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An independent supplement distributed in The Observer on behalf of Business Focus who take sole responsibility for its content

Sunday 16th March 2014

For futher information on this report, please visit: www.businessfocus.org.uk

Banking

Energy

Infrastructure

Innovative services are driving change across the sector.

Striving for energy security and a greener future.

Investing in large-scale projects to boost capacity.

BusinessFocus 29th Floor, One Canada Square Canary Wharf, London E14 5DY United Kingdom Tel. +44 20 7712 1699 Fax +44 20 7712 1501

TURKEY and the U.K. — Steadfast Partners Written by Niki Thornton

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02 TURKEY

Taking the region by storm Playing a pioneering and strategic role between Europe and the Middle East, Turkey’s star continues to rise.

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s a key member of the G20, Turkey is not only an important geopolitical partner to the U.K, but a dynamic energy, financial, trade and tourism hub in the region. With far-reaching privatisation initiatives taking hold within various sectors, Turkey is becoming increasingly important to international investors, and in energy terms, it will be a significant power in the coming years. The country has the second-largest electricity network in Europe, serving 95 million people and operating a distribution and transmission line that exceeds one million kilometers. In 2012, Turkey had an installed capacity of 8.1% against 5.2% in consumption—an encouraging statistic that shows robustness and a sound business strategy when it comes to energy security. With gas from the Caspian Sea set to move from the Southern Caucasus to Europe via Turkey within five years, and many other energy transportation links coming to fruition, Turkey will become an increasingly crucial link for the U.K. As Minister of Energy and Natural Resources, Taner Yıldız puts it: “Our energy projects put Turkey in a highly strategic position in terms of global geopolitics.” Turkey earned the equivalent of £5.7 billion from the privatisation of the energy sector in 2012, and has earned a further £8 billion from the privatisation of the energy distribution grid, with the same amount expected in revenues from electricity generators in the longer term. “We are rich in terms of renewable energies,” the Minister says. “Our aim is to reduce our spending on natural gas by £7.2 billion per year until 2023, and replace it with domestic resources. By 2023 we want to have a third more renewables in the energy mix.” Turkey has also signed a $20 billion (£12 bn) deal with Russia to build its first nuclear plant in the southern town of Akkuyu, and a second deal with Japan that will see another built in the northern province of Sinop. As well as energy, Turkey, and particularly the vibrant city of Istanbul, is earning a strong reputation as an international financial centre. Banks, such as Odeabank ¸ A.S., have become more responsive to clients and are investing heavily in new technologies, while the sector as a whole has aligned its legislation with that of the E.U. A new capital markets law has changed the investment climate and gone a long way to increase investor confidence. Attila Köksal, CFA chairman of the Association of Capital Market Intermediary Institutions of Turkey, takes up the story. “Turkey has a very young capital market—it is not even 30 years old—and for the first 20 years, inflation was around 60%,” he says. “In the last decade, however, Turkey’s GDP has tripled, the stock market has flourished and interest rates have

The government has done amazing things in the last 13 years in terms of regulation, the economy and infrastructure. Korosh Farazad, Chairman and CEO, Farazad Investments

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Our energy projects put Turkey in a highly strategic positon in terms of global geopolitics. Taner Yıldız, Minister of Energy and Natural Resources

gone down to as low as 5%. The problem was that although foreign investors have benefitted, Turkish investors, who had typically invested in gold and foreign exchange, did not. In fact, they lost out. So the new law was brought in to strengthen the markets by creating local investment banks and changing mentalities.” The Association is playing a key role in the new economy as it supports the industry through the changes. “It is a long-term plan,” Köksal says. “Our corporate and equities markets have started growing, but these are medium-term issues. We are educating and guiding the industry and working together with the Capital Markets Board and Borsa Istanbul, our Stock Exchange, to shape the infrastructure. “There are always ups and downs, but investors know that Turkey offers solid long-term investment opportunities.” Over at the Capital Markets Board, chairman Vahdettin Ertas¸ believes Turkey now has some of the most developed financial regulations in the world. “The next step will be to enact legislation to protect investors’ rights. We have enabled investors, including those from London, to attend general assembly meetings of companies through electronic general assembly legislation. We are working on corporate governance rules and independent board member legislation, as well as protecting the rights of minor shareholders. “In emerging market economies like Turkey, the financial sector is more dependent on banking, but we are trying to change that and have long-term investments financed by long-term capital markets. There are many infrastructural projects on Turkey’s agenda, including a third international airport in Istanbul and a third bridge, which need to be financed through capital market sources because each project requires $10 billon-15 billion (£6 billon-£9 billion.)” The Banking Regulation and Supervision Agency (BRSA), established in 2000 to restructure Turkey’s financial system, is also playing a vital role in nurturing a stable but dynamic banking sector. “The recent global financial crisis has given us the chance to test the resilience of the sector to significant outer shocks,” says Mukim Öztekin, BRSA chairman. “I can confirm that the Turkish banking sector has a high-asset quality and a sound capital structure, it sustains its profitability steadily, increases its competitive power in the international arena and has high-growth potential.” For Korosh Farazad, chairman and CEO of Farazad Investments Inc., which provides collateral and credit for commercial loans, Turkey, and particularly Istanbul, have provided a stable home and business base for almost 15 years. Despite only intending to stay for a week when on business in 2000, the well-travelled financial expert fell in love with the city the minute he stepped out of the airport. “Turkey has a very positive energy and is very hospitable,” he says. “Everything is

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An independent supplement distributed in The Observer on behalf of Business Focus who take sole responsibility for its content

Turkey’s banking sector is resilient and innovative

possible here. We have offices in Dubai, the U.S., Australia, China, South Korea and Istanbul, but Istanbul has become our hub because travelling to and from there is easier. If I were to travel to Dubai from London, it would be a three-day trip—from here, I can do it in one day.” It is also ideal in terms of business relationships. As Farazad observes: “Once you have closed a deal and the client feels comfortable with you, doors will open. If you have knowledge and passion, the profits come easily. The government has done amazing things in the last 13 years in terms of regulation, the economy and infrastructure. I’ve been to other emerging markets, such as Indonesia, Malaysia and Mongolia, and while they have a lot of wealth, they don’t yet know how to implement their advantages into gains for the population. Turkey has been able to do this.” While there may still be challenges—mainly with red tape such as residency permits— the head of Farazad Investments, a company which plans to open an office in London in the near future, believes 2014 will be an exceptional year for Turkey.

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Levent-Istanbul’s financial district

try of textiles, agriculture and construction,” he says. “Today, it is a country of automobiles, chemicals, machinery and furniture and has one of the most promising real-estate markets in the world. Turkey’s consumer market is also very promising.” With David Cameron one of the most vocal supporters of Turkey’s accession to the European Union, Ayci is hoping bonds between the two countries will become even stronger in the coming years. “The U.K. has been one of our top-five investors in the last decade and we have great connections between Istanbul and London,” he says. “Vodafone and HSBC are just two British success stories here. Tourism is also a significant link, and we had a very productive meeting with the top-ten CEOS from both countries at Prime Minister Cameron’s house with Prime Minister Erdogan ˘ present. “Mutual relationships, cooperation and collaboration will increase their competitiveness in the third markets as well; either in the Middle East, Africa or the CIS.”

Expertise on the ground With so much potential, the Investment Support and Promotion Agency (ISPAT) is operating at full tilt to help investors maximise the opportunities in real estate, finance, automotives, ICT, renewable energies, iron and steel, tourism and petrochemicals, to name just a few. The U.K.’s expertise in public-private partnerships would boost Turkish business considerably—and while Turkey’s privatisation efforts amounted to £30 billion in the last decade, there are several more areas waiting to be privatised, including energy generation and infrastructure.

The U.K. has been one of our top-five investors in the last decade. We have great connections. Ilker Ayci, President, ISPAT

ISPAT is also drawing investors’ attention to new possibilities in education, energy, defence, health care, transport and other public services. “Turkey is a very good partner for investors,” says Ilker Ayci, ISPAT’s president. “It has continued growing in terms of both domestic and external demand and exports have more than tripled in the last decade. We analyse Turkey’s global competence in certain sectors so we can see the missing parts of the value chain. “We then focus on informing companies and investors on those gaps. Turkey offers very lucrative and smart incentives for investors based on win-win policies for both parties. We have a population of 76 million, half of which are under 29, which is a huge strength. Educational reforms made in the last decade are also driving growth.” The ISPAT president also emphasises the manufacturing potential and the unrivalled access to markets in the region. “Two or three decades ago, Turkey was a coun-

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04 TURKEY

The Bosphorus

Golden Horn Metro Bridge

The face of modern banking One of the newest banks in the sector, Odeabank is growing fast.

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ne of the youngest banks in Turkey, Odeabank is a joint stock company that has been operating since October 2012. Owned by Bank Audi, the bank is working hard to grow into an institution that will quickly outperform its competitors and move forward with assured steps. “As we cope with the challenges of establishing a new bank organisation that is sustainable and enjoys sound growth, we are confident we’ll soon make our banking services appreciated and trusted in the market,” CEO Hüseyin Özkaya says. “Odeabank boasts some of the most modern systems and technologies in the banking sector. With an increasingly open investment landscape, the bank is allowing potential investors to see its many advantages.” As it concentrates on catering efficiently to all banking segments, Odeabank has structured its service procedures to ensure every customer feels special. “It is my firm belief that the emphasis we place on both human resources and technology, combined with our wide array of products, will establish platforms on which long-term and trust-based relationships with our customers are built,” Özkaya says. “To maximise customer satisfaction, we have equipped our branches with cutting-edge technology that will boost operation speed and service quality.” Since it started operating in Turkey, Odeabank has become Turkey’s 14th largest bank, a staggering achievement that Özkaya puts down to a number of factors. “First, the quality of our employees is one of our best assets. We have been able to build a team based on a shared vision and a good working environment,” he says. “Secondly, we have the commitment and support of the shareholder so we can grow. This is just not the case in other companies. When we deliver, they gain more and vice-versa. Our last selling point is customer service. We understand our customers’ needs and we react and deliver in a fast way.” Turkey’s financial landscape offers unique opportunities, he explains. “Due to the nature of our business, we cannot always compete on an equal footing with the big banks in countries where the average consumer has preconceived ideas and habits.

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In this respect, Turkey is at an advantage because our customers do not have those ideas and habits, so banks can come here and compete as equals. “In Turkey, the banking sector is more important than elsewhere because we don’t yet have other financial institutions. It is a key resource for government, trade and consumer. In 2001, Turkey experienced a devastating financial crisis, but the upside was that it established very tough regulatory and supervisory boards. These two institutions have saved us from the worst of the recent crisis. “While the rest of the world was deregulating the sector and experiencing the consequences of that, we had already been through the same problems and addressed

We understand our customers’ needs and we react and deliver in a fast way. Hüseyin Özkaya, CEO, Odeabank

them through strict and well-defined rules. The banks grew more disciplined over the years and it is easy to comply with the regulations because they were established progressively and logically.” The capital structures, capital owner’s strength, internal stakeholders and human resources are qualitative elements that play a vital role in the success of any bank, the bank chief says. “I therefore take this opportunity to thank our dynamic team of professionals who do not see banking as a mere job, but work eagerly to achieve the pre-set goals, our capital owner who has always stood by us with relentless support, and last but not least, our dearly valued customers who are our core strength.”

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An independent supplement distributed in The Observer on behalf of Business Focus who take sole responsibility for its content

BORSA İSTANBUL HAS TAKEN VITAL STEPS ON BOTH NATIONAL AND INTERNATIONAL PLATFORMS IN JUST EIGHT MONTHS

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IMAGINE WHAT IS TO COME WHILE WE ARE MARCHING TOWARDS İSTANBUL INTERNATIONAL FINANCIAL CENTRE VISION Borsa İstanbul held a series of seminars and conferences, hosting some of the most prominent names in the fields of economics and finance from all around the world, such as Prof. Terrance Odean, John Bollinger and Hashem Pesaran. BIFEC (Borsa İstanbul Finance and Economics Conference) was initiated in 2013.

The new Capital Markets Law envisaging, inter alia, Borsa İstanbul’s demutualisation went into force after being published in the Official Gazette on December 30, 2012.

Borsa İstanbul as a company was founded and incorporated upon the registration of its Articles of Association on April 3, 2013.

Borsa İstanbul was determined to become a founding partner and major shareholder of the Energy Exchange, where electricity, gas and other energy products will be spot traded.

İstanbul Gold Exchange and İstanbul Stock Exchange were merged on April 3, 2013, and thereafter, precious metals and precious stones started being traded on Borsa İstanbul.

“BIST Sustainability Index”, which will be an indicator for new financial products was announced. Borsa İstanbul initiated the Sustainability Platform, covering all related stakeholders.

Borsa İstanbul acquired the entire shares of the Turkish Derivatives Exchange (TURKDEX) on May 3, 2013. Derivative contracts traded on TURKDEX migrated to Borsa İstanbul Derivatives Market (VİOP) on August 5, 2013.

With the target of making Istanbul a leading element of the global financial network, a memorandum of understanding was signed with NASDAQ OMX group on July 3, 2013.

Derivatives Market (VİOP) broke a new record with a traded value of 3.2 billion TRY on August 27, 2013.

Borsa İstanbul announced Listingİstanbul project with 14 domestic intermediary institutions and programme partners, reaching 41 countries.

The World Bank Global Islamic Finance Development Centre was launched in cooperation with the World Bank on October 30, 2013. The centre is opened within Borsa İstanbul premises, as the World Bank’s only representation office on Islamic finance.

Huge investments are made to offer an integrated exchange and international platform operating with state-of-the art technology, trading all assets traded globally. The construction of a world-class data centre started in December, 2013.

The first of the series of forums entitled “İstanbul: Regional Hub, Global Actor” was held on October 11, 2013, in Washington D.C.

Borsa İstanbul signed a strategic partnership agreement with NASDAQ OMX Group on December 31, 2013.

Joint projects with prestigious multinational organisations such as EBRD and OECD were carried out. Active roles in various international platforms were undertaken including; Coordinator – Organisation of Islamic Cooperation Member States’ Exchanges Forum, Board Member – World Federation of Exchanges (WFE), Chairperson – Federation of Euro-Asian Stock Exchanges (FEAS), and Secretary General – FEAS.

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06 TURKEY

Moving into exciting territory Turkey’s local businesses are sophisticated, driven and globally minded, as Business Focus discovers.

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s new investment floods into Turkey, Chris Gaunt, head of the dynamic British Chamber of Commerce in Turkey, explains how his members help prepare new businesses before they arrive. “Vodafone and HSBC, for example, play a key role in providing a broader picture of understanding and knowledge for SMEs,” he says. “It is important for potential investors to know that bigger companies have done so well and that Turkey’s strategic location played a key part in their decision. I was with Coca-Cola for 20 years setting up new locations in Asia and the hub in Istanbul serves 96 countries. If you look at Unilever, the Istanbul hub is responsible for 32 countries. For SMEs to develop in the region, there are also great benefits. Turkey is the place to be.” Local businesses are also growing strongly. Bio Istanbul is one such company making a big impression on the Istanbul landscape, and in Turkish society, by working on a health care, biomedicine and biotechnology project—Istanbul Biomedical Research Centre (IBRC)—that will integrate research, science and technology within an open community. With principles centred on energy efficiency and maintaining contact with nature, Bio Istanbul has created an incentive-rich plan that will kickstart R&D in Turkey in a powerful way. “We are focusing on two things,” says Elie Haddad, group CEO and chairman of Bio Istanbul. “We want to bring back the Turkish scientists who are spread across Europe and the U.S., and we want to attract international pharma from the U.K., France, Switzerland and the U.S. so we can have a local presence and local manufacturing facilities. Turkey is the most advanced country in the region in terms of

We want to build a platform with the right people on board, and the right government support, funding and incentives. Elie Haddad, Group CEO and Chairman, Bio Istanbul

research. We want to build a platform with the right people on board, the right government support, funding, incentives and scientific programmes. We created the IBRC as an independent foundation, with an independent board of trustees and and an independent scientific advisory board. “There are many pharmaceutical companies based in the U.K. whose operations in Russia, the CIS, the Middle East and Eastern Europe could benefit from them having a base here. Tax regimes are better and there is a lot of cheap, skilled labour. We have modelled our campus on the campuses of Oxford, Cambridge and Harvard, with a hospital and a true community, not just students. We see clear opportunities for U.K. companies to relocate part of their business, staff and R&D here. Our hospital will be the best in Turkey and the region.” Also making an impression in a rising consumer market is Çilek, a company committed to designing and producing functional, high-quality, distinctive, specific

www.armadahotel.com.tr

+90 212 455 4455

Experience the life and times of Istanbul in the heart of the historical centre. A trusted and reliable investment partner in the Turkish energy sector.

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A leading light in the nation’s future, we’re investing in our network to boost output.

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Award-Winning Project Financing Specialist · Dynamic and innovative player in the global financial market · Directly and indirectly funded projects worth $2.1 billion · Offices across Five Continents Farazad Investments Inc. Level 41, Emirates Towers, Sheik Zayed Road P.O.Box 31303, Dubai U.A.E. Tel: +971 4 319 7757 | Fax: +971 4 319 7525 enquiry@farazadinvest.com | www.farazadinvest.com

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An independent supplement distributed in The Observer on behalf of Business Focus who take sole responsibility for its content

We have about 12,000 MW of renewable energy in the sector, which represents approximately 30% of our capacity. Kemal Yildir, GM and Chairman, TEIAS

and durable furniture and accessories for children, babies and teenagers. As part of the government’s drive to raise awareness of the “Made In Turkey” brand, Çilek was one of the first companies to be awarded “Turquality” status, which increases support for Turkish companies that have the best international potential. Since 1996, when it closed its first overseas deal in Switzerland, Çilek has expanded to 65 countries on five continents and operates 444 sales outlets. It boasts a workforce of 2,000, a yearly turnover of TL220 million (£59 million), and plans to grow by 20% in the coming years. Talha Çilek, who set up the specialist furniture empire in 1995, says: “Every child dreams of having a unique room, so we created a brand that would fulfill their dreams, but at the same time, be something that parents liked and that would look good in their homes. Coincidentally, our name means “strawberry” in Turkish, and this has been useful in developing the brand. “We meet the most advanced child safety standard by using high-technology and first-class materials complying with the most stringent E.U. standards. The challenge is to keep our brand growing and gaining more international awareness —but this year and next are looking good and we are very optimistic.” In the meantime, with the government committed to exploring alternative energies, the Turkish Electricity Transmission Co. (TEIAS) is open to partnerships with British companies as it invests in the Smart Grid to provide an important role in Europe’s electricity provision. “We have about 12,000 MW of renewable energy in the sector, which represents approximately 30% of our capacity. We are waiting for the construction to be fina-

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lised for coal power plants, hydropower plants and some natural gas power plants,” says TEIAS GM and chairman, Kemal Yildir. “Each year, 4,000 MW are added to the grid, and the amount will continue to increase until 2023, when we plan to have 20,000 MW of renewable energy. “At TEIAS, we manage the market and separate it with EPIAS, a private sector market management company. After privatisation, we will own 30%, 30% will be traded on Borsa Istabul and 40% will belong to the private sector. We cannot continue as a government company because generation and consumption companies pay our tender, salary and investment through tariffs which is uneconomical.”

Rest and explore in charming surroundings Meanwhile, as tourism in effervescent Istanbul takes off, hotels are moving in to take advantage of the new rush of business and leisure visitors. Around 40,000 new rooms have been constructed in the last few years and close to 9 million tourists now visit the city each year. As a self-termed “HIP” hotel—Highly Individual Place—the sophisticated luxury of the Sofa Hotel offers 82 spacious and comfortable rooms, including 17 executive suites, in the heart of Nisantasi, ¸ ¸ one of Istanbul’s most upmarket areas. With art integrated into all the public spaces, a large, modern spa and fitness centre, business essentials, such as high-speed Internet, currency exchange and business centre, and the finest Turkish gastronomy, the Sofa Hotel gives its guests no reason to leave the premises. “The understanding of hospitality in the Turkish culture is something naturally embedded in the hotel,” says chairman Ali Güreli. “We strive to create a welcoming space and personalise the experience so that guests feel at home.” In the old city and close to well-known historical monuments such as Aya Sofia and the Blue Mosque, the Armada Hotel offers 108 charming rooms and two Istanbul-style restaurants. Committed to preserving local culture and providing an authentic Istanbul experience, the Armada brings Istanbul to its guests with its wonderful touches. “Istanbul is fascinating,” says chairman Kasim Zoto. “As a bridge between Europe and Asia, it is a city of both worlds. It is just a short flight from most European cities and has benefitted from the onset of easy and cheap air travel. The Armada is in a very special part of town and our goal is to preserve, reserve and serve.”

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08 TURKEY

Making Capital Gains Using London as a model, Borsa Istanbul is helping transform Turkey’s financial landscape by attracting capital and increasing competitiveness.

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s Turkey’s financial system transforms, the head of Borsa Istanbul— the country’s Stock Exchange that was established in 1985—Ibrahim Turhan sat down with Business Focus to explain his vision. “We have a very good relationship with the London Stock Exchange,” Turhan begins. “Xavier Rolet is a good friend and a great man; he has accomplished a lot there. We meet up often to share our knowledge, ideas and thoughts about the industry. “FTSE is a great brand so we think we can collaborate in business development. The capital market law (CML) that was introduced recently has changed our legal infrastructure: it included an amendment enacted to transform the Turkish Clearing House into a central counterpart and we are following the directive of the E.U. so that we are in full compliance with European standards and laws. “I’m also chairman of the Turkish Clearing House, so I am very seriously observing and following the opportunities and partnerships between this and the London Clearing House. We are reducing the procedural differences and creating an investment environment where financial investments can be done easily. To buy and sell something and clear the transaction in both countries without any difficulty, will, for example, constitute a huge opportunity.

Our general mindset is that we have to build solid links between Istanbul and London. Ibrahim Turhan, Chairman and CEO, Borsa Istanbul

“We are also looking for ideas, projects and opportunities to establish a financial centre, and London is, of course, a very successful example. London has authority and an institutional identity so we can follow that model. We are considering opening some offices in there soon. So, while there are concrete, tangible projects under way, the general approach and our general mindset is that we have to, and we will, build solid links and bridges between Istanbul and London.”

Working towards an IPO Borsa Istanbul’s mission is to operate as a dependable, transparent, stable, and fair market in line with the principles of efficiency and competitiveness. It is working hard to increase the number of publicly traded companies and bring its market capitalisation to a level that reflects the potential of the Turkish economy, diversifying the capital markets instruments traded on Borsa Istanbul and making Borsa Istanbul the leading market of its region offering the trading of domestic and foreign capital markets instruments, thereby making Istanbul a leading international financial centre. As the chairman and CEO explains, he expects Borsa Istanbul to consider an Initial Public Offering within the next two years. “Currently, 49% of the shares are state-owned,” he says. “We did keep 51% as treasury stock, but recently gave shares to industry representatives and intermediary institutions such as brokerage offices and banks. We are also on the look-out for opportunities to establish strategic partnerships with. “In December, Nasdaq OMX group took a 5% stake in Borsa Istanbul, so we are considering other private placements in order to add value to our stock, with well known, respected and experienced partners and institutions, in order to increase the liquidity of the Turkish markets on the one hand, and our reputation, credibility and visibility on the other. The ultimate aim is to make Istanbul an integrated part of the global finance network.

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“I hope that within the first half of 2016 we will be ready for a possible IPO, but it will be a decision for our shareholders, treasury and government. It will also depend on market conditions—but what we can promise is that we will do whatever it takes to be ready for an IPO at that time.” Turhan’s vision is to have 1,000 companies listed by 2023—an ambitious project, but one he is committed to achieving. “The number of listed companies is still low,” he explains. “Only 14% of the largest Turkish companies are listed. There is a huge opportunity, because those companies are already well established and appropriate in terms of size and scale, but most of them are family-run businesses. It will take some time to change the mindset of those owners to open their companies to the public. “I am watching the change take place and it is very satisfying. Turkey has ambitious targets for 2023, the centennial of the republic, which is to bring our GDP per-capita to $25,000 (£15,000), the equivalent of $2 trillion (£1.2 trillion) total GDP. To reach this level, we have to invest and that means bringing more capital into the country. So far, whenever corporations need to finance their activities, their first resource has been a bank loan, but I think this will change, not least because the loan-to-deposit ratio for the industry is already very high. “We need to bring in other players. In the corporate bond market, for example, we are already witnessing a huge and fast transformation with more and more companies appearing in this market. That is a direct result of the CML.” The company is also looking to list companies from neighbouring economies. “Sometimes companies are too large for their domestic economies, especially when they are commodity dependent,” Turhan says. “They then have to go to other markets. So, for companies that may be too big for their own economies, but too small for larger financial centres, Istanbul can fill the gap because we are in-between. “We are large enough to cover the needs of these companies, but not so large that they will get lost.”

In good hands Turhan is keen to send out a message of confidence to investors in what are uncertain economic times. “Before I took this job, I worked in the central bank,” he says. “I therefore know that you cannot create a real outcome, a real effect through monetary policy alone. You can make smoother cycles, but you cannot change the track, so the change in the monetary policy stance of advanced economies is affecting the world and this will continue to have some consequences. “However, I think everybody should have in mind that although we don’t know where the new equilibrium will be, there will be one sooner or later. We will have a new normal. “Turkey’s fiscal outlook is great and the banking sector is doing well. When you look at demographics, productivity and real indicators, you can see that in industries like energy, retail, services—including health care and education—and many other domains, Turkey will be a very promising market. Once this tsunami is over, what will be left are some rising stars and some dying ones. Turkey will be one of the rising stars. To be ready for the competition, you need to exercise—the worst mistake a Turkish company or business leader can make for the time being is to relax. This is the time to prepare, to look to the future and to take all the necessary measures to be ready. “To quote from the economist Joseph Schumpeter, crisis is creative destruction. If you have competitive advantages, if you have plans in place, if you know you are ready to fill a niche—this is the time for it. This is exactly what Borsa Istanbul is trying to achieve: we are changing our company. If you show people you are serious and determined, then in the good times, those partners will pay you back. This is why we are participating in important meetings and gatherings; we are determined to keep the Turkish economy on the right path.”

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Turkey report - March 2014