Turkey held a long-awaited referendum on April 16, with majority of Turkish citizens voting for constitutional changes that will ensure democracy and stability. For the first time in its history, Turkey decided on such an important change through the will of people and the Grand National Assembly of Turkey.
Fifteen months has been the average lifespan of Turkish governments over the country's political history, and more than half of the governments formed held executive powers for less than a calendar year. Some of the reasons for such short governing lifespans are coalition governments and political crises caused by ideological conflicts between the presidency and the parliament. When both the president and parliament held executive powers, as was the case prior to the referendum, there were numerous instances where a power struggle ensued. Under the constitutional reform package, the Turkish people chose a presidential system that will enhance executive, legislative, and judiciary powers and enable each of the independent powers to exercise their core functions. Thus, such short governing lifespans should become a thing of the past, and this change will enable Turkey to make a greater leap forward. A better working bureaucracy, with a stronger and more effective executive and cabinet, means that Turkish state administration will be much more investor-friendly.
In addition to political stability, the new presidential system will overcome red tapes in bureaucracy and foster a more investor-friendly and reform-oriented environment. This sets the stage for a more positive and predictable outlook for investors, which in turn should lead to an increase in FDI. As stated by government officials, structural reforms will be Turkey’s top priority in the post-referendum period. Strengthening of the Credit Guarantee Fund, employment support, and new investment incentives are being focused on for the short-term, while the government looks to implement additional structural reforms in the medium-run to boost economic growth.
According to ISPAT President Arda Ermut, international investors’ feedback has been positive in the wake of the referendum. They expect the required steps will be taken swiftly and that the new system should yield improvements in the level of efficiency in bureaucratic operations, prompt decision-making and implementation, public reform, and market predictability.
Ermut also expects a further inflow of investments from both neighboring countries and from all around globe, particularly through PPP-model mega projects such as the Grand Istanbul Tunnel, Canal Istanbul, and Çanakkale 1915 Bridge, and renewable energy projects such as the Renewable Energy Resources Zone (YEKA) projects in solar and wind energy. “Along with the Karapınar solar YEKA project that was put out to tender last month, investors are already showing great interest in the 1,000 MW wind energy YEKA project as well. These are combined tenders that set forth conditions of equipment manufacturing together with power generation. Through these investments, Turkey is also attracting investments in other parts of the value chain. We will continue to see investors from around the globe in such projects in Turkey with a value-added effect,” said Ermut.