Planning the transaction: The political, regulatory and economic background
Issues
Guidance on the political and economic background: In common with many other emerging markets, in recent years Turkey has experienced a dramatic narrowing of the risk premium over investments in the US and Europe. Foreign investment inflows have risen from around US$ 1 billion per annum in the 1990’s to US$ 19.8 billion in 2006. Because of this, the valuations applicable to Turkish businesses have moved upward, closer to those in the US or Europe. It is important to reach a balanced and informed view in areas such as:
- The political risks
- Government deficits and balance of payments
- The strengths and weaknesses of the legal system
- Turkey’s position in the region: relations with the EU to the West, relations with the Middle East, and with Russia to the North.
Although these are uncertain and intangible matters, they may lie at the heart of any decision whether to invest in Turkey or in another economy.
Regulatory background: Foreign investment legislation is now genuinely liberal and operates on the principle of informing the authorities of investments, rather than seeking the authorities’ permission. There are no restrictions on foreign shareholding percentage. As in other countries, competition authority approval for significant transactions has become an important feature of recent years.
Specific regulatory frameworks apply to sectors such as banking, insurance, retail etc. Work permits and residence permits for expatriates are relatively routine, although delays of several months can occur in the granting of work permits.
EU issues
As Turkey’s negotiations over the acquis communautaire continue, a Turkish company’s future may be fundamentally impacted by the implementation of EU legislation in its sector.
How we can assist
We can assist you in understanding the political and economic position of the country and the regulatory framework applicable to the sector in which you are interested, as well as general commercial law considerations.
We can organise an assessment of how EU regulations are likely to affect the sector you are interested in.
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