Business climate in Turkey deteriorates, says World Bank

Business climate in Turkey deteriorates, says World Bank
By bne IntelliNews October 28, 2015

Business climate in Turkey has deteriorated as it dropped to the 55th place out of 189 economies in the World Bank’s latest Doing Business 2016 ranking from its 51th place on the previous list.

The World Bank reported that the country made starting a business more difficult this year as it ranks 94th in this category, down from its 88th place a year ago.

The political uncertainty, concerns over the government’s commitment to rule of law and politically motivated tax fines imposed on particular business groups all affect business sentiment, adding to investors’ unease.

In a sign of the government’s increasingly erratic attitude towards the opposition, the police raided the offices of the Koza-Ipek Group on October 27, owned by a businessman close to the US-based cleric Fethullah Gulen, a formal ally of President Recep Tayyip Erdogan turned arch-enemy.

Urgent economic reforms have not been on the government’s agenda for some time as it is busy cracking down on the opposition, struggling with the renewed Kurdish insurgency and efforts to regain the majority in parliament it lost in the June elections for the first time since coming to power in 2002.

However, most opinion surveys point to a yet another hung parliament in November’s snap elections, raising concerns that Turkey may enter a prolonged period of political uncertainties.

Business circles favour a coalition government between the ruling Justice and Development Party, AKP, and the centre-left secularist Republican People’s Party, CHP. In theory, a possible AKP-CHP coalition could ease social tension and improve business climate.

But the question is how long a coalition government of the AKP and CHP could survive if Erdogan’s influence over politics is not reduced and given the sharp ideological differences between the two major parties.

In the sub-categories of the World Bank’s Doing Business index, Turkey ranked 98th in dealing with construction permits, an improvement from its 108th place in the previous report. In the getting credit category its ranking dropped to 79th from 71th. In the paying taxes category Turkey ranks 61th versus 56th.

  DB 2016 Rank DB 2015 Rank Change in rank
Starting Business 94 88 -6
Dealing with construciton permits 98 108 10
Getting electricity 36 35 -1
Registering property 52 51 -1
Getting credit 79 71 -8
Protecting minotiry investors 20 20 no change
Paying taxes 61 56 -5
Trading across borders 62 61 -1
Enforcing contracts 36 17 -19
Resolving insolvency  124 102 -22
Source: World Bank, Doing Business 2016