In September 2017, Turkey’s Medium Term Economic Program for 2018 to 2020 was unveiled. Prepared every year by law, then approved by the cabinet, and released by the Ministry of Development, it is finally published in the Official Gazette of Turkey.
The Medium Term Economic Program is a study of how the current economy is performing and includes targets for the next two years. Focusing on Macroeconomics, which is a branch of economics, fundamental areas include inflation, growth, GDP, unemployment and investment.
Many people from the public and private sectors follow Turkey’s Medium Term Economic Program including foreign investors.
It gives them a base framework of government policies and is a reliable indicator of how safe their investment is, whether it is financially sustainable and whether it has the potential for profit and growth.
Turkey has put a lot of work into attracting foreign investors through various schemes including tax breaks, credit financing and VIP Citizenship.
Many eyes around the world are also taking a significant interest in the Turkish economy. Turkey showed the most significant growth out of all the G20 countries and also smashed its export industry targets.
After suffering a downturn in tourism figures, many industry insiders are also predicting 2018 could be a year when tourism returns to the record-breaking 2015 levels.
The one downside of any medium-term program is that external factors, as well as global events bouncing around the world, means any well-laid plan has a specific risk factor where events can influence final targets.
However, over the last two years, after a relationship with the Russians affected tourism and exports, as well as a failed coup and several terrorist events, Turkey has proven it can deal with the worst, is resilient and flexible enough to adapt to current crises. This gives many foreign investors and other sectors confidence in the Turkish economy.
Main Points of Turkey’s Medium Term Economic Program
Economy and Deputy Prime Minister Mehmet Simsek said the main aim is to ensure sustainable growth, after a record 15-year success rate. An example is shown in the GDP that rose to 11,000 USD in 2016 from a mere 3,500 USD in 2002. He added that their targeted unemployment for 2020 is 9.6 %, inflation will reduce to 5%, and the GDP per capita will rise to 13,000 USD by 2020.
Primary Goals of Turkey’s Medium Term Economic Program
- Increase human capital and labour quality
- Enhance high value-added production
- Increase employment
- Improve income distribution
Improve Business and Investments
The Turkish government is also extremely eager to improve the business and investment environment, therefore supporting growth and reducing unemployment. They want to reduce the number of documents and approvals needed to start a business by simplifying the bureaucratic process. Where not already in place, implementation of digital systems will improve speed and efficiency of license approvals and necessary criteria to start a business.
The One Stop Office approach, introduced in Istanbul in 2016, where potential investors have access to a wide range of information as well as streamlined approval process will also be expanded.
Construction permit procedures will be shortened, and environmental impact assessments will be finalised within two months.
Information systems will specify ripe investment areas and land allocation for large-scale investment. Notary prices will also be decreased.
Financing opportunities will be revised, and the Credit Guarantee Fund implemented in 2017 will be restructured.
Other significant factors include helping disadvantaged members of society to get into the workforce, introducing regulations in flexible work for specific sectors such as women. There is also a planned revision of the tax system for the Turkish real estate market.