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TURKISH ECONOMY / Free Trade Zones in Turkey

Economic Outlook

Foreign Trade

Foreign Investment

Free Trade Zones

Banking and Capital Market

Frontier Formalities

Statistics

 

Free Zones are defined as special regions within the country that are deemed to be outside of the customs border and where the valid regulations related to foreign trade and other financial and economic areas are either not applicable, are partly applicable or in which new regulations are tested. Free Zones are also the regions where a more convenient business climate is provided in order to increase trade volume and export for certain industrial and commercial activities as compared to other parts of country.

Free Zones Law numbered 3218 was issued in 1985 with the objective of increasing export-oriented investment and production in Turkey, accelerating the entry of foreign capital and technology, procuring inputs into the economy in an economic and orderly fashion and increasing the utilization of external finance and trade possibilities.

Free Zones Law No. 3218 was put into effect in 1985 and since then the Mersin and Antalya Free Zones became operational in 1988, the Aegean and Istanbul Ataturk Airport Free Zones in 1990, the Trabzon Free Zone in 1992, the Istanbul-Leather Free Zone in 1995 and commercial activities have been conducted in the Mardin and Eastern Anatolian Free Zones since October, 1995.

On the other hand , a new implementation, the Istanbul International Stock Exchange Free Zone which is expected to commence its activities in the second half of 1996 and whose main objective is to create an international finance center, will operate in the field of stock purchasing-selling, stock barter, maintenance and in the field of other transactions within the body of Istanbul Stock Exchange, one of the most intensive stock exchange in this region of the world that foreigners carry out their transactions when it become operational.

The 15th International Conference of Free Zones and Export Processing Zones and the 8th General Assembly Meeting was held between October 8 and 11, 1995 in Rio de Janeiro, Brazil by the World Export Processing Zones Association (WEPZA) which the General Directorate of Free Zones (Undersecretariat for Foreign Trade) has been a member since 1991. During the 8th General Assembly Meeting, held with the participation of 32 countries, Turkeys representative, the Director of the General Directorate of Free Zones was elected unanimously by the members of the General Assembly for 4 years to the membership of the WEPZA Council, which is the highest body of WEPZA.

Moreover, it was decided that the 17th International Conference of Free Zones and Export Processing Zones and the 9th General Assembly were to be held in Istanbul, Turkey in 1997.

In addition, the General Directorate of Free Zones assists at project and technical levels in studies on the establishment of free zones in the countrys region and provides the necessary documentation for their legal arrangements.

Turkish Free Zones, as far as their legislation, infrastructure and volume of trade are concerned, provide a good example in our region. In this context, technical and project assistance have been given to the countries in the region to help to establish their free zones. A joint protocol was been signed between the Turkish and Georgian Governments on October 31, 1995 in Tbilisi to carry out technical and feasibility studies to establish the Georgian Free Zones and also to prepare the required legislation for this purpose.

As of the end of 1995 the trade volume of the five operational free zones amounted $1,400 million US in the Mersin Free Zone, $176 million US in the Antalya Free Zone, $704 million US in the Aegean Free Zone, $438 million US in the Istanbul Ataturk Airport Free Zone and $149 million US in the Trabzon Free Zone and $93 million US in the Istanbul-Leather Free Zone and reached $2,960 million US, showing an increase of 51 percent as compared to 1994.

Source: General Directorate of Free Zones

Currently, there are 951 firms in the Turkish Free Zones of which 178 are foreign and 773 are local. These zones employ approximately 6000 personnel.

When the breakdown of volume of trade by countries as of the end 1995 is evaluated, it is seen that the volume of trade realized with EU countries was 15 percent, with the other OECD countries 6 percent, with the other European countries 2 percent, with CIS countries 13 percent, with the Middle East Countries 4 percent, with the other countries 1 percent and with Turkey 50 percent.

In 1995, free zones exports to Turkey reached $545.5 million US which constitutes 21 percent of the free zones' total volume of trade. On the other hand, free zones imports from Turkey was $969 million US, representing 34 percent of the free zones' total volume of trade.

As of the end of 1995 industrial products constituted 74%, agricultural and livestock products 23% and mining products 3% of free zones' trade volume.

When the sectoral breakdown of volume of trade is studied, industrial products are seen to be made up of textiles and garment products with $884 million US, machinery industry products with $227 million US, motor vehicles with $201 million US, electric-electronic and optical products with $192 million US, chemical products with $184 million US respectively.

In general, a great variety of activities can be performed in Turkish Free Zones such as manufacturing, storing, packing, general trading, banking and insurance. Investors are free to construct their own premises, while zones also have available office spaces, workshops, or warehouses on a rental basis at attractive terms. All fields of activities open to the Turkish private sector are also open to joint-venture or foreign companies.

I- Mersin Free Zone

Adjacent to Mersin Port, the Mersin Free Zone has been established on 776.000 square meters of public estate. Commercial activities have been conducted since the beginning of 1988 and the zone is operated by MESBAS-Mersin Free Zone Operator Inc.

As of the end of 1995 the volume of trade realized by zone users reached $1,400 million US which shows an increase of 51% compared to 1994.

There are 376 licenced firms in the zone of which 72 are foreign. 219 firms are operating in the field of purchasing and selling while 29 firms are in the field of production, 49 firms storing, 50 firms leasing and others are in the field of banking, insurance and repair-maintenance.

II. Antalya Free Zone

Adjacent to Antalya Port, the Antalya Free Zone encompasses an area of 536,740 square meters of public property. A customs corridor was established between the zone and the port and thereby the connection of the zone with the port was assured. Commercial activities in the Antalya Free Zone have commenced in 1988 and ASBAS, a private firm, performs as the zone operator company.

As of the end of 1995 the volume of trade realized by zone users reached $176 million US which shows an increase of 98% as compared to the volume of trade realized in 1994.

A total of 95 firms, of which 14 are foreign, hold free zone operating licences. 42 firms are operating in the field of purchasing and selling while 13 firms are in production, 15 firms leasing, 9 firms banking and insurance, 7 firms storing and the rest are in the fields of assembling-disassembling and repair-maintenance.

III. Aegean Free Zone

Just 4 kilometers away from the Adnan Menderes International Airport and 14 kilometers away from the Izmir Port, the Aegean Free Zone covers an area of 2.2 square kilometers of public estate. The zone is basically designed for hi-tech industries and commercial activities partly commenced in 1990. The founder-operator company of the zone, ESBAS has a foreign share of 96.4%.

As of the end of 1995 the volume of trade realized by zone users reached $704 million US which shows an increase of 55 as compared to 1994.

A total of 241 firms, of which 58 are foreign, hold free zone operating licences. 166 firms are operating in the field of purchasing and selling while 44 firms are in production, 4 firms leasing and 5 firms banking-insurance and the rest in storing, assembling and repair-maintenance.

IV. Istanbul Ataturk Airport Free Zone

The Istanbul Ataturk Airport Free Zone has two sections; the first one provides 33 premises and has been in operation since 1990, while the second one, which became operational in 1991 offers 57 premises. Since there is no operating company for the zone, services are provided by the Zone Directorate through contracted firms. A total of 98 firms, of which 13 are foreign, hold free zone operating licences.

As of the end of 1995 the volume of trade realized by zone users reached $438 million US which shows a decrease of 2% as compared to 1994.

V. Trabzon Free Zone

Commercial activities in the zone have been underway since June 4, 1992. The founder-operator company of the zone, TRANSBAS and has a foreign share of 94%. TRANSBAS has rented an area of 44,692 square meters in Trabzon Harbour.

As of the end of 1995 the volume of trade realized by zone users reached $149 million US which shows an increase of 237% as compared to the volume of trade realized in 1994.

Three are 30 licenced firms in the Zone of which 9 are foreign. One firm has an establisher licence, 25 firms hold purchasing and selling operating licences while the rest storing, banking, insurance operating licences and the others storing, banking, insurance operating licences.

VI. Istanbul Leather Free Zone

The zone has been established on 88,000 square meters of private estate by the Founder-Operator Company, DESBAS. Free zone applications for operating licences have been accepted since June 20, 1994 and commercial activities started in March 1995. There are 111 firms, of which 7 are foreign, that hold free zone operating licenses. As of the end of 1995 the volume of trade by zone users reached $93 million US.

Though the Istanbul Leather Free Zone was intended to specialize in leather products, other fields of activity can be carried out by zone users.

VII. Erzurum -Eastern Anatolian and Mardin Free Zones

Additionally, the establishment of the Erzurum-Eastern Anatolian and Mardin Free Zones are envisaged within the framework of the measures taken for the development of Eastern and Southeastern Anatolia. In this context decree of the Council of Ministers No. 94/6028 which determines the location and boundaries of the Erzurum-Eastern Anatolia and Mardin Free Zones, was issued in the Official Gazette No.22069 dated 2.10.1994 . These two new free zones were put into operation in November 1995.


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