WORLD TRADE
ORGANIZATIONWT/TPR/M/44/Add.1
14 December 1998
(98-5032)
Trade Policy Review Body
12-13 October 1998
TRADE POLICY REVIEW
TURKEY
Minutes of Meeting
Addendum
Answers to Questions
The following communication was received on 13 November 1998 from the delegation of Turkey
responding to advance written questions submitted to, and questions raised during, the Trade Policy
Review Body for the review of Turkey.
__________
ADDITIONAL REPLIES TO QUESTIONS
I. ECONOMIC BACKGROUND
Macroeconomic Performance
A table on balance of payments of Turkey and a table on invisible items are attached to provide
detailed information (Annex 1 and 2).
II. TRADE AND INVESTMENT REGIME
The Coverage of the Customs Union with the EU
The Association (Ankara) Agreement of 1963 foresees establishment of a Customs Union
between Turkey and the European Communities which covers all sectors of the economy.
By Decision No. 1/95 of the Association Council,  however, Parties have agreed to postpone the
free movement of agricultural products until Turkey's adoption of the Common Agricultural Policy of the
European Community.WT/TPR/M/44/Add.1
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Nevertheless, during the first years of the transition period, Parties agreed to apply a preferential
regime towards each other in accordance with the Article 26 of the  Decision No. 1/95.  This preferential
arrangement covers almost 90 % of the agricultural trade between the Parties.
The trade of European Coal and Steel Commun ity (ECSC) products between the EC and Turkey
is regulated by a Free Trade Agreement.  It is expected that with the abolishment of the ECSC Treaty
in 2001, the ECSC products which have a 4% share in total  trade volume in 1997 would be covered bythe Customs Union.
Trade statistics for 1997 concerning Turkey-EC trade are as follows:
(US$ million )
Agriculture 2,090
- duty free (approximately) 1,100
- others (mostly preferential) 990
Mining 305
Industrial goods 34,722
- ECSC products 1,495
- Others (covered by the CU) 33,227
TOTAL 37,117
The share of duty free trade (covered by the Customs Union) in total trade:  93.3% .
The share of duty free trade (including ECSC products) in total trade:  97.3% .
Thus, it can be easily said that the customs union between Turkey and the EC meets the
requirements of Article XXIV of the GATT 1994 by  covering “substantially all trade” between the
Parties.
The Scope of preferential arrangements which are being made by Turkey in accordance with its
commitments arising from the CUD
 In parallel with its commitments arising from the Customs Union, Turkey has adopted
Community’s Common Commercial Policy and undertook to adopt EC’s preferential customs regime
applied to third countries.
 The most important part of these preferential arrangements is free trade area agreements.
 General objectives of the agreements which have been concluded between Turkey and certain
countries (Bulgaria, Czech Republic, Estonia, Hungary,  Israel, Latvia, Lithuania, Romania, and Slovakia)
currently can be enumerated as the establishment of a free trade area between the Parties after a
transitional period of five years ending at the latest on 1 January 2001 or 1 January 2002 in conformity
with the provisions of the GATT 1994, creation of favourable market access conditions for the Parties in
each other’s markets through gradual reduction of trade barriers, improvement of competitiveness,
providing fair competition conditions for exporters, and creation of joint investment possibilities.
 The agreements cover all industrial products and reciprocal concessions granted for a limited
number of agricultural and processed agricultural products.WT/TPR/M/44/Add.1
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 Upon the entry into force of the agreements, Parties abolish all customs duties and charges having
equivalent effect on industrial products, with the exception of the products classified as sensitive products
for which the above-mentioned transition periods have been set.
The agreements also include provisions on the prevention of unfair competition, payments, state
monopolies, structural adjustment and institutional arrangements.
The trade effects of the customs union with EU on third countries
Preliminary observations and the trends in the import side proved that trade creation effect of the
Customs Union is overwhelming.
The introduction of the Customs Union resulted in a substantial reduction of Turkey’s applied
tariff rates. The average MFN tariff rates fell from 26.7% in 1993 to 12.7% in 1998.  As a consequence,
trade statistics for 1996 and 1997 showed that imports  from third countries (other than the EC Members)
reached to US$20.5 billion and US$23.7 billion in 1996 and 1997 respectively.  These figures indicate
approximately US$5 billion, which corresponds to almost  25% increase in imports from third countriesby the end of the second year of the Customs Union when compared the 1995 figure of US$18.9 billion.
The application of anti-dumping duties
Pursuant to the Article 11.1 of the Anti-Dumping Agreement, an anti-dumping duty remains in
force only as long as and to the extent necessary to offset the injury caused by dumped imports.
Furthermore, along with the other rules of the Anti-Dumping Agreement, Turkey also abides by
the five year duration rule of the definitive measures. However, as the domestic legislation in force does
not include a clause concerning the five year rule, in accordance with Article 18.3.2 of the Anti-Dumping
Agreement, the beginning date of the five year duration rule for Turkey is 26 March 1995 for the duties
imposed before the date of establishment of the WTO.
Moreover,  after the lapse of one year following the date of imposition of the said duty, no request
for a review, containing sufficient evidence, has be en lodged by any of the Korean exporters of the
product subject to the anti-dumping duty in question. In accordance with Article 11.4 of the
Anti-Dumping Agreement, such a review is to be concluded normally within 12 months of the date of
initiation of the review.
In this context, it is worth noting that Turkey has observed and will observe all the procedural and
legal rights of the Republic of Korea stemming from the Anti-Dumping Agreement.
The adoption of anti-dumping legislation of the EU
No specific provision in the Customs Union Decision mentions automatic adoption of EC’s
Anti-Dumping Legislation by Turkey.
Provisions of the said Decision regarding the anti-dumping issues are as follows:
According to the Article 12 of the Decision, Tu rkey shall apply provisions and implementing
measures which are substantially similar to thos e of the Community with respect to anti-dumping
legislation.  Paragraph 2 of Article 45 further mentions that Turkey and the EC will keep
implementing their anti-dumping legislation separately towards third countries.  The said
paragraph states that the Parties will seek possibilities to coordinate their actions concerning tradeWT/TPR/M/44/Add.1
Page 4
policy measures against third countries.  Furthermore, Article 46 implies that Turkey and the EC
will maintain the application of anti-dumping measures against one another even after the
Decision enters into force. Finally, Article 44 states that the Association Council may decide to
suspend the application of trade defence instru ments between the Parties provided that Turkey
has implemented competition, state aid control and other relevant parts of the acquis
communautaire .
The analysis of the aforementioned provisions of the Customs Union Decision leads to the
conclusion that Turkey has not undertaken to automatically adopt EC’s Anti-Dumping Legislation.
FDI
Foreign direct investment regime of Turkey is mainly formulated by the Law No. 6224 of
18 January 1954 concerning the Encouragement of Foreign Capital, which is based on the principle of
"national treatment".
Almost all sectors of the economy open to private domestic investors are also open to foreign
participation. However, there are some other legislation having provisions relating to rights and
obligations of foreign investors and in some cases set some restrictions for them. These legislative
arrangements regulate specific sectors like broadcasting, aviation, maritime transportation,
fish-processing, petroleum, and mining with the aim of ensuring national security, public order and
health, professional standards.  Such sectoral restrictions are also declared in the list of country specificexception of Turkey during "Multilateral Agreement on Investments" negotiations in the OECD.
Fishing and fish-processing is one of the few sectors which requires additional obligations from
foreign enterprises. Legal source of these oblig ations are fishing Law No. 1380, by-law on Fishing
Products No. 6710 and Turkish Commercial Code No. 6762.  According to these legislation
foreign-owned enterprises in Turkey may engage in fish-processing activities, but cannot obtain a fishing
license.  Fishing vessels may not be registered in Turkey unless they are owned by Turkish nationals or
by companies of which majority of voting shares are owned by the Turkish citizens.  The rationale behind
this measure is on the grounds of prudential control and public order.
Privatization of the Energy and Telecommunications Sectors in Turkey
Energy
A comprehensive and detailed study to determine basic parameters for restructuring Turkish
electricity sector was undertaken in January 1997, by the Ministry of Energy  and Natural Resources. The
objectives of the work, mainly as set out, were to:
- establish an institutional structure and corresponding regulatory framework for the sector which
would be consistent with the goal of privatization of the industry which would promote the
following objectives:  competition where this is likely to stimulate efficiency, attraction of foreign
and local private capital both for the privatizat ion of existing assets and to new investments,
efficient and reliable electricity supply at the least cost;
- specify the main characteristics of the new ente rprises to be formed using the assets of the
relevant public sector entities Turkish Electricity Generation and Transmission Company (TEA Ş)
and Turkish Electricity Distribution Company (TEDA Ş);
- specify corresponding commercial arrangements amongst the new entities;WT/TPR/M/44/Add.1
Page 5
- specify the main characteristics of and prepare key operational guidelines for the new regulatory
institutions;
- establish the detailed guidelines for economic, technical and customers services regulation;  and
- prepare a privatization strategy and action plan to implement the recommended institutional and
regulatory changes and to transfer ownership to the private sector.
The project is expected to be completed not later than 1999.Regarding the investment opportunities the participation of foreign and local private capital to
invest in the energy sector has been highly encouraged by the Government.
The total investment requirement for construction of the generating plants until year 2010 is
between US$45 and US$50 billion.  This figure will reach US$100 billion in 2020.
Looking at the projections for power plant inve stments, 340 units with the total capacity around
88,000 MW should be installed by the year 2020. These units will be tendered mostly by using BOT/BO
models and to a lesser extent by international lump sum turn key bidding.
Telecommunications
Currently, the main legislation governing the Turkish telecommunications sector is the original
Telegraph and Telephony Law No. 406. Although this law grants monopoly power to Turk Telecom
(TTAŞ) to provide all kinds of telecommunications services in Turkey, it also enables the Ministry of
Transportation to give operating permits and licenses for the value added telecommunications servicesupon TTA Ş’s proposal.
Depending on the Law mentioned above and the Council of Ministers’ approval of
6 August 1998, 39% of TTA Ş shares will be privatized through a combined strategy of block sale and
public offering. Accordingly, up to 20% of the shares will be sold to a strategic core investor consortia
which must include foreign international fixed line telecom operator(s) with majority share. Theremaining portion will be sold through domestic and international public offering, which will be held
subsequent to the block sale. As dictated by law, at least 5% of the total shares will be sold to TTA Ş’s and
General Directorate of Post’s employees and to small local investors. If domestic demand exceeds 5%,
then the extra stake will be allocated from the shares to be sold internationally.
The studies relating to the sale process has already been started. According to the proposed
timetable, the strategic sale is expected to be completed by the end of the first quarter 1999, which will be
followed by the public offering.
The interpretation of the current legislation will be a monopoly power for TTA Ş for the basic
telephony services but necessarily a fully liberalized market for the value added telecommunications
services, as the Ministry of Transportation requires TTA Ş’s proposal to issue a license. In this respect, the
Ministry of Transportation has already granted two GSM 900 Licenses to two private companies-Turkcell
and Telsim-and planning to issue two other GSM 1800 mobile licenses services shortly, one for TTA Ş
(which will be privatized shortly and will have a foreign partner) and one for a private company which
will also have foreign partnership due to the nature of the auctioned service.
During the first phase of TTA Ş privatization process, a draft amending law has been prepared,
consisting specific amendments for developing and implementing a successful and efficient regulatoryWT/TPR/M/44/Add.1
Page 6
policy for the Turkish telecommunication sector. In addition to the basic changes, this draft law also
outlines a timetable for the liberalization of the sector.
Once this draft amending law is enacted, the monopolistic structure of the sector will change.
With the recommendations of the advisory consortium, the exclusivity period on the basic telephony
services is planned to be terminated by 31 December 2003 and the full liberalization for the value added
telecommunications services will begin on 1 January 2000.  This will provide TTAS with sufficientpreparation time for the upcoming competition and enhance its value before the privatization.
III. SPECIFIC TRADE MEASURES
Customs Procedures
In accordance with customs Circular No. 1998/5, imports of textile products (goods of
chapters 50-63) can be carried out at specialized customs offices. These customs offices are Halkal ı
Textile, Bursa Textile, Mersin Import and İzmir Import. The goods, which are not covered by this
Circular, and that can be imported from any customs offices, are:
- cotton, cotton yarn and wool;
- wool yarn, natural fibre, artificial synthetic fibres and yarn that are imported to be used as raw
material;
- goods imported temporarily or under inward-processing regime according to the Article 118 of
Turkish Customs Code;  and
- goods imported temporarily according to the article 119 of Turkish Customs Code.
Importation of commercial samples of limited value and quantity, arriving by plane can be carried
out by that customs office (airport).
The goods carried under the cover of TIR Carnet can be examined and cleared on the vehicle, if
that is physically possible without placing them into a warehouse.
The importation of whisky
In accordance with the regulation on alcoholic beverages, any importer is allowed to import
whisky into Turkey. Therefore TEKEL(Turkish Monopolies)  is not the sole importer.
The objective of labelling requirement to provide information in Turkish in importation of whisky
is to prevent the smuggling and to protect the consumer. In accordance with the Codex on DistilledAlcoholic Beverages, the age of  the whisky is required to be written on label of imported or locally
produced whisky without discrimination.
Government Procurement
Information about construction works that may be  carried out through force account commissions
(entrustment)
As it is described in Article 81 (a) of the Government Procurement Law (GPL, Law No. 2886),
certain construction works up to TL 16 billion (equivalent to US$53,731 as of February 1998) (This valueWT/TPR/M/44/Add.1
Page 7
is changed each year by the budget law) and those works explained in article 81 of the GPL may be
procured by the concerned administrations and carried out through force account commissions to be
composed of the officials of the administration. In such cases, to award a contract, closed and sealed
envelope tendering (open tendering) procedure should be used.
Force account is not a procurement procedure. It is a procurement mode.
Some procuring entities (such as General Directorate of Highways, General Directorate of State
Hydraulic Works, General Directorate of Village Service) may possess sufficient work force, machinery,
material, equipment and vehicles for construction works and transportation. In order to reduce costs,
entities allow contractor to use entities work forc e, machinery, material, equipment, etc. Under the
inspection and responsibility of  force account commissions, the contractor complete the works.
TEAS's procurement procedures
The procurements of TEA Ş which are realized by international bidding are being financed by
TEAŞ’s own sources and foreign credits such as the World Bank, European In vestment Bank supplier
credits etc.
TEAŞ international bidding which are financed from TEA Ş’s own sources is opened to bidders
from all countries. However, in case of the projects which are financed by the World Bank, such as the
project for Renewal and Extension of TEA Ş National Load Dispatch System, the project is opened to all
suppliers from eligible source countries as defined in Guidelines, Procurement under IBRD Loans andIDA credits January 1995, August 1996 and September 1997.
TEAŞ grants projects to the bidders taking into account technical specifications, and  price
offered as well as past experience.
Meanwhile, specific qualification criteria set forth for power transformer manufacturers refer only
to past export performance directed to the EU and EFTA countries.  Since Turkey aims to be connected toUCPTE system, it is also necessary to have a power grid in technical conformity and standards with
European countries.
IV. SECTORAL ISSUES
Requirements for the foreigners to perform in Turkey
Foreigners should receive work permit from the Undersecretariat of Treasury, General
Directorate of Foreign Investment in order to perform in Turkey. Work permit shall be issued to foreign
citizens applying as administrative and technical personnel provided that they have sufficient technical
and administrative experience.
The enterprises wishing to employ foreign citizens should apply to the Undersecretariat of
Treasury, with the following documents:
Foreign Personnel Application form.
Personnel's:- copy of passport certified by notary public;
- if the person in question is a foreign partner representative, confirming document;WT/TPR/M/44/Add.1
Page 8
- copy of Marriage Certificate if the foreign personnel is married to a Turkish citizen;
- copy of Diploma(s);  and
- other information and documents.
Enterprise's:
- copy of the Establishment License received from the Ministry of National Education for
private schools;
- copy of the operation or investment certificate, if any, received from the Ministry of
Tourism for administrative personnel to be employed by tourism enterprises;
- certificate to be obtained from the relate d legal entity stating that the enterprises
(including consortiums), have undertaken the job which was put international bidding by
public sector enterprises;  and
- previous year’s balance sheet and profit/loss table certified by the Tax Office and the
company’s export incentive and investment incentive certificate, if any.
Engineering and Architectural Services
With respect to engineering and architectural services, foreign engineers and architects who want
to perform more than one month in Turkey must apply to the related Union of Chambers in order to
become a temporary member. The only  criterion that the Ministry of Public Works and the related Union
of Chambers take into consideration is the recognition of the education of foreign engineers and architectsby Turkey.  There is no local training or practice requirement, local examination requirement and prior
residency requirement.
Tourism
Detailed information is provided in Annex 3 regarding the investments in tourism sector in
Turkey.
There are no restrictions on foreign participation in the tourism sector.WT/TPR/M/44/Add.1
Page 9
ANNEX I
Balance of payments
(US$ million)
1997
Jan.-
June1998*
Jan.1998*
Feb.1998*
Mar.1998*
Apr.1998*
May1998*
June1998*
Jan.-
June
A. Current account
Merchandise exports f.o.b. 15,213 2,480 2,419 2,841 2,279 2,743 2,394 15,156
Exports f.o.b. in trade returns 12,415 2,112 1,991 2,357 1,883 2,338 2,036 12,717
Shuttle trade 2,552 322 375 423 367 367 323 2,177
Transit Trade 246 46 53 61 29 38 35 262
Merchandise imports f.o.b. -21,965 -2,996 -3,784 -4,193 -3,519 -4,111 -4,073 -22,676
Imports c.i.f. in trade returns -22,266 -3,081 -3,796 -4,311 -3,583 -4,170 -4,145 -23,086
Imports of non-monetary gold -811 -58 -165 -83 -125 -159 -147 -737
Transit Trade -224 -42 -50 -58 -26 -32 -30 -238
Freight and insurance on imports 1,336 185 227 259 215 250 249 1,385
Trade balance -6,752 -516 -1,365 -1,352 -1,240 -1,368 -1,679 -7,520
Other goods, services, and income:  credit 8,706 1,394 1,417 1,611 1,648 2,124 2,489 10,683
Travel 2,616 261 229 318 420 718 787 2,733
Interest 870 135 187 143 169 161 265 1,060
Other 5,220 998 1,001 1,150 1,059 1,245 1,437 6,890
Other goods, services, and income:  debit -6,230 -920 -1,211 -1236 -1,213 -1,225 -1,352 -7,157
Travel -923 -130 -173 -167 -207 -137 -211 -1,025
Interest -2,027 -252 -387 -380 -379 -401 -458 -2,257
Other -3,280 -538 -651 -689 -627 -687 -683 -3,875
Total:  goods, services, and income -4,276 -42 -1,159 -977 -805 -469 -542 -3,994
Private unrequited transfers:  credit 1,854 360 304 438 360 449 504 2,415
Workers' remittances 1,645 348 285 410 342 424 481 2,290
Other 209 12 19 28 18 25 23 125
Official unrequited transfers 105 7 22 6 10 9 12 66
W o r k e r s '  r e m i t t a n c e s 1 7462333 2 1
O t h e r 8 83 1 64769 4 5
Current account balance -2,317 325 -833 -533 -435 -11 -26 -1,513
B. Capital, excluding reserves 4,905 973 1,155 1,622 2.019 1,771 257 7,797
D i r e c t  i n v e s t m e n t  ( n e t ) 2 5 6 56 01 81 31 3 1 1 1 2 2 0
Portfolio investment (net) 1,152 89 839 18 505 347 -378 1,420
Other long-term capital movements 1,614 5 35 366 1,378 474 406 2,664
Drawings 3,850 623 597 978 1,871 864 1,065 5,998
Repayments -2,678 -700 -667 -672 -535 -427 -693 -3,694
Dresdner (net) 442 82 105 60 42 37 34 360
Short-term capital movements 1,883 874 221 1,220 123 937 118 3,493
Assets (net) 361 953 -129 425 177 -275 -725 426
Credits extended -154 -15 -11 -31 13 24 -115 -135
DMB's Fx. holdings 836 1,009 -75 505 207 -254 -573 819
Other assets -321 -41 -43 -49 -43 -45 -37 -258
Liabilities (net) 1,522 -79 350 795 -54 1,212 843 3,067
Credits received 1,739 216 68 293 -86 732 728 1,951
Deposits -217 -295 282 502 32 480 115 1,116
C. Net errors and omissions -1,942 100 -486 914 1,416 -706 647 1,885
Total:  overall balance 646 1,398 -164 2,003 3,000 1,054 878 8,169
F. Total change in reserves -646 -1,398 164 -2,003 -3,000 -1,054 -878 -8,169
IMF 0 -27 -13 0 -27 -13 0 -80
Official reserves -646 -1,371 177 -2,003 -2,973 -1,041 -878 -8,089
* Provisional.WT/TPR/M/44/Add.1
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ANNEX II
Invisible items
(US$ million)
1997
Jan.-
June1998*
Jan.1998*
Feb.1998*
Mar.1998*
Apr.1998*
May1998*
June1998*
Jan.-
June
Credit 10,678 1,767 1,748 2,062 2,026 2,588 3,016 13,207
1. Services Income 8,706 1,394 1,417 1,611 1,648 2,124 2,489 10,683
Shipment 803 136 136 174 136 146 161 889
Freight & insurance on export & transit trade 803 136 136 174 136 146 161 889
F r e i g h t  o n  p e t r o l e u m  i m p o r t s 00000000
O t h e r  t r a n s p o r t a t i o n 1 8 12 32 33 03 18 46 8 2 5 9
Travel 2,616 261 229 318 420 718 787 2,733
Investment income 1,906 316 388 353 389 403 490 2,339
Direct investment 1,036 181 201 210 220 242 225 1,279
Interest 870 135 187 143 169 161 265 1,060
Other off. and priv. goods & services 3,200 658 641 736 670 773 983 4,463
2. Unrequited transfers 1,972 373 331 451 378 464 527 2,524
Private 1,854 360 304 438 360 449 504 2,415
Worker's remittances 1,645 348 285 410 342 424 481 2,290
I m p o r t s  w i t h  w a i v e r 2 0 91 21 92 81 82 52 3 1 2 5
O f f i c i a l 1 1 81 32 71 31 81 52 3 1 0 9
G r a n t s 11211027
N A T O  –  I n f r a s t r u c t u r e 5 2220321 1 0
O t h e r  ( i n c .  w o r k e r s  r e m . ) 6 51 02 31 21 41 32 09 2
Debit -6,243 -926 -1,216 -1,243 -1,221 -1,231 -1,363 -7,200
1. Services -6,230 -920 -1,211 -1,236 -1,213 -1,225 -1,352 -7,157
Shipment -676 -89 -112 -128 -108 -132 -132 -701
Other transportation -190 -39 -38 -29 -48 -45 -61 -260
Travel -923 -130 -173 -167 -207 -137 -211 -1,025
Investment -2,253 -298 -441 -477 -432 -465 -505 -2,618
Profit transfers -226 -46 -54 -97 -53 -64 -47 -361
Interest -2,027 -252 -387 -380 -379 -401 -458 -2,257
Other Off. and Priv. Goods & Services -2,188 -364 -447 -435 -418 -446 -443 -2,553
2. Unrequited transfers -13 -6 -5 -7 -8 -6 -11 -43
O f f i c i a l - 1 3- 6- 5- 7- 8- 6 - 1 1 - 4 3
* Provisional.WT/TPR/M/44/Add.1
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ANNEX III
You want to make an investment
You have decided to put your savings into use in the form of an investment.
You will make the most profitable use of your funds and select the area of your investment,
considering also the national economy and position of Turkey in the world.
Can the tourism sector be a good investment area for you?
What is tourism?
Tourism is the whole of relations and events involving the travel and accommodation of people
outside their permanent work places and/or domiciles.
Tourism is the broadest economic and social activity of our age in the international arena and is a
sector that helps the economic and social development efforts of developing countries in many ways.
Tourism is a driving force of economic growth, is an important element of consumption, creates
and maintains employment, is an effective instrument of protecting and developing the natural, culturaland social environment, is a sector affecting the external balance-of-payments, constitutes an in situ
exportation of services, and is an important factor in eliminating infrastructural deficiencies.
In view of these facts, a special importance is a ttached to the development of the tourism sector in
development plans.
Basic guidelines and policies of tourism which are also reflected in development plans:
- Incentive policies will be developed to make winter, hunting, water sports, festival, health
youth, congress, thermal springs, golf and senior-age tourism more attractive.
- It will be ensured that the knowledge and skills of persons who directly or indirectly
serve the tourism sector are improved through training and that the number of such
persons is brought to a sufficient level.
- Importance will be attached to raising the quality and quantity of tourism infrastructure
and superstructure.
- Assets that are part of the cultural and natural heritage of humanity will be protected
effectively and tourism activities and investments will be planned and carried out on the
basis of environmental and cultural landscaping principles.
- Charter transport will be developed, and Turkish travel agencies that are also tour
operators will be encouraged.
- Measures will be taken to increase capacity utilization rates in existing facilities to
prolong the activity season and to raise quality.WT/TPR/M/44/Add.1
Page 12
- Priority will be given to the protection of natural beauties and cultural treasures, certain
areas will be placed under protection, and incentives will be made available to open them
up for tourism.
- It will be ensured that people go on holiday under the most appropriate and healthiest
conditions.
The incentives provided for the development of the to urism sector in line with these guidelines and
objectives:
Those provided under the Law 2634 for the encouragement of tourism:
- Allocation of public land to investors for tourism investments;
- Availability of funds from the Fund for the Development of Tourism;
- Availability of tourism loans extended by Turkish Development Bank, Inc.;
- Permission to employ foreign personnel and artists;
- Discounts on water, electricity and gas prices;  and- Priority in allocations of telephone, fax and telex lines.
Those provided under incentive certificates (the scope and conditions of incentives are published every
year, in Decrees issued on "State Subsidies for Investors"):
- Customs exemption;
- Investment allowance;- Incentive loans;
- Tax, Duty and Fee exceptions;
- Finance Fund;
- Building Construction Fee exception;  and
- Incentive premium, etc.
Other incentives:
- Corporation Tax exception (under the Corporation Tax Law);  and
- Real Estate Tax exception (temporary) (under the Real Estate Tax Law).
PART I
You have decided to make your investment in tourism
First, you should get to know certain concepts which occur in Law 2634 for the Encouragement
of Tourism and in the related Regulations and which you will often come across.
Tourism region
A region, the boundaries of which are determined and announced by the Council of Ministers
upon the proposal of the Ministry of Tourism.WT/TPR/M/44/Add.1
Page 13
Tourism area
An area within a tourism region which requires being developed on a priority basis, where natural
and socio-cultural assets are concentrated, and the boundaries and exact location of which are determined
and announced by the Council of Ministers upon the proposal of the Ministry of Tourism.
Tourism center
A place of importance for tourism, within or outside a tourism region, the boundaries and exact
location of which are determined and announced by the Council of Ministers upon the proposal of the
Ministry of Tourism.
Tourism investment certificate
A certificate issued by the Ministry of Tourism to a person or an organization investing in the
tourism sector for a specific investment period.
Tourism establishment certificate
A certificate issued by the Ministry of Touris m to an establishment operating in the tourism
sector.
Incentive certificate
A certificate issued by the Treasury Undersecretariat to a person or organization investing in a
certain sector, which indicates the required ratios of equity and credit, the loans from which benefit may
be derived and the rates of such loans, so that the investment may benefit from incentives.
Land use plan
A document in the form of a drawing which has legal effect and which indicates the land use
decisions related to a certain plot of land and the conditions to be complied with in building upon it.  It is
named:  (i) a Landscaping Plan when scaled 1/25,000 ;  (ii) a Mater Land Use Plan when scaled 1/5,000;
and (iii) an Implementation Plan when scaled 1/1,000.
Implementation plans are drawn up always in accordance with the corresponding master plans
which have the next smallest scale.  An implementation plan that is drawn up for areas which are located
outside the boundaries of the existing land use plan and which are not integrated with it and that
introduces solutions within its own scope for social (1 ) and technical (2) infrastructure is called a Local
Land Use Plan.
Land Use Plans are drawn up by persons (3) authorized to draw up plans.
Land Use Plans are drawn on approved current maps (4) which in turn are prepared by authorized
persons (5).
Plans are prepared in accordance with cert ain technical rules and specifications (6).WT/TPR/M/44/Add.1
Page 14
(1) Social infrastructure is a general name given to education, health, religious, cultural and
administrative buildings necessary to be constructed in order to create a healthy environment and
also to parks, children's playgrounds and green areas.
(2) Technical infrastructure is a general name given to facilities constructed for the purpose of
providing electricity, gas, drinking and using water, sewerage transport, telecommunication and
treatment and also to open and covered carparks.
(3) Authors holding a certificate pursuant to th e "Regulation on the Proficiency of Authors and
Author Organizations Undertaking to Prepare Land Use Plans" which was published in the
Official Gazette 18916 of 2 November 1985.
(4) Maps prepared in accordance with the "Technical Regulation concerning the Base Maps with a
Scale of 1/25,000 and Greater" which was published in the Official Gazette 14854 of
10 April 1974 and approved in accordance with Article 7 of the Land Use Law 3194.
(5) Cartographers holding a certificate pursuant to  the "Regulation on the Proficiency of Authors
and Author Organizations Undertaking the Work of Purchasing Current Maps and Land
Arrangements on the Ground" which was published in the Official Gazette 18916 of
2 November 1985.
(6) On this subject, you may refer to the "Regulation on the Preparation and Amendment of Land
Use Plans".
Have you chosen the type of investment you will make?
In order to make a profitable tourism investment for foreign tourism in particular and to be
eligible for incentives provided to the tourism sector, the investment you intend to make must be certified
by the Ministry of Tourism.  The following are the types of investment for which Tourism Investment
Certificates and Tourism Establishment Certificates may be issued under the "Regulation on the Required
Qualities of Tourism Investments and Establishments", provided that the requirements of the saidregulation are fulfilled.
a. Primary accommodation facilities
1. Hotels
• one-star
• two-star
• three-star
• four-star
• five-star
2. Motels
• second-class
• first-classWT/TPR/M/44/Add.1
Page 15
3. Holiday villages
• second-class
• first-class
4. Guest-houses5. Camping sites
b. Auxiliary accommodation facilities
1. Apart hotels
2. Second homes3. Mountain homes, sport and hunting facilities
4. Hostels
5. Floating facilities
6. Motor caravans
7. Rural tourism facilities
c. Dining and entertainment facilities
1. Restaurant
• third-class
• second-class
• first-class
• luxury
2. Cafeterias3. Places of entertainment
• Within accommodation facilities
• Independent
d. Auxiliary service facilities
1. Health and thermal springs tourism facilities
2. Pools
3. Beach facilities
4. Congress and exhibition centers
5. Theme parks
6. Entertainment centers
7. Golf facilities8. Day facilities
9. Staging posts
10. Terminal services facilities
e. Tourism complexesWT/TPR/M/44/Add.1
Page 16
f. Personnel training facilities
g. Yacht tourism facilities
(Within the framework of Yacht Tourism Regulations)
• Yacht Investments and Operation
• Marina Investments and Operation
h. Travel agencies
(Within the framework of the Law for Travel Ag encies and Union of Travel Agencies, No. 1618)
You have decided on the type of your investment
How will you choose a location for your investment?
The most important aspect of any investment, particularly a tourism investment, is location.  A
choice of location both on a regional scale and on a localized scale has a direct impact on the profitability
of the investment.  You are faced with four alternatives in this respect:
A. You will carry out the investment on a plot of land you currently own.
B. You will buy land on which to carry out the investment.
C. You will apply for allocation of public land located within a tourism area or center.D. You will apply for allocation of treasury or forest land located outside tourism areas and centers.
A. You want to use your own land
First, you should find out the status of your land as shown on the land-use plan.
This information may be obtained from:
• Municipalities, if your land is located within municipal and adjacent areas,
• Provincial Public Works and Settlement Director ates, if it is located outside municipal and
adjacent areas, or
• The Directorate-General of Investments, the Ministry of Tourism, if an application is filed
together with a map scaled 1/25,000 on which the exact location of your land is indicated.
No tourism facilities may be constructed on land not allocated for tourism uses in land use plans of
whatever scale.
If your land is not located within the boundaries of any plan, a land use plan must be made first in
order for the tourism investment to proceed.
For this purpose:
• It will be checked whether there is a current map scaled 1/1,000 for the land (with the
concerned Municipality if the land is located within municipal and adjacent areas;  if not,
with the concerned Provincial Public Works and Settlement Directorate or with the
Department of Maps, the Bank of Provinces).WT/TPR/M/44/Add.1
Page 17
• If there is no such map, a current map will be made and approved (by the concerned
Municipality if the land is located within municipal and adjacent areas and by the Provincial
Public Works and Settlement Directorate, if not).
• If the land is located on the coast, a Shore Line Determination will be made (pursuant to the
provisions of the Regulation concerning the Implementation of the Coastal Law).
• A land use plan for the land will be made and approved.
It is recommended that an application should be made to the Directorate-General of Investments,
the Ministry of Tourism, to seek an opinion on these procedures.
If your land is located in an area allocated for tourism under approved plans, or if this is the case
as a result of a plan you have prepared and had approved:
Your land is ready for a tourism investment.
You may find out the surface area, the permitted construction area, and the number of storeys or
the height allowed, of your land (your land use parcel) from the land use plan and then proceed with
design work.
It is recommended that an application should be made to the Directorate-General of
establishments, the Ministry of Tourism, to seek an opinion on this procedure.
The following procedures are described in PART TWO.
B. Private land may also be purchased.
Purchase of land specifically for an investment is an issue that should be carefully considered by
the investor, because plots considered for purchase must be not only suitable for a tourism investment in
terms of their physical characteristics, but also be allocated for tourism under land use plans.  Location,size, access, distance to airports, particularly with regard to international tourism, and existing and
required infrastructure, are all factors that should be considered in selecting a plot for purchase.
You should consult the relevant departments of the Ministry of Tourism.  Please provide valid
documents (title-deeds, size and boundary plans, maps, etc.) which describe the location of the plot,
and seek an opinion on all these issues at the stage of selection.
The stages described in Section A will also apply to you after the land is purchased.
The following procedures are described in PART TWO.
C. You will apply for allocation of public land located within a tourism area or center.
Of such public lands are placed at the disposal of the Ministry of Tourism by concerned
governmental agencies (the Ministries of Finance and Forestry) and as are located in placed allocated fortourism under land use plans in tourism areas and centers, those which are deemed appropriate for
allocation to investors are from time to time announced  to tourism investors by the Ministry of Tourism
through advertisements place in newspapers (the Official Gazette and dailies), indicating their location,
their land use status, their infrastructural condition, their maps and characteristics and the deadline for
application for allocation.WT/TPR/M/44/Add.1
Page 18
You may apply for the allocation of such a plot of land which is appropriate to the size and nature
of the investment you consider, provided that you meet the conditions stipulated in the " Regulation for
the Allocation of Public Land for Tourism Investments " and attach the required documents.  A file
containing the information and documents indicated in the specification which you may obtain form the
Directorate-General of Investments, the Ministry of Tourism within an application period of about 1 to
1.5 months following the date of the newspaper advertisement shall be submitted to the Ministry ofTourism at the end of the specified period.  Applications shall be finalized by the Land Allocation
Committee within 2 months.  Allocation decisions b ecome final upon the approval of the Minister of
Tourism.
D. You will apply for allocation of treasury-held or forest land located outside tourism areas
and centers.
If the plot of land for which you apply is owned by the treasury:
You must submit to the Ministry of Tourism an application file which contains:
• A certified copy (by the Provincial Public Works and Settlement Directorate) of a map
scaled 1/25,000 showing the location of the land applied for;
• A report indicating the type, class, capacity and characteristics of the facility you intend to
construct on said land and putting forth infrastructural solutions and marketing and
management ideas; and
• A report giving a financial description of the person or organization applying for allocation.
The application will then be examined with regard to land use plans and plan decisions.  If it is
found to be appropriate, the investors will be notified of the allocation decision through an advertisement,as in the case of plots of land located within Tourism Areas and Centers, and the concerned plot will be
allocated, pursuant to Council of Ministers Decision 86/10497 of 18 March 1986 and the protocol signed
between the Ministry of Finance and the Ministry of Tourism.
• If the land, whether within or outside Tourism Areas and Centers, is owned by a public
organization such as a Municipality, Local Ad ministration, etc. and an authorization along
with special conditions on allocation, the Ministry of Tourism may find, on behalf of theowner, an investor by publishing announcements.
The conditions in Section C will also apply to you with regard to the preliminary authorization to
be issued to you as a result of the land allocation decision.
The investor has been given a preliminary authorizat ion for a period of 6 months which is the first
stage in carrying out the investment:
Within the preliminary authorization period:
• The investor must fulfil the requirements stated in the "Regulation for the Allocation of
Public Land for Tourism" and in the specification and receive a Tourism Investment
Certificate.WT/TPR/M/44/Add.1
Page 19
Following the receipt of the tourism investment certificate and the performance of the other
requirements, the land will be allocated to the investor definitively and the INVESTMENT PROCESS
WILL HAVE BEGUN.
The receipt of a Tourism Investment Certificate and the following procedures are described
in PART TWO.
If the land for which you are applying is forest land:
You will file your application first with the Directorate-General of Forests, the Ministry of Forestry.
The Ministry of Forestry will evaluate your application:
• In line with the "Regulation for Allocation of Forest Lands" published in the Official 
Gazette 22249 of 5 April 1995, and the protocol signed by and between the Ministry 
of Tourism and the Ministry of Forestry on 11 June 1993.
The procedures following the completion of la nd allocation procedures by the Ministry of
Forestry are described in PART TWO.
PART II
You have reached the stage of receiving a tourism investment certificate.
Facilities to be certified with Tourism Investment Certificates at the investment stage and with
Tourism Establishment Certificates at the operation stage by the Ministry of Tourism must meet certain
requirements.  After determining the type, class and capacity of your investment, you should thoroughly
examine these requirements which are detailed in the "Regulation on the Required Qualities of Tourism
Investments and Establishments" and also have them examined by the technical group that will design
your facility.  During intermediate stages of your design work, you may apply to the Department of
facilities, the Directorate-General of Establishments, the Ministry of Tourism, to seek an opinion as your
project develops.
Following the completion of architectural design, application for TOURISM INVESTMENT
CERTIFICATE should be made to the Directorate-General of Establishments of the Ministry of Tourism
together with all documents and explanator y information as stated in the regulation.
• Health and thermal facility projects to be approved by the Ministry of Health.
• In lands of dense tree cover, design and layout projects are planned according to the tree 
plane table works.
• In Tourist Areas and Centers, all layout plans of investment projects are also subject to
the approval of the Directorate-General of Investments of the Ministry of Tourism.
After your application and design project are examined, the design project will be submitted to
the Certification Committee and a TOURISM INVESTMENT CERTIFICATE  will be issued if it is
found appropriate.WT/TPR/M/44/Add.1
Page 20
During all this procedure, you may prepare the engineering (infrastructural, static-reinforced
concrete, installation, ventilation, air-conditioning, landscaping, decoration, etc.) design projects, the bills
of quantities, and the cost estimations of your project so that you can start the subsequent procedures
promptly.
AFTER THIS STAGE.
The work you will carry out at the subsequent stag e of your investment involves procedures which
require different types of preparation with different agencies.
Before proceeding with all this, you are advised to meet with the authorized officers of the
agency concerned and obtain preliminary information and to receive any forms and brochures that are
related to the preparation work to be done.
TO START CONSTRUCTION, YOU MUST OBTAIN A CONSTRUCTION PERMIT.
TO BENEFIT FROM INCENTIVES, YOU MUST OBTAIN AN INCENTIVE CERTIFICATE FROM
THE TREASURY UNDERSECRETARIAT.
YOU MAY BENEFIT FROM THE INVESTMENT LOANS OF TURKISH DEVELOPMENT BANK,
INC.
YOU MAY SEEK FOREIGN INVESTORS AS A PARTNER IN YOUR INVESTMENT.
How to obtain a construction permit?
You will obtain a construction permit by applying to the local administration (the concerned
Municipality if your investment is carried out in municipal and adjacent areas or the concerned Provincial
Public Works and Settlement Directorate, if not) that has previously approved the architectural design
project and the static-reinforced concrete, installation and electrical designs and calculations which you
have submitted to he Ministry of Tourism and which constitute a basis for your Tourism Investment
Certificate, enclosing in your application the said design project and designs.
If your investment is certified with a Tourism Investment Certificate by the Ministry of
Tourism and with an Incentive Certificate by the Treasury Undersecretariat.
YOU WILL BE EXEMPT FROM PERMIT FEES
AT THIS STAGE
If your facility is on a plot of land owned by the forest administration and allocated to you, then
you must apply to the Regional Directorate of Forestry to obtain permission to cut trees.
NOW, YOU MAY START CONSTRUCTION WORK
ATTENTION
If you do not want to face any problems in the future that would be impossible to solve, never do anything
contrary to the land use plan or to your layout plan and architectural design project.WT/TPR/M/44/Add.1
Page 21
How to obtain an incentive certificate?
If your investment is eligible for incentives under the Decrees on State Subsidies for Investment,
you will apply directly to the Treasury Undersecretariat together with the necessary information and
documents.
An Incentive Certificate will be issued for your investment project, the required qualities of
which are set out in Annual Incentives Decrees, if it is found appropriate as a result of assessments madeby the Treasury Undersecretariat.
The scope of incentives and the manner of applying for them are re-determined annually in the
Decrees on State Subsidies for Investments.  It is, therefore, advised to apply to the Treasury
Undersecretariat for detailed information before making preparations related to the Incentive Certificate.
How to benefit from the investment loans of Turkish Development Bank, Inc.?
Turkish Development Bank, Inc. extends loans to projects certified with Tourism Investment
Certificates by the Ministry of Tourism and with Investment Incentive Certificates, if the Bank finds themappropriate as a result of an assessment.
To find out the terms and conditions of these loans and the manner of applying for them, which
are re-determined every year, you should carefully examine the brochures and forms obtainable from
Turkish Development Bank, Inc.  You may also personally apply to the Bank and receive information
from its authorized officers.
In order to make a loan application, you must have obtained all the necessary certificates,
completed the engineering and architectural design projects, the bills of quantities and the cost
estimations, and have received a construction permit.
How to cooperate with foreign capital?
You may use foreign resources to establish your facility.  One of the ways of doing this is to
cooperate with foreign capital.  After having preliminary negotiations with the foreign investors and
reaching a preliminary agreement with them, you must apply to the Directorate-General of Foreign
Capital, the Treasury Undersecretariat, in order to carry out the necessary procedures and to obtain
permission.
The form and the principles of this application are set out in detail in the Framework Decree for
Foreign Investments and related communiques.
You are also advised to contact the Directorate-General of Foreign Capital, the Treasury
Undersecretariat, to obtain information before filing your application and while carrying out the
procedures involved.WT/TPR/M/44/Add.1
Page 22
PART III
You will receive a tourism establishment certificate.
Trial Operation Period
Following the completion of project of Investment Certificate, application for operation may be
made in writing together with a "Building Utili zation Permit" to the Ministry and those built in
conformity with the plans and designs may be granted a trial operation certificate by the Ministry ofTourism.
• No facility with an investment certificate may be commissioned for operation without first
obtaining a trial operation certificate.
The trial operation period is determined by the Ministry.  At the end of this period, the
Classification Committee formed by the Directorate-General of Establishments, the Ministry of Tourism,
will carry out an assessment to determine whether the facility has been operated properly, and a Tourism
Establishment Certificate will be issued if the facility is determined to have been so operated.
• Price tariffs to be applied by the establishment will be approved by the Ministry of Tourism,
and the way in which the facility is operated will be inspected.
In addition to all this information you are advised to study the following documents.
• Law 2634 for the Encouragement of Tourism
• The Regulation on the Required Qualities of Tourism Investments and Establishments
• The Regulation on the Allocation of Public Land for Tourism Investments
• The Yacht Tourism Regulation
• Law 6224 for the Encouragement of Foreign Capital,  the Framework Decree on Foreign Capital and
relevant Communiques
• The Regulation on the Right to Use Thermal Waters Located in Tourism Areas and Centers and on
the Procedures and Principles of their Operation
• The Regulation for Allocation of Forest Lands
• The annual Incentives Decree and related Communiques
• The Coastal Law and Regulations
USEFUL INFORMATION – ADDRESSES
Tourism investments with foreign capital
Foreign investors willing to invest in Turkey are guided under Law 6234 for the Encouragement
of Foreign Capital and the Framework Decree on Foreign Capital.
An enterprise that will invest in our country is expected to make a contribution to the economic
development of Turkey, to make its investment in a way that increases the tourism capacity of Turkey,
and also to have such marketing capabilities as will raise foreign tourism demand towards our country.
Under this legal framework, an investment to be  carried out with 100% foreign capital, with the
necessary permission obtained through an application to the Treasury Undersecretariat, the Prime
Ministry, is eligible for all rights, incentives  and facilities granted to the Turkish investors.WT/TPR/M/44/Add.1
Page 23
Acquisition of real estate in Turkey by foreigners
Under the current laws and regulations, and in accordance with the principle of re-ciprocity, real
persons of foreign nationality may purchase real estate within municipal boundaries, provided that it is
located outside Military Forbidden Zones and Security Zones.
As for foreign companies, they may in principle not acquire real estate in our country.  However,
an exception has been introduced for investments planned to be carried out by foreign companies inTurkey and approved and permitted by the Treasury Undersecretariat.
Thus, companies established under Law 6224 for the Encouragement of Foreign Capital may
acquire such real estate as is required for th eir investments that are permitted by the Treasury
Undersecretariat.
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