Sector Overview

Turkey has a total population of 75.2 million and generated a gross domestic product (GDP) of € 515 billion in 2007. With the initiation of the European Union (EU) accession process in 2005, Turkey has adopted a new environmental law (2006) as a first step in the harmonization of its environmental regulations with EU standards. This is still in the transition phase and enforcement is being improved.

Experts estimate that complete implementation of these regulations could take more than 10-15 years and this process has the potential to create a market for nvironmental technologies and infrastructure services that are expected to be valued around € 59 billion until 2024. Of this sum, approximately 70 percent government and 30 percent private investment is expected. Half of this investment would focus on drinking water and wastewater facilities and the balance on solid waste and air pollution treatment and prevention.

Adoption of EU environmental regulations and norms is driving demand for goods, services and technologies in this sector and there is increased environmental awareness among all decision-makers. There are great opportunities for Canadian environmental technology products in this progressively developing market

Economic Situation and Its impact on Environmental Investments The Turkish economy has grown steadily over the last 20 quarters. GDP and GDP per capita figures highlight the strength and stability of the national economy as well as its integration into macroeconomic global trends. Following items are the major indicators for the years between 2002 and 2007:

-GDP increased by 187%,
-Annual average real GDP grew by appx. 7%.
-Exports increased by 197%,
-Foreign trade increased by 216%.
-Exports to neighbouring countries rose 478%.
-Imports from neighbouring countries grew by 340%.

Despite the economic growth stated above, the current global economic crisis is expected to influence various sectors of development in Turkey. Environmental investments, particularly in the manufacturing sector, are anticipated to slow down whereas environmental investments in the energy sector with regards to air quality should continue in line with the ongoing energy investments.

Main buyers/investors:

Key players in the Turkish environmental sector are State Organizations, Non Government Organisations (NGOs), universities, municipalities and private companies, all of whom must comply with environmental rules and regulations. Major buyers of equipment and services in the Turkish environmental market are local authorities (municipalities) and industrial organizations.

Municipalities are responsible for the construction and management of solid waste and wastewater treatment services. The public tendering system often requires a locally established company involved in consortium tendering. Build & Operate and Build Operate & Transfer systems (BO/BOT) enhance the participation of foreign firms combined with the funding systems.

The private sectors, especially mining and manufacturing firms, have faster and simpler procurement systems. Tenders are announced in the Official Gazette, business magazines, and web sites of related organizations. Turkish industries are also potential buyers of industrial waste treatment and recycling technologies and equipment, as well as air pollution prevention products and services. The Ministry of Environment and Forestry (MoEF) is the body that makes and implements Turkey’s macro-environmental plan at the national level. MoEF buy environmental consultancy services in the scope of EU approximation process.

Main Local Industry:

There are more than 300 companies actively operating in the market. The capabilities of local firms in the sector are mostly in the contracting business; local engineering companies have limited capabilities to undertake comprehensive environmental projects due to their lack of experience and know-how. Therefore, they often have to seek partnerships with a foreign company to undertake larger projects. Local firms provide only civil works and basic technological services for many projects in industrial wastewater treatment systems, flue gas desulphurization systems in power and composting plants, incinerators and remediation  technologies, but they generally seek project financing. For these requirements, and for hard engineering equipment, local suppliers have to import the required technology, equipment and services, and would often team up with a foreign partner for the required financing of BO/BOT projects in the public sector.

Market and Sector Challenges

Policy and access issues: As a result of Turkey’s Customs Union with the EU and the country’s EU accession process, Turkey is on track for implementation of EU common commercial policy measures in all sectors. Recent reforms in Turkey’s business and investment arena have improved prospects for foreign firms and have greatly reduced time consuming bureaucratic processes and procedures.

Improvement is still needed in the areas of transparency and predictability in public sector projects.

The Turkish market requires long-term commitment and cooperation with local partners and a network of contacts both in the public and private sector. In this respect, regular visits and participation of Canadian firms in local trade fairs are significantly important for successful market entry. To be successful in Turkey, it is advisable for Canadian companies to have a local representative or opening a liaison office in order to enter the market. As business develops, this will lead to companies opening up their subsidiaries in Turkey. Canadian companies can rely on local experience and knowledge to assist in doing business and in marketing Canadian products and services in this developing market, as well as in understanding the regulatory and business framework.

Although not a major impediment to conducting business in Turkey, not having a Double Taxation Agreement (DTA) between Canada and Turkey, despite major efforts over the years to conclude one, is an issue to be resolved in order to reduce tax expenses to Canadian companies incorporated in Turkey. It is anticipated that the DTA will be in place in 2009. Depending on the location of consumers, most distributors have a dealer network throughout the country or in particular areas where the product is most used. In the case of several industrial sectors, a dealer/repair network may be required. Commission representatives/agents periodically visit their customers and their foreign principals to maintain strong personal contact (which is a very important marketing tool in Turkey).

Changes to policies with implications to trade and investment: Since the start of EU accession talks, environmental protection issues have become a hot issue on Turkey’s agenda. The environment is one of the thirty-five chapters that Turkey has been negotiating with the EU. The new Environmental Law was enacted in April 2006, imposing much stronger fines and penalties to prevent individuals and industries from polluting the environment.

As an incentive to reduce and prevent industrial pollution, the government plans to offer industrial plants a reduction in their electricity bills if they set up their own waste treatment facilities. The new law makes them liable for fines up to € 1,000,000

Therefore, the main areas offering business opportunities for Canadian companies are:

_ Industrial and municipal wastewater treatment;
_ Desulphurization systems for power plants and process industries;
_ Solid waste treatment and disposal; industrial and domestic water treatment/purification;
_ Waste incineration plants; environmental impact assessment and monitoring; waste recycling;
_ Water resource management consulting/engineering services;
_ Environmental health infrastructure and sanitary installation technologies;
_ Pipes and equipment; water insulation products;
_ Channel cleaning systems and products (for sewerage networks);
_ Alternative and renewable energy systems: Wind, hydraulic, geothermal, solar, hydrogen and fuel cell batteries for portable applications;
_ Hazardous waste collection systems: waste collection units, disposal services;
_ Emissions control: Emission reduction technologies, measurement, monitoring and control, and laboratory technologies systems.


Excerpts from: Turkey - Environmental Goods and Services, January 2009. By Golder & Associates, for Canadian Trade Commissioner Service