Strategy and action plan for Istanbul International Financial Center
Turkey will soon be one of the significant and prominent financial centers, with her young and dynamic population, qualified labor force, geopolitical advantages, rapidly growing and developing economy, cultural and historical assets, developed markets, diversity of financial products, services and practices, and a strong regulatory framework in the financial sector.
Istanbul is the natural financial center of Turkey. Progressing towards EU membership, by its regional location, Turkey is also a country of significant economic size for the Middle East, Central Asia, North Africa and Eastern Europe. Istanbul has the potential to become an important center for gathering the financial resources of the region and redirecting them to the said regions.
Turkey is the 17th largest economy in the world. Her GDP at the end of 2008 reached $741.8 billion. Various international research reports argue that Turkey will be among the ten largest economies in the world in the 40 years to come.
The financial sector, which ensures accumulation and effective distribution of resources, incorporates various subsectors integrated with global markets and is capable of producing products/services of high added value, will be the driving force of economy in the coming years.
The ratio of financial assets consisting of bank assets, stock shares, public and private debt instruments to the GDP in 2007 is estimated as 150 percent for Turkey, 246 percent for developing countries and 421 percent across the world.
The Turkish financial services sector includes, in addition to banks and insurance companies, such non-banking financial organizations as factoring companies, financial leasing companies, consumer financing companies, private pension companies, securities brokers, precious metal brokers, mutual funds, investment trusts and real estate investment trusts.
Turkey has significant growth potential in all areas of the financial services sector. The share of total assets to the GDP as at the end of 2008 is 88.5 percent for the banking sector, 3.2 percent for the insurance sector, and 2.9 percent for mutual funds. The share of bank assets in the GDP is lower in Turkey than in developed countries. The insurance sector in particular is open to development by its opportunities. The overall capitalization worth of capital markets is lower than the markets in developed countries, however, approximately at the same level with developing countries. The market for debt instruments is relatively developed; the market for private sector debt instruments is negligibly small; however, it has become open to development through recent efforts.
IFC-Istanbul will be integrated to Turkey in terms of laws, taxes and regulation. Products and services offered in the financial sector will further develop through the utilization of existing opportunities and local potential.
Istanbuls becoming a regional and global financial center will make considerable contribution to increased employment and increased inflow of international funds into Turkey, and to economic growth.
By a survey study administered to foreign investors in the context of preparatory works of the Strategy and Action Plan, priority areas were identified as changing the regulatory approach and improving the tax system. As regards to developing financial products and services; political instability, macroeconomic conditions and transaction costs are spotted as the main obstacles.
In this Strategy and Action Plan, in order to have Istanbul to be an international financial center, priorities and measures have been determined for building a legal infrastructure that operates in international standards, increasing the diversity of financial products and services, developing a simple and effective tax system, improving regulatory and supervisory framework, strengthening the physical and technological infrastructure, ensuring an education system that provides qualified human resources in required fields and establishing an organizational structure that will promote and monitor at global scale.