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Business activity in Turkey
The Embassy promotes bilateral economic and commercial relations. It relays the messages of the Swiss public and private sector to the Turkish authorities and keeps the official or interested parties in Switzerland informed about the developments in Turkey. In the field of trade promotion, it co-operates with OSEC Business Network Switzerland , Swiss-Turkish Chamber of Commerce in Istanbul and Swiss-Turkish Business Council in Switzerland. The Embassy provides information about Turkey in the following areas to the interested parties:
- the economic and business environment
- the laws and regulations
- general tax and customs procedures
- sectors and sub sectors
- fairs and exhibitions
The Embassy conduct mandates in partner search, fact finding mission and problem shooting upon the requests of Swiss companies.
The Embassy promotes Switzerland as a business location by providing information about the economic, business, political and cultural environment in Switzerland.
With its surface area of 41'285 km2, two thirds covered with mountains, Switzerland is a small country compared to Turkey (774’815 km2). It is divided into 26 cantons and 3'000 communes. With about 8 million inhabitants (Turkey: 75 million) and a per capita income of $83'000 (Turkey: $10’400, as of 2011), Switzerland enjoys a prosperity which is virtually unrivalled worldwide. The Swiss economy is very reliant on foreign trade and services due to its small domestic market and virtually no mineral resources. Chemicals & pharmaceuticals, machines & electronics, instruments, watches, jewellery, foodstuff are the major export products of Switzerland besides its banking and insurance know-how and civil engineering services.
The Swiss economy mainly depends on highly qualified work and well-trained work force rather than on mass production. Many businesses follow a niche strategy, concentrating on a small range of high quality products. Beside the well-known international companies like ABB, Clariant, Mövenpick, Nestlé, Novartis, Roche, Schindler, SGS, Syngenta etc., the backbone of the Swiss industry is made up of highly specialized small and medium sized enterprises. Switzerland is a leading country in the area of scientific research. A higher percentage of employees work in research and development than in other industrial countries. 3% of the gross national product is spent on research.
Until the 19th century famines were not unusual in Switzerland. Therefore, many Swiss emigrated, trying their future in wealthier countries. It is only since World War I that Switzerland has gradually developed into one of the richest countries in the world. The basis of this prosperity, however, goes back to the last decades of the 19th century, when manufacturing and service companies were established. In some cases, they are still operating today world-wide.
The following arrangements define the legal framework of the economic relations between Switzerland and Turkey:
- Trade Agreement (1930)
- Agreement on the Organization of Commercial Exchange and Payments (1942)
- Agreement on the Reciprocal Promotion and Protection of Investment (1988)
- Free Trade Agreement EFTA-TURKEY (1991)
- Memorandum of Understanding (MoU) of Joint Economic Commission (2001)
- MoU on High Level Commercial and Economical Consultation (2002)
- MoU in Energy Cooperation (2009)
- EFTA Protocol E (Mutual Recognition of Conformity Assessment of Products) (2011)
- Avoidance of Double Taxation Agreement (valid as of 01/2013)
The agreement on the Reciprocal Promotion and Protection of Investments, the EFTA-Turkey Free Trade Agreement as well as the Avoidance of Double Taxation Agreement provides a good legal framework for bilateral trade and economic activities between Switzerland and Turkey.
The historical data shows that both countries increased their exports to each other more than 70 percent between 1990 and 2000. This momentum also continued in the following decade. In the first half of 2000s, exports of both countries expanded about 50 percent. The total trade volume (export-import) reached its highest value CHF3.5 billion in 2007. In the following years, due to the global economic crisis, the bilateral trade regressed to its levels in early 2000s. 2010 was an encouraging year. The bilateral trade started to recover and increased by about 15 percent. The recovery in 2011 continued and total trade volume reached CHF2.9 billion (Swiss exports: CHF2.1 billion; Swiss imports: CHF0.8 billion). Although the trade balance between Turkey and Switzerland is in favour of the later, Swiss tourists and the remittances of Turkish community living in Switzerland (which is over 100 thousand) as well as Swiss investments in this country offset a part of this gap.
Tourism is another important economic activity between the two countries The number of Swiss travelling to Turkey exceeded 320 thousand in 2011, the highest figure recorded so far (according to the Turkish statistics, www.turkstat.gov.tr ). Several daily scheduled commercial flights connecting three Swiss airports to Istanbul as well as several seasonal charter flights to the Mediterranean coasts of Turkey provide a rich alternative to travellers between the two countries.
Switzerland is an important foreign investor in Turkey. According to the Swiss National Bank, the Swiss investment stock in Turkey is about CHF2.9 billion as of end-2010, creating over 15 thousand jobs. Investments are mainly concentrated on chemicals, pharmaceuticals and manufacturing industries. The number of Swiss companies having subsidiary, local partner or liaison office in Turkey is around 600 (2011), according to the Turkish Economy Ministry. In return, according to the same source, Turkish investments in Switzerland amounted to $384 million (2011).
In general, the bilateral economic relations between the two countries are assessed as good and friendly. Although there is no specific discrimination against Swiss exporters and investors, they face some difficulties regarding doing business in/with Turkey. Some tariff and non-tariff barriers exist in certain areas. The high tariffs and taxes on Swiss food products and tobacco; high administrative burdens and delays in the field of product registration, pricing, approvals and reimbursement; import permissions (e.g. conformity checks, test reports, complex customs clearance procedures and excessive documentation); market access restrictions in some areas (e.g. public procurement) and unsatisfactory protection of intellectual property rights are the major concerns of the Swiss business world regarding the Turkish market.