Policies Towards Foreign Direct Investment

The Government of Mali encourages foreign investment. In general, the law treats foreign and domestic investment equally. In practice, U.S. investors report facing many of the same challenges as other foreign investors do, including allegedly unfair application of tax collection laws, difficulties clearing goods through customs, and requests for bribes. Corruption in the judiciary is common and foreign companies may find themselves at a disadvantage vis-à-vis Malian investors in enforcing contracts and competing for public procurement tenders.

The Malian government has instituted policies promoting direct investment and export-oriented businesses. Foreign investors go through the same screening process as domestic investors. Criteria for authorizing an investment under Mali’s 2012 investment code include the size of the proposed capital investment, the use of locally produced raw materials, and the level of job creation.

Mali’s Investment Promotion Agency (API-Mali) serves as a one-stop shop for prospective investors and serves both Malian and foreign enterprises of all sizes. API-Mali’s website ( https://apimali.gov.ml/ ) provides information on business registration, investment opportunities, tax incentives, and other topics relevant to prospective investors.

Mali maintains an office in charge of business climate reform (Cellule Technique des Réformes du Climat des Affaires or CTRCA). Since 2015, Mali has also had a committee for monitoring business environment reforms that includes both government and private sector members. Mali adopted a law governing public-private partnerships (PPPs) in 2016 and has a dedicated PPP unit charged with reviewing and facilitating implementation of PPP projects in a multitude of sectors.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign and domestic private entities have the right to establish and own business enterprises with no restriction to forms of remunerative activities. There are some specific limits on ownership in the mining and media sector: Malian law requires that the owners and primary shareholders of media companies be Malian nationals. Foreign investors in the mining sector can own up to 90 percent of a mining company. The West African Economic and Monetary Union (WAEMU), of which Mali is a member, requires Malian and foreign companies to report if they will hold foreign currency reserves in their Malian business accounts and to receive approval from the Ministry of Economy and Finances and from the Central Bank for West African States (BCEAO).

Other Investment Policy Reviews

The World Trade Organization (WTO) reviewed the trade and investment policies of WAEMU members, including Mali, in 2018. The review can be accessed here .

Business Facilitation

Mali’s Investment Promotion Agency, API-Mali ( https://apimali.gov.ml/ ), serves as a one-stop shop to facilitate both foreign and local investment. In 2020, the World Bank’s Doing Business Report ranked Mali 124th out of 190 countries for ease of starting a business (a separate indicator that feeds into the overall ease of doing business ranking). The 2020 Doing Business Report estimates that it takes an average of 11 days and five separate administrative procedures to register a firm. There is no discrimination based on gender, age, or ethnicity in the process of business registration.

Foreign companies wishing to register in Mali may receive tax and customs benefits depending on the size of investment. Small and medium-sized enterprises (for which there is no common definition across government entities) are also eligible for some fiscal advantages.

Outward Investment

The transition government has no specific policy to promote outward investment.

Transparency of the Regulatory System

As reflected in agreements with the IMF and World Bank, Mali has adopted a generally transparent regulatory policy and laws to foster competition. Mali’s laws related to commerce, labor, and competition are designed to meet the requirements of fair competition, ease bureaucratic procedures, and facilitate the hiring and firing of employees. In practice, however, many international firms complain of lack of transparency in the regulatory system and challenges in enforcing regulatory requirements to the detriment of business prospects. There is no public comment period or other opportunity for citizens or businesses to comment upon proposed laws.

Mali is a member of UNCTAD’s international network of transparent investment procedures. Mali is also a member of the African Organization for the Harmonization of Business Law (OHADA) and implements the Accounting System of West African States (SYSCOA), which harmonizes business practices among several African countries consistent with international norms. There are no informal regulatory processes managed by nongovernmental organizations or associations.

Mali’s Public Procurement Regulatory Authority (Autorité de régulation des marchés publics or ARMDS) is tasked with ensuring transparency in public procurement projects and may receive complaints from businesses on public procurement-related issues. ARMDS publishes information about its decisions in disputes as well as key laws relating to public procurement on its website at http://www.armds.ml/ .

The Government of Mali regularly reviews regulations in order to adapt them to the current national context or to international standards or commitments. The new mining code and its implementing decree adopted respectively in 2019 and in 2020 will apply to future mining projects. Reforms to the investment code and the customs code are ongoing. The tax code and the tax procedures book (Livre de procédures fiscales) were substantially amended in September 2020, mainly to introduce a mandatory registration of all taxpayers, to operate changes in the VAT refund, to classify companies in terms of risks for the tax office, to digitalize tax return and payment. The tax office has also planned to obligate the use of e-services by June 2021 for online tax return and online tax check. More information is available on the tax office’s website here .

Mali makes public finance documents, including the budgets for all government ministries and offices, available on the Ministry of Economy of Finance’s website ( https://www.finances.gouv.ml/lois-des-finances ). Mali’s national budget provides details on the expenditures of government entities (including the presidency and prime minister’s office) and the revenues of tax collection authorities, including customs, the public debt directorate, the land administration directorate, and the treasury and public accounting directorate. The budget also includes information on public debt, as well as government subsidies to petroleum products and to the state-owned utility company (Energie du Mali or EDM). Mali also publishes a simplified version of the budget known as the citizen’s budget. Mali has multiple audit institutions tasked with monitoring public spending. The Malian supreme court’s accounts section is responsible for reviewing and approving the financial statements of all of Mali’s government departments. The Office of the Auditor General (Bureau du Verificateur General or BVG) is authorized to audit the accounts of all government entities as well as private companies or other entities that receive public funds. Its reports are made public and can be accessed at http://www.bvg-mali.org/ . Mali has other auditing institutions, including the Office to Fight against Illicit Enrichment (Office central de Lutte contre l’Enrichissement illicite or OCLEI), the General Comptroller of Public Services (Contrôle Général des Services Publics or CGSP), and the Support Unit for Administrative Auditing Bodies (Cellule d’Appui aux Structures de Contrôle de l’Administration or CASCA). Despite the existence of multiple audit institutions, management of public funds remains opaque and subject to corrupt practices, particularly in public procurements. In 2020, the Department of State determined that Mali did not meet the minimum requirements of fiscal transparency despite significant progress.

Mali has multiple audit institutions tasked with monitoring public spending. The Malian supreme court’s accounts section is responsible for reviewing and approving the financial statements of all of Mali’s government departments. The Office of the Auditor General (Bureau du Verificateur General or BVG) is authorized to audit the accounts of all government entities as well as private companies or other entities that receive public funds. Its reports are made public and can be accessed at http://www.bvg-mali.org/ . Mali has other auditing institutions, including the Office to Fight against Illicit Enrichment (Office central de Lutte contre l’Enrichissement illicite or OCLEI), the General Comptroller of Public Services (Contrôle Général des Services Publics or CGSP), and the Support Unit for Administrative Auditing Bodies (Cellule d’Appui aux Structures de Contrôle de l’Administration or CASCA). Despite the existence of multiple audit institutions, management of public funds remains opaque and subject to corrupt practices, particularly in public procurements. In 2020, the Department of State determined that Mali did not meet the minimum requirements of fiscal transparency despite significant progress.

International Regulatory Considerations

As a member of WAEMU and ECOWAS, Mali applies WAEMU and ECOWAS directives.

Mali is a member of the WTO. Mali has not notified the WTO of any measures concerning investments related to trade in goods that are inconsistent with the requirements of Trade Related Investment Measures. Information on other notifications from Mali to the WTO can be found at https://www.wto.org/english/thewto_e/countries_e/mali_e.htm  under the “Notifications from Mali” section.

Legal System and Judicial Independence

Mali’s legal system is based on French civil law. Mali uses its investment code, mining code, commerce code, labor code, and code on competition and price to govern disputes. Disputes occasionally arise between the government or state-owned enterprises and foreign companies. Some investors report that certain cases involve wrongdoing on the part of corrupt government officials.

Although Mali’s judicial system is independent, many companies have noted that it is subject to political influence. Numerous business complaints are awaiting an outcome in the courts. The Minister of Justice wields influence over the career paths of judges and prosecutors, which may compromise their independence. Corruption in the judicial system is common, leading to what foreign investors have characterized as flawed decisions.

An independent commercial court was established in 1991 with the encouragement of the U.S. government to expedite the handling of business litigation. Commercial courts, located in Bamako, Kayes, and Mopti, can hear intellectual property rights cases. In areas where there is no commercial court, the local courts of first instance have the jurisdiction to hear business disputes. Decisions made by the courts of first instance are appealable in the court of appeals and/or in the supreme court. Since its inception, the commercial court has handled cases involving foreign companies. The court is staffed by magistrates and is assisted by elected Malian Chamber of Commerce and Industry representatives. Teams composed of one magistrate and two Chamber of Commerce and Industry representatives conduct hearings. The magistrate’s role is to ensure that the court renders decisions in accordance with applicable commercial laws, including internationally recognized bankruptcy laws, and that court decisions are enforced under Malian law.

Laws and Regulations on Foreign Direct Investment

Mali’s investment code gives the same incentives to both domestic and foreign companies for licensing, procurement, tax and customs duty deferrals, export and import policies, and export zone status if the firm exports at least 80 percent of production. Incentives include exemptions from duties on imported equipment and machinery. Investors may also receive tax exemptions on the use of local raw materials. In addition, foreign companies can negotiate specific incentives on a case-by-case basis. Mali has reduced or eliminated many export taxes and import duties as part of ongoing economic reforms; however, export taxes remain for gold and cotton, Mali’s two primary exports. The government applies price controls to petroleum products and cotton, and occasionally to other commodities (such as rice) on a case-by-case basis.

In most cases, foreign investors may own 100 percent of any business they create, except in the mining and media sectors. Foreign investors may also purchase shares in parastatal companies. Foreign companies may also start joint-venture operations with Malian enterprises. The repatriation of capital and profit is guaranteed.

Despite having a generally favorable investment regime on paper, foreign investors have complained of facing challenges in practice, including limited access to financing, high levels of corruption, poor infrastructure (including inconsistent electricity access), a non-transparent judicial system, and the lack of an educated workforce.

The following websites provide additional information relating to investments in Mali:

Investment Promotion Agency: https://apimali.gov.ml/  and http://mali.eregulations.org/ 

Mali Trade Portal: https://tradeportal.ml/ 

National Council of Employers: http://www.cnpmali.org/index.php/lois-et-reglements/codes 

Niger River Authority (Officer du Niger): https://www.on-mali.org/on/ 

Chamber of Commerce and Industry: http://www.cci.ml 

Ministry of Economy and Finances: http://www.finances.gouv.ml 

Public Procurement Regulatory Authority: http://www.armds.ml/ 

Competition and Antitrust Laws

The Ministry of Commerce and Industry is responsible for reviewing free competition in the Malian marketplace. Mali’s national competition law (Law 2016-006 and Decree 2018-0332) and the WAEMU 2002 anti-trust rules are the primary judicial documents that govern competition in Mali. The competition law bans any agreements restricting competition or market access. It also bans control or fixation of prices through agreements. Abuses of dominance are prohibited. The commercial court (Tribunal of Commerce) and ARMDS are the primary judicial bodies that oversee competition-related concerns.

Mali’s Organization of Industrial Entrepreneurs (Organisation Patronal des Industriels or OPI) has criticized corruption and smuggling as significant hurdles to fair competition. Contacts report that Mali struggles to limit illegal imports of products such as sodas, juices, tobacco, medicines, and textiles (including fabrics). The General Directorate of Customs, the National Directorate for Commerce and Competition, and the Agency for the Sanitary Security of Foods occasionally intervene to address the import and commercialization of smuggled goods but have limited capacity to effectively address the problem.

Expropriation and Compensation

Expropriation of private property other than land for public purposes is rare. In January 2021, the Malian authorities launched an operation to demolish unlawful construction in the areas surrounding Bamako’s international airport. According to the transition government, illegal construction covering a total surface area of 7,192 hectares in the vicinity of the airport is slated to be destroyed.

Mali has not unfairly targeted U.S. firms for expropriation. Under Malian law, the expropriation process must be public and transparent and follow the principles of international law. Compensation based on market value is awarded by court decision.

The government may exercise eminent domain in various situations, including when undertaking large-scale public projects, in cases of bankrupt companies that had a government guarantee for their financing, or when a company has not complied with the requirements of an investment agreement with the government.

In cases of illegal expropriations, Malian law affords claimants due process in principle. However, given reported corruption in the land administration sector, impartial adjudication of court cases involving land disputes is rare.

Dispute Settlement

ICSID Convention and New York Convention

Mali is a member of the International Center for the Settlement of Investment Disputes (ICSID). Malian law (Decree No. 09/P-CMLN promulgating Order No. 77-63/CMLN of November 11, 1977 and Order No. 77-63/CMLN) authorizes implementation of the ICSID Convention. Mali is also a signatory of the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention).

Investor-State Dispute Settlement

Investors engaged in disputes with the state are supposed to undertake amicable negotiations before engaging Mali’s Public Procurement Regulatory Authority (ARMDS) or the courts. Failure to reach an out-of-court agreement will lead to the case being transferred to the Court of First Instance, the commercial court, or international arbitration. The decisions of foreign courts are enforced so long as they are specified and recognized by Malian law.

Mali’s investment code allows a foreign company that has a signed agreement with the government to refer to international arbitration any case that the local courts are unable to resolve. Mali’s 2019 mining code specifies that if there is a disagreement between the Malian government and a mining company related to application of the mining code, the disagreement may be referred to Malian courts, regional courts, and international courts.

Investors have reported that the dispute resolution process is often unfair, cumbersome, and time-consuming. Dispute resolution can take multiple years and is reportedly often fraught with corruption, political influence, and demands for payments to facilitate the legal process.

International Commercial Arbitration and Foreign Courts

Mali is a member of the African Organization for the Harmonization of Business Law (OHADA) and has ratified the 1993 treaty creating the Common Court of Justice and Arbitration. OHADA has a provision allowing litigation between foreign companies and domestic companies or with the government to be tried in an appellate court outside of Mali.

Bankruptcy Regulations

Mali’s bankruptcy law is found in its commerce code, which does not criminalize bankruptcy. According to the World Bank’s 2020 Doing Business Report, resolving insolvency takes 3.6 years on average and costs 18 percent of the debtor’s estate. Generally, a bankrupt company will be sold piecemeal. The average recovery rate is 28.3 cents on the dollar.

Investment Incentives

Mali’s investment, mining, commerce, and labor codes aim to encourage investment and attract foreign investors. By law, there is no discrimination between foreign-owned firms and Malian entities with regard to investment opportunities. The investment code offers incentives to companies that reinvest profits to expand existing businesses or diversify into another relevant sector. The code also encourages the use of locally sourced inputs, which can offer tax exemptions. Companies that use at least 60 percent locally produced raw materials in their products are eligible for certain tax exemptions. Companies that invest at least five percent of their turnover in supporting local research and development are eligible for a reduction of payroll taxes for Malian employees.

Companies (domestic or foreign) that export at least 80 percent of their production are entitled to tax-free status. As such, they benefit from duty free-status on all equipment and other inputs needed for their operations. Mali encourages investment in the cultural sector by reducing taxes on imports of cultural goods. In March 2020, Mali adopted an order exempting renewable energy equipment from VAT and import taxes. Mali may also provide short-term tax exemptions on certain essential products (such as rice, cooking oil, milk, and sugar) when the prices of those goods are unusually high.

Most businesses are located in the capital city of Bamako. The investment code encourages the establishment of new businesses in other areas through incentives such as income tax exemptions for five- to eight-year periods, reduced energy prices, and the installation of water, electric power, and telecommunication lines in areas lacking public utilities.

Foreign Trade Zones/Free Ports/Trade Facilitation

To date, there are no dedicated free trade zones in Mali. Mali, Cote d’Ivoire, and Burkina Faso have planned to establish a special economic zone involving the agricultural areas of Sikasso in Mali, Korogho in Cote d’Ivoire, and Bobo-Dioulasso in Burkina Faso, but the zone is not yet operational. The investment code states that companies operating in special economic zones will benefit from reductions of taxes on profits and of corporate taxes to 25 percent over a period of seven years.

Performance and Data Localization Requirements

The 2019 mining code requires large mining companies (for which there is no precise definition in the mining code) to recruit Malian nationals who possess the requisite skills and experience. Mining companies must also progressively replace foreign employees with Malian nationals who possess the requisite skills and experience. Feasibility studies for large mines must incorporate a plan to replace foreign employees with Malian employees. There is no requirement that foreign investment or foreign equity in a mine be reduced over time.

Real Property

Property rights are protected under Malian law. Ownership of property is defined by the use, the profitability, and the ability of the owner to sell or donate the property. According to the World Bank’s 2020 Doing Business Report, registering property in Mali requires five steps, takes 29 days, and costs 11.1 percent of the property value on average. Mali scored 8 (against 9 for other sub-Saharan African countries and 23 for OECD countries) on the quality of land administration index (with 0 being the worst score and 30 the best).

The Government of Mali established the Malian Center for the Promotion of Industrial Property to implement property rights protection laws, including the WTO TRIPS (Trade Related Aspects of Intellectual Property Rights) agreement. The Malian Center for the Promotion of Industrial Property is a member of the African Property Rights Organization and works with international agencies recognized by the United Nations Industrial Development Organization. Patents, copyrights, and trademarks are covered under property rights protection laws. These structures notwithstanding, property rights are not always adequately protected in practice.

Mali’s National Land Agency (Direction Nationale des Domaines et du Cadastre or DNDC) defines three types of land property classifications in Mali: 1. a land title (le titre foncier), which gives full property ownership to an individual; 2. an occupancy permit (permis d’occuper) that can be obtained by paying a fee and does not grant full ownership; and 3. farming rights granted to rural agricultural communities. All non-registered land belongs to the state. Various government officials, including prefects, mayors, governors, and officials from the Ministry of Lands, are able to grant land ownership status.

Mali currently lacks a nationwide land registry, and different government structures at the local, regional, and national level are involved in land administration. As a result, there are often competing claims for land. In March 2020, as part of efforts to improve land management, Mali began the process of adopting a new law to create a one-stop shop for land registration, eliminate rural land titles (concession rurale), reinforce traditional land rights (droit coutumier), and enable the Minister of Lands to cancel the attribution or confiscation of public properties.

Intellectual Property Rights

Mali is a member of the World Intellectual Property Organization (WIPO). Mali has ratified a number of international treaties related to intellectual property rights (IPR). There are two primary agencies involved with the protection of IPR in Mali: the Malian Office of the Rights of the Author (Bureau Malien du Droit d’Auteur or BUMDA) and the Malian Center for the Promotion of Intellectual Property (Centre Malien de Promotion de la Propriété Intellectuelle or CEMAPI). CEMAPI is the primary agency for patents and for industrial property rights violation claims, while BUMDA covers artistic and cultural works. In addition to registering copyrights, BUMDA conducts random searches during which it seizes and destroys counterfeit products. Mali’s Agency for the Sanitary Security of Foods, the National Directorate of Agriculture, and the National Directorate for Commerce and Competition are also charged with enforcing laws related to fair trade, fair competition, and IPR.

In general, however, the government has limited capacity to combat IPR violations or to seize counterfeit goods. There is a significant number of reported IPR violations in the artistic sector as well as in the pharmaceutical sector. According to the Malian National Pharmaceutical Association, nearly 50 percent of pharmaceuticals sold in Mali are counterfeit. Many CDs, movies, and books are reported to be pirated. Several companies have noted that children are often involved in selling counterfeit products such as clothes, CDs, and books. In the past, counterfeit products were typically imported from foreign cities, including Guangzhou and Dubai. However, BUMDA has reported that counterfeit products increasingly originate in Mali and Nigeria.

Mali is not included in the United States Trade Representative (USTR) Special 301 Report or the Notorious Markets List.

Capital Markets and Portfolio Investment

Portfolio investment is not a current practice in Mali. In 1994, the government instituted a system of treasury bonds available for purchase by individuals or companies. The payment of dividends or the repurchase of bonds may be done through a compensation procedure offsetting corporate income taxes or other sums due to the government.

The WAEMU stock exchange program based in Abidjan has a branch in each WAEMU country, including Mali. One Malian company is quoted in the stock exchange. The planned privatization of Mali’s state-run electricity company (EDM), telecommunications entity (Societé des Telecommunications du Mali or SOTELMA), cotton ginning company (Compagnie Malienne pour le Développement du Textile or CMDT), and Bamako-Senou Airport offer prospects for some companies to be listed on the WAEMU stock exchange.

Money and Banking System

WAEMU statutes and the BCEAO govern the banking system and monetary policy in Mali. Commercial banks in Mali enjoy considerable liquidity. The majority of banks’ loanable funds, however, do not come from deposits, but rather from other liabilities, such as lines of credit from the BCEAO and North African and European banks. Despite having sufficient loanable funds, commercial banks in Mali tend to have highly conservative lending practices. Bank loans generally support short-term activities, such as letters of credit to support export-import activities and short-term lines of credit and bridge loans for established businesses. Small- and medium-sized businesses have reportedly had difficulty obtaining access to credit. The Guarantee Fund for Private Sector (le Fonds de Garantie du Secteur Privé or FGSP) is a partially state-owned financial institution which provides guarantees up to 50 percent of the loan that SMEs/SMIs and microfinance institutions could borrow from commercial banks. The FGSP also provides direct financing to the private sector. Mali recently increased the financial resources of the FGSP as a measure to support the private sector to face the economic impact of the COVID-19 pandemic. Mali also created a National Directorate of Small and Medium Enterprises (SMEs) in 2020 in part to address the challenges SMEs face in accessing financing.

In order to improve the business environment and soundness of the financial system, the BCEAO adopted a uniform law regarding credit reference bureaus. The Government of Mali aligned its legislation with this regional requirement by authorizing a credit reference bureau in Mali to collect and process information from financial institutions, public sources, water and electricity companies, and other entities to create credit records for clients. The credit rating system aims to increase the solvency of borrowers and improve access to credit.

Mali’s microfinance sector has grown rapidly. Despite this growth, microfinance institutions suffer from poor governance and management of resources and have not put in place all government regulations or regional best practices to ensure sufficient financial controls and transparency.

Money laundering and terrorist financing are concerns in Mali. Although Mali’s anti-money laundering law designates a number of reporting entities, companies have noted that very few comply with their legal obligations. While businesses are technically required to report cash transactions over approximately $10,000, most reportedly do not. Despite the operation of a number of al-Qaeda-linked terrorist and armed groups in northern and central Mali, the country’s financial intelligence unit, the National Financial Information Processing Unit (CENTIF), receives relatively few suspicious transaction reports concerning possible cases of terrorist financing. With the exception of casinos, designated non-financial businesses and professions are not subject to customer due diligence requirements.

Mali is a member of the Inter-Governmental Action Group Against Money Laundering in West Africa (GIABA), a Financial Action Task Force (FATF)-style regional body. Mali’s most recent mutual evaluation report completed November 2019 can be found at http://www.giaba.org/reports/mutual-evaluation/Mali.html .

Foreign Exchange and Remittances

Foreign Exchange

As one of the eight WAEMU countries, Mali uses the CFA franc—issued by the BCEAO—as its currency. The CFA franc is pegged to the euro and supported by the French treasury, which ensures a fixed rate of exchange. The Malian investment code allows the foreign transfer and conversion of funds associated with investments, including profits. Local currency exchanges are available at Malian banks.

There are no limits on the inflow or outflow of funds for repatriation of profits, debt service, capital, or capital gains. In the CFA franc zone, there is no limit on the export of capital provided that an exporter has adequate documentation to support a transaction and the exporter meets the domiciliation requirement. Most commercial banks have direct investments in western capital markets.

Article 12 of Mali’s 2012 investment code states that foreign investors may transfer abroad, without prior authorization, all payments relating to business operations in Mali (including net profits, interest, dividends, income, allowances, savings of expatriated salaried employees). Capital and financial transactions (such as buying and selling stocks, assets, and compensation from expropriation) are free to transfer abroad but are subject to declaration requirements to the Ministry of Economy and Finances. These transfers must be done through authorized intermediaries such as banks or financial institutions.

Remittance Policies

Mali does not have a specific policy for remittances. According to the World Bank, personal remittances from Mali’s diaspora represented around six percent of GDP in 2018.

Sovereign Wealth Funds

Mali does not have a sovereign wealth fund.

Mali has privatized or reduced government involvement in a number of state-owned enterprises (SOEs). However, there are still 45 state-owned or partially state-owned companies in Mali, including 12 mining companies, five banks, the national electricity company (EDM), a telecommunications entity (SOTELMA), a cotton ginning company (CMDT), a cigarette company (SONATAM), sugar companies (SUKALA and N-SUKALA), and the Bamako-Senou Airport. The government no longer has shares in two banks, BSIC-Mali, Coris Bank International-Mali, in which it had respectively 25 and 10 percent shares as of December 2017. The government reduced its shares in the Malian Development Bank (BDM) and Malian Solidarity Bank (BMS) while it maintained its share in the Banque Nationale de Developpement Agricole (BNDA) which increased its total capital stock by 21.5 percent in 2019 compared with 2018. More details on SOEs are available here .

Private and public enterprises compete under the same terms and conditions. No preferential treatment is given to SOEs, although they can be at a competitive disadvantage due to the limited flexibility they have in their management decision-making process. Malian law guarantees equal treatment for financing, land access, tax burden, tax rebate, and access to raw materials for private firms and SOEs.

The government is active in the agricultural sector. The parastatal Niger River Authority (Office du Niger) controls much of the irrigated rice fields and vegetable production in the Niger River inland delta, although some private operators have been granted plots of land to develop. The Office du Niger encourages both national and foreign private investment to develop the farmlands it manages. Under an MCC-funded irrigation project, Mali granted titles to small private farmers; an adjacent tranche developed with MCC was to have been open to large-scale private investment through a public tender process. However, all MCC projects were suspended as a result of the coup d’état of March 2012 and discontinued when the projects reached the end of their implementation deadline. The national cotton production company, CMDT, which is yet to be privatized, provides financing for fertilizers and inputs to cotton farmers, sets cotton prices, purchases cotton from producers, and exports cotton fiber via ports in neighboring countries.

The government also remains active in the banking sector. The state owns shares in five of the 14 banks in Mali: BDM (19.5 percent share), BIM (10.5 percent), BNDA (36.5 percent), BMS (13.8 percent), and BCS (3.3 percent). While the government no longer has a majority stake in BDM, it has significant influence over its management, including the privilege to appoint the head of the Board of Directors.

Senior government officials from different ministries make up the boards of SOEs. Major procurement decisions or equity raising decisions are referred to the Council of Ministers. Government powers remain in the hands of ministries or government agencies reporting to the ministries. No SOE has delegated powers from the government.

SOEs are required by law to publish an annual report. They hold a mandatory annual board of directors meeting to discuss financial statements prepared by a certified accountant and certified by an outside auditor in accordance with domestic standards (which are comparable to international financial reporting standards). Mali’s independent Auditor General conducts an annual review of public spending, which may result in the prosecution of cases of corruption. Audits of several state-owned mining companies have revealed significant irregularities.

Privatization Program

The government’s privatization program for state enterprises provides investment opportunities through a process of open international bidding. Foreign companies have responded successfully to calls for bids in several cases. The government publishes announcements for bids in the government-owned daily newspaper, L’Essor. The process is non-discriminatory in principle; however, there have been many allegations of corruption in public procurement.

There is no general awareness or defined standard of responsible business conduct in Mali among producers or consumers. Despite the creation of the Malian Agency for Normalization and Quality Promotion (Agence Malienne de Normalisation et de Promotion de la Qualité or AMANORM) and the National Agency for the Sanitary Security of Foods (Agence Nationale pour la Securité Sanitaire des Aliments or ANSSA), some report that Mali continues to produce, import, and export dangerous products and products of poor quality. Allegations of violations of hygiene and quality standards are common in the food-processing industry and investors have reported there is no general awareness about the dangers of unsafe and toxic chemical products in food production.

Labor rights are not generally respected given Mali’s large and unregulated informal sector. Even formal businesses often hire workers informally, such that employees do not always receive social security, retirement, or other related benefits. Mali has various laws intended to prevent child and forced labor as well as business practices harmful to the environment and local communities. Despite these laws, there are frequent reported cases of child labor and forced labor in the mining, agricultural, service, and industrial sectors. The mining code requires owners of mining and exploitation permits to present local development plans to mitigate the health, security, hygiene, environment, and cultural heritage impacts of their mining activities. Conflicts between local artisanal mining communities and foreign mining companies over land ownership rights are frequent. Local communities have also voiced concern with the significant environmental impacts of mine closures because of the lack of government-enforced measures to restore and rehabilitate the environment. Foreign mining and oil exploration companies sometimes provide schools and health clinics to communities in proximity of their activities as a form of corporate social responsibility. These activities are not done in accordance with the OECD Guidelines for Multinational Enterprises but are rather the result of individual negotiations between the company and the leaders of neighboring communities.

Mali is an active member of the Extractive Industries Transparency Initiative (EITI) and since 2011 has been designated as a “compliant country.” The latest EITI decision available at https://eiti.org/board-decision/2019-47  notes that Mali made “meaningful progress with considerable improvements in implementing the 2016 EITI Standard.”

Acute insecurity and intercommunity violence in the northern and central regions as well as episodic terrorists’ attacks in the southern regions have contributed to the development of the private security sector which proposes services to the government , local companies, foreign governments and companies, and international organizations. Mali is not a signatory to the Montreux Document on Private Military and Security Companies, nor of the International Code of Conduct for Private Security Service Providers’ Association (ICoCA).

Additional Resources

Department of State

• Country Reports on Human Rights Practices ();
• Trafficking in Persons Report ();
• Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities () and;
• North Korea Sanctions & Enforcement Actions Advisory ().

Department of Labor

• Findings on the Worst forms of Child Labor Report ( );
• List of Goods Produced by Child Labor or Forced Labor ();
• Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World () and;
• Comply Chain ().

Many companies claim that corruption is the most significant obstacle to foreign investment and economic development in Mali. While corruption is a crime punishable under the penal code, bribery is frequently reported in many large contracts and investment projects. Some investors report that government officials often solicit bribes in order to complete otherwise routine procedures. The transition government has pledged to prioritize anti-corruption efforts. In 2020, Transparency International’s global corruption ranking for Mali slightly improved to 129th of 180 ranked countries (from 130th of 180 in 2019). Mali’s perceived public corruption score from Transparency International was 30 out of 100 in 2020 (with 0 being “highly corrupt” and 100 being “very clean”). Relative to other developing countries, Mali was rated at the 67th percentile for control of corruption on the FY2020 MCC Scorecard (based on World Bank and Brookings Worldwide Governance Indicators reports).

Corruption is reportedly common in government procurement and dispute settlement. The government has addressed this issue by requiring procurement contracts to be inspected by the Directorate General for Public Procurement, which determines whether the procedure meets fairness, price competitiveness, and quality standards. However, there are allegations of significant political interference in procurement. In addition, both foreign and domestic companies complain about harassment and requests for bribes from officials involved in tax collection. Mali’s international donor community has been working with the government to reduce corruption.

Investors have found the judicial sector to be neither independent nor transparent. Questionable judgments in commercial cases have occasionally been successfully overturned at the supreme court. However, there is a general perception among the populace that while prosecution of minor economic crimes is routine, official corruption, particularly at the higher levels, goes largely unpunished.

In 2004, then-president of Mali Amadou Toumani Touré created the Office of the Auditor General (Bureau du Verificateur General or BVG) as an independent agency tasked with auditing public spending. Since its inception, the BVG has uncovered several significant cases of corruption, including in the customs directorate. However, few findings of corruption have resulted in prosecutions.

Growing pressure from international donors for more transparency in public resource management led to changing the appointment process of the Directors of Finance and Equipment. As a result, in March 2017, the Minister of Economy and Finances dismissed 15 Directors of Finance and Equipment. Eighteen others were moved to other ministries. The government opened a new office in 2017, the Office to Combat Illicit Enrichment (Office central de Lutte contre l’Enrichissement illicite or OCLEI), to combat illicit enrichment by government officials. The OCLEI has the authority to collect asset declarations from public servants, to conduct investigations of government officials suspected of corruption, and to refer cases for prosecution if sufficient evidence is gathered against the defendant. However, the OCLEI’s operations were temporarily suspended following civil servants’ union protests against asset declaration requirements. Negotiations between the unions, the government, and donors eventually yielded a satisfactory solution that enabled the office to resume operations, and the office has begun registering asset declarations for certain categories of civil servants. According to its 2017-2018 report, the OCLEI received asset declarations from approximately 1,000 civil servants (nearly 70 percent of all civil servants in Mali are subject to assets declaration) over 2017-2018 and referred three suspected cases of corruption to the justice system. However, the OCLEI came under significant pressure in 2020 when Mali’s main workers union requested that the government close OCLEI.

Following a cabinet reshuffle in 2019, the newly appointed Minister of Justice took measures to address corruption by appointing a new prosecutor in the Economic and Financial Specialized Judicial Office of Bamako, a court in charge of prosecution of corruption. Since these changes, many high-profile business and political leaders have been arrested due to corruption allegations. Mali’s Auditor General also increased the pace of its reporting in 2019 and 2020, releasing 11 financial audit reports, four performance audit reports, four reports of conformity, and seven reports on the level of implementation of recommendations it made in previous audit reports. The Auditor General refers cases of fraud or other unlawful practices to the Economic and Financial Specialized Judicial Office of Bamako.

Resources to Report Corruption

Mamoudou Kassogue

Head Prosecutor

Economic and Financial Specialized Judicial Office (Pole Economique et Financier de Bamako)
Tel. (+223) 20 29 71 34

Samba Alhamdou Baby
Chief Auditor
Office of the Auditor General (Bureau du Verificateur General)
Tel. (+223) 20 29 70 25

Mama Sininta
Chief Prosecutor
Accounts Chamber of the Supreme Court (Section des Comptes de la Cour Supreme)
Tel. (+223) 20 22 15 02

Konate Salimata Diakite
Comptroller
Comptroller of Public Services (Controleur General des Services Publics)
Tel. (+223) 20 22 58 15

The U.S. Department of State’s Fact Sheet on Mali is available at https://www.state.gov/u-s-relations-with-mali/. The current Travel Advisory for Mali is available at https://travel.state.gov/content/travel/en/traveladvisories/traveladvisories/mali-travel-advisory.html.

Throughout nearly three decades of multi-party democracy, Mali has consistently encouraged private enterprise and investment. However, the destabilizing effects of Mali’s 2012 coup d’état led to a deterioration of the economic situation and uncertainty in the investment climate. Mali continues to face significant political and security challenges amidst slow implementation of a peace agreement signed in 2015 that aims to resolve the ongoing conflict in northern Mali. A disparate group of politically-motivated armed groups, militias, bandits, and extremist groups continue to exert influence in wide swathes of Mali’s largely ungoverned northern areas as well as central Mali. Furthermore, terrorist groups have increased the frequency and range of their attacks—particularly against the base camps of the UN peacekeeping mission (MINUSMA) and the Malian Armed Forces in northern and central Mali—in an effort to destabilize the country. The situation in central Mali—namely in the Segou and Mopti regions—is increasingly unstable due to intercommunal conflict, localized political violence, and the incursion of extremist groups into the region. The 2020 coup d’état again plunged the country into political uncertainty and instability, further exacerbating existing challenges.

Terrorist groups with varying degrees of allegiance to al-Qaeda and ISIS operate in Mali, and often pursue local agendas complementary to these global extremist movements. Groups linked with al-Qaeda in the Islamic Maghreb (AQIM), which have merged under the banner of Jama’at Nusrat al-Islam wal-Muslimin (JNIM), continued to conduct terrorist attacks throughout 2020, primarily targeting international and Malian military forces. These groups have claimed responsibility for recent gun and improvised explosives attacks, kidnappings, and other violent actions in northern and central Mali.

In addition to MINUSMA’s peacekeeping presence, French troops are deployed in the country and conduct offensive counterterrorism operations in collaboration with Malian security forces that target extremist elements. However, their presence is not sufficient to counter every threat. Extremist groups have attacked UN peacekeepers’ northern base camps in Timbuktu, Gao, and Kidal. Attacks by violent extremist groups have moved beyond the traditional conflict zone in the North to central and southern Mali. The area along the border with Burkina Faso, and some remote parts of southern Mali, are increasingly under threat of attack.

While Malian forces, backed by MINUSMA and French forces, have taken steps to reassert control over most of the major cities, much of the North and Center remain unstable, with large swaths of the country outside state control. AQIM, long entrenched in northeastern Mali, remains a threat. AQIM has demonstrated a pattern of kidnapping hostages for ransom and launching operations against neighboring Algeria, Mauritania, Burkina Faso, and Niger. AQIM and its local affiliates have been involved in various terrorist attacks targeting Westerners in Mali, including at a restaurant in Bamako in March 2015; at a hotel frequented by foreigners in Sevare in August 2015; against the Radisson Blu Hotel in Bamako in November 2015; and against the Campement de Kangaba hotel in June 2017.

While previous extremist attacks have generally spared foreign companies, aside from hotels and restaurants, some attacks have targeted infrastructure projects involving foreign companies. In October 2017, extremists attacked a foreign company in charge of the construction of a road in Timbuktu and destroyed several vehicles. In March 2018, terrorists attacked and destroyed a USD 66 million dam construction project in Djenne. In addition, in April 2020, extremist groups carried out attacks in the southwestern region of Kayes, Mali’s gold-mining region.

U.S. citizens living or traveling in Mali are encouraged to enroll in the Smart Traveler Enrollment Program (STEP) at https://step.state.gov/step to receive security messages and make it easier to be located in an emergency.

Labor is widely available in Mali, but companies have reported that skilled labor is in short supply. Reliable unemployment data is difficult to obtain. While a 2017 survey by Mali’s government found an unemployment rate of 9.1 percent, the actual figure is likely much higher. The rate is generally higher for youth between the ages of 15-24, coming in at 21.9 percent according to the government’s 2017 survey. Workers have the right to unionize. Relations between labor and management are often contentious and strikes are common. The government has ratified all International Labor Organization (ILO) conventions protecting the rights of workers.

Since June 2014, the Government of Mali faced several strikes led by different unions, including the national union of workers (UNTM), the union of university and basic education professors, the union of workers from the tax office, the union of workers of the national radio and television company, the confederation of unions (CSTM), the union of judges, and the union of health workers. Since its inauguration in September 2020, the transition government has also faced a series of strikes across sectors. The private sector also participates in strikes, as seen in 2015 and 2017 banking and financial sector strikes. While employers and workers are often able to reach a resolution, strikes can significantly disrupt economic activities, particularly when they involve key sectors like transportation or the financial sector.

The labor code adopted in 1992 (amended in December 2011, in June 2017, and in July 2019) streamlined hiring and firing procedures. Conflicts often arise when employers terminate contracts and fire employees. Large Malian and international employers have had difficulty enforcing their rights in court, given that powerful and independent labor unions play an important role in supporting their members and in other national affairs. Compensation plan negotiations and firing procedures are time-consuming and closely scrutinized by the Ministry of Labor and the judiciary. Labor laws differentiate between layoffs and firing. Employees who are laid off are not entitled to unemployment compensation but are entitled to other benefits, including one-month gross salary and compensation for untaken leave. Employers are required to provide advance notice and a certificate to laid off employees. Although not a requirement, it is advisable to have regular contacts with labor inspectors, especially when concluding new hiring contracts or considering terminations or reductions in force.

Child labor and trafficking in persons continue to be serious problems in Mali. The ILO reports that over 46 percent of children in Mali engage in child labor, including the worst forms of child labor such as child soldiering and hazardous activities in the agriculture and gold mining sectors. Cotton, artisanal gold, and rice are included on the U.S. government’s List of Goods Produced by Child Labor or Forced Labor. Additionally, rice is included on the U.S. government’s Executive Order 13126 List of Goods Produced by Forced and Indentured Child Labor. The government has action plans for monitoring child labor and unsafe working conditions. Labor inspection entities, however, are underfunded and unable to regularly conduct inspections or provide support for victims of violations. In June 2017, Mali amended its labor code to align Malian law on the minimum age of employment with the ILO standard, increasing the minimum age of employment from 14 up to 15. The amended labor law bans discrimination based on religion, race, or gender. It also requires equality in terms of remuneration and forbids forced and compulsory labor.

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

* Source for Host Country Data: BCEAO (rate: USD $1 = 542 FCFA)

Table 3: Sources and Destination of FDI

Table 4: Portfolio Investment 

Data not available.

Economic and Commercial Office
U.S. Embassy Bamako, Mali
ACI 2000, Rue 243, Porte 297 +223 20 70 23 00
+223 20 70 23 00
BamakoEcon@state.gov 

Policies Towards Foreign Direct Investment  

Turkey acknowledges that it needs to attract significant new foreign direct investment (FDI) to meet its ambitious development goals.  As a result, Turkey has one of the most liberal legal regimes for FDI among Organization for Economic Cooperation and Development (OECD) members.  According to the Central Bank of Turkey’s balance of payments data, Turkey attracted a total of USD 5.67 billion of FDI in 2020, almost USD 200 million down from USD 5.87 billion in 2019.  This figure is the lowest FDI figure for Turkey in the last 16 years, and likely reflects a need to improve enforcement of international trade rules, ensure the transparency and timely execution of judicial awards, increase engagement with foreign investors on policy issues, and to implement consistent monetary and fiscal economic policies to promote strong, sustainable, and balanced growth.  Turkey also needs to take other political measures to increase stability and predictability for investors.  A stable banking sector, tight fiscal controls, efforts to reduce the size of the informal economy, increased labor market flexibility, improved labor skills, and continued privatization of state-owned enterprises would, if pursued, have the potential to improve the investment environment in Turkey.

Most sectors open to Turkish private investment are also open to foreign participation and investment.  All investors, regardless of nationality, face similar challenges:  excessive bureaucracy, a slow judicial system, relatively high and inconsistently applied taxes, and frequent changes in the legal and regulatory environment.  Structural reforms that would create a more transparent, equal, fair, and modern investment and business environment remain stalled.  Venture capital and angel investing are still relatively new in Turkey.

Turkey does not screen, review, or approve FDI specifically.  However, the government has established regulatory and supervisory authorities to regulate different types of markets.  Important regulators in Turkey include the Competition Authority; Energy Market Regulation Authority; Banking Regulation and Supervision Authority; Information and Communication Technologies Authority; Tobacco, Tobacco Products and Alcoholic Beverages Market Regulation Board; Privatization Administration; Public Procurement Authority; Radio and Television Supreme Council; and Public Oversight, Accounting and Auditing Standards Authority.  Some of the aforementioned authorities screen as needed without discrimination, primarily for tax audits.  Screening mechanisms are executed to maintain fair competition and for other economic benefits.  If an investment fails a review, possible outcomes can vary from a notice to remedy, which allows for a specific period of time to correct the problem, to penalty fees.  The Turkish judicial system allows for appeals of any administrative decision, including tax courts that deal with tax disputes.

Limits on Foreign Control and Right to Private Ownership and Establishment  

There are no general limits on foreign ownership or control.  However, there is increasing pressure in some sectors for foreign investors to partner with local companies and transfer technology, and some discriminatory barriers to foreign entrants, on the basis of “anti-competitive practices,” especially in the information and communication technology (ICT) sector or pharmaceuticals.  In many areas Turkey’s regulatory environment is business-friendly.  Investors can establish a business in Turkey irrespective of nationality or place of residence.  There are no sector-specific restrictions that discriminate against foreign investor access, which are prohibited by World Trade Organization (WTO) Regulations.

Other Investment Policy Reviews 

The OECD published an Environmental Performance Review for Turkey in February 2019, noting the country was the fastest growing among OECD members.  Turkey’s most recent investment policy review through the World Trade Organization (WTO) was conducted in March 2016.  Turkey has cooperated with the World Bank to produce several reports on the general investment climate that can be found at: http://www.worldbank.org/en/country/turkey/research. 

Business Facilitation  

The Presidency of the Republic of Turkey Investment Office is the official organization for promoting Turkey’s investment opportunities to the global business community and assisting investors before, during, and after their entry into Turkey.  Its website is clear and easy to use, with information about legislation and company establishment. (http://www.invest.gov.tr/en-US/investmentguide/investorsguide/Pages/EstablishingABusinessInTR.aspx).  The website is also where foreigners can register their businesses.

The conditions for foreign investors setting up a business and transferring shares are the same as those applied to local investors.  International investors may establish any form of company set out in the Turkish Commercial Code (TCC), which offers a corporate governance approach that meets international standards, fosters private equity and public offering activities, creates transparency in managing operations, and aligns the Turkish business environment with EU legislation as well as with the EU accession process.

Turkey defines micro, small, and medium-sized enterprises according to Decision No. 2018/11828 of the Official Gazette dated June 2, 2018:

• Micro-sized enterprises: fewer than 10 employees and less than or equal to 3 million Turkish lira in net annual sales or financial statement.
• Small-sized enterprises: fewer than 50 employees and less than or equal to 25 million Turkish lira in net annual sales or financial statement.
• Medium-sized enterprises: fewer than 250 employees and less than or equal to 125 million Turkish lira in net annual sales or financial statement.

Outward Investment

The government promotes outward investment via investment promotion agencies and other platforms.  It does not restrict domestic investors from investing abroad.

Since 1962, Turkey has negotiated and signed agreements for the reciprocal promotion and protection of investments.  As of 2020, Turkey has 81 bilateral investment agreements in force with: Afghanistan, Albania, Argentina, Austria, Australia, Azerbaijan, Bahrain, Bangladesh, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, China, Croatia, Cuba, Czech Republic, Denmark, Egypt, Estonia, Ethiopia, Finland, France, Georgia, Germany, Greece, Guatemala, Hungary, India, Indonesia, Iran, Israel, Italy, Japan, Jordan, Kazakhstan, Kosovo, Kuwait, Kyrgyzstan, Latvia, Lebanon, Libya, Lithuania, Luxembourg, Macedonia, Malaysia, Malta, Mexico, Moldova, Mongolia, Mauritius, Morocco, Netherlands, Oman, Saudi Arabia, Pakistan, Philippines, Poland, Portugal, Qatar, Romania, Russia, Serbia, Senegal, Singapore, Slovakia, Slovenia, South Korea, Spain, Sweden, Switzerland, Syria, Tajikistan, Tanzania, Thailand, Tunisia, Turkmenistan, United Arab Emirates, United Kingdom, United States, Ukraine, Uzbekistan, and Yemen.

Turkey has a bilateral taxation treaty with the United States.

Since 1962, Turkey has negotiated and signed agreements for the reciprocal promotion and protection of investments.  As of 2020, Turkey has 81 bilateral investment agreements in force with: Afghanistan, Albania, Argentina, Austria, Australia, Azerbaijan, Bahrain, Bangladesh, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, China, Croatia, Cuba, Czech Republic, Denmark, Egypt, Estonia, Ethiopia, Finland, France, Georgia, Germany, Greece, Guatemala, Hungary, India, Indonesia, Iran, Israel, Italy, Japan, Jordan, Kazakhstan, Kosovo, Kuwait, Kyrgyzstan, Latvia, Lebanon, Libya, Lithuania, Luxembourg, Macedonia, Malaysia, Malta, Mexico, Moldova, Mongolia, Mauritius, Morocco, Netherlands, Oman, Saudi Arabia, Pakistan, Philippines, Poland, Portugal, Qatar, Romania, Russia, Serbia, Senegal, Singapore, Slovakia, Slovenia, South Korea, Spain, Sweden, Switzerland, Syria, Tajikistan, Tanzania, Thailand, Tunisia, Turkmenistan, United Arab Emirates, United Kingdom, United States, Ukraine, Uzbekistan, and Yemen.

Turkey has a bilateral taxation treaty with the United States.

Investment Incentives

Turkey’s regional incentives program divides the country into six different zones, providing the following benefits to investors:  corporate tax reduction; customs duty exemption; value added tax (VAT) exemption and VAT refund; employer’s share social security premium support; income tax withholding allowance; land allocation; and interest rate support for investment loans.  The program was launched in 2012; more detailed information can be found at the Presidency of the Republic of Turkey Investment Office website:  https://www.invest.gov.tr/en/investmentguide/pages/incentives-guide.aspx.   In a policy speech delivered on March 12, 2021, President Erdogan stated that Turkey will prioritize incentives for high-tech FDI and provide long-term loan support to investments in Turkey’s less developed southeast region (Zones 5 and 6).  Additional measures may be forthcoming.

The incentives program gives priority to high-tech, high-value-added, globally competitive sectors and includes regional incentive programs to reduce regional economic disparities and increase competitiveness.  The investment incentives’ “tiered” system provides greater incentives to invest in less developed parts of the country, and is designed to encourage investments with the potential to reduce dependency on the importation of intermediate goods seen as vital to the country’s strategic sectors.  Other primary objectives are to reduce the current account deficit and unemployment, increase the level of support instruments, promote clustering activities, and support investments to promote technology transfer.  The map and explanation of the program can be found at:  www.invest.gov.tr/en-US/Maps/Pages/InteractiveMap.aspx

Foreign firms are eligible for research and development (R&D) incentives if the R&D is conducted in Turkey.  However, investors, especially in the technology sector, say that Turkey has a retrograde brick-and-mortar definition of R&D that overlooks other types of R&D investments (such as in internet platform technologies).  Turkey is seeking to foster entrepreneurship and small and medium-sized enterprises (SMEs).  Through the Small and Medium Enterprises Development Organization (KOSGEB), the Government of Turkey provides various incentives for innovative ideas and cutting-edge technologies, in addition to providing SMEs easier access to medium and long-term financing.  There are also a number of technology development zones (TDZs) in Turkey where entrepreneurs are given assistance in commercializing business ideas.  The Turkish Government provides support to TDZs, including infrastructure and facilities, exemption from income and corporate taxes for profits derived from software and R&D activities, exemption from all taxes for the wages of researchers, software, and R&D personnel employed within the TDZVAT, corporate tax exemptions for IT-specific sectors, and customs and duties exemptions.

Turkey’s Scientific and Technological Research Council (TUBITAK) has special programs for entrepreneurs in the technology sector, and the Turkish Technology Development Foundation (TTGV) has programs that provide capital loans for R&D projects and/or cover R&D-related expenses.  Projects eligible for such incentives include concept development, technological research, technical feasibility research, laboratory studies to transform concept into design, design and sketching studies, prototype production, construction of pilot facilities, test production, patent and license studies, and activities related to post-scale problems stemming from product design.  TUBITAK also has a Technology Transfer Office Support Program, which provides grants to establish Technology Transfer Offices (TTO) in Turkey.

Foreign Trade Zones/Free Ports/Trade Facilitation

There are no restrictions on foreign firms operating in any of Turkey’s 21 free zones.  The zones are open to a wide range of activities, including manufacturing, storage, packaging, trading, banking, and insurance.  Foreign products enter and leave the free zones without imposition of customs or duties if products are exported to third country markets.  Income generated in the zones is exempt from corporate and individual income taxation and from the value-added tax, but firms are required to make social security contributions for their employees.  Additionally, standardization regulations in Turkey do not apply to the activities in the free zones, unless the products are imported into Turkey.  Sales to the Turkish domestic market are allowed with goods and revenues transported from the zones into Turkey subject to all relevant import regulations.

Taxpayers who possessed an operating license as of February 6, 2004, do not have to pay income or corporate tax on their earnings in free zones for the duration of their license.  Earnings based on the sale of goods manufactured in free zones are exempt from income and corporate tax until the end of the year in which Turkey becomes a member of the European Union.  Earnings secured in a free zone under corporate tax immunity and paid as dividends to real person shareholders in Turkey, or to real person or legal-entity shareholders abroad, are subject to 10 percent withholding tax.  See the Ministry of Trade’s website:  https://www.ticaret.gov.tr/serbest-bolgeler.

Performance and Data Localization Requirements  

The government mandates a local employment ratio of five Turkish citizens per foreign worker.  These schemes do not apply equally to senior management and boards of directors, but their numbers are included in the overall local employment calculations.  Foreign legal firms are forbidden from working in Turkey except as consultants; they cannot directly represent clients and must partner with a local law firm.  There are no onerous visa, residence, work permits or similar requirements inhibiting mobility of foreign investors and their employees.  There are no known government-imposed conditions on permissions to invest.

Recent laws targeting the Information and Communication Technology (ICT) sector have increased regulations on data, social media, online marketing, online broadcasting, tax collection, and payment platforms.  In particular, ICT and other companies report GOT pressure to localize data, which it views as a precursor to greater GOT access to user information and source code.  Law #6493 on Payment and Security Systems, Payment Services and e-money Institutions, also requires financial institutions to establish servers in Turkey in order to localize data.  The Turkish Banking Regulation and Supervision Agency (BDDK) is the authority that issues business licenses as long as companies 1) localize their IT systems in Turkey, and 2) keep the original data, not copies, in Turkey.  Regulations on data localization, internet content, and taxation/licensing have resulted in the departure of several U.S. tech companies from the Turkish market, and has chilled investment by other possible entrants to the e-commerce and e-payments sectors.  The laws potentially affect all companies that collect private user data, such as payment information provided online for a consumer purchase.

Turkey enacted the Personal Data Protection Law in April 2016.  The law regulates all operations performed upon personal data including obtaining, recording, storage, and transfer to third parties or abroad.  For all data previously processed before the law went into effect, there was a two-year transition period.  After two years, all data had to be compliant with new legislation requirements, erased, or anonymized.  All businesses are urged to assess how they currently collect and store data to determine vulnerabilities and risks in regard to legal obligations.  The law created the Data Protection Authority (KVKK), which is charged with monitoring and enforcing corporate data use.

There are no performance requirements imposed as a condition for establishing, maintaining, or expanding investment in Turkey.  GOT requirements for disclosure of proprietary information as part of the regulatory approval process are consistent with internationally accepted practices, though some companies, especially in the pharmaceutical sector, worry about data protection during the regulatory review process.  Enterprises with foreign capital must send their activity report submitted to shareholders, their auditor’s report, and their balance sheets to the Ministry of Trade, Free Zones, Overseas Investment and Services Directorate, annually by May.  Turkey grants most rights, incentives, exemptions, and privileges available to national businesses to foreign business on a most-favored-nation (MFN) basis.  U.S. and other foreign firms can participate in government-financed and/or subsidized research and development programs on a national treatment basis.

Offsets are an important aspect of Turkey’s military procurement, and increasingly in other sectors, and such guidelines have been modified to encourage direct investment and technology transfer.  The GOT targets the energy, transportation, medical devices, and telecom sectors for the usage of offsets.  In February 2014, Parliament passed legislation requiring the Ministry of Science, Industry, and Technology, currently named the Ministry of Industry and Technology, to establish a framework to incorporate civilian offsets into large government procurement contracts.  The Ministry of Health (MOH) established an office to examine how offsets could be incorporated into new contracts.  The law suggests that for public contracts above USD 5 million, companies must invest up to 50 percent of contract value in Turkey and “add value” to the sector.  In general, labor, health, and safety laws do not distort or impede investment, although legal restrictions on discharging employees may provide a disincentive to labor-intensive activity in the formal economy.

Real Property 

Secured interests in property, both movable and real, are generally recognized and enforced, and there is a reliable system of recording such security interests.  For example, real estate is registered with a land registry office.  Turkey’s legal system protects and facilitates acquisition and disposal of property rights, including land, buildings, and mortgages, although some parties have complained that the courts are slow to render decisions and are susceptible to external influence.  However, following the July 2016 coup attempt, the GOT confiscated over 1,100 companies as well as significant real estate holdings for alleged terrorist ties.  Although the seizures did not directly impact many foreign firms, it nonetheless raises investor concerns about private property protections.   

The Ministry of Environment and Urbanization enacted a law on title-deed registration in 2012 removing the previous requirement that foreign purchasers of real estate in Turkey had to be in partnership with a Turkish individual or company that owns at least a 50-percent share in the property, meaning foreigners can now own their own land.  The law is also much more flexible in allowing international companies to purchase real property.  The law also increases the upper limit on real estate purchases by foreign individuals to 30 hectares and allows further increases up to 60 hectares with permission from the Council of Ministers.  As of March 2020, a valuation report, based upon real market value, must be prepared for real estate sales transactions involving buyers that are foreign citizens.  To ensure that land has a clear title, interested parties may inquire through the General Directorate of Land Registry and Cadastre (www.tkgm.gov.tr).  The World Bank’s Doing Business Index gave Turkey a rank of 27 out of 190 countries for ease of registering property in 2019.  See: http://doingbusiness.org/en/rankings. 

Intellectual Property Rights 

Turkey continues to implement its intellectual property rights (IPR) law, the Industrial Property Code No. 6769, which entered into force in 2017.  The law brings together a series of “decrees” into a single, unified, modernized legal structure.  It also greatly increases the capacity of the country’s patent office (TurkPatent) and improves the framework for commercialization and technology transfer.  Turkey is a member of the World Intellectual Property Organization (WIPO) and party to many of its treaties, including the Berne Convention, the Paris Convention, the Patent Cooperation Treaty, the WIPO Copyright Treaty, and the WIPO Performances and Phonograms Treaty.

However, while legislative frameworks are improving, IPR enforcement remains lackluster.   Turkey remains on USTR’s Special 301 Watch List for 2021.  Concerns remain about policies requiring local production of pharmaceuticals, inadequate protection of test data, and a lack of transparency in national pricing and reimbursement.  IPR enforcement suffers from a lack of awareness and training among judges and officers, as well as a lack of prioritization relative to terrorism and other concerns.  Law enforcement officers do not have ex-officio authority to seize and destroy counterfeit goods, which are prevalent in the local markets.  Software piracy is also high.  The Istanbul Grand Bazaar in Turkey is included in USTR’s 2020 Notorious Markets List. 

Additionally, the practice of issuing search-and-seizure warrants varies considerably.  IPR courts and specialized IPR judges only exist in major cities.  Outside these areas, an application for a search warrant must be filed at a regular criminal court (Courts of Peace) and/or with a regular prosecutor.  The Courts of Peace are very reluctant to issue search warrants.  Although, by law, “reasonable doubt” is adequate grounds for issuing a search-and-seizure order, judges often set additional requirements, including supporting documentation, photographs, and even witness testimony, which risk exposing companies’ intelligence sources.  In some regions, Courts of Peace judges rarely grant search warrants, for example in popular tourist destinations.  Overall, according to some investors, it is difficult to protect IPR and general enforcement is deteriorating.  For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en.  

Capital Markets and Portfolio Investment

The Turkish Government encourages and offers an effective regulatory system to facilitate portfolio investment.  Since the start of 2020, a currency crisis that has been exacerbated by the COVID-19 pandemic, and high levels of dollarization have raised liquidity concerns among some commentators.  Existing policies facilitate the free flow of financial resources into product and factor markets.  The government respects IMF Article VIII by refraining from restrictions on payments and transfers for current international transactions.  Credit is generally allocated on market terms, though the GOT has increased low- and no-interest loans for certain parties, and pressured state-owned, and even private banks to increase their lending, especially for stimulating economic growth and public projects.  Foreign investors are able to get credit on the local market.  The private sector has access to a variety of credit instruments.

The Turkish banking sector, a central bank system, remains relatively healthy.  The estimated total assets of the country’s largest banks were as follows at the end of 2020:  Ziraat Bankasi A.S. – USD 127.09 billion, Turkiye Vakiflar Bankasi – USD 93.04 billion,  Halk Bankasi – USD 91.64 billion, Is Bankasi – USD 79.92 billion, Garanti Bankasi– USD  66.31 billion, Yapi ve Kredi Bankasi – USD 61.86 billion, Akbank – USD 60.11 billion. (Conversion rate: 7.42 TL/1 USD).  According to the Turkish Banking Regulation and Supervision Agency (BDDK), the share of non-performing loans in the sector was approximately 4.08 percent at the end of 2020.  The only requirements for a foreigner to open a bank account in Turkey are a passport copy and either an identification number from the Ministry of Foreign Affairs or a Turkish Tax identification number.

The Turkish Government adopted a framework Capital Markets Law in 2012, aimed at bringing greater corporate accountability, protection of minority-shareholders, and financial statement transparency.  Turkish capital markets in 2020 drew growing interest from domestic investors, according to data from the Central Registry Agency (MKK).  In 2020, the number of local real investors reached 2 million, up an average of 65,200 per month, with the total portfolio value reaching USD 28.31 billion.

The BDDK monitors and supervises Turkey’s banks.  The BDDK is headed by a board whose seven members are appointed for six-year terms.  Bank deposits are protected by an independent deposit insurance agency, the Savings Deposit Insurance Fund (TMSF).  Because of historically high local borrowing costs and short repayment periods, foreign and local firms frequently seek credit from international markets to finance their activities.  Foreign banks are allowed to establish operations in the country.

Foreign Exchange and Remittances

Foreign Exchange

Turkish law guarantees the free transfer of profits, fees, and royalties, and repatriation of capital.  This guarantee is reflected in Turkey’s 1990 Bilateral Investment Treaty (BIT) with the United States, which mandates unrestricted and prompt transfer in a freely-usable currency at a legal market-clearing rate for all investment-related funds.  There is little difficulty in obtaining foreign exchange in Turkey, and there are no foreign-exchange restrictions, though in 2019, the GOT continued to encourage businesses to conduct trade in lira.  An amendment to the Decision on the Protection of the Value of the Turkish Currency was made with Presidential Decree No. 85 in September 2018 wherein the GOT tightened restrictions on Turkey-based businesses  conducting numerous types of transactions using foreign currencies or indexed to foreign currencies.  The Turkish Ministry of Treasury and Finance may grant exceptions, however.  Funds associated with any form of investment can be freely converted into any world currency.  The exchange rate is heavily managed by the Central Bank of the Republic of Turkey.  Turkish banking regulations and informal government instructions to Turkish banks limit the supply of Turkish lira to the London overnight swaps market.  Turkey took a variety of measures to prop up the lira in 2020, including the imposition of withdrawal limits and time delays, mostly for private individuals owning FX deposit accounts.  In March 2020, the bank insurance and transaction tax introduced in 2019 was increased from 0.2 percent to 1 percent for purchases of FX and gold.  Running down its FX reserves and freezing international banks out of its FX market provided short-term relief during June and July, but reduced these reserves to dangerously low levels.  The BDDK raised the limits for swap, forward, option and other derivative transactions that Turkish lenders can execute with nonresidents.  Previously, swap limits with foreigners were lowered to levels of 1 percent, 2 percent, and 10 percent for weekly, monthly and annual terms, respectively.  Then the limits were raised from 2 percent to 5 percent of bank equity for trades with seven days to maturity; from 5 percent to 10 percent  for those with 30 days to maturity; and from 20 percent to 30 percent for one-year to maturity transactions.

There is no limit on the amount of foreign currency that may be brought into Turkey, but not more than 25,000 Turkish lira or €10,000 worth of foreign currency may be taken out without declaration. Although the Turkish Lira (TL) is fully convertible, most international transactions are denominated in U.S. dollars or Euros due to their universal acceptance.  Banks deal in foreign exchange and do borrow and lend in foreign currencies.  While for the most part, foreign exchange is freely traded and widely available, a May 2019 government decree imposed a settlement delay for FX purchases by individuals of more than USD 100,000, while as mentioned above there is also a 0.2 percent tax on FX purchases.  Foreign investors are free to convert and repatriate their Turkish Lira profits.

The exchange rate was heavily managed by the Central Bank of the Republic of Turkey (CBRT) with a “dirty float” regime until November 2020, when a new central bank governor assumed responsibility.  After several months of increased policy rates, tight monetary policy, and a more stable Turkish Lira, the governor was fired, as a result of which the lira quickly depreciated by 10 percent.  It is still too early to predict the medium to long-term effects of the recent changes to the CBRT on currency and macroeconomic stability.

The BDDK announced on April 12, 2020 new limits to FX transactions.  The agency cut the limit for Turkish banks’ FX swap, spot and forward transactions with foreign entities to 1 percent of a bank’s equity, a move that effectively aims to curtail transactions that could raise hard currency prices.  The limit had already been halved to 25 percent in August 2018, when the currency crisis hit.  These moves to shield the lira have meant a de facto departure from Turkey’s official policy of a floating exchange rate regime over the past year.

Remittance Policies

In Turkey, there have been no recent changes or plans to change investment remittance policies, and indeed the GOT in 2018 actively encouraged the repatriation of funds.  The GOT announced “Assets Peace” in May 2018 which incentivized citizens to bring assets to Turkey in the form of money, gold, or foreign currency by eliminating any tax burden on the repatriated assets.  The Assets Peace has been extended until June 30, 2021.  There are also no time limitations on remittances.  Waiting periods for dividends, return on investment, interest and principal on private foreign debt, lease payments, royalties, and management fees do not exceed 60 days.   There are no limitations on the inflow or outflow of funds for remittances of profits or revenue.

According to the Presidential Decree No. 1948 published in the Official Gazette No. 30994 dated December 30, 2019, the above-mentioned notification and declaration periods for activities related to the “Asset Peace Incentive” defined in Paragraphs 1, 3 and 6 of Temporary Article 90 of Income Tax Code have been extended for six more months following the previous expiration dates.

Sovereign Wealth Funds

The GOT announced the creation of a sovereign wealth fund (called the Turkey Wealth Fund, or TVF) in August 2016.  Unlike traditional sovereign wealth funds, the controversial fund consists of shares of state-owned enterprises (SOEs) and is designed to serve as collateral for raising foreign financing.  However, the TVF has not launched any major projects since its inception.  In September 2018, the President became the Chair of the TVF.  Several leading SOEs, such as natural gas distributor BOTAS, Turkish Airlines, and Ziraat Bank have been transferred to the TVF, which in 2020 became the largest shareholder in domestic telecommunications firm Turkcell.  Critics worry management of the fund is opaque and politicized.  The fund’s consolidated financial statements are available on its website (https://www.tvf.com.tr/en/investor-relations/reports), although independent audits are not made publicly available.    Firms within the fund’s portfolio appear to have increased their debt loads substantially since 2016.  International ratings agencies consider the fund a quasi-sovereign.  The fund was already exempt from many provisions of domestic commercial law and new legislation adopted April 16 granted it further exemptions from the Capital Markets Law and Turkish Commercial Code, while also allowing it to take ownership of distressed firms in strategic sectors.  As part of its response to the COVID-19 pandemic, in 2020 Turkey allowed the TVF to take equity positions in private companies in distress.

As of 2020, the sectors with active State-owned enterprises (SOEs) include mining, banking, telecom, and transportation.  The full list can be found here: https://www.hmb.gov.tr/kamu-sermayeli-kurulus-ve-isletme-raporlari.  Allegations of unfair practices by SOEs are minimal, and the U.S. Mission is not aware of any ongoing complaints by U.S. firms.  Turkey is not a party to the World Trade Organization’s Government Procurement Agreement.  Turkey is a member of the OECD Working Party on State Ownership and Privatization Practices, and OECD’s compliance regulations and new laws enacted in 2012 by the Turkish Competitive Authority closely govern SOE operations.

Privatization Program

The GOT has made some progress on privatization over the last decade.  Of 278 companies  that the state once owned, 210 are fully privatized.  According to the Ministry of Treasury and Finance’s Privatization Administration, transactions completed under the Turkish privatization program generated USD 609 million in 2019 and USD 677 in 2020.  See: https://www.oib.gov.tr/.

The GOT has indicated its commitment to continuing the privatization process despite the contraction in global capital flows.  However, other measures, such as the creation of a sovereign wealth fund with control over major SOEs, suggests that the government currently sees greater benefit in using some public assets to raise additional debt rather than privatizing them.   Accordingly, the GOT has shelved plans to increase privatization of Turkish Airlines and instead moved them and other SOEs into the TVF.  Additional information can be found at the Ministry of Treasury and Finance’s Privatization Administration website: https://www.oib.gov.tr/.

In Turkey, responsible business conduct (RBC) is gaining traction.  Reforms carried out as part of the EU harmonization process have had a positive effect on laws governing Turkish associations, especially non-governmental organizations (NGOs).  However, recent democratic backsliding has reversed some of these gains, and there has been increasing pressure on civil society since the coup attempt.  Despite OECD Membership and adherence to the OECD Guidelines for Multinational Enterprises, Turkey has not yet established a National Contact Point, or central coordinating office to assist companies in their efforts to adopt a due-diligence approach to responsible conduct.  Rather, the topic of RBC is handled by various ministries.  Some U.S. companies have focused traditional ‘corporate social responsibility’ activities on improving community education.

NGOs that are active in the economic sector, such as the Turkish Union of Chambers and Commodity Exchanges (TOBB) and the Turkish Industrialists’ and Businessmen’s Association (TÜSIAD), issue regular reports and studies, and hold events aimed at encouraging Turkish companies to become involved in policy issues.  In addition to influencing the political process, these two NGOs also assist their members with civic engagement.  The Business Council for Sustainable Development Turkey (http://www.skdturkiye.org/en) and the Corporate Social Responsibility Association in Turkey (www.csrturkey.org), founded in 2005, are two NGOs devoted exclusively to issues of responsible business conduct.  The Turkish Ethical Values Center Foundation, the Private Sector Volunteers Association (www.osgd.org) and the Third Sector Foundation of Turkey (www.tusev.org.tr) also play an important role.

Additional Resources

Department of State

• Country Reports on Human Rights Practices (https://www.state.gov/reports-bureau-of-democracy-human-rights-and-labor/country-reports-on-human-rights-practices/);
• Trafficking in Persons Report (https://www.state.gov/trafficking-in-persons-report/);
• Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities (https://www.state.gov/key-topics-bureau-of-democracy-human-rights-and-labor/due-diligence-guidance/) and;

• North Korea Sanctions & Enforcement Actions Advisory (https://home.treasury.gov/system/files/126/dprk_supplychain_advisory_07232018.pdf).

Department of Labor

• Findings on the Worst forms of Child Labor Report (https://www.dol.gov/agencies/ilab/resources/reports/child-labor/findings );

• List of Goods Produced by Child Labor or Forced Labor (https://www.dol.gov/agencies/ilab/reports/child-labor/list-of-goods);
• Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World (https://www.dol.gov/general/apps/ilab) and;

Comply Chain (https://www.dol.gov/ilab/complychain/).

Corruption remains a concern, a reality reflected in Turkey’s sliding score in recent years in Transparency International’s annual Corruption Perceptions Index, where it ranked 86 of 180 countries and territories around the world in 2020.  Government mechanisms to investigate and punish alleged abuse and corruption by state officials remained inadequate, and impunity remained a problem.  Though independent in principle, the judiciary remained subject to government, and particularly executive branch, interference, including with respect to the investigation and prosecution of major corruption cases.  (See the Department of State’s annual Country Reports on Human Rights Practices for more details:  https://www.state.gov/reports-bureau-of-democracy-human-rights-and-labor/country-reports-on-human-rights-practices/).  Turkey is a participant in regional anti-corruption initiatives such as the G20 Anti-Corruption working group.  Under the new presidential system, the Presidential State Supervisory Council is responsible for combating corruption.

Public procurement reforms were designed in Turkey to make procurement more transparent and less susceptible to political interference, including through the establishment of an independent public procurement board with the power to void contracts.  Critics claim, however, that government officials have continued to award large contracts to firms friendly with the ruling Justice and Development Party (AKP), especially for large public construction projects.

Turkish legislation outlaws bribery, but enforcement is uneven.  Turkey’s Criminal Code makes it unlawful to promise or to give any advantage to foreign government officials in exchange for their assistance in providing improper advantage in the conduct of international business.

The provisions of the Criminal Law regarding bribing of foreign government officials are consistent with the provisions of the Foreign Corrupt Practices Act of 1977 of the United States (FCPA).  There are, however, a number of differences between Turkish law and the FCPA.  For example, there is no exception under Turkish law for payments to facilitate or expedite performance of a “routine governmental action” in terms of the FCPA.  Another difference is that the FCPA does not provide for punishment by imprisonment, while Turkish law provides for punishment by imprisonment from 4 to 12 years.  The Presidential State Supervisory Council, which advises the Corruption Investigations Committee, is responsible for investigating major corruption cases brought to its attention by the Committee.  Nearly every state agency has its own inspector corps responsible for investigating internal corruption.  The Parliament can establish investigative commissions to examine corruption allegations concerning cabinet ministers; a majority vote is needed to send these cases to the Supreme Court for further action.

Turkey ratified the OECD Convention on Combating Bribery of Public Officials and passed implementing legislation in 2003 to provide that bribes of foreign, as well as domestic, officials are illegal.  In 2006, Turkey’s Parliament ratified the UN Convention against Corruption.

Resources to Report Corruption

Contact at government agency or agencies are responsible for combating corruption:
ORGANIZATION: Presidential State Supervisory Council
ADDRESS: Beştepe Mahallesi, Alparslan Türkeş Caddesi, Devlet Denetleme Kurulu, Yenimahalle
TELEPHONE NUMBER: Phone: +90 312 470 25 00  Fax : +90 312 470 13 03

NAME: Seref Malkoc
TITLE: Chief Ombudsman
ORGANIZATION: The Ombudsman Institution
ADDRESS: Kavaklidere Mah. Zeytin Dali Caddesi No:4 Cankaya ANKARA
TELEPHONE NUMBER: +90 312 465 22 00
EMAIL ADDRESS: iletisim@ombudsman.gov.tr

The period between 2015 and 2016 was one of the more violent in Turkey since the 1970s.   However, since January 2017, Turkey has experienced historically low levels of violence even when compared to past periods of calm, and the country has greatly ramped up internal security measures.  Turkey can experience politically-motivated violence, generally at the level of aggression against opposition politicians and political parties.  In a more dramatic example, a July 2016 attempted coup resulted in the death of more than 240 people, and injured over 2,100 others.  Since the July 2015 collapse of the cessation of hostilities between the government and the terrorist Kurdistan Workers’ Party (PKK), along with sister organizations like the Kurdistan Freedom Hawks (TAK), have regularly targeted security forces, with civilians often getting injured or killed, by PKK and TAK attacks.  (Both the PKK and TAK have been designated as terrorist organizations by the United States.)

Other U.S.-designated terrorist organizations such as the Islamic State of Iraq and Greater Syria (ISIS) and the leftist Revolutionary People’s Liberation Party/Front (DHKP/C) are present in Turkey and have conducted attacks in 2013, 2015, 2016, and early 2017.  The indigenous DHKP/C, for example, which was established in the 1970s and designated a terrorist organization by the U.S. in 1997, is responsible for several attacks against the U.S. Embassy in Ankara and the U.S. Consulate General Istanbul in recent years, including a suicide bombing at the embassy in 2013 that killed one local employee.  The DHKP/C has stated its intention to commit further attacks against the United States, NATO, and Turkey.  Still, widespread internal security measures, especially following the failed July 2016 coup attempt, seem to have hobbled its success.  In addition, violent extremists associated with ISIS and other groups transited Turkey en route to Syria in the past, though increased scrutiny by government officials and a general emphasis on increased security has significantly curtailed this access route to Syria, especially when compared to the earlier years of the conflict.

There have been past instances of violence against religious missionaries and others perceived as proselytizing for a non-Islamic religion in Turkey, though none in recent years.  On past occasions, perpetrators have threatened and assaulted Christian and Jewish individuals, groups, and places of worship, many of which receive specially-assigned police protection, both for institutions and leadership.  Anti-Semitic discourse periodically features in both popular rhetoric and public media, and evangelizing activities by foreigners tend to be viewed suspiciously by the country’s security apparatus.  Still, government officials also often point to religious minorities in Turkey positively, as a sign of the country’s diversity, and religious minority figures periodically meet with the country’s president and other senior members of national political leadership.

Turkey has a population of 83.6 million, with 22.8 percent under the age of 14 as of 2020.  Ninety-three percent of the population lives in urban areas.  Official figures put the labor force at 30.9 million in December 2020.  Approximately one-fifth of the labor force works in agriculture (17.6 percent) while another fifth works in industrial sectors (20.5 percent).  The country retains a significant informal sector at 30.6 percent.  In 2020, the official unemployment rate stayed at 13.2 percent, with 25.3 percent unemployment among those 15-24 years old.  Turkey provides twelve years of free, compulsory education to children of both sexes in state schools.  Authorities continue to grapple with facilitating legal employment for working-age Syrians, a major subset of the 3.6 million displaced Syrian men, women, and children—unknown numbers of which were working informally—in the country in 2020.

Turkey has an abundance of unskilled and semi-skilled labor, and vocational training schools exist at the high school level.  There remains a shortage of high-tech workers.  Individual high-tech firms, both local and foreign-owned, typically conduct their own training programs.  Within the scope of employment mobilization, the Ministry of Family, Labor, and Social Services, Turkish Employment Agency (ISKUR) and Turkey Union of Chambers and Commodity Exchanges (TOBB) has launched the Vocational Education and Skills Development Cooperation Protocol (MEGIP).  Turkey has also undertaken a significant expansion of university programs, building dozens of new colleges and universities over the last decade.

The use of subcontracted workers for jobs not temporary in nature remained common, including by firms executing contracts for the state.  Generally ineligible for equal benefits or collective bargaining rights, subcontracted workers—often hired via revolving contracts of less than a year duration— remained vulnerable to sudden termination by employers and, in some cases, poor working conditions.  Employers typically utilized subcontracted workers to minimize salary/benefit expenditures and, according to critics, to prevent unionization of employees.

The law provides for the right of workers to form and join independent unions, bargain collectively, and conduct legal strikes.  A minimum of seven workers is required to establish a trade union without prior approval.  To become a bargaining agent, a union must represent 40 percent of the employees at a given work site and one percent of all workers in that particular industry.  Certain public employees, such as senior officials, magistrates, members of the armed forces, and police, cannot form unions.  Nonunionized workers,  such as migrant  seasonal agricultural laborers, domestic servants, and those in the informal economy, are also not covered by collective bargaining laws.

Unionization rates generally remain low.  Independent labor unions—distinct from their government-friendly counterpart unions—reported that employers continued to use threats, violence, and layoffs in unionized workplaces across sectors.  Service-sector union organizers report that private sector employers sometimes ignore the law and dismiss workers to discourage union activity.  Turkish law provides for the right to strike but prohibits strikes by public workers engaged in safeguarding life and property and by workers in the coal mining and petroleum industries, hospitals and funeral industries, urban transportation, and national defense.  The law explicitly allows the government to deny the right to strike for any situation it determines a threat to national security.  Turkey has labor-dispute resolution mechanisms, including the Supreme Arbitration Board, which addresses disputes between employers and employees pursuant to collective bargaining agreements. Labor courts function effectively and relatively efficiently.  Appeals, however, can last for years.  If a court rules that an employer unfairly dismissed a worker and should either reinstate or compensate him or her, the employer generally pays compensation to the employee along with a fine.

Turkey has ratified key International Labor Organization (ILO) conventions protecting workers’ rights, including conventions on Freedom of Association and Protection of the Right to Organize; Rights to Organize and to Bargain Collectively; Abolition of Forced Labor; Minimum Age; Occupational Health and Safety; Termination of Employment; and Elimination of the Worst Forms of Child Labor.  Implementation of a number of these, including ILO Convention 87 (Convention Concerning Freedom of Association and Protection of the Right to Organize) and Convention 98 (Convention Concerning the Application of the Principles of the Right to Organize and to Bargain Collectively), remained uneven.  Implementation of legislation related to workplace health and safety likewise remained uneven.  Child labor continued, including in its worst forms and particularly in the seasonal agricultural sector, despite ongoing government efforts to address the issue.  See the Department of State’s annual Country Reports on Human Rights Practices for more details on Turkey’s labor sector and the challenges it continues to face.

The U.S. International Development Finance Corporation (DFC) replaced the Overseas Private Investment Corporation (OPIC) in December 2019, and continues to offer programs in Turkey, including political risk insurance for U.S. investors, under its bilateral agreement.  Since 1987, Turkey has been a member of the Multinational Investment Guarantee Agency (MIGA), most recently financing a public hospital project in 2019. 

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

Table 3: Sources and Destination of FDI

Table 4: Sources of Portfolio Investment

“0” reflects amounts rounded to +/- USD 500,000.

IMF’s Coordinated Portfolio Investment Survey (CPIS) data available at: http://data.imf.org/regular.aspx?key=60587804

Economic Specialist 
American Embassy Ankara 
110 Atatürk Blvd. 
Kavaklıdere, 06100 Ankara – Turkey 
Phone: +90 (312) 455-5555 
Email:  Ankara-ECON-MB@state.gov