Slow courts deter foreign investors: Turkish finance minister

ISTANBUL - Anadolu Agency

Mehmet Şimşek spoke at the CEO Club meeting organized by the economy magazines Capital and Ekonomist on Oct. 21. AA Photo

The government will pass a significant structural reform this week in its bid to make Istanbul a global arbitration center, Finance Minister Mehmet Şimşek has said, complaining that it currently takes too long to finalize court rulings in Turkey and vowing that the government aims to solve this problem.

“We have recently defined around 1,250 micro reforms to be made soon. In this vein we will make a structural reform of great significance this week to make Istanbul into an international arbitration center,” Şimşek said at the CEO Club meeting on Oct. 21, organized by the economy magazines Capital and Ekonomist.

He said everyone complains about slow judicial processes in Turkey.

“We have asked how long it takes to finalize court decisions in Turkey. World Bank data show how bad we are regarding this important topic. How could we solve this problem? Our decision to prepare a legal basis to make Istanbul an international arbitration center really matters,” Şimşek said, adding that the related draft law will be sent to Parliament this week.

The planned Istanbul arbitration center is expected to enable both Turks and foreigners to resolve their conflicts via arbitration or alternative resolutions.

Şimşek particularly cited the period between 2015 and 2019 as key to making the required structural reforms, as there will be no elections held in Turkey during this period. But he also noted that political stability was not enough for any country to maintain good growth figures.

“A politically stable country can grow rapidly so long as it makes the required reforms,” he said.

Şimşek said a number of reforms were also planned in the upcoming two months, from the field of patent regulations to the protection of personal data.

“Okay, we have a problem with the temporary increasing of the inflation rate right now. But we were able to decrease the inflation rate to single-digits before. If it continues to increase, it will become the biggest obstacle in front of our sustainable growth,” he said, adding that higher inflation mainly resulted from higher food prices in Turkey and the loss of value in the Turkish Lira.

“Fortunately, Turkey’s Central Bank is independent. Our Central Bank has been banned from issuing money since 2001 and its balance of payments has been shrinking, while the balance of payments of many other central banks is ballooning. There is no reason for the inflation rate to increase permanently in Turkey, as our finances are very strong,” Şimşek added.

The government has announced that fighting inflation will continue to be the fundamental priority of Turkey’s economic plan in 2015 to 2017, along with boosting growth and reducing the current account deficit.

This month, it cut growth forecasts to 3.3 percent from 4 percent for 2014 and to 4 percent from 5 percent for next year.

Şimşek noted that the country should increase the quality of its institutions for sustainable growth to continue.

“We need to buckle down on the candidateship process of the European Union. Some 14 chapters are open, but the remaining 20 chapters are waiting to be negotiated,” he said.

“Many analysts have said Turkey has adopted EU standards in around 26-27 chapters … But due to the existing political conditions in Europe we cannot open the remaining chapters. We will improve the administrative capacity and legal framework of Turkey by increasing the quality of institutions,” he added.