Corporate governance is improving in Turkey but some key issues, including the potential for unfair treatment of minority shareholders, need to be tackled, according to a new OECD report, Corporate Governance in Turkey: A Pilot Study.
Turkey has a strong regulatory framework for corporate governance, according to the report, and disclosure to the market by listed companies is improving. The report sees challenges though, and cites family-controlled groups of companies. These are a common feature of the Turkish business scene, often with a high degree of cross-ownership between companies. While not a problem in itself, there is potential for abuse, for example in situations where controlling shareholders impose commercial conditions that go against the interests of the company as a whole and minority shareholders. Market discipline is still relatively weak.
To address this, the OECD recommends that Turkey strengthen the laws on deals involving related parties, for example by implementing proposed amendments to Turkish company law requiring more disclosure about deals between companies that belong to a group, and requiring controlling companies to compensate controlled companies for losses resulting from the exercise of control.
The report also recommends that publicly held companies be required to give more detailed and easier-to-understand disclosure about who owns them and controls them, proposes tougher penalties for breaking the law and encourages the authorities to focus more resources on enforcing these laws.
Corporate Governance in Turkey: A Pilot Study evaluates Turkish corporate governance standards and practices in light of recommendations in the OECD Principles of Corporate Governance. The 1999 principles were revised in 2004 and the Turkey report is the first study of its kind in an OECD country. For more on Corporate Governance in Turkey: A Pilot Study and The OECD Principles of Corporate Governance, see www.oecd.org/daf/corporate-affairs.
A recent increase in overall tax revenues calculated as a proportion of GDP in OECD countries reflects higher incomes and profits from stronger economic growth, rather than higher tax rates, a new report says.
In 2005, according to the OECD’s annual Revenue Statistics, tax revenue as a proportion of GDP rose in 17 out of the 24 countries for which provisional figures are available, and fell in only five countries. The biggest increases were in Iceland, where the tax burden rose by 3.7 percentage points to 42.4% of GDP, followed by the US (up 1.3 points to 26.8% of GDP) and the UK (up 1.2 points to 37.2%). The largest reduction in overall tax ratios was in Hungary (down one percentage point to 37.1%).
Most OECD governments raise much of their revenues from some combination of taxes on income and profits, social security contributions and taxes on goods and services. The recent rise in the tax burden interrupts a declining trend from 2000 to 2003. In that time, the tax ratio in the OECD area as a whole fell from 36.6% of GDP to 35.8% of GDP, but in 2004 it moved back up slightly to 35.9%.
The increases in income tax revenues–both personal and corporate–have come despite the fact that statutory rates of corporate and personal income taxes remain stable or are falling in many OECD countries, including in the UK and the US.
For further information on Revenue Statistics, contact email@example.com or the OECD’s Centre for Tax Policy and Administration. It can be purchased at www.oecd.org/bookshop or for subscribers at www.sourceoecd.org.
Myanmar has been removed from a key international list of countries and territories not co-operating in the international fight against money laundering. The Financial Action Task Force (FATF), which works against money laundering and terrorist financing, has determined that Myanmar has made good progress in implementing its anti-money laundering system. The announcement was made at an FATF plenary meeting in Vancouver, 9-13 October 2006.
The FATF will continue to monitor Myanmar during the coming year. The group, which is housed at the OECD headquarters in Paris, has advised Myanmar to enhance regulation of the financial sector, including the securities industry, and to ensure that dealers in precious metals and precious stones follow anti-money laundering requirements.
The FATF’s approach of identifying non-cooperating countries and territories has proved successful, with all 23 jurisdictions that were listed in 2000 and 2001 now removed thanks to improvements in their anti-money laundering and counter-terrorist financing systems. Nevertheless, the FATF warns that it remains vigilant on international co-operation issues.
The FATF welcomed Korea as an observer to the meeting. This is seen as a first step in full membership of the task force. China is already an FATF observer, and talks on observership are in progress with India.
Gross domestic product (GDP) in the OECD area rose by 0.7% in real terms in the second quarter of 2006, down from 1% in the previous quarter, according to preliminary estimates. In the US GDP grew by 0.6% in the second quarter of 2006, considerably less than the 1.4% growth recorded in the previous quarter. Japan’s GDP rose by 0.2%, down from 0.7% in the previous quarter. Yet GDP in the euro area rose by 0.9%, the highest growth rate observed since the second quarter of 2000. Among the major seven countries, GDP growth in the second quarter of 2006 ranged from 0.2% in Japan to 1.1%-1.2% in France. Compared with a year earlier, growth was highest in the US at 3.5% and lowest in Italy at 1.5%.
The latest OECD composite leading indicators (CLIs) suggest that economic expansion will slow in the OECD area, with August 2006 data showing weakening performance in the CLI’s six-month rate of change in all the G7 OECD economies except Canada. The CLI for the OECD area decreased by 0.1 point in August to 109.6 from 109.7 in July, and its six-month rate of change was down for the fifth consecutive month.
The CLI for Canada decreased by 0.2 point in August, but its six-month rate of change shows an upward trend since May 2005. For France the CLI increased by 0.5 point in August, and its six-month rate of change has been relatively stable since October 2005. The latest data for non-OECD economies indicate a weakening outlook for China but a steady expansion in India, Russia and Brazil.
The OECD composite leading indicators incorporate a wide range of data, such as building permits, order flows, long-term interest rates and sentiment surveys in a bid to deliver early signals of forthcoming trends in economic activity. For details with graphs and background data, see www.oecd.org/statistics/news-releases.
In the OECD area, consumer prices rose by 3% in the year to August 2006, compared with 3.1% in the year to July 2006. On a monthly basis, the price level increased by 0.2% between July and August 2006 after a rise by 0.1% between June and July. Euro area inflation was 2.3% in the year to August, compared with 2.5% for the same period to July, while in the US, the consumer price index rose by 3.8%, down from 4.1% in July. Japan’s consumer prices rose by 0.9% in August over a year earlier, compared with 0.3% in July.
Consumer prices for energy rose by 11.6% year-on-year in August as against 14.3% in July.
For details, see www.oecd.org/statistics/news-releases.
Growth in goods trade volume in the G7 OECD countries continued to slow in the second quarter of 2006 to a seasonally-adjusted 1.1% for exports and 0.1% for imports. The US, Germany and Japan all saw their volume performance stagnate or slow. On a year-to-year basis, however, G7 trade volumes looked livelier, with exports 8.9% higher and imports up 5.7%.
In value terms, OECD trade in goods and services remained stable or grew, with export growth of goods and services increasing slightly to a seasonally-adjusted 5.1% quarter-on-quarter in the second quarter of 2006, and imports growth steady at 4.8% in the same period. For year-on-year values, OECD export growth for goods and services increased to 12%, and import growth, which remained higher, increased to 13.4%.
In 2005 the total exports of goods and services of the 30 OECD countries amounted to US$8.5 trillion ($5.1 trillion for the G7), while imports were higher at $8.9 trillion ($5.7 trillion for the G7). Goods accounted for 78% of OECD exports of goods and services and 81% of imports.
For more detail, see www.oecd.org/std/its.
©OECD Observer No 257, October 2006