There are fears that a draft bill handing the ruling party some sweeping powers, including the seizure of assets and properties of companies which are critical of the government, will stoke uncertainty while discouraging foreign entrepreneurs in Turkey, observers argue.
The discussions come amid concerns that the political tension following government attempts to cover up some serious corruption investigations would further dent foreign investor confidence in Turkish markets, Today’s Zaman reported Friday.
Many say foreign direct investments (FDI) to Turkey will dry up amid fears that the government will intensify its pressure on financial and non-financial companies which it sees as a “threat.” What makes the situation even worse and complicated is that the definition of this threat is vague as the government declines to provide details regarding the changes to laws as required.
The media reported on Wednesday that the ruling Justice and Development Party (AK Party) had submitted a draft bill to Parliament on Tuesday evening that will empower the police and prosecutors with sweeping powers in searches, seizures, detentions and arrests while significantly restricting the rights of the defense for suspects.
The proposed bill allows the courts to seize the assets of any investor in case the entrepreneur is charged with a “crime against the government,” a vague explanation for a legal term, the report said.
Fears of Collapse
In the run up to Turkey’s domestic financial crisis in 2001, most wealthy Turks transferred their assets overseas over fears of a collapse of the financial system under poor political management. Interest from foreign investors and funds in Turkey took a serious blow back then.
If implemented, the proposed bill will not only discourage foreign investors from coming into the country but local companies will feel compelled to withdraw their capital from Turkey and deposit it into accounts abroad, analyst Mehmet Altan noted.
Underlining that the government has the potential to pass such a bill, Altan says: “There have been other legislations which we thought would not be passed but they did, including the ban on access to Twitter and Facebook. … So we should expect worse from this government, which has done everything to cover up the corruption probe. Foreign investors are following all these developments with concern.”
Self Shooting
“Passing such a law will be very bad news for Turkey given the fact that the country is desperately in need of hot money and new, long-term investments. … The government will shoot itself in the foot but it will be too late once it is passed,” economist Ugur Gurses told Today’s Zaman.
According to Gurses the bill risks intensifying political pressure and intervention in the markets. “It will not only be companies critical of the government’s policies, politically neutral businesses can also feel under pressure; this can lead to chaos,” he said. Gurses says this will have a negative impact on domestic markets.
“Foreign investors who would like to partner with their Turkish counterparts will not know which company will be at odds with the government and when. This is very risky at a time of a slowdown in economic growth and high unemployment,” he says.
