Megacity with Ambitions to Match

Powerful voice of business Leyla Boulton meets Umit Boyner (right), ISTANBUL outspoken head of the Tusiad lobby group and advocate of good Business & Finance governance Page 4 FINANCIAL TIMES SPECIAL REPORT | Wednesday December 14 2011 www.ft.com/istanbul2011 | twitter.com/ftreports Megacity with ambitions to match If Istanbul addresses its infrastructure problems and mitigates earthquake risk, it can rank among the world’s great centres, writes Daniel Dombey tanding between the tramline and the Grand Bazaar, with no plaque to mark it out, a forlorn column bears witness to Istan- Sbul’s long history as a world city. This ancient mass of porphyry, once topped by a statue of the emperor Constantine, was built to mark the inauguration of the new centre of the Roman empire in 330AD. Only in 1923, after 16 centuries of triumphs and defeats under Byzantines and Otto- mans, did the city lose its status as a capital. But today Istanbul is at the fore- front of the world stage once again. Kadir Topbas, mayor, argues that Istanbul’s “increasing prestige, brand value and economic power” is more than a match for the challenges it faces in infrastructure and other areas. “Istanbul is a city the world looks at with envy,” he claims. Home to the biggest banks and com- panies of a self-confident Turkey, Istanbul is a multitude of cities crammed into one – an industrial hub; a centre of financial activity; a diplo- Grand design: the vision of the government of Recep Tayyip Erdogan, Turkey’s powerful, Istanbulborn prime minister, is to transform the city still further Dreamstime matic and conference meeting point with a backdrop beyond compare; a covering 85 countries, including Saudi The country’s internal market of – which include the proposed new nels under the Bosphorus – is far from “It’s a very expensive process to megacity whose 15m-strong popula- Arabia, Russia, South Africa, Nigeria more than 70m people is unlikely to $6bn bridge over the Bosphorus and the main infrastructure problem fac- take measures to reduce this risk,” tion makes it Europe’s largest. and Pakistan. repeat the 10 per cent year-on-year election-time talk by Mr Erdogan of ing Istanbul. That title belongs to the says Ali Pamir, an Istanbul property “If you are thinking about the world One perennial advantage is location. growth it achieved in the first half of the canal and two new cities to the essential, yet enormously difficult, adviser. that is taking shape today, with the The tankers and container ships that the year, at least in the near future. west and east of Istanbul – augur fur- work of reducing the damage likely to Of course, failing to prepare for current geopolitical evolution, Turkey push their way through the Bospho- But, fuelled by favourable demogra- ther big change. be inflicted by the big earthquake such a disaster could be more expen- is becoming more of a centre,” says rus show that Istanbul remains, as it phy, its prospects of further expansion The bridge, in particular, inspires widely expected to hit the city in the sive still; Constantine’s battered col- Karim Karti, chief executive of the has been for centuries, a key crossing in the medium term dazzle in compar- strong emotions. Its backers defend it next 20 or so years. umn is testimony to the frailty of Istanbul-based regional operations of point between north and south, as ison with western Europe. as a means of reducing the city’s Istanbul still has too many sub- even the greatest of achievements. GE Healthcare, the medical technolo- well as east and west. The city also has a unique pull. Mr crushing traffic jams. Its opponents standard buildings, and anxiety has But if this monumental and gies subsidiary of General Electric. Today, there are also direct flights O’Neill remarks that it has become decry it as a threat to the few green increased after the recent deadly dynamic city can escape, or at least His comments allude to the country’s to much of the wider region – includ- “almost the congress capital of the areas remaining north of the city, the earthquake in the eastern province of manage, such threats in the years push to take a leading role in the ing all the countries where Mr world”, so many conventions gather harbinger of more urban sprawl and, Van. Mr Topbas has declared that the ahead, its allure is only likely to grow. Middle East and beyond. O’Neill’s company operates. Mr Karti at its hotels. The monuments, gas- ultimately, more traffic. only solution is to “build a new city” Istanbul’s rise in the past decade has Mr Karti’s argument – and that of says many of the countries he is tronomy and nightlife continue to Yet even this project – and similar – but the cost of doing so in a megalo- been impressive; its prospects could many other businesspeople – is that a responsible for are four hours or attract throngs of tourists; and, as ones such as new road and rail tun- polis of 1.6m buildings is prohibitive. be even better. headquarters in Istanbul makes the fewer away and enthuses about the visits by dignitaries such as Joe most of that new prominence. Turkish government’s success in Biden, the US vice-president, attest, The governments of both the city establishing visa-free travel to many Istanbul threatens to eclipse Ankara, and the country have still greater of its neighbours. the capital, as a hub for diplomatic ambitions. One is to make Istanbul an activity. international financial centre with a But the grand vision of the govern- base on the Asian side, where con- Inside this issue ment of Recep Tayyip Erdogan, Tur- struction work is at fever pitch. Shipyards key’s powerful, Istanbul-born prime Another is a series of grand infra- Yachtmakers are minister, is to transform the city still structure projects, including a third cruising ahead, further. bridge over the strait and, possibly, a insulated by a Part of that is the goal to make canal to run parallel to the wealthy clientele, Istanbul an international financial Bosphorus waterway that links the as shipyards feel centre by 2023 – a place between Lon- Sea of Marmara and the Black Sea. the pinch don, Frankfurt and Hong Kong where Besides these far from uncontrover- Page 2 big investment decisions are made sial projects, Istanbul has to wrestle and large banks are based. with many daunting challenges, such Banking Foreign investors Years after the idea was first as managing its sheer size, attracting remain interested although it mooted, halfway through the last dec- higher value-added investment and has been a tough year Page 2 ade, it faces a series of tests. protecting itself against earthquakes. The government is in the process of In this vast city with its limited public Commercial Code A shifting financial regulatory agencies transport and concentration of indus- longawaited new law, due next and big state-owned banks from year, will put the emphasis on trial and economic activity that repre- transparency Page 2 Ankara to a new campus in the Asian sents more than 25 per cent of Tur- part of Istanbul, although the central key’s gross domestic product, conges- Infrastructure A wave of big bank has so far resisted the move. tion is a serious problem. building projects has been a Mr Erdogan’s team has also But for all that, Istanbul’s re-emer- mixed blessing Page 3 asserted more control over the Istan- gence as one of the world’s indispen- bul stock exchange, with a view to sable cities is gathering speed. Property Overseas interest is modernising and privatising it. “Istanbul has come to prominence underpinning prices despite “We want to turn Istanbul into a again, particularly over the last dec- slowing growth Page 3 global financial centre and we need ade,” says Michael O’Neill, chief exec- the stock exchange to modernise,” Ali utive of Coca-Cola Içecek, the soft- Visitor Guide Babacan, the deputy prime minister drink company’s Istanbul-based bot- The buzz of the responsible for the economy, told the tler, who after six years of interna- bazaar and FT in a recent interview. tional expansion presides over beauty of the “We will turn it into a corporation operations in 10 countries, including Bosphorus with shareholders and then do an ini- Jordan, Pakistan and Kazakhstan. Page 4 tial public offering. Today, it’s a state “It has become a more and more body run by member dealers and a attractive point of location, more and structure where there really is no Historic Istanbul Away from more of a hub, not just for us, but for the tourist sites, medieval competition.” many other multinationals who are marvels can be hidden gems Even more important is a long- operating in central Asia, the Middle Page 4 promised legislative package, suppos- East and some of the Balkan coun- edly due out early next year, that tries,” he says. would seek to ease the way for the Indeed, in 2000 Microsoft, the tech- More on FT.Com development of the financial centre nology company, chose Istanbul as Daniel Dombey interviews through tax and regulatory changes, the headquarters for its 79-country Istanbul’s mayor on his plans specialised courts, and an arbitration Middle East and African operations for the city chamber, as a much-anticipated com- and in 2008 GE Healthcare decided to mercial code is implemented. base regional operations in the city, Meanwhile, the infrastructure plans Ankara weighs in with shakeup of exchanges The origin of the ISE’s based derivatives exchange, Capital markets largesse lies in a budget into one “multi-asset” surplus that it enjoyed in bourse.

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