In this framework, policies regarding foreign trade, competitiveness and education-technology should be implemented in coordination and conformity. Conditions for continued success So far, I have tried to explain the relative macroeconomic stability and the structural transformation process observed in the Turkish economy in the last three years. I wanted to draw your attention to the radical changes experienced throughout this process. These radical changes have created an environment in which uncertainties and resulting volatilities have been eased. In this environment, it is now possible to make forward-looking policy suggestions that will enable the improvement of social welfare and necessary measures to be taken. However, despite the significant distance covered in terms of achieving lasting macroeconomic stability, we have not yet reached desired level. In order to make current achievements permanent, the immediate sound policies and the structural transformation process should continue in an uninterrupted manner. As also stated in the 2004 European Union Progress Report on Turkey, structural reforms needed for establishing a healthy macroeconomic environment in the coming period can be categorized under a number of headings. The first one is the necessity of assuring ongoing support to the achieved stability in the banking sector with the help of reforms that will strengthen the sector. Despite the important steps taken on the way to remove problems in the banking systems following the 2001 crisis, there are still shortcomings in this area. In line with the achievements observed in the banking sector, studies for an effective risk management scheme have started.

Studies aimed at removing these unfavorable conditions and attracting more direct investment have gained momentum in Turkey since 2000, followed by the enactment of a new Direct Foreign Investment Law. In this framework, the conditions for establishing companies were eased and the  16  BIS Review 36/2005  establishment process was shortened to 24 hours, while the number of official authorities to be referred to for the establishment procedures was reduced to 2 from 19 and the number of official documents to 8 from 56. Another positive development regarding foreign investments was the meeting of the Investment Advisory Council for Turkey in March 2004. This meeting gave foreign directors the chance to directly convey their evaluations about Turkey to top-level authorities. Meanwhile, Turkey had the opportunity to show her enthusiasm for foreign investments. However, despite all these favorable developments, no improvement was noted pertaining to problems regarding sectoral licenses, land acquisition and site development, taxes and incentives regulation, customs and standards, and intellectual property rights. At this point, I should underline the fact that investment problems encountered by Turkish entrepreneurs and foreign entrepreneurs in Turkey do not differ that much. “Complexity of the administrative and bureaucratic process” stands as one of the most important barriers to both domestic and foreign capital investments. To ensure long-term development in Turkey, the investment environment needs to be improved. This, in turn, depends on an efficient legal system as well as sustainable macroeconomic balances and administrative stability in terms of basic policies.