DOING BUSINESS

Doing Business 2016 - 2017 Comparison for Turkey

November 1, 2016

 

The Doing Business project provides objective measures of business regulations for local firms in 185 economies and selected cities at the subnational level.

 

Doing Business 2017: Equal Opportunity for All, a World Bank Group flagship publication, is the 14th in a series of annual reports measuring the regulations that enhance business activity and those that constrain it. Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 190 economies—from Afghanistan to Zimbabwe—and over time. The report analyses

Doing Business sheds light on how easy or difficult it is for a local entrepreneur to open and run a small to medium-size business when complying with relevant regulations. It measures and tracks changes in regulations affecting 11 areas in the life cycle of a business. These are; starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency and labor market regulation.

As it can be seen on the table below, Turkey stands at 69 in the ranking of 190 economies on the ease of doing business. This means there is a 6 ranking fall compared to last year’s Doing Business report. Although there are a lot of reasons for this fall, this demonstrates the significance of long-standing issue of implementing structural reforms in Turkish economy. It should also be noted the Turkish government is pushing ahead with sector and project based incentives to attract investments. The publication analyses Turkey’s position in the report and compares Turkey with other emerging markets. The results demonstrate that while Turkey’s overall ranking decreased in the index, it still performs better than most of its competitors measured by various indicators.

Doing Business Turkey Report Comparison

What does it take to start a business in Turkey?

According to data collected by Doing Business, starting a business in Turkey takes 6.5 days, costs 16.4% of income per capita for men and women. A requirement of paid-in minimum capital of 10.2% of income per capita is legally mandatory for both men and women. Most indicator sets refer to a case scenario in the largest business city of an economy, except for 11 economies for which the data are a population-weighted average of the 2 largest business cities.

Starting a Business

Globally, Turkey stands at 79 in the ranking of 190 economies on the ease of starting a business (figure 2.2). Last year Turkey stood at 90 in the ranking. The reason behind this rise is that last year Turkey made starting a business more difficult by increasing the notary and company registration fees. But this year Turkey simplified the process of starting a business by reducing the time needed to register a company.  

 

How Turkey and comparator economies rank on the ease of starting a business

Dealing with Construction Permits

Turkey stands at 102 in the ranking of 190 economies on dealing with construction permits. Last year the ranking was 101. The reason behind this fall is, in 2016 Turkey made dealing with construction permits easier by streamlining the process to obtain the fire clearance. Apparently, this process couldn’t be sustained.

Getting Electricity

Access to reliable and affordable electricity is vital for businesses. To counter weak electricity supply, many firms in developing economies have to rely on self supply, often at a prohibitively high cost. Whether electricity is reliably available or not, the first step for a customer is always to gain access by obtaining a connection. Turkey stands at 58 in the ranking of this year’s Doing Business report. Last year’s ranking was 36.

The reason behind this 22 points of falling is that Turkey made getting electricity a lot easier by eliminating external inspections and reducing some administrative costs last year. Other countries can be seen on the figure below:

How Turkey and comparator economies rank on the ease of getting electricity 

 

Registering Property

The ranking of registering property has not changed compared to last year for Turkey. According to data collected by Doing Business, registering property in Turkey takes 7.0 days. Turkey has 21.5 points out of 30 in the quality of the land administration index. In the OECD high income countries this point is 22.7

Getting Credit

Globally, Turkey stands at 82 in the ranking of 190 economies on the ease of getting credit. Last year Turkey stood at 78 in the ranking. Unfortunately, Turkey takes the least point among other countries on the subject of strong legal rights for borrowers.

How strong are legal rights for borrowers and lenders? 

Economy scores on strenght of legal rights index

Protecting Minority Investors

Protecting minority investors matters for the ability of companies to raise the capital they need to grow, innovate, diversify and compete. Effective regulations define related-party transactions precisely, promote clear and efficient disclosure requirements, require shareholder participation in major decisions of the company and set detailed standards of accountability for company insiders.

How strong are minority investor protections against self-dealing in Turkey? The economy has a score of 7.0 on the strength of minority investor protection index, with a higher score indicating stronger protections. Globally, Turkey stands at 22 in the ranking of 190 economies on the strength of minority investor protection index. Last year this ranking was at 18.

Paying Taxes

Globally, Turkey stands at 128 in the ranking of 190 economies on the ease of paying taxes. The ranking has not changed compared to last year. During the last years Turkey made paying taxes more costly for companies by increasing employers’ social security contribution rate. More recently, Turkey made paying taxes easier by introducing electronic invoicing and electronic bookkeeping. At the same time, however, Turkey also increased the rate of transaction tax applicable on checks.

Trading across Borders

Globally, Turkey stands at 70 in the ranking of 190 economies on the ease of paying taxes. The ranking has not changed compared to last year.

How Turkey and comparator economies rank on the ease of trading across borders

Summary of export and import time and cost for tradingacross borders in Turkey

Source: Doing Business Database

Enforcing Contracts

Globally, Turkey stands at 33 in the ranking of 190 economies on the ease of starting a business (figure 2.2). Last year Turkey stood at 32 in the ranking. Despite the one point fall this year, Turkey made enforcing contracts easier by introducing an electronic filing system for court users.

Resolving Insolvency

A robust bankruptcy system functions as a filter, ensuring the survival of economically efficient companies and reallocating the resources of inefficient ones. Fast and cheap insolvency proceedings result in the speedy return of businesses to normal operation and increase returns tocreditors. By clarifying the expectations of creditors and debtors about the outcome of insolvency proceedings, well-functioning insolvency systems can facilitate access to finance, save more viable businesses and sustainably grow the economy.

How Turkey and comparator economies rank on the ease of resolving insolvency

Globally, Turkey stands at 126 in the ranking of 190 economies on the ease of resolving insolvency. Last year this ranking was at 124.

 

 

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About

StratejiCo. is an independent Turkish corporate and public affairs consultancy firm, providing trusted advice to multinational companies and government institutions in Eurasia since 1987. 

Disclaimer

This report is prepared by StratejiCo. based on the information gathered from publicly available sources. Opinions and views expressed in this view does not reflect StratejiCo.’s official view. The purpose of this content is to provide our readers with different perspectives about their businesses. StratejiCo. cannot be hold liable or responsible for the decisions based on the information provided here.