The first phase of completion of the Istanbul new airport is slated for the last quarter of 2018 and is expected to include a Free Trade Zone (FTZ) that will complement business and commercial trade-based activities at the airport, having a far-reaching impact on trade volume in the Turkish economy.
The zone will be a significant link in the chain of business operations of the airport, catering to the increasing need for a more efficient, business-friendly trade environment with less bureaucratic red tape, while providing a value added tax (VAT) exemption, customs duties exemption, corporate tax exemption and no currency restrictions.
Moreover, considering the fact that the Istanbul New Airport is expected to serve 90 million passengers annually upon completion of the first phase of construction, and 200 million upon completion of the entire airport facility to host over 100 airliners and numerous shipping operations, the FTZ will mobilize Turkey’s goals to become an important rivet of the One Belt and One Road (OBOR) initiative launched by Chinese President Xi Jinping in 2013 amid efforts to revive economic activity along the new Silk Road, potentially reaching nearly 65 percent of the entire global population.
According to the Ministry of Economy, FTZ areas are defined as those that offer special regulations for operating users in order to boost export volume of goods and services. These zones constitute a flexible and convenient business environment and aim to accelerate foreign direct investments (FDI), compelling businesses to engage in exports and promoting and developing global trade. Ministry data has revealed that there are currently 19 free trade zones in Turkey, one of which began operations at Istanbul’s Atatürk Airport in 1990. In these zones, activities including research and development (R&D), manufacturing, banking and insurance, storing, and trading are conducted.
Many of the world’s leading free trade zones are located on airport premises, facilitating global transportation for the movement of goods and services with high added value. Namely, the FTZ at Istanbul’s Atatürk Airport operates to allow companies around the world to transport goods via relaxed bureaucratic methods and procedures, benefiting from corporate tax exemptions and VAT and the free transfer of profits. All these opportunities make free trade zones located on airport premises attractive business centers with cost-effective expenses and well developed, state-of-the-art infrastructure.
One of the best examples of airport-based free trade zones is the Dubai Airport Free Zone Authority (DAFZA), which as a single entity, contributed 4.7 percent to Dubai’s GDP in 2015, aiming to further increase this rate in line with the strategic vision of 2017-2021.