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Challenges to doing business in Turkey

Bribery and Corruption

Anyone doing business in Turkey is likely to encounter or hear of corruption in one form or another. Historically, practices such as facilitation payments, bribes and giving and receiving expensive gifts in order to develop relationships were often regarded as a normal part of doing business. This is still the case in some areas, although the level of corruption varies according to sector, type of business and region. However, the general perception is that the situation is improving.

UK companies operating abroad must comply with the UK Bribery Act - see: www.gov.uk/government/publications/bribery-act-2010-guidance

In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national nor resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.

The OECD (Organisation for Economic Co-operation & Development) has assessed Turkey to have made significant progress since 2007 in its efforts to combat bribery in international business deals by fully implementing all but one of the recommendations of the OECD’s Working Group on Bribery. However, the Turkish media has reported that a significant number of Turks believe bribery and fraud to be common in Turkey.

Information on key security and political risks which UK businesses may face can be found on the gov.uk Overseas Business Risk page: www.gov.uk/government/collections/overseas-business-risk

Scams and how to avoid them

Ensure that you carry out basic due diligence checks before issuing a letter of invitation.

Too good to be true?

If you receive an apparently very attractive order from Turkey (or indeed, anywhere else), ask yourself: is this too good to be true? If your product is a low-tech manufactured component or other item easily made or provided overseas, ask yourself why someone in Turkey would want to import items which could probably be made locally for a fraction of the price. If you are not entirely sure, speak to your local International Trade Adviser or contact the relevant Embassy or Consulate-General, who will often be aware of current scams.

Whatever you do, don't get on the plane without carrying out appropriate due diligence checks.

 

Terrorism

There is a threat from terrorism in Turkey and a number of terrorist groups remain active in the country. The main terrorist group operating in Turkey is the separatist Kurdistan Workers Party (PKK). The PKK have been known to carry out attacks in the south east of the country including the provinces of Hakkari, Sirnak, Siirt and Tunceli. Other areas that can be affected are Van, Bitlis, Bingol, Elazig, Mus, Batman, Erzincan, Diyarbakir, Mardin and Agri.

Some PKK attacks have known to be focussed on government and civilian targets, including military targets in major cities Istanbul, Ankara and Adana, Izmir, Mersin and tourist resorts on the Mediterranean and Aegean coasts (these have included Kusadasi, Cesme, Marmaris and Antalya, Manavgat).

The FCO also provide up-to-date travel advice. You should consult this before you travel. Please visit: www.gov.uk/foreign-travel-advice/turkey

Protective Security Advice
The Centre for the Protection of National Infrastructure also provides protective security advice to businesses

Crime levels in Turkey are generally quite low. The main issues are:

  • Street robbery and pick-pocketing are common.

  • Burglaries

  • Demonstrations can occur regularly in major cities

 

Intellectual Property

IP rights are territorial, that is they only give protection in the countries where they are granted or registered. If you are thinking about trading internationally, then you should consider registering your IP rights in your export markets.

 

Organised Crime

The main organised crime threat in Turkey relates to the trade in narcotics. Turkey remains a key transit country for heroin destined for Western Europe from Afghanistan. However, Turkish law enforcement continues to make significant efforts to tackle this issue. The United Nations Office of Drugs and Crime (UNODC) World Drug Report 2010 noted that Turkey seized 15.4 metric tonnes in 2008 which represents more seizures than the whole of the European Union combined in that year.

With the growth of the Turkish economy, Turkey may also find itself becoming more attractive as a destination country for Organised Immigration Crime.

 

Contracts

Turkish importers tend to use standard form contracts in their transactions. Foreign contracts are seldom accepted for fear of being trapped by unfamiliar contract stipulations.

Adding special provisions to the contract form is normally acceptable.

You can expect to see the following key terms and conditions in a Turkish import contract: Terms of price and shipment Turkish import businesses often conduct transactions at FOB prices in consideration for using Turkish shipping companies.

C&F and CIF terms are accepted only if the freight is proved to be cost-effective.
 

Insurance

Turkish importers generally have "open insurance" for their import cargoes – i.e. importing companies submit notifications of import cargo shipments and other relevant documents which are then acknowledged by the insurance company as insurance orders, and against which the insurance premium will be settled with the insured. Terms of payment: this is normally by letter of credit (L/C).

Inspection

Certificates of quality, quantity or weight – issued by manufacturers or public assessors – are normally required as part of the process of setting up a letter of credit. However, if the goods are discovered not to be in conformity with the certificates after re-inspection by Turkish inspection authorities, the buyer will either return the goods to the seller or lodge claims against the seller for compensation on losses on the strength of inspection at the port of destination.

In the case of equipment imports, Turkish companies often insert a clause in the contract withholding a portion of the payment – normally 5 to 10% of the total contract value – which will be paid only when the equipment is installed and commissioned.

This retention sum tends to become a permanent rebate, so beware of allowing a figure too high.

Dispute resolution

In cases of dispute the formal contract must have a provision that a solution must be sought through friendly consultation. If this does not work, arbitration is then adopted to settle the dispute. Arbitration is not widely used in Turkey. Litigation is only used as a last resort.

 

Source - UKTI


 

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