“If one had but a single glance to give the world, one should gaze on Istanbul.” Adopting Alphonse de Lamartine’s phrase to our topic would be a great injustice to both the great poet and the great city. Nevertheless, I will give it a try. Healthy financial markets, solid growth prospects, and a unique geographical location present Istanbul with the potential to be a global financial hub. The progress that Turkey achieved in recent years on macroeconomic stability, especially financial stability, is quite remarkable. Moreover, a young and skilled labor force, a dynamic economy, a lower cost of doing business, and an alluring lifestyle are key qualities that make Istanbul an attractive location. On the way to providing the necessary elements to launch Istanbul as a financial center, the ongoing structural problems of Turkey have to be addressed and resolved. Any progress made on this front would spill over to other sectors and result in higher productivity and an enhanced growth potential. Once the aftershocks of the global crisis ease, major financial actors will find Istanbul quite attractive in order to expand their operations at the crossroads of Europe and Asia. With its vibrant economy, Istanbul emerges as a leading candidate to assume the role of an international financial center, provided that the initial conditions are put in place effectively and sustained permanently.
I think the potential is definitely there, but in my opinion being a financial center is more than just having all the sector companies with their offices in tall buildings in and around Istanbul. The regulations and the fiscal framework should be arranged in such a way that the financial center attracts foreign and domestic investors as market participants. The integration of our markets and fund platforms with other global and/or regional centers is, in my opinion, critically important. In short, our stock market, our derivatives market, exchanges, and mutual fund platforms all need to be integrated with the domiciles of potential global investors. There is a lot to be done in terms of the integration of our custody system, settlements, regulatory framework, and fiscal framework. Equally important is the ability to attract and create high-quality human capital in the finance sector. I believe Istanbul has a strong advantage in this area.
DR. MURAT YÜLEK
Istanbul has a huge unfulfilled potential. It was a massive metropolitan city long before many current global centers even existed. It is one of the top five most important centers in the world, surrounded by huge resource rich markets on every side, from Russia, to the Middle East, the GCC, Iran, North Africa, and Europe. Istanbul truly has the potential to become a financial center, and we shouldn’t disregard the city’s “excitement factor” when considering its potential. I believe Istanbul’s realization of its potential will come about naturally, yet a lot of work is required to make the transition smooth. Work needs to be done on laws and regulations, as well as in relation to education, especially in the English language.
DR. GÜRMAN TEVFİK
Istanbul is a very good location for business and it has always been like that throughout its history. You can fly to Tokyo in 10 hours, and to New York and Johannesburg also in 10 hours. You can have a business meeting with someone in Tokyo in the morning and with someone from New York in the evening. It’s just right in the middle of those time zones. Istanbul has a European character and a Middle Eastern/Asian character as well. It’s a real city with a great wealth of culture and history. It has a good quality of life, it’s sophisticated, and the infrastructure is always improving. It has a great climate. In addition, people are much more educated than they used to be in the past. Many more people can speak English and other languages. It’s a young and dynamic population. There is a highly advanced health sector in Turkey and quality international schools and universities. That being said, it’s important to have a target such as being a financial center, and I think that target should enable to create an industrial center in Anatolia, not just remain as a financial center like Ireland or Iceland. If that target is accepted, then I’m sure the growth of Turkey will be incredible.
Istanbul has a very large potential. The government is now taking certain steps and the city will now begin to be identified more internationally as a place with great potential to become a financial center. Istanbul has a strong, innovative banking system, and technologically it is strong and innovative. The equity market is one of the largest in the area from Eastern Europe to Singapore. With the developed equity and fixed income markets that we have, derivatives will also take off quickly. We have a well-educated workforce in the financial sector, and the geographic position of the country can also not be overlooked. It is a hugely diversified nation. Many Turkish companies are becoming international, and strong infrastructure together with good standards of living will contribute to making Istanbul a strong financial center.
It takes a lot to be a successful international financial center. Istanbul has a large domestic market. It also has a healthy financial sector. Turkey has also become a center for trade with a number of countries in the region. Indeed, many companies are establishing regional offices in Istanbul. These components are going to be helpful. If you look at successful financial centers in the world, such as Singapore and Hong Kong, what both of them have going for them is that they are gateways. For Hong Kong, this gateway is clearly to China, and for Singapore it is Indonesia, Malaysia, and India. I think Turkey will have to design a very solid strategy in terms of what region it wants to cover as a financial center. Trying to compete with Dublin, Dubai, or Singapore is going to be difficult as that competition has been there for a while and is ahead of Istanbul in terms of having an established offshore banking regulatory framework, and having established players in town and a specific tax framework in place. I believe Turkey needs to carve out its own niche, and define a region that it believes it can make a difference to and design a regulatory framework that will enable banks to operate more effectively in that region compared to anywhere else.
© The Business Year