Privatisation in Turkey

Turkey aims at minimizing the state involvement in the industrial and commercial activities within the economy (hence confining the State activities to only social security, basic health and education, national defence and some large scale infrastructure investment projects), maximising the private sector participation in the economy, and providing efficient allocation of resources. Providing a robust, fair, well-functioning and problem-free market environment. Decreasing the financial burden of State Economic enterprises on public finance. Expanding and deepening the existing capital market by promoting wider shared ownership.

In this regard, privatisation is very crucial and the current economic stabilisation program of Turkey envisaging the privatisation of giant enterprises of the country. The Turkish government emphasizes that they are strongly determined to privatise as many enterprises as possible.

The following factors have lead to successful privatisation in Turkey

Turkey's potential integration into European Union
Establishment of independent regulatory and supervisory authorities
Recent developments in the investment climate and
Very desirable outcomes of the current economic program.


Turkey has transformed its outdated state-owned economic enterprises into competitive companies through a comprehensive and radical privatization program during the last two decades. Priority is given to sectors such as maritime transportation, food, iron and steel, petrochemicals, textile, energy and banking. The implementation of the program provided the state with a total income of USD 10 billion over the years.

The jewel on the crown was the privatization of Turk Telecom, the flagship telecom company of Turkey. After a joint bargaining in 2005, a Lebanese-Saudi joint venture, Oger Telecom, sealed a deal with the Government over a majority stake (55%) with an offer of USD 6.5 billion.

In a recent tender, the Government has agreed over the sale of a controlling share (51%) of Petkim, the biggest petrochemical producer of Turkey. Socar & Turcas-Injaz won the contest with an offer of USD 2.04 billion.

Turkish banking sector has also attracted attention of potential foreign investors. Belgium-based Dexia and National Bank of Greece have bought the majority stakes of Denizbank and Finansbank with a total value of USD 5.1 billion in 2006. The 20% stake of Akbank, a prominent private bank in Turkey, was purchased by Citigroup with a value of USD 3.1 billion. In fact, international banks are already present in the banking sector. Unicredito, Fortis, BNP Paribas and General Electric are to name few.

* Source: The Republic of Turkey Prime Ministry Privatization Administration

(Last updated December 19, 2007 )

A strong and sustained commitment

The striking economic shifts of the 80’s ushered a new era for the world economy, where privatization became one of the most essential and indispensable financial reforms on the economic agendas of many nations. As being one of the fundamental tools of the free market economy, privatization has been on Turkey's agenda since 1984.

Privatization in Turkey, not only aims to minimise state involvement in economic activities and to relieve the financial burden of State Economic Enterprises (SEE) on the national budget, but also contemplates the development of capital markets and the re-channelling of resources towards new investments.

Turkey, one of the fastest growing economies of the world has positioned itself as an attractive and promising investment environment through the implementation free trade principles and establishment of dynamic capital markets as well as offering liberal incentives facilitating transactions for international investors and exporters.

The fundamental transformation in Turkish economy has moved the country from an inward-focussed import substitution model towards an export led growth and industrial one. The East-West expansion of the world’s geopolitical horizons has opened up a new era for Turkey with many promising opportunities for international investors. The investment opportunities in Turkey are particularly attractive in the framework of country’s ongoing ambitious privatization agenda. The involvement and participation of international investors is highly encouraged in the massive privatization program. The privatization process in Turkey with a view of relieving the burden of state economic enterprises on the national budget, has proved to be an important source of funds for the government and brought tangible results and progress within this philosophy. Although this task has not been easy, many state-owned companies have passed to the private sector.

THE LEGAL FRAMEWORK

The principles, procedures, authorised agencies and other issues regarding privatization are all set out in the Privatization Law No. 4046, dated 1994.

The Privatization Law in essence, regulates the principles of privatization namely; to improve productivity in the economy and to reduce public expenditures. This Law,

expands the scope of assets to be privatized,

provides adequate framework, funds and appropriate
mechanisms to speed up the privatization and restructuring processes,

establishes a social safety net for workers who lose their jobs
as a result of privatization,

establishes the Privatization High Council and the Privatization
Administration to facilitate the decision making process in the
privatization endeavour.


The ‘Law Regarding Making Amendments in Some Laws and in the Decrees With The Force of Law Dealing With Establishment and Duties of the General Directorate Turkish National Lottery’ numbered 4971, prepared in order to speed up privatization, has been put into effect by being published on the 15th of August 2003. In the framework of the aforementioned Law, stipulations have been placed in order to accelerate privatization applications through the arrangements that have been made to the Law No. 4046. These include arrangements that have been made to privatize the Turkish National Lottery by way of handing out licenses for the planning, organizing and arranging of the draws of the games and those enabling the utilization of convertible bonds in the privatization of Türk Telekom.

Publication: "PRIVATIZATION ENDEAVOR IN TURKEY"

The Republic of Turkey Prime Ministry Privatization Administration
provides further information on the following areas:

Administration

Portfolio

Social Project

Programme

The principles and priorities of privatisation implementations

Implementations

(Last updated December 19, 2007 )