protection and promotion of investments in the mediterranean: the case of turkey
TRANSCRIPT
Investment Support and Promotion Agency of Turkey
(ISPAT)
REPUBLIC OF TURKEY
PRIME MINISTRY
“Protection and promotion of investments in the Mediterranean:
The Case of Turkey”
Necmettin KAYMAZ Chief Project Director
The Parliamentary Assembly of the Union for the Mediterranean, Meeting of the Committee on Economic & Financial Affairs, Social Affairs & Education
Ankara, 01 December 2014
AGENDA
Global FDI Landscape
FDI potential of UfM
The Case of Turkey:
Positioning itself as an attractive FDI destination
Improving Investment Climate in Turkey
Improving Investment & Trade Relations with UfM
Global FDI Landscape
Global FDI Landscape
Source: UNCTAD
Fierce Competition
Global FDI Flows ($ Trillion)
0,6
0,7
1,0
1,5
2,0
1,8
1,2
1,4
1,7
1,3 1,5
0,0
0,5
1,0
1,5
2,0
2,5
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
Advanced Economies Developing Economies
Around $1,5 trillion FDI is being circulated annually in the world over the past decade
Fierce competition between advanced and developing economies to attract FDI
61% of Global FDI went to developing economies in 2013, up from 34% in 2007
Global FDI Landscape
Source: UNCTAD
Main Benefits of FDI
Long-term capital inflow
Employment
Integrating local companies into Global Value Chain, hence
increasing their competitiveness
Technology transfer
Improving labor skills
Improving exports
Benefits of FDI
Why are countries competing to attract FDI?
Global FDI Landscape
Source: UNCTAD World Investment Report 1998: Trends and Determinants.
Determinants of FDI
Host country determinants
1. Policy Framework • Economic, political & social stability • Rules regarding entry & operations • Policies on functioning and structure
of markets • International agreements on FDI • Privatization policy • Trade policy • Tax policy
2. Economic determinants
3. Business facilitation • Investment promotion & facilitation • Investment incentives • Hassle costs (related corruption,
administrative efficiency, etc.) • Social amenities (bilingual schools,
quality of life, etc.) • After-investment services
Motives of TNCs
Principal economic determinants in the host countries
A. Market-seeking
•Market size, income per capita •Market growth • Access to regional & global markets • Country-specific consumer preferences • Structure of markets
B. Recourse/asset seeking
• Raw materials • Low-cost unskilled labor • Skilled labor • Technological, innovatory & other created assets
(e.g. brand name), including as embodied in individuals, firms and clusters • Physical infrastructure (port, roads..)
C. Efficiency-seeking
• Cost of resources & assets listed under B, adjusted for productivity for labor resources •Other input costs , eg. Transport &
communication costs to/from /within host economy and cost of other intermediate goods •Membership of a regional integration
agreements conducive to the establishment of regional corporate networks
H o s t c o u n t r y d e t e r m i n a n t s o f F D I
FDI Potential of UfM
FDI potential of UfM
FDI Flows into UfM Countries 2003-2013
Destination $ Billion
EU 28 4.721,8
Turkey 136,5
Israel 88,2
Egypt 63,9
Lebanon 38,6
Morocco 24,8
Jordan 21,3
Algeria 19,7
Tunisia 16,7
Syria* 9,2
Albania 7,7
Montenegro 7,0
Bosnia and Herzegovina 6,5
Mauritania 5,2
Palestine 1,3
TOTAL 5.168,6
UfM attracted 35% of Global FDI (32% to EU28)
Source: UNCTAD Note: No data available for Monaco *Self-suspended
UfM attracted over $5 trillion FDI between 2003-2013
FDI Flows
300
244
535
650
923
611
402 420
532
260 291
0
200
400
600
800
1000
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
Other UfM
EU28
FDI Flows into UfM ($ Billion)
Outward FDI Flows from UfM 2003-2013
Source $ Billion
EU 28 6.143,2
Israel 63,9
Turkey 20,5
Lebanon 8,5
Egypt 5,9
Morocco 3,6
Algeria 1,4
Other UfM countries 1,8
TOTAL 6.248,8
Over 41% of Global FDI was done by UfM, led by EU with 40%
Source: UNCTAD
FDI Inflows
UfM invested over $6 trillion abroad between 2003-2013
298
381
609
706
1272
997
390
496
595
246 260
0
150
300
450
600
750
900
1050
1200
1350
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
Other UfM
EU28
FDI Flows from UfM ($ Billion)
FDI potential of UfM
Greenfield FDI Projects in UfM 2003-2013
Destination $ Billion
EU28 1.944,0 Turkey 119,8 Egypt 111,0 Algeria 69,8 Morocco 51,3 Tunisia 45,4 Jordan 42,5 Syria* 33,7 Israel 17,4 Bosnia & Herzegovina 14,1 Lebanon 11,6 Albania 10,6 Mauritania 4,2 Montenegro 3,9 Palestine 1,2 TOTAL 2.480,5
UfM attracts 27% of Global Greenfield FDI, (21% by EU28)
Source: fDi Intelligence
UfM attracted c. $2,5 trillion Greenfield FDI between 2003-2013
Greenfield Investment
156 158
212
269 288
409
268
199 203
164 155
0
50
100
150
200
250
300
350
400
450
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
Other UfM
EU28
Greenfield FDI Projects in UfM ($ Billion)
FDI potential of UfM
Greenfield FDI Projects in UfM 2003-2013
Source $ Billion
EU 28 3.536,1 Israel 53,2 Turkey 41,8 Egypt 18,2 Lebanon 7,5 Jordan 4,7 Tunisia 1,8 Algeria 1,7 Morocco 1,6 Rest of UfM 1,7 TOTAL 3.668,1
39% of Global Greenfield FDI is done by UfM (38% by EU28)
Source: fDi Intelligence
UfM invested $3,7 trillion Greenfield FDI abroad between 2003-2013
Potential
293
236 255
336
385
573
424
366 335
225 241
0
100
200
300
400
500
600
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
Other UfM
EU28
Greenfield FDI Projects by UfM ($ Billion)
Greenfield Investment
FDI potential of UfM
The Case of Turkey: Positioning itself as an attractive FDI destination in
the region
Source: IMF World Economic Outlook April 2014, Eurostat, OECD, TurkStat, OECD Economic Outlook No.93, May 2013
4,9
4,6
4,3
4,1
4,0
3,7
3,5
3,4
3,4
2,6
2,6
1,8
1,1
1,1
0,9
0
1
2
3
4
5
Average Annual Real GDP Growth (%) 2002-2013
5,1
5,0
4,6
4,1
3,8
3,7
3,5
3,3
3,3
3,2
3,2
3,0
2,9
2,7
2,7
2,6
2,4
2,1
2,1
2,0
2,0
1,9
1,7
1,7
1,5
1,5
1,5
1,4
1,4
1,3
1,2
1,1
1,0
1,0
0,8
0,8
0,8
0,2
0,1
0
1
2
3
4
5
6
Turk
ey
Ch
ile
Sou
th A
fric
a
Ko
rea
Arg
enti
na
Bra
zil
Isra
el
Au
stra
lia
Ru
ssia
Slo
vaki
a
Mex
ico
Esto
nia
Po
lan
d
No
rway
Swed
en
Luxe
mb
ou
rg
Ne
w Z
eal
and
Cze
ch R
ep.
Swit
zerl
and
US
Can
ada
OEC
D
Au
stri
a
UK
Fran
ce
Fin
lan
d
Bel
giu
m
Ne
the
rlan
ds
Irel
and
Hu
nga
ry
Ge
rman
y
Slo
ven
ia
Euro
are
a
Den
mar
k
Jap
an
Icel
and
Spai
n
Po
rtu
gal
Ital
y
Average Annual Real GDP Growth (%) 2012-2017
Strong record, bright future
Economic Performance
Turkey: Positioning itself as an attractive FDI Destination
Source: Indicators are based on the compilations of OECD and Turkstat data
Quarterly Real GDP Growth (Index: Q1-2009=100) Seasonally adjusted
Fastest growing economy in Europe and one of the fastest growing economies in the world
The fastest recovering economy since the onset of global financial crisis in 2009
95
100
105
110
115
120
125
130
135
140
Q1
-20
09
Q2
-20
09
Q3
-20
09
Q4
-20
09
Q1
-20
10
Q2
-20
10
Q3
-20
10
Q4
-20
10
Q1
-20
11
Q2
-20
11
Q3
-20
11
Q4
-20
11
Q1
-20
12
Q2
-20
12
Q3
-20
12
Q4
-20
12
Q1
-20
13
Q2
-20
13
Q3
-20
13
Q4
-20
13
Q1
-20
14
Q2
-20
14
Turkey
Russia
Brazil
Poland
Czech Rep.
Hungary
Economic Performance
Turkey: Positioning itself as an attractive FDI Destination
Source: TurkStat
Main Drivers of the Economic Growth
67,6%
29,7% 29,7%
10,1% 5,5%
-1,8%
-40,9%
-45%
-25%
-05%
15%
35%
55%
75%
Contribution to Real GDP Growth 2002-2013
An economy driven by entrepreneurial spirit of private sector, robust domestic market and lucrative export opportunities
Manufacturing; 27,1%
Financial intermediation;
18,3% Transport, storage &
communication; 17,1%
Wholesale & retail trade;
14,3%
Other; 23,3%
Contribution to Real GDP Growth 2002-2013
Economic Performance
Turkey: Positioning itself as an attractive FDI Destination
Gross Public Debt Stock (% of GDP)
Strong macroeconomic fundamentals
Maastricht Criteria: 60 % Maastricht Criteria: -3 %,
74
36,3
60,3
89,4
30
35
40
45
50
55
60
65
70
75
80
85
90
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
TURKEY
EU
Source: Treasury, European Commission,
-10,2
-1,6 -2,5
-3,3
-12
-9
-6
-3
0
20
02
20
03
20
04
20
05
20
06
20
07
20
08
200
9
20
10
20
11
20
12
20
13
TURKEY
EU
Central Government Budget Balance (% of GDP)
Economic Performance
Turkey: Positioning itself as an attractive FDI Destination
Source: UN, IMF, national sources
2013 Ranking of Countries with Population over 70 million
1.367
1.261
319
252
203
188
179
157
146
127
120
100
90
88
87
81
78
77
- 300 600 900 1.200 1.500
China (1)
India (2)
US (3)
Indonesia (4)
Brazil (5)
Pakistan (6)
Nigeria (7)
Bangladesh (8)
Russia (9)
Japan (10)
Mexico (11)
Philippines (12)
Vietnam (13)
Ethiopia (14)
Egypt (15)
Germany (16)
Iran (17)
Turkey (18)
Population
(Million)
16.768
9.469
4.899
3.636
2.246
2.097
1.877
1.261
870
822
522
367
272
271
233
171
162
46
- 5.000 10.000 15.000 20.000
US (1)
China (2)
Japan (3)
Germany (4)
Brazil (5)
Russia (6)
India (7)
Mexico (8)
Indonesia (9)
Turkey (10)
Nigeria (11)
Iran (12)
Philippines (13)
Egypt (14)
Pakistan (15)
Vietnam (16)
Bangladesh (17)
Ethiopia (18)
GDP
($ Billion)
52,6
45,0
38,5
14,4
11,1
10,8
10,5
6,9
4,7
3,5
3,1
2,9
2,7
1,9
1,5
1,2
1,0
0,5
0 10 20 30 40 50
US (1)
Germany (2)
Japan (3)
Russia (4)
Brazil (5)
Turkey (6)
Mexico (7)
China (8)
Iran (9)
Indonesia (10)
Egypt (11)
Nigeria (12)
Philippines (13)
Vietnam (14)
India (15)
Pakistan (16)
Bangladesh (17)
Ethiopia (18)
GDP per capita
($K)
Turkey: Positioning itself as an attractive FDI Destination
Domestic Market
Source: TURKSTAT, OECD
30,3
23,8
20,9
16,4
13,3
8,4 6,8
4,4 3,7 2,8 2,3
2,1
0
5
10
15
20
25
30
35
200
2
200
3
2004
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
Percentage (%) of Poor People Living on Less than $4,3 Per Day
63,6
47,4
40,5 40,2 39,8 39,2 34,3
30,8
25,1
7,3 0
10
20
30
40
50
60
1 2 3 4 5 6 7 8 9 10
Lowest income
top income group
Real Increase (%) in Household Income 2002-2012
I n c o m e D e c i l e G r o u p s ( 1 0 % )
-0,1
-0,08
-0,06
-0,04
-0,02
0
0,02
0,04
0,06
Turk
ey
Mex
ico
Irel
and
Gre
ece
Bel
giu
m
Spai
n
Hu
nga
ry
Ital
y
Slo
vaki
a
Po
rtu
gal
UK
Po
lan
d
Cze
ch R
ep.
Jap
an
No
rway
Ko
rea
Fran
ce
USA
Au
stri
a
Au
stra
lia
Ger
man
y
Fin
lan
d
Den
mar
k
Can
ada
Swed
en
Percentage point changes in the Gini coefficient (Mid-1990s to Mid-2000s)
Increasing income
Turkey: Positioning itself as an attractive FDI Destination
Rise of the middle-class in Turkey
Source: Euromonitor International; Credit Suisse, Adults are defined to be individuals aged 20 or above
0
2
4
6
8
10
12
14
16
18
2002 2013
10,6
2,3
5,3
18,0
1,0
9,5
Income < $10K Income > $10K Income > $25K
Number of Households by Annual Disposable Income (million)
5000
10000
15000
20000
25000
30000
2002 2013
11.141
25.909
Wealth per Adult ($)
Increasing income
Turkey: Positioning itself as an attractive FDI Destination
Source: TurkStat
Changing consumption culture with increasing purchasing power and lower liabilities
Food & Housing
54%
Other 46%
2002
Allocation of Household Consumption Expenditures (%)
Increasing Income
21
65
85
0
20
40
60
80
100
Turkey Euro Area USA
Household Liability % of GDP
(2012)
Turkey: Positioning itself as an attractive FDI Destination
Food & Housing
45% Other 55%
2013
Source: TURKSTAT
Increasing export
Export (US$ Billion)
36,1
47,3
63,2
73,5
85,5
107,3
132
102,2
114
135
152 152
35
50
65
80
95
110
125
140
155
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Export Opportunities
Turkey: Positioning itself as an attractive FDI Destination
Customs Union with the European Union
Free Trade Agreements with 25 countries
Source: Ministry of Economy, * In ratification process *
1. Albania 14. Tunisia
2. Bosnia & Herzegovina 15. Montenegro
3. Egypt 16. Serbia
4. Georgia 17. Chile
5. Iceland 18. Jordan
6. Israel 19. Mauritius
7. Lichtenstein 20. South Korea
8. Macedonia 21. Lebanon*
9. Morocco 22. Kosovo*
10. Norway 23. Ghana*
11. Palestine 24. Malaysia*
12. Switzerland 25. Moldavia*
13. Syria
Free Trade
Export Opportunities
Turkey: Positioning itself as an attractive FDI Destination
Source: IMF World Economic Outlook and WTO; GDP, Imports and population figures as of 2013
Access to Multiple Markets
1,5 Billion People
$26 Trillion GDP,
over $8 trillion trade
(45% global trade)
at a 4-hour flight
distance
Strategic Location
Turkey: Positioning itself as an attractive FDI Destination
EUROPE
GDP: $19.7 trillion Import: $6,6 trillion Population: 670 million
RUSSIA
GDP – $2.1 trillion Import: $344 billion Population: 143 million
CENTRAL ASIA & CAUCASUS
GDP: $433 billion Import: $106 billion Population: 84 million
MENA
GDP: $3,7 trillion Import: $1 trillion Population: 665 million
A Manufacturing Hub
Source: Deloitte, oica, worldsteel, turkbesd TURKEY TURKEY TURKEY
T U R K E Y
Turkey will be the 16th manufacturing hub in the world and 2nd in Europe
Strategic Location
Turkey: Positioning itself as an attractive FDI Destination
Turkey is already;
17th largest automotive manufacturer in the world & the largest commercial vehicle manufacturer in Europe (2013)
8th largest steel manufacturer in the world & 2nd in Europe (2013)
Largest TV & white goods manufacturer in Europe (2013)
Turkey emerges as a regional manufacturing hub for global firms
SOURCE: TSKB
PCs and peripherals • Tripling production with new investment • To export 90% of total
production
Heavy commercial vehicles • New model to be
manufactured in Turkey and exported to 65 countries
Energy • Tripling production to export to countries in
Europe, North Africa, and South America
FMCG
• Production base for the Middle Eastern and North African markets
Filters and generators • 85% of total
production to be exported
Textile • Moving all
production volume to Turkey
New line of trucks
•Regional manufacturing
hub for new line of trucks
• Annual production capacity of 150K units
• Total FDI 1.6 Bn USD • Exports to 30 countries
Strategic Location
Turkey: Positioning itself as an attractive FDI Destination
Turkey is also becoming a regional management hub for global firms
Company Regions managed from
Turkey Rationale behind chosing Turkey as a management hub
90 countries • Eurasia • Africa
“Turkey is a strong country due to its dynamic economy and young population” -Ahmet Bozer, Executive Vice President and President of Coca Cola International, 2011
79 countries • Middle East • Africa
“Besides, the business opportunities Istanbul offers, its educated workforce and infrastructure supporting expats are important” -Ala Faramawy, VP Microsoft International, 2011
64 countries • Middle East • Africa
"Turkish managers have the European business ethics and discipline and the strong communication skills of Eastern managers" –Intel's Business Dev.Manager, Burak Aydın, 2012
20 countries • Caucasus • Central Asia • Eastern Europe
"Pfizer Turkey is referred to as 'A School of Leaders', since it continuously transfers successful executives to Pfizer companies worldwide. Today, more than 35 Turkish senior executives are appointed to Pfizer affiliates all around the world. " –ISPAT website, 2012
Source: Press releases
Strategic Location
Turkey: Positioning itself as an attractive FDI Destination
Largest youth population as compared to EU; half of the population is under age 30
Population Pyramid (%)
5 4 3 2 1 0 1 2 3 4 5
0-4
5-9
10-14
15-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65-69
70-74
75-79
80-84
85-89
90+
Female Male
%
Age Group TURKEY
5 4 3 2 1 0 1 2 3 4 5
0-4
5-9
10-14
15-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65-69
70-74
75-79
80-84
85-89
90+
Female Male
%
Age Group EUROPE
Source: Turkstat, Eurostat, UN, 2013
77 million young & dynamic people
5 4 3 2 1 0 1 2 3 4 5
0-4
5-9
10-14
15-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65-69
70-74
75-79
80-84
85-89
90+
Female Male
%
Age Group ASIA
Demographics
Turkey: Positioning itself as an attractive FDI Destination
Source: UN
Favorable
Demographic
Trend
80
85
90
95
100
105
110
115
120
125
2013 2016 2019 2022 2025 2028 2031 2034 2037 2040 2043 2046 2049
Working Age Population (15-64), 2013=100
Europe
Turkey
40
50
60
70
80
90
100
2013 2016 2019 2022 2025 2028 2031 2034 2037 2040 2043 2046 2049
Total Dependency Ratio (%) (Age 0-14 & Age 65+) / Age 15-64
Europe
Turkey
Labor Force
Turkey: Positioning itself as an attractive FDI Destination
Source: IMD World Competitiveness Yearbook 2014, IMD WCY Executive Opinion Survey based on an index from 0 to 10 (0 = Not available 10 = Readily available)
Skilled Labor Force 2014
6,0
5,9
5,8
5,4
5,0
4,7
3,1
0 1 2 3 4 5 6
Turkey
Romania
Czech Rep.
Poland
China
Hungary
Bulgaria
Availability of Skilled Labor Force
6,0
5,2
5,2
5,2
4,8
4,1
2,7
0 1 2 3 4 5 6
Turkey
Czech Rep.
Romania
Poland
China
Hungary
Bulgaria
Availability of Competent Senior Managers
7,1
6,8
6,7
6,22
6,0
5,6
3,9
0 2 4 6 8
Turkey
Hungary
Romania
Czech Rep.
China
Poland
Bulgaria
Availability of Qualified Engineers
Labor Force
7,0
6,5
5,7
5,4
5,4
5,2
3,6
0 1 2 3 4 5 6 7
Turkey
Poland
Romania
China
Hungary
Czech Rep.
Bulgaria
Availability of Finance Skills
Turkey: Positioning itself as an attractive FDI Destination
Source: Eurostat , TurkStat, Mercer
4,6 5,5 5,7 6,6 6,7 7,8 8,3 8,3 8,3
9,7 10,8
11,9
22
0
5
10
15
20
25 Annual average number of sick days per employee, 2008
52,0
42,7 41,9 41,9 41,7 41,5 41,5 41,5 40,8 40,4 40,1 40,0 39,6 38,8
30
35
40
45
50
55
Productive and Cost-effective Labor Force
Annual Average Hours worked per week, 2013
95
110
125
140
155
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Turkey
Poland
Czech Rep.
Hungary
Productivity: Real GDP per hour worked (Index: 2001=100)
45,8 45,0
39,2
28,8 27,2
18,8
12,4 11,5 9,7 8,8
6,9 0
5
10
15
20
25
30
35
40
45
50
Fran
ce
Ger
man
y
Irel
and
Spai
n
UK
Slo
ven
ia
Cze
ch R
ep.
Slo
vaki
a
Hu
nga
ry
Po
lan
d
Turk
ey
Labor Cost Per Hour in Manufacturing ($), 2012
Labor Force
Turkey: Positioning itself as an attractive FDI Destination
Improving Investment Climate in Turkey
National Treatment
Guarantee of Transfers
International Arbitration
Purchase of Real Estate
Employment of Expats
International standards (IFRS & IAS)
Transparency & Accountability
Institutionalization of companies
Opportunity to perform board meetings online
27
29
30
30
31
36
37
38
39
25 30 35 40
Romania
Russia
Bangladesh
Bulgaria
Poland
Morocco
Cameroon
Turkey
Guatemala
6,5
8,0
11,2
13,0
19,0
28,4
30,0
31,4
05101520253035
Turkey
Romania
Russia
Spain
Czech Rep.
India
Poland
China
Reforms
Number of Days to Establish a Company in 2013
Number of Days to Establish a Company in 2003
New FDI Law in 2003
CIT reduced to 20% in 2006
New Commercial Code in 2012
Source: World Bank
Improving Investment Climate
Source: OECD
-0,1
0
0,1
0,2
0,3
0,4
0,5
0,6
Ch
ina
Ind
on
esia
Ind
ia
New
Ze
alan
d
Mal
aysi
a
Mex
ico
Ru
ssia
Can
ada
Icel
and
Ko
rea
Au
stra
lia
Isra
el
Au
stri
a
Bra
zil
Un
ited
Sta
tes
No
rway
Swit
zerl
and
Po
lan
d
OEC
D -
Ave
rage U
K
Turk
ey
Swed
en
Jap
an
Ital
y
Slo
vaki
a
Fran
ce
Irel
and
Arg
enti
na
Den
mar
k
Gre
ece
Hu
nga
ry
Ger
man
y
Spai
n
Fin
lan
d
Net
her
lan
ds
Cze
ch R
ep.
Luxe
mb
ou
rg
Drop in Index Score from 2003 to 2013 2013 Score
TOP REFORMERS 1. Turkey 2. Malaysia 3. Finland 4. India 5. Russia
------ OECD
Average Score
in 2013
Index Score: 1=Closed to FDI, 0=Open to FDI
M o r e R e s t r i c t i v e L e s s R e s t r i c t i v e
Reforms
FDI Regulatory Restrictiveness Index
Turkey has emerged as the biggest reformer
Improving Investment Climate
Investment Zones (Technology Development Zones, Organized Industrial Zones, Free Zones)
Corporate and Personal Income Tax allowances Exemption from custom duties VAT exemption Social Security Premiums Support
R&D and Innovation Support Law
R&D allowances and Enhanced Tax allowances Income Withholding Tax Deduction Cash support for entrepreneurial scientists
New incentive system (General, Regional, Large-scale, Priority, Strategic Investment) Reduced corporate tax rates Social security premium support Allocation of state land Interest support Withholding tax support
INVESTMENT INCENTIVES IN TURKEY Incentives
Improving Investment Climate
Bilateral Agreements for the Promotion and Protection of Investments
Turkey signed bilateral treaties with 76 countries to promote and protect investments
• Afghanistan • Albania • Argentina • Australia • Austria • Azerbaijan • Bangladesh • Belarus • Belgium • Bosnia and Herzegovina • Bulgaria • China • Croatia • Cuba • Czech Republic • Denmark • Egypt • Estonia
• Ethiopia • Finland • France • Georgia • Germany • Greece • Hungary • India • Indonesia • Iran • Israel • Italy • Japan • Jordan • Kazakhstan • Kuwait • Kyrgyzstan • Latvia
• Lebanon • Libya • Lithuania • Luxembourg • Macedonia • Malaysia • Malta • Moldova • Mongolia • Morocco • Netherlands • Oman • Pakistan • Philippines • Poland • Portugal • Qatar • Romania
• Russia • Saudi Arabia • Senegal • Serbia • Singapore • Slovakia • Slovenia • South Korea • Spain • Sweden • Switzerland • Syria • Tajikistan • Thailand • Tunisia • Turkmenistan • Ukraine • Uzbekistan
• UAE • USA • UK • Yemen
Improving Investment Climate
Source: A.T. Kearney
Likelihood of investment in a market over the next 3 years Confidence
0 0,5 1 1,5 2 2,5 3
USA (1)China (2)
Canada (3)UK(4)
Brazil (5)Germany (6)
India (7)Australia (8)
Singapore (9)France (10)
UAE (11)Mexico (12)
South Africa (13)Switzerland (14)
Malaysia (15)Sweden (16)
Chile (17)Spain (18)Japan (19)
Italy (20)Belgium (21)
Netherlands (22)Denmark (23)
Turkey (24)Indonesia (25)
Foreign Direct Investment Confidence Index 2014 (0=Low Confidence; 3=High Confidence)
Low Confidence High Confidence
Improving Investment Climate
Increasing Confidence in Turkey: FDI Confidence Index based on 300 companies’ responses
The Index examines overarching trends and ranks countries on how changes in their political, economic, and regulatory systems are likely to affect FDI inflows in the coming years.
Source: Central Bank of Republic of Turkey, *as of 2014 September, Ministry of Economy
Increasing Foreign Direct Investment (FDI)
15
146
0
30
60
90
120
150
1923-2002 (80 years) 2003-2014*
FDI Inflows ($ billion)
Investment Climate
FDI
5,6
40,9
0
5
10
15
20
25
30
35
40
45
Number of Foreign Companies (Thousand)
Improving Investment & Trade Relations with UfM
Source: Central Bank of Republic of Turkey, Ministry of Economy, *as of 2014 September
71% of FDI in Turkey is done by UfM (EU:70%)
Investment & Trade relations with UfM
Investment
0
3000
6000
9000
12000
15000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014*
Other UfM
EU 28
FDI Flows from UfM into Turkey ($ million)
FDI Flows from UfM into Turkey Source Cumulative Value 2003-2014* ($ Million) EU 28 82.624 Lebanon 1.135 Israel 384 Jordan 215 Albania 5 TOTAL 84.363
Number of UfM companies in Turkey 2014*
EU 19.186
Syria** 1.503
Israel 306
Jordan 297
Egypt 277
Lebanon 276
Algeria 91
Palestine 86
Tunisia 71
Bosnia-Herzegovina 65
Morocco 63
Albania 57
Monaco 9
Montenegro 7
Mauritania 2
TOTAL 22.296
Source: Central Bank of Republic of Turkey, Ministry of Economy, *as of 2014 September **self-suspended
Turkey has invested c.$16 billion in UfM countries since 2003
0
500
1000
1500
2000
2500
3000
3500
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
201
4*
Other UfM
EU28
FDI Flows from Turkey into UfM ($ million)
FDI Flows from Turkey into UfM Cumulative Value 2003-2014*
Destination ($ Million) EU 28 14.860 Tunisia 220 Egypt 174 Bosnia -Herzegovina 148 Macedonia 110 Morocco 68 Albania 67 Lebanon 31 Algeria 29 Lebanon 31 Syria** 18 Israel 6 Jordan 4 TOTAL 15.757
Investment & Trade relations with UfM
Investment
Source: TurkStat
Turkey’s foreign trade with UfM
exponentially increased and
reached $175 bn in 2013, up from
$50bn in 2002
Investment & Trade relations with UfM
Trade
23
54
64
76
-
20
40
60
80
2002 2006 2010 2013
Othe UfM
EU28
Export ($ Billion)
27
62
77
99
-
20
40
60
80
100
2002 2006 2010 2013
Other UfM
EU28
Import ($ Billion)
50
116
141
175
0
25
50
75
100
125
150
175
2002 2006 2010 2013
Export
Import
Turkey’s Foreign Trade with UfM ($ Billion)
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