Turkey is still hoping that Istanbul will become a global financial centre, and will benefit from the job creation and wealth that this could bring. The next two years is likely to see a large expansion in financial services as there is still huge room for growth. The Turkish government has made substantial inroads into creating demand for financial services, both locally and in the Balkans, and also in the Middle East. The banking system within Turkey has a reputation for being stable, and the country benefits from having good flight connections and relatively cheap labour.
In spite of these attributes in Turkey still needs to do a lot of work in order to make Istanbul a viable financial centre. The right legal environment needs to be established, and the right taxes and regulations need to be put in place in order to attract finance chiefs. Turkey also needs to be able to supply a highly skilled workforce that is fluent in English.
At the moment Turkey is unable to meet these demands, and is quite lowly ranked on indexes trying to measure finance centres. One such index is compiled by the Z/Yen Group and looks at 77 financial centres around the world. This year it ranked Istanbul as being 61st in the world, while the World Economic Four Financial Development Report placed Turkey’s financial sector 43rd out of 60.
The Turkish government only devised an action plan to try to develop Istanbul as a financial centre in 2009, and its list contains 71 different points that include being able to efficiently resolve disputes through setting up specialist courts, making it easier for foreigners to obtain work visas, simplifying the tax system, and improving English language education within the school system. By next year Istanbul is expected to move up to the mid-50s rank in the Z/Yen report. This is not necessarily because these goals have been met, but simply because all this effort is raising Istanbul’s profile within the finance sector.