One of the oldest cities of the world, Istanbul is the center of history, culture, art and science. It is also home to millions of young, dynamic entrepreneurs. Istanbul, located at the crossing point of East and West, is now transforming its features into an economic value and getting ready to assume a new title: Istanbul International Financial Center.
Following the global crisis, at a time when international investments fell and the search for a new financial structure is in progress, it is very important for Istanbul to come forward with a competitive structure. In consideration of Turkey’s strong presence in terms of economic and financial development in Eastern Europe, Middle East and Central Asia, it is possible to say that Istanbul has the potential to become a regional, and then global financial center.
Now right time to take your place in this master project. Turkey is a country offering significant opportunities for foreign investors with its geographically perfect position to function as a gateway between Europe, Middle East and Central Asia. The opportunities exist not only in the dynamic domestic market, but also throughout the region. Large and growing domestic market Mature and dynamic private sector Leading role in the region secure investment environment Supply of high quality and cost-effective labor force Customs union with EU countries Developed infrastructure Institutionalized economy Competitive tax system. Istanbul International Finance Center will house the head offices of the country’s financial market governing bodies, state-owned and private banks, and related businesses offices ect.
SIZE: 170 acres / 70 hectares 45 million sq. ft. / 4.2 million sq. m.
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A set of criteria must be fulfilled in order to be an “International Financial Center”, and to offer a globally competitive business environment. Actually, Istanbul is a global city that satisfies all of these criteria…
Access to International Financial Centers
Istanbul’s proximity to both the East and the West is a remarkable advantage. As a geopolitically important center that unites London in the West with Singapore in the East, Istanbul is located at a spot that has the highest potential of bringing together investors and financial companies within the triangle of Central and Eastern Europe, the Middle East, and Central Asia. Thanks to this location, Istanbul has a time difference of maximum two hours with European, Eurasian and MENA countries. Its proximity to centers including London, Frankfurt and Zurich in terms of physical location and time zone is a significant facility for financial institutions that plan to open branches in Istanbul. The city’s convenient location in terms of time zone makes it easier for it to work with the world exchanges.,
Access to Clients
As a bridge that unites Asia and Europe, Istanbul’s central location allows a passenger to fly to 56 different countries and the other financial centers in the region in less than 4 hours. With Turkish Airlines flights, it is possible to access more than 260 international routes directly. In addition to the two airports in the city, the construction of a third airport, which is larger than both, has started. Thanks to the modern urban life, both the number of international conferences and other activities organized in Istanbul as well as foreign participation in these events have increased. Furthermore, the meeting halls of five-star hotels offer high-capacity meeting facilities. There are 50,000 hotel rooms in the city, and most of the hotels belong to international chains. Istanbul is the most crowded city of Turkey, and hosts large companies operating in a variety of sectors.
Qualified Labor Force
Turkey has a labor force of advancing education level. 33 percent of Turkey’s population of 77.7 million is younger than 20. 48 percent of Istanbul’s 14 (14.4) million population is under 30. The financial sector employs a total of 180,000 people led by banks, employing 150,000. The target of establishing at least one university in every city led the number of universities in the country to more than double in the last couple of years, increasing to 181. With 49 universities, Istanbul is the leader in terms of the number of higher education institutions. The new target is to add to the qualified labor force for IFC Istanbul. Towards this purpose, universities are encouraged to train finance experts through post graduate programs. Also, effort is made to attract highly qualified labor force from abroad.
In order to position Istanbul as an international financial center, novelties and improvements were planned in many fields, and a significant part of these have been already realized. The new Capital Markets Law is one of the most important steps taken in this respect. The new Turkish Commercial Code, on the other hand, went in force on July 1, 2012. As a country in EU-accession process, Turkey has already taken a long way with respect to the harmonization of the Turkish capital markets regulation with the EU acquis. New bilateral agreements that encourage cross-border investments and that prevent double-taxation are signed every day. The target is to harmonize tax, legal infrastructure, transparency and information mechanisms as well as financial sector regulations with international arrangements and practices, especially the EU acquis.
Business Infrastructure Facilities
Business infrastructure is the synthesis of a business plan and a business process. It consists of human resources, business process and operational infrastructure. As part of IFC Istanbul strategy, the living quality, security and transportation facilities in Istanbul will be improved, and the physical conditions that will satisfy the infrastructure requirements of financial institutions will be provided. New investments are made continuously in order to strengthen Turkey’s technology and communication infrastructure; offering fast, reliable, uninterrupted and low-cost electronic communication facilities. The most important feature of a financial center is bringing together supply and demand at a common spot. Financial products and services play a key role in this respect. Strategy and Action Plan for IFC Istanbul envisages that the necessary infrastructure be established for financial products and services, which have not yet been offered or have not reached adequate trading volumes in Turkish markets, that have high growth potential and that could make Istanbul an attractive financial center.
A Fair Business Environment
Efforts are in progress to establish an independent and autonomous “arbitration center” in Istanbul. Such arbitration center will be internationally competitive with respect to cost, speed, and finalization process of decisions. Parties will be allowed to select arbitrators of their choice, including those that are not included in the list of arbitrators accepted by the Arbitration Center. Provisions on arbitration in the Code of Civil Procedure and those of the International Arbitration Law will be combined and a single set of arbitration regulations will be prepared. Mediation system will also be improved so as to settle disputes in a short time, without referring to the court. The arbitration center will also offer corporate mediation. These draft regulations are expected to contribute to the IFC Istanbul project, and effort is made in order to accelerate their enactment. Turkey’s current taxation system, which is quite complicated, requires consultation services. However, the government is planning to put various regulations in force. Large companies are highly ethical taxation-wise. In general, Turkey acts within the framework suggested by the OECD. Effort is made in order to eliminate the discrepancies in implementing the laws. Market participants suggest specialized courts
Corporate Tax Regime
The government is working towards making both the tax regulations and secondary legislation simple, comprehensible, predictable, and sustainable in order to; ·encourage financial transactions in Turkey, ·establish a sustainable and stable tax regime suitable for the macroeconomic conditions, ·clearly define legal arrangements to secure the certainty and predictability of law, ·decrease the share of indirect taxes in total tax revenues and to make the financial sector free from unfair competition due to unregistered operations, ·put in place an efficient taxation policy Tax advantages are applied for angel investors, with tax discounts of up to 75% of their investments. Withholding tax will be discounted for long term investments while for investment funds 75% of whose assets are invested in shareholders’ equity, no withholding tax is applied. Corporate tax in Turkey stands at 20%, which is quite reasonable compared with international practices.
Individual Tax Regime
Individual tax rates are up to 35% of salaries, while 50% of dividend income is taxable. For Istanbul to become a financial center, the taxation regime must be simple, comprehensible, consistent, practical and measurable. Currently, the taxation regime is undergoing a change. The Strategy and Action Plan for IFC Istanbul project, prepared by the Turkish Ministry of Development, envisages a simple and efficient taxation system. Revisions are planned in the arrangements for foreign investors, and improving the taxation system as a whole is envisaged
Access to Professional Service Providers
Consultancy and support services by professionals are required for financial centers and participants. Such professionals include lawyers, accountants, tax consultants, advisors, arbitrators, and information technology teams. Numerous international companies prefer Istanbul for their regional administration offices since it is one of the most suitable cities of East Europe, Middle East and Central Asia in terms of access to professional services. The number of service providers for the financial sector is increasing rapidly. Turkish information technology provides services worldwide. On the other hand, there are improvements in the accounting services. The legal sector is enhancing. An increasing number of graduates of high quality universities join the legal sector.
Quality of Life
Istanbul is a prominent metropolitan city that has served as the capital of Roman, Byzantine and Ottoman Empires. People of many different cultures have been living in the city for centuries. Turkey’s education system is making a rapid progress. The government offers many education facilities in addition to numerous highquality private schools.
With a history of 8500 years, 72 museums, 5 empire palaces and 49 universities, Istanbul was designated as the most popüler congress city in the World in 2011 and 2012. Istanbul is a popular tourist destinaiton with more than 100 shopping malls, 4 historical bazaars, lots of restaurants and cafes offering best of local cousins as well as flavors from around the world in unique settings with breath taking views, 94,000 hotel bed capacity, 2 international airports and more than 10 million visitors annually. In addition, for long term settlement, cost of living in Istanbul is also quite attractive for financial sector employees.
According to a survey by Financial Times in 2011, Istanbul ranks first among livable cities. The survey takes into consideration current potential and level of improvement in cities, and Istanbul ranked above New York and London based on these criteria. Istanbul was elected as “the coolest city” by Newsweek and “Best Travel Destination” according to 2014 travellers’ choice TripAdvisor Awards.
Public trasportation is widely used in the city through subway and bus systems and continously being improved with a fast pace. Construction of a third airport as well as a third bridge between is under way. High speed train between Istanbul and the capital city Ankara as well as a railway system running under Bosphorous connecting European and Asian sides of Istanbul have recently become operational
Opportunities and Quality of Commercial Real Estate
Turkish real estate sector is growing rapidly. According to Sunday Times, Turkey is the 5th most attractive country for investment. Foreigners are now attracted to the metropolitan area rather than tourism areas. High-quality residential and office areas are offered. Demand is rising rapidly; the occupancy rate for high quality office buildings stands at 88%. As a result of the legal revisions, citizens of foreign countries are no more subject to limitations in acquisition of residential buildings. Construction technologies that will minimize earthquake and security risks will be used in regions where financial institutions will be operating and employees will be residing, so that the required office and residence stock will be provided, and real estate investments applying new technology will contribute to the city’s quality of life.
Construction of the complex in Ataşehir, which will host the headquarters of gigantic public banks such as Ziraat, Halkbank, and Vakıfbank currently based in Ankara, as well as those of Banking Regulation and Supervision Agency, Savings Deposit Insurance Fund and Capital Markets Board is in progress, and expected to be completed in 2015. This complex includes skyscrapers for private sector offices, hotels, residences and social facilities.
In consideration of the current economic conditions, operational costs, including real estate and labor force costs, may influence finance companies’ decisions on location.
As the costs in financial centers located in developed countries are higher in general, financial centers in some emerging countries may offer more competitive conditions.
In spite of the fact that Turkey does not rank in higher echelons in terms of ease of doing business, its investment circle is expanding rapidly. Domestic and foreign investors are subject to the same legislation. The government applies incentives on investment, which are valid for both Turkish and foreign investors. Incentives include facilitating company incorporation, getting loans, and doing business with international companies.
Culture and Language
Istanbul hosts numerous international festivals, biennials, concerts, exhibitions and all kinds of artistic activities in its museums, art galleries, halls and cultural centers. Education reforms are adopted to facilitate foreign language education. Foreign language curriculum in primary education is improved. An intensive education of English, German and French is offered in both public and private schools, which multiply every day.
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