working visa extension requests. The first method remained in force for many years. A decision of the Council of economic policies are implemented realistically, consistently and free
In early 1980, I worked together with Turgut Özal - then the executive who had his put forth his request was asking for a two-year Ministers was required for foreign capital investments over USD 50 from populism.
Robert Bosch started operating in Turkey
with an agency in 1910. In 1915, Ottoman British Petroleum Company (BP) started its activities
Emperor Mehmet Reşat Han awarded in Turkey in 1912, and continued its operations under
1910 Robert Bosch with a medal of appreciation. 1912 the name Steaua Romana until 1949. In 1953, it took
Today, Bosch Group comprises six different the name, “BP Aegean Limited,” and in 1957, it was
establishments. reestablished and registered as a Turkish company.
26

15. INTERNATIONAL INVESTORS ASSOCIATION
Foreign investment in the plants, airports, and ports projects were developed under this
framework.
As part of the financial reform, the government improved the legal
framework in the area of capital market, leasing, and factoring, by
enacting the necessary laws and regulation and opened the country
last 30 Years One of the main goals of Özal Government was to redefine the role
of the government, and limit its activities to those what government
should be doing; such as defense, justice, security, education, health,
to international banking. As part of the fiscal measures, VAT was
introduced and other tax reforms aiming to improve public finance
were made; special new and innovative funds were established to
big infrastructures, and other public services oriented for the solve specific problems in education, health, social housing and
I
would like to remind our reader where Turkey has come of Turkish economy. These policies steered the Turkish economy improvement of the welfare of the people. Another goal was to defense industry. Turkey also signed investment protection and
from in last 30 years, and how we created the right business into an acute problem of inflation and balance of payments in late privatize State Economic Enterprises (SEE) by opening them to the avoidance of double taxation agreements with leading countries of
climate for foreign investment in Turkey. As you may 1970s. domestic and international private sector. To accomplish this the world to promote foreign investment.
know, direct foreign capital investment makes great objective, State Planning Organization initiated a study to develop a
contribution to the economic development of a country by reducing In January 1980, Turkey took the first step towards making a clean Master Plan for the privatization of SEEs. However, the progress of Consequently, Özal Government reduced government intervention
the deficit in balance of break with its economic past and implemented a comprehensive the privatization implementation was slow due to the legal challenge in economic activities and developed the legal framework in order to
foreign currency payments economic stabilization program by removing price control and of the opposition parties in 1990s. Eventually the majority of SEEs improve the business climate in Turkey. Subsequent governments
while improving production liberalizing the Exchange, Import and Export Regimes. Days of was privatized by the current government in the last 6-7 years, and continued to improve the efficiency and competitiveness of the
and employment opportunities. producing only for the domestic market which was tied foot and the budget deficit ratio reduced to 2-3%, while the economic growth Turkish economy, by implementing the necessary measures for
hand, behind an import protection wall were over. Knowing that rate increased to 6-8%. optimum allocation of resources. Turkey has now put its house
Prior to 1980, Turkey’s trade is a two-way street, Turkey was determined to become a major politically and economically in good order, and decided to join the
basic strategy of development trading partner of Europe. The favorable results of the liberal investment policies implemented world economy as a country,
was based on import and the incentives adopted by the Turkish government can easily be confident of its ability to
substitution in a closed For the first time, the government established a Foreign Investment observed in foreign direct investment inflows. Whereas the compete and succeed. And its
economic model, supported Department (FID) in State Planning Organization, with a cumulative amount of foreign investment in Turkey between 1954 current macroeconomic
by heavy state controls. transparent Foreign Investment Decree. FID hired Lazard Brothers and 1980 was only USD 278 million, this figure reached to USD 4.3 outlook is a distinct indicator
This model initially was to study the investment and business climate in Turkey and billion in 1992, then to USD 15.1 billion in 2002, and is expected to of the country’s present and
selective and satisfactory, implemented their findings to the administrative and financial reach USD 104 billion in 2010. As you can see, foreign capital prospective business climate.
but became progressively infrastructure, while promoting investment and export incentives inflows increased exponentially since 1980.
inefficient and stagnant in for domestic and international investors. Major foreign companies
Namık Kemal Kılıç (PhD)
Former Undersecretary of Treasury due course. Turkish were organized under YASED to represent the interests of foreign Like many other developing countries, one other problem of
and Foreign Trade of Turkey economy, instead of capital in Turkey. These programs improved Turkey’s stagnant Turkey’s economic development constituted of low income, low
integrating with the world economy, reined inflation and restored country’s international savings, low public revenues, lack of good cash management and
economy, chose to isolate itself from international competition. credit-worthiness. misuse of capital formation. To break this vicious cycle, Turkey
Furthermore, foreign invested companies could not increase their adapted positive interest policies to improve savings and optimize
capitals and nor could transfer their profits or license fees. During Some of the infrastructure projects, which were necessary, but did capital allocation. At the same time, the government implemented
this period, Turkish economy failed to attract significant foreign not fit the budget outlays, were opened up to the private sector daily adjustable exchange rate policies, in the beginning, and
investment. Much of the foreign investment that came in was for the within the framework of Build- -Operate-Transfer (BOT) and declared convertibility in 1989 to promote a stable economic
domestic market and did not contribute greatly to the development Build-Operate (BO) models. Some of the hydraulic dam, power environment.
A 25-year concession agreement was signed in the year 1928
between the government and the Ford Motor Company. The
Ford Motor Company established an assembly facility in
Shell initialized its activities in the Turkish market in
Istanbul in 1929, and started production with 450 employees.
year 1923 with the distribution of fuel oil. Receiving
In 1959, Vehbi Koç started the assembly of Ford trucks at
1923 its first oil prospecting permit in Turkey in 1955, 1928 Otosan. With the mass production of Anadol, launched in
Shell found the first oil in Turkey in 1963, and 1966, the first seeds of the automotive industry were planted
established the first oil well in Kurkan, Diyarbakır. in Turkey. And on October 14, 1983, the Ford – Koç
partnership was established. 28