Legal factors include discriminatory practices and laws, partisan
consumer law, anti-trust
law administered on undertakings
breaching public trust, harsh employment
laws and health and safety law. These factors can
affect how a company operates, its costs, and the demand for its products.
DL: Even though the
constitutional system of Turkey is based on the equality of all individuals
without discrimination before the law, irrespective of “language, race, color,
gender, political opinion, philosophical belief, religion and sect, or any such
consideration”, there is a slow shift to islamist nationalism. According
to the Gender Gap Index (2015) of World Economic Forum, Turkey is the130th country out of 145 countries, which means, Turkey which
is the 17th biggest economy in the world ranks among the lowest
countries (last 15th) in terms of gender equality.
of 5 women are exposed to physical and sexual violence at least one in their
NEW TURKISH COMMERCIAL
CODE: BOT Model (Build,Operate,transfer) is adopted to gain a lead in
industrial promotion and investment financing. Key sectors are industry and
services (Tourism), Chemical,Energy,Automobiles. Privatization Programmes, New
investment incentive schemes are designed to encourage investments, reduce
dependency on the imports of intermediary goods vital to country’s strategic
sectors. The Primary Objective is to reduce the Current Account Deficit, boost
Investment support for lesser developed regions, increase the level of
supportive instruments and promote clustering activities and investment that
will create transfer of technology. To increase local and foreign investment,
support instruments such as VAT Exemption,VAT Refund,Customs Duty Exemption Tax Reduction Income Tax withholding Allowance, Interest
Rate Support, Land Allocation, etc are doled out.
Anti trust law: In Turkey, hefty fines are imposed by the Turkish Competition Authority,
especially towards the undertakings which took advantage of public interest and
it increased the awareness of competition law around the country. Competition
Board determines infringements during its investigations and it can impose on
the undertakings an administrative fine of up to 10% of their turnover of the
previous year. Additionally, injured parties of the practices preventing
competition may file an action for damages and the Courts may impose
compensations up to the three times of the actual damage. Moreover, attorneys’
fees, litigation costs from the actions for damages or compulsory expenditure
made during the investigations made by the Turkish Competition Authority may
increase litigation fees to a significant amount.
Employment laws: Turkey
unemployment at 10.8% labour force. Labor force
participation rate of women is 30% and 70% for men. 34% worked 50 hours
or more, the highest in any OECD nation.
Intellectual Property (IP): IP rights are
territorial, that is they only give protection in the countries where they are
granted or registered. If you are thinking about trading internationally, then
you should consider registering your IP rights in your export markets.
Contracts: Turkish importers tend to use standard
form contracts in their transactions. Foreign contracts are seldom accepted for
fear of being trapped by unfamiliar contract stipulations. Adding special
provisions to the contract form is normally acceptable. You can expect to see
the following key terms and conditions in a Turkish import contract: Terms of
price and shipment Turkish import businesses often conduct transactions at FOB
prices in consideration for using Turkish shipping companies. C&F and CIF
terms are accepted only if the freight is proved to be cost-effective.
Insurance Turkish importers generally have “open insurance” for their
payment: This is normally by letter of credit (L/C). Inspection Certificates of
quality, quantity or weight – issued by manufacturers or public assessors – are
normally required as part of the process of setting up a letter of credit.
However, if the goods are discovered not to be in conformity with the
certificates after re-inspection by Turkish inspection authorities, the buyer
will either return the goods to the seller or lodge claims against the seller
for compensation on losses on the strength of inspection at the port of
destination. In the case of equipment imports, Turkish companies often insert a
clause in the contract withholding a portion of the payment – normally 5 to 10%
of the total contract value – which will be paid only when the equipment is
installed and commissioned.
Dispute resolution: In cases of dispute, the formal
contract must have a provision that a solution must be sought through friendly
consultation. If this does not work, arbitration is then adopted to settle the
dispute. Arbitration is not widely used in Turkey. Litigation is only used as a
Social factors affecting business include
the cultural aspects and health consciousness of the country, population growth
rate, age distribution, career attitudes and emphasis on safety. For example, growth rate includes the ageing
population and may imply a smaller and less-willing workforce (thus increasing
the cost of labour). In such a scenario, companies may change various
management strategies to adapt to social trends caused from recruiting older
is 76.9 million. Every fit male Turkish citizen otherwise not
barred is required to serve in the military, it being the 2nd largest military
force behind the US for a period ranging from three weeks to a year, dependent
on education and job location.
Culture: Culture of Turkey sees clear efforts of combining modernization
and westernization into the social fabric since the 1800s keeping intact traditional,
religious and historical values. This results in a chaotic cultural identity
and a constant bridging of unequal ethics and sensibilities.
Foreign Relations: Turkey
is not part of EU yet but has formed a customs union for industrial products
and processed agro products (Common external tariff, Elimination of all customs
duties i.e a drop from 10% customs duty to 0). It is EU’s 4th largest export
market and 5th largest provider of imports. Turkey is also EU’s #1
export (44%) import (38%) partner. Turkey is the 2nd largest
recipient of FDI in West Asia behind Israel. Turkey reached record high 22 bn
USD in 2007. FDI flows to Turkey decreased to 17.5 bn in 2015 and 12.1 bn in
2016 according to the Turkish Ministry of Economy.