Who is the new incentive system for? Will the 'Century of Turkey' become the 'Century of Capital'?

The New Incentive System (Decision on State Aid for Investments), which entered into force with the Presidential Decree dated May 29, 2025, and numbered 2025/9903, was announced with an ambitious title: "Century of Turkey Development Move." The goal of this new system is to create a radical change in the Turkish economy, increase production and employment, reduce foreign dependency, and accelerate digital and green transformation. However, the steps taken to achieve these goals are facing some criticism…

The new system covers incentive applications made until December 31, 2030. It is fundamentally divided into two main categories: Century of Turkey Development Move and Sectoral and Regional Incentive Practices. However, in practice, major inequalities and difficulties in access are noteworthy. Especially SMEs and small entrepreneurs cannot find a place for themselves in the system. The setting of minimum fixed investment amounts sends a message to small and medium-sized enterprises that "you have no place at this table"…

Century of Turkey Development Move: For Large Investments

There are three main programs in the system:

• Technology Move Program: Focuses on R&D, advanced production technologies, and high value-added product investments. However, the minimum investment amounts set for small businesses are very high. Such investments are at levels that only large-scale firms can access.

• Local Development Move Program: Four investment topics suitable for each province's own potential are determined. These investments are considered priority, but it is quite difficult for small local entrepreneurs to benefit from these incentives.

• Strategic Move Program: Only large-scale investments are supported in sectors such as energy supply security, defense industry, and digital and green transformation. High minimum investment amounts such as 50 million TL (green/digital transformation), 100 million TL (high technology), and 200 million TL (general strategic investments) have been set for such investments.

Sectoral Incentive System: Size Matters

It consists of two sub-systems:

• Priority Investments Incentive System: Strategic areas such as digital and green transformation programs, defense industry, energy production, and R&D investments are supported. However, there is a 1 billion TL limit for medium-high technology investments outside of Istanbul.

• Targeted Investments Incentive System: Investment topics included in Annex-3 of the Decision are supported if they meet the specified conditions. Special conditions are provided only for investments made in certain sectors and certain geographies. A minimum investment amount of 12 million TL has been set for the 1st and 2nd regions, and 6 million TL for the 3rd-6th regions.

Regional Incentives: Unfair Distribution

Turkey has divided its provinces into six regions according to their socio-economic development levels to eliminate regional development disparities. However, it can be said that these regional incentives are applied unfairly and that large capital is in an advantageous position. While the most developed provinces are in the 1st Region (8 provinces: Ankara, Antalya, Bursa, Eskişehir, Istanbul, Izmir, Kocaeli, and Muğla), 13 of our provinces including Mersin are in the 2nd Region, 17 of our provinces including Adana are in the 3rd Region, 11 of our provinces including Sivas are in the 4th Region, 15 of our provinces including Hatay are in the 5th Region, and 17 of our provinces including Adıyaman, Diyarbakır, Şanlıurfa, and Van are in the 6th Region, which is the least developed.

Support Elements

Some of the support elements provided within the scope of the new incentive system are as follows:

• Value Added Tax Exemption: Applied to domestic and foreign machinery/equipment purchases.

• Customs Duty Exemption: Tax is zeroed on imported machinery.

• Tax Reduction: Corporate tax can be reduced by up to 60%.

• Insurance Premium Employer and Employee Share Support: In the 6th region, the employee premium is also covered.

• Interest or Profit Share Support: Interest support is provided for loans used in the 4th, 5th, and 6th regions.

• Machinery Support: A 25% state contribution is provided for machinery exceeding 2 million TL.

• Investment Location Allocation: Land allocation can be made by the Ministry in Organized Industrial Zones (OIZ) or industrial zones.

SMEs and Local Entrepreneurs: Unable to Benefit from Incentives

The new system creates a major obstacle, especially for small businesses and entrepreneurs. Minimum investment amounts make it almost impossible for SMEs to benefit from these incentives. Although 99% of businesses in Turkey are in the SME category, the vast majority of incentives are directed towards large investors. This situation significantly limits the inclusivity of the incentives.

Sub-Region Support

Investments made in an organized industrial zone or industrial zone and investments carried out in the districts specified in Annex-5 of the Decision will be able to benefit from this support in terms of insurance premium employer share support for the conditions and duration provided in one sub-region lower than their current region, and investments that meet both conditions will be able to benefit from this support for the conditions and duration provided in two sub-regions lower than their current region.

Sustainability and Green Transformation: Good Intentions, Weak Content

Although there are headings such as "Green Transformation Program" and "Digital Transformation Program" within the incentive system, the direction of the support has shifted more towards fossil energy investments, mining, and nuclear energy projects:

• Nuclear power plants, LNG investments, and gas storage facilities are supported as priority investments.

• In contrast, community-based energy cooperatives, renewable micro-projects, and ecological production systems have been completely left out of the system.

• Solar or wind energy investments are supported only within the scope of self-consumption and in a very limited way.

This approach does not mean environmentalism, but rather green-washed industrial lobbying.

Education, Agriculture, Social Services: Token Headings

Although investments in the field of education and social services are on the list of encouraged investments, the support of nurseries, care centers, or education investments is only possible with high-capital private sector projects. In other words, it is not public needs, but again profitable models that come to the fore.

The agricultural sector is almost non-existent. Except for soilless greenhouse investments, basic issues such as agriculture, food security, and local seed production are non-existent on the incentive list. This situation reveals a model where agriculture and local development are ignored.

Bursa and Adana: Inequalities in Cities

Even in developed cities like Bursa and Adana, it is quite difficult for small businesses to benefit from incentives aimed at large capital. Although Bursa offers incentives for digitalization in the industrial and automotive sectors, access to these incentives for small businesses is very limited. Similarly, large agricultural investments are supported in Adana, but small farmers and local entrepreneurs are excluded.

Bursa: Capital of Digitalization or Fortress of Big Capital?

Bursa is one of Turkey's most developed cities in terms of industry, trade, and quality of life. However, there are development differences between its districts. While the province of Bursa is in the 1st Region in Investment Incentive Practices, 4 of its 17 districts (Orhaneli, Büyükorhan, Harmancık, and Keles) are in the category of the least developed districts in terms of socio-economic development and are on the list of districts that will benefit from sub-region support. These districts can access more favorable incentives compared to the center of Bursa, which is in the 1st region in the "Investment Incentive Practices" list, and the other 13 districts that are at relatively higher levels.

Although Bursa, which has been Turkey's industrial engine for years, seems to be receiving incentives for the transition to high technology in the automotive and textile sectors, the system actually leaves out small and medium-sized producers.

• Within the scope of the Technology Move, robotic and software-based production lines are supported. However, the minimum capital level for the investment to be acceptable often reaches 100 million TL. This means that small sub-industry businesses in Bursa cannot effectively benefit from these supports.

• Under the name of green transformation, textile investments that reduce carbon emissions are supported. However, in practice, these supports are directed only to firms that can invest large budgets in recycling technology. Small dyehouses, workshops, and textile cooperatives are completely outside the system.

• A 2nd region support rate is applied to investments in the OIZ in Bursa, which is in the 1st region. This "privileged status" creates additional incentive resources for firms that are already strong, but does not contribute to employment justice or social development in the city.

• Up to 60% tax reduction can be provided for strategic investments. However, this support also appeals only to capital groups of a certain size. Thousands of small producers in Bursa cannot find a place at this "strategic table" of the system.

Digitalization and green transformation in Bursa are turning into a club that only those with a strong capital structure can enter. The city's production mosaic is being narrowed by this one-sided support system.

Adana: Green Transformation or Token Change of Direction?

In Adana, major differences are observed in terms of development level within the city. While the province of Adana is in the 3rd Region in Investment Incentive Practices, 9 of its 15 districts (Pozantı, Yumurtalık, İmamoğlu, Karataş, Karaisalı, Tufanbeyli, Aladağ, Feke, and Saimbeyli) are in the category of the least developed districts in terms of socio-economic development and are on the list of districts that will benefit from sub-region support. These districts can access more favorable incentives compared to the center of Adana, which is in the 3rd region in the "Investment Incentive Practices" list, and the other 6 districts that are at relatively higher levels.

Adana's strong industrial base and agricultural production power are evaluated under the heading of "transition to green industry" in the incentive system. But in reality, this transformation changes little other than being a showcase for profitable and flashy projects.

• Investments in Organized Industrial Zones are applied with 4th region incentive rates to Adana, which is in the 3rd region. However, this opportunity is only open to large-scale firms investing within the OIZ. Local entrepreneurs and small producers in the rural areas of Adana are deprived of this support.

• Although agriculture and water management investments seem to be in the priority category, the system does not encourage cooperative-based or community-based irrigation projects, but large-scale agricultural infrastructure investments. This shows that thousands of small farmers in Adana have been written off.

• It is said that investments such as solar energy are supported; however, in reality, energy investments in the incentive system are expected to be only self-consumption oriented and large-budget. Small investors who want to produce with solar energy in rural areas are outside the system.

• SGK employer premium support can be provided at a rate of 50%. However, these supports are offered without providing employment security; there is a high risk of layoffs when the incentive ends.

Adana's transition to green industry exists in rhetoric, but it is not inclusive in practice. Instead of a real transformation, the flow of incentives to profitable sectors continues.

Audit and Transparency: Problematic Areas

The system's evaluation mechanisms are largely closed. The structure of the committees evaluating incentive applications and the decision criteria are not open to the public. Actors such as local governments, non-governmental organizations, and professional chambers are not included in the decision-making processes. This situation weakens the democratic legitimacy of the incentive system.

Conclusion: The Century of Turkey Must Be the Century of the People

Although the New Incentive System has emerged with the claim of realizing Turkey's economic growth targets, criticisms are also coming to the fore that it prioritizes large capital in practice, excludes small businesses, and ignores environmental and social justice. These incentives, which are impressive on paper, create opportunities only for certain sectors and large-scale investors in reality, while becoming inaccessible for local entrepreneurs, SMEs, and small producers.

Even in developed cities like Bursa and Adana, small businesses are limited to incentives reserved only for large capital groups in areas such as technology and green transformation. This narrows the production diversity in cities and deepens economic injustice.

Important topics such as green transformation and digitalization have been shaped for large investments; small-scale producers and entrepreneurs have been excluded from these processes. Areas for public benefit such as agriculture, education, and social services can benefit from the supports in a very limited way. In short, the incentive system has taken on a structure that appeals to the interests of large capital and is only in favor of large firms.

As a result, the Century of Turkey goal can only be possible with an incentive system based on a fair and sustainable development model that includes the people, local actors, and small businesses. For this, the following steps must be taken:

• Minimum investment amounts should be lowered, and accessible incentives should be created for SMEs and local entrepreneurs.

• Special support should be given to local development-oriented projects such as women's entrepreneurship and cooperatives.

• Renewable energy and environmentally friendly investments should be encouraged more.

• Environmental and social impacts should be monitored by independent audit institutions, and audit processes should be made transparent.

• Decision-making processes should be democratized with region-based participatory committees, and local stakeholders should be given a say…

For Turkey to reach its sustainable development goals, incentives must be reorganized in a way that benefits not only large capital but all segments of society. Otherwise, instead of providing fair and sustainable development, this system could result in a "Century of Turkey" period dominated by large capital and disconnected from the people.