UK-Turkey relations and Turkey's regional roleWritten evidence from the City of London Corporation

Submitted by the Office of the City Remembrancer

Introduction

1. The City Corporation welcomes the opportunity to contribute to the Committee’s inquiry into UK-Turkey relations. In his capacity as ambassador for UK based financial and professional services the Lord Mayor, Alderman Michael Bear, and a thirty-strong business delegation, visited Turkey in January this year. This visit followed on from the July 2010 visit of the Prime Minister, who pledged to double UK-Turkey bilateral trade in the next five years. The Lord Mayor’s visit sought to emphasise the contribution that the UK’s business services can make in meeting this undertaking.

2. The key theme of the visit was to highlight the continued attractiveness of the UK as an inward investment destination and partner of choice for the increasing number of Turkish companies seeking to expand or acquire financial and business services products. The current Lord Mayor’s background in engineering prompted detailed discussion to take place with senior government officials and a range of key business leaders, on their plans for construction, transportation, ports and general infrastructure and in the promotion of UK expertise in PPP/PFI to fund such projects. Strengthening existing ties between the two countries in the maritime and shipping communities was also a topic of discussion.

3. During the visit it became clear that UK-Turkey relations remain very strong, not least because the UK is the strongest advocate of Turkey’s accession to the European Union. Turkey’s economy has diversified massively in the last 20 years and has become increasingly industrialised. However, it was noted that certain obstacles to expanding trade still exist—especially in the development of the tax system which lags behind Europe’s.

Public Private Partnerships

4. Turkey has a 10 year plan to develop infrastructure in time for the 100th anniversary of the Turkish Republic in 2023 and to that end the delegation met with contractors, working in the infrastructure and construction sectors, to discuss PPP/PFI opportunities for UK firms. Minister of Transportation and Communications, Binali Yildirim, emphasised that he was keen to work with UK firms on implementing key projects focusing on maritime infrastructure (including ports), roads (including highways and interstates), rail (both urban and intercity fast rail), airports and an advanced metro system in Istanbul, where traffic congestion posed a real problem. The delegation stressed the City of London’s expertise in this arena, with particular strengths in raising capital for projects. In particular, developing the infrastructure of Istanbul as a regional (and potentially an international) financial centre would be of interest to City firms.

5. The potential for PPPs to be developed in Turkey was highlighted at a UKTI Seminar supported by the Ankara Municipality. It was noted that the most vital aspect of delivering this agenda is defining a new law to facilitate PPP, in line with international standards. Finance models for such projects were also discussed and particular interest was taken in the Tax Increment Financing (TIF) model where councils raise finance for infrastructure projects by borrowing against future gains on tax revenue and business rate income, and asked for further details to be provided in future correspondence.

Maritime Services

6. The Turkish shipping industry has strong links with London and a developed client base. Through the work of Maritime London and the Baltic Exchange, the Lord Mayor’s visit sought to reinforce the support for the already-strong maritime cooperation between the two countries. In meetings, the Lord Mayor said that London wishes to be Turkey’s partner of choice, emphasising the important role that Turkey plays in the Black Sea and the Middle East region. Maritime London and the Baltic Exchange pledged to continue to work with industry interlocutors on improving commercial links between the UK and Turkey’s maritime services sectors.

Branding and Reputation Management

7. Building Istanbul into a financial hub is an objective of the current government, who wish to develop Istanbul as a rival to other major centres of world finance. Istanbul is a very clear and well recognised brand in tourism, culture and sport, but is not widely seen as a global leader in finance. At a seminar on improving Istanbul’s global branding and reputation, the Lord Mayor, spoke on how to create and maintain the reputation of a city as a successful financial business centre. The importance of location reputation, and factors which have made the brand “London” enticing for investors, were set out as possible exemplars for Istanbul.

30 August 2011

Prepared 2nd April 2012