The story of Istanbul International Finance Center, IIFC, began in 2007. As a preliminary step, the government requested a report from the Turkish Banks Association. Deloitte Consultancy was commissioned by the Banks Association in 2007 to produce the feasibility study and a roadmap.
The main issue was, “Is it possible to build a world-class Financial Center in Turkey?”
Deloitte’s hundred-page study stated that, yes, Turkey has the ability to create a world-class Financial Center as a country with resources, local and regional potential, a latent base of talents, location, and national pride. But to take tough choices, commitment to substantial resources and patient attitude towards return-on-investment would need strong leadership and political mobilization.
1- Istanbul Financial Center; Some Political Aspects:
Prime minister Recep Tayyip Erdoğan and his administration embraced this initiative in their medium-term plan extremely seriously in 2007.
The 9th and 10th SPOs spanning the years 2007 and subsequently 2009-2011 medium-term programs and subsequent ones give particular significance to this initiative.
In 2009, the SPO produced a full “Strategy and Action Plan,” now under execution and carefully monitored by the government. Today, almost 80 % of 71 actions have been carried out.
This Istanbul Global Finance Center project is fully supported politically. In order to offer you an idea, 9 Working Groups have contributed to this “Strategy and Action Plan,” including more than 80 public and private sector organizations, including more than 300 specialists.
2- Global Financial Centers compete on 12 competitive dimensions:
- Expert labor
- Potential revenue creation
- Image
- Law
- Political stability
- Economic stability
- Taxation environment
- Regulatory framework
- Business facility
- Business costs
- Lifestyle
- Professional service availability
3- System Upgradation Priorities:
The improved judicial system, in particular with regard to:
- Litigation, arbitration, and settlement of disputes.
- Establishment in Istanbul of an independent, autonomous arbitration center of global quality.
- To speed up the legislative process of legal proceedings/draft legislation and IFC-related regulations. (Commercial Code, Debt Law, etc.)
- It is enhancing the quantity, variety, and quality of EU-compatible financial products and services.
- To enhance financial market openness and increase the distribution of financial data.
4- Hardware Priorities:
Remember, two kinds of hardware are present: city hardware, visible, and town hardware, unseen.
We can all imagine the visible. Mumford’s second focus is on ICT and connectivity. Both together make Istanbul a Smart City.
Today, you cannot aspire to be a Financial Centrum without being a smart city.
Prepare Istanbul for a better, safer, and easier city for travel by upgrading physical facilities. Headquarters in Istanbul Financial Center and residential property stocks, transit, national and international, education and health facilities, etc., are clearly included.
Enhance technical infrastructure by providing affordable, rapid, and secure electronic communication without interruption.
They are enriching the human resources pool required by increasing the efficiency of the current pool but also investing in new entrants for the Istanbul International Finance Center.
They are Preparing an effective PR campaign at home and abroad.
5- IFC Head Challenges:
No diversion from EU adjustment, No distraction from standardization, and greater democratization. In other words, the “genius” must carry out its job.
Concentrate and guarantee sustained private-sector development based on productivity, innovation, and technological usage.
Short-term inflation should be controlled. Increasing domestic savings, enhancing the quality of finance for current account deficits, and the battle against a non-registered economy should also be emphasized. Knowing that the present Turkish growth financing structure renders TRY (and bond rates) susceptible to change in global perceptions of risk, this is one of the important policy factors for years to come.
There are a wide variety of product-specific possibilities for Turkey to explore first a niche market, a regional market, and ultimately a global Financial Center in the present and future macroeconomic circumstances. Specific possibilities for products may include REITs, Islamic finance, derivatives, insurance categories, commodities futures, green finance, regional currencies, shipping, transport, and freight trading instruments, packaging, and so on.
The main issue for governments today will be to show and demonstrate their commitments to a recent reform package that seeks to pull the nation out of the so-called ‘mid-income trap’ and to embark on a new era development path.
6- Skilled Labor Force:
Turkey has an expanding education workforce. 33% of the 77.7 million Turkish population is younger than 20.48% of Istanbul’s 14 (14.4) million people is under the age of 30. The financial industry has a total of 180,000 bank-led workers and 150,000 employees. The goal of creating at least one university in every city has more than doubled the number of universities in the nation in the last few years to 181. Istanbul Finance City is the top in the number of higher education institutions with 49 universities. The new goal is to add IFC Istanbul’s skilled workforce. Universities are encouraged to develop financial specialists via post-graduate degrees for this purpose. Efforts are being made to recruit highly skilled workers from outside. World bank Islamic Finance Center Istanbul also comes into play.
7- Heart of Global Financial Sector:
The International Finance Corporation (IFC) will build a special kind of facility. It will be at the heart of the global financial sector. Also, it will be open to the public 24 hours a day, seven days a week. The completion of the Istanbul International Finance Center will result in the employment of about 30000 individuals.
The IFC will be constructed on a 2.5 million-square-foot site. It will have a capacity of 2,000 people. Likewise, it will include 560,000 m2 of office space. You will observe a total of 90,000 m2 of retail space in it. The total hotel space will be 70,000 m2. Moreover, you can easily find 60,000m2 of residential space and a cultural and convention center.
8- The 9th in World Ranking:
According to the Z/Yen Group, a prominent business think tank in London, Istanbul has gained nine places in the Financial Centers ranking globally, moving from 68 to 59 in the 25th edition of the Global Financial Centers Index (GFCI).
Over the period from September 2018 to December 2018, Istanbul Finance City improved by 30 points to 620 points in the list. Istanbul has risen from 4th to the 2nd position in the rankings of Eastern Europe and Central Asia cities. In September 2014, the city was rated 42nd out of 100 cities.
9- Point of Focus:
The area of development is approximately 1 million m² and comprises 723.00 m² of office, retail, residential buildings, hotel, a conference center for 2,000 participants, mosques, schools, car park, and other community facilities.
The new area will bring together the key banking institutions. The Financial Center District will be the focus not just for Istanbul or Turkey but also for the world business and finance sectors once the present objectives for this region have been fulfilled.
The Istanbul Finance Center Project covers 70 hectares of land, and the area’s estimated population is about 30000.
10- Times Tower Istanbul:
Times Tower is one of the top Istanbul Skyscrapers and a premium property with a high quality of life that is situated in the heart of Istanbul Financial District. The investment project with the greatest potential for return on investment is designated as the winner. There is also a Cultural and Congress Center. There are many facilities on-site, including two metro stations, a retail mall, a hotel, and a municipal park.
Design houses with European-style facades, completely completed kitchens, and bathrooms can be found at Times Tower, which is a contemporary and beautiful development.
Building construction consists of 34 stories, with apartments ranging in size from 0+1 to 1+4 with prices starting at 125.000$.
In addition to Times Tower, there are three other buildings in the complex: the Time Palace Residences, the Times Park & Offices, and the Times Tower itself.
With a living space of 250.000 m² constructed on a total land area of 3.200.000 m², the project offers an overall living area of 250.000 m².
This project, which has been designed to resemble a small city, provides a wide variety of on-site facilities as well as the luxury of living near the new Istanbul Financial Centre and having easy access to the TEM and E-5 motorways as well as metro connections.
11- Tax Benefits:
For angel investors, tax benefits are provided with tax reductions of up to 75% of their contributions. For long-term investments, a withholding tax will be discounted, whereas for investment funds, 75% of whose assets are invested in equities, no withholding tax will be imposed. Corporate tax is 20% in Turkey, which is quite acceptable in comparison to worldwide norms.
12- Individual Tax Systems:
Individual tax rates are up to 35% of wages, and 50% of dividend income is taxed. In order to make Istanbul an International Financial Center, the tax system must be straightforward, understandable, coherent, practical, and quantifiable. The taxation system is currently undergoing reform.
Conclusion:
The success of an Istanbul Global Finance Center is based on a clear vision, a well-defined plan of action, and a strong institutional structure. Although we have a clear goal and convert it into the plan, we feel it is excessive as an undertaking to promote Istanbul as an RFC until 2023.
In March 2019, during Istanbul’s Financial Center Conference in Istanbul, Finance and Treasury Ms. Berat Albayrak stated that a robust finance architecture in Turkey was a major goal for the government. He stated that the Istanbul Finance Center Project would be implemented before 2023 with changes involving taxation and infrastructure completion. Istanbul wouldn’t compete or not catch Dubai’s pace with the world’s major financial markets, including New York, London, and Hong Kong. It may certainly become a regional refining center, though, by adopting the appropriate methods. United States’ knowledge and assistance may help Turkey achieve this Istanbul Financial Center target.
The regional and international financial center of Istanbul is deliberate to be built on an area. This area is composed of approximately 300,000 m². The common name of the whole project is Istanbul Financial Center. You will see the state-owned banks in it, such as the state bank, Ziraat, Halk, and Vakiflar Bankasi banks. Also, some public institutions like BBDK and SPK will be there. In addition to this, you will locate the private sector land ownership projects that are currently being developed in Istanbul.
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References:
- https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwj_8v-3urDyAhUHMewKHUxVBh0QFnoECAIQAQ&url=http%3A%2F%2Fwww.istka.org.tr%2Fmedia%2F117169%2Fistanbul_international_financial_center.pdf&usg=AOvVaw1asEW_OVVtn0XJXBg3USJQ
- https://www.emlakkonut.com.tr/en-US/istanbul-finance-center
- https://www.arup.com/projects/istanbul-international-financial-centre
- https://estatenation.com/blog/the-new-international-financial-district-in-istanbul/
- https://www.investistanbul.com/iifc/
- https://www.aa.com.tr/en/economy/istanbul-finance-center-to-fuse-economies-of-west-east/1661615#
