OECD Product Market Regulation (PMR) Indicators: How does Turkey compare? ___________________________________________________________________________________ Competitive product markets foster economic growth and can improve the living standards of citizens. OECD’s Product Market Regulation Indicators assess the alignment of a country’s regulatory framework with internationally accepted best practices. The Economywide Indicator measures the distortions to competition that can be induced through the involvement of the State in the economy, as well as the barriers to entry and expansion faced by domestic and foreign firms in different sectors of the economy. This indicator is complemented by a set of Sector Indicators that measures regulatory barriers to competition at the level of specific network and service sectors.
Overall PMR Indicator Index scale 0 to 6
Turkey
2.28
OECD average
1.38
5 Most competitionfriendly countries 5 Least competitionfriendly countries
1.00 1.82 0.0
2.0
4.0
6.0
Economy-wide PMR Indicators: a breakdown by major components Index scale 0 to 6 from most to least competition-friendly regulation
6
Turkey
OECD average
5 Most competition-friendly countries
5 Least competition-friendly countries
5 4 3 2 1 0 Public Ownership
Involvement in Business Operations
Simplification and Evaluation of Regulations
Admin. Burden on Start-ups
Barriers in Service Barriers to Trade & Network sectors and Investment
Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2018. Source: OECD 2018 PMR database.
ECONOMY-WIDE HIGHLIGHTS Product market regulation in Turkey is less competition-friendly than in most OECD countries. The process for opening up a new business is more burdensome than in most other OECD countries. Public ownership of firms in the overall economy is close to the OECD average, but the state owns some of the largest operators in key network sectors. In addition, privatisation of state-owned companies often requires a legislative action. Furthermore, barriers to foreign investment, to trade and to the entry of foreign suppliers are among the highest in the OECD.
Economy-wide PMR indicators: a breakdown by sub-components Index scale 0 to 6 from most to least competition-friendly regulation Distortions Induced by State Involvement Simplification and Evaluation of Regulations
Complexity of Regulatory Procedures
6 5 4 3 2 1 0
Interaction with Interest Groups
Involvement in Business Operations
5 Least competition-friendly countries
Assessment of Impact on Competition
6 5 4 3 2 1 0
Price controls
Governance of SOEs
Direct Control
Scope of SOEs
Gov’t Involv. in Network Sectors
Public Ownership
6 5 4 3 2 1 0
5 Most competition-friendly countries
Public procurement
OECD average
Command & control regulation
Turkey
Barriers to Domestic and Foreign Entry
Barriers to Trade Facilitation
Barriers to Trade and Investment
Treatment of Foreign Suppliers
6 5 4 3 2 1 0
Tariff Barriers
Barriers in Service & Network sectors
5 Least competition-friendly countries
Barriers to FDI
6 5 4 3 2 1 0
5 Most competition-friendly countries
Barriers in Network sectors
Licenses and Permits
Admin. Burden on Start-ups
Admin. Requirements for Lim. Liab. Companies and Pers.Owned Enterp.
6 5 4 3 2 1 0
OECD average
Barriers in Services sectors
Turkey
Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2018. If the blue bar does not appear on the chart for a specific indicator, it means that its value is 0. Source: OECD 2018 PMR database.
SECTOR-SPECIFIC HIGHLIGHTS Regulatory settings are far from international best practices in many network sectors. Professionals face stricter rules than in many OECD countries, except for estate agents. Retail distribution and the retail sale of medicines also have a regulatory set-up that is not competition friendly.
Regulation in network and service sectors PMR Indicators for network sectors Index scale 0 to 6 from most to least competition-friendly regulation Turkey 5 Most competition-friendly countries
6
OECD average 5 Least competition-friendly countries
5 4 3 2 1 0 Electricity
Gas
Rail
Air
Energy
Road
Water
Fixed
Transport
Mobile
E-Communications
PMR Indicators for professional services* and retail distribution Index scale 0 to 6 from most to least competition-friendly regulation Turkey 5 Most competition-friendly countries
6
OECD average 5 Least competition-friendly countries
5 4
3 2 1
0 Lawyers
Notaries
Accountants
Architects
Professional services
Civil engineers
Real estate agents
Retail distribution
Retail sale of Medicines
Retail trade
* When comparing the indicators across countries, it should be kept in mind that the activities undertaken by specific professions may vary between countries. Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2018. If the blue bar does not appear on the chart for a specific indicator, it means that its value is 0. Source: OECD 2018 PMR database.
OVERALL ASSESSMENT
With regulatory barriers to competition that are higher than the OECD average in several areas, there is scope for improving product market regulation in Turkey.
Strengths
Challenges
Regulation in the e-communications sector is in line with international best practices. In addition, the state does not own any of the mobile operators. However, the government owns the largest operator in the fixed e-communication sector.
Turkish legislation requires to involve stakeholders when designing new regulations and to consider the impact on competition in regulatory impact assessments of new regulations.
The administrative requirements necessary to set up new firms, whether limited liability companies or personally owned enterprises, are complex and burdensome. For example, to start a business it is necessary to fulfil a large number of procedures and to contact several different bodies. In addition, there are neither physical nor online “one-stopshops” to obtain information on licences and permits or to issue them; and the lack of a “silence is consent” rule further slows down the administrative process.
Professionals, with the exception of real estate agents, are strictly regulated; in particular, they face constraints on the legal form that professional firms can take, on the level of their fees, and on inter-professional cooperation.
There is a lack of rules regulating the interaction between interest groups and policymakers. In addition, no public officials have a compulsory cooling-off period when they leave their post, and there are no regulations dealing with possible conflict of interests involving public officials.
Turkey regulates retail fees and prices, more than most other OECD countries. Except in the case of monopolies, allowing supply and demand to determine the level prices would benefit consumers and ensure effective competition among suppliers.
Further information
“What are the 2018 OECD PMR indicators?” PowerPoint presentation on OECD PMR website
Vitale, C., et al. (2020), " The 2018 Edition of the OECD PMR Indicators and Database – Methodological Improvements and Policy Insights", OECD Economics Department Working Papers
Please visit our website : http://oe.cd/pmr Contact us at: PMR2018@oecd.org