Improving the institutional and regulatory framework has been a key area of reform in Turkey, where administrative burdens are high relative to OECD levels. The review and simplification of legislations are part of the SME Strategy and are undertaken through various actions by the Prime Minister’s Office. The Reduction of Bureaucracy and Simplification of Legislation Initiative (BAMS) was launched in 2014 followed by a number of legislative amendments, changes in application processes, new online services and digitalised documents. In 2017-18, the procedures to create a business were simplified by removing the paid-in minimum capital requirement and the notarisation of company documents and legal books. The introduction of paperless transactions as part of the E-Government Strategy and Action Plan 2016-19 is also expected to streamline bureaucratic procedures for businesses and citizens.
OECD SME and Entrepreneurship Outlook 2019
Chapter 42. Turkey
Figure 42.1. Structure and performance of the SME sector in Turkey
Note: Chart A: The OECD average refers to 2016.
Source: Charts A, C, D: OECD Structural and Demographic Business Statistics Database 2018, http://dx.doi.org/10.1787/sdbs-data-en; Chart B: OECD Timely Indicators of Entrepreneurship Database 2018, http://dx.doi.org/10.1787/sdbs-data-en; Chart E: OECD Structural and Demographic Business Statistics Database 2018, Employer Business Demography dataset.
SME business conditions and access to strategic resources
Institutional and regulatory framework
Market conditions
In recent years, private consumption and investment in Turkey have been fuelled by fiscal policies and goods export demand, although service exports remain weak. SMEs account for over 55% of exports in Turkey, and supporting SMEs’ internationalisation is a priority in the 2015-18 SME Strategy, which places emphasis on specialised training for SMEs expanding in international markets.
Infrastructure
Turkey’s investments in inland transport infrastructure are in line with the OECD median, while the country’s ICT infrastructure is less developed than in most other OECD countries, with low rates of fixed and mobile broadband penetration. These however reflect large differences across regions in the quality of infrastructure and SMEs’ uptake. The National Broadband Strategy and Action Plan 2017-20 aim to increase investments in broadband services in order to spread related infrastructure across the country. Turkey has made significant strides in building up its R&D infrastructure, with international cooperation playing a pivotal role, including in the framework of EU programmes, and several schemes to boost commercialisation and high-technology start-ups. .
Access to finance
SMEs lending in Turkey grew steadily over 2007-17, also supported by a variety of government’s programs. KOSGEB, the main body for executing SME policies in Turkey, runs a number of credit interest support programmes and, in 2016, launched an interest free credit model for SMEs. In 2016 as well, a bill was passed on movable collateral in commercial transactions, which allows SMEs’ access to finance against receivables, machinery, inventory and stock. This reform led to the creation of security rights for an estimated EUR 9.3 billion. KOSGEB also introduced the SME Technological Product Investment Support and the Strategic Product Support Programmes in 2017 with a view to stimulating alternative sources of finance. The Turkish Growth and Innovation Fund, established in 2016, is a fund-of-funds targeting early stage and start-up businesses, technology transfer accelerators and investments involving business angels.
Access to skills
Turkey lags behind other OECD countries in terms of adult literacy and training and student proficiency. The National SME Strategy and Action Plan (2015-18) emphasises the importance of building SME skills intelligence for designing training programmes. In 2017, the government created a Platform for the Digital Transformation of Industry with the participation of business organisations that help identify skills needs for the transition. The Ministry of Labour and Social Services and Family is working on an Adult Skills Strategy in partnerships with different stakeholders.
Access to innovation assets
Despite their substantial investment in equipment and software, Turkish SMEs exhibit low uptake of digital practices, including e-sales. The Programme to Support Market Research and Market Entry subsidises 80% of SME membership fees on e-commerce sites/portals for a three-year period. Efforts have been made to strengthen legal frameworks for e-payments and consumer protection. The new Trust Mark in Electronic Commerce provides a label to audited e-commerce sites regarding data protection, regulations awareness, transparency etc. Turkey is also developing statistics on e-commerce with a dedicated information platform for registering and recording activities.
The full country profile is available at https://doi.org/10.1787/34907e9c-en
References
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European Training Foundation (2018), Turkey – Helping SMEs Internationalise Through Training, https://www.etf.europa.eu/en/news-and-events/news/turkey-helping-smes-internationalise-through-training (accessed on December 2018).
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World Bank (2017), Turkey - Country Partnership Framework for the Period FY18 - FY21 (English), World Bank Group, Washington DC, http://documents.worldbank.org/curated/en/585411504231252220/Turkey-Country-partnership-framework-for-the-period-FY18-FY21.