invest.gov.tr1

WHY INVEST IN TURKEY?

August 2020

invest.gov.tr2

10 REASONS TO INVEST IN TURKEYWHY INVEST IN TURKEY?

10 reasons to invest in Turkey

Robust

Economy

Domestic

Market + EUStrategic

Location

Favourable

Demographics

Skilled Workforce

with Cost

Advantage

Continuous

Reform Process

Business-friendly Opportunities

Benign R&D

Ecosystem Lucrative

Incentives

invest.gov.tr3

13TH LARGEST ECONOMY

IN THE WORLD

RANKING OF ECONOMIES BY GDP AT PPP

REAL GDP GROWTH (INDEX: 2002=100)

AVERAGE ANNUAL GDP

GROWTH (%), 2003-20185.3 2.24.0 4.0 2.8

TURKEY POLAND ROMANIA CZECHIA HUNGARY

100

120

140

160

180

200

220

240

260

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

TRACK RECORD GROWTH AND

BRIGHT FUTURE WITH PROVEN RESILIENCE

ROBUST ECONOMY

2003 2019

Source: TurkStat, OECD, World Bank, IMF, PPP: Purchasing Power Parity

1.

2.

3.

5.

4.

6.

7.

8.

9.

10.

11.

12.

13.

14.

15.

16.

17.

18.

1.

2.

3.

5.

4.

6.

7.

9.

10.

11.

12.

13.

14.

15.

16.

17.

18.

8.

invest.gov.tr4

0102030405060708090

100110120130

19

73

19

74

19

75

19

76

19

77

19

78

19

79

19

80

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

STRONG MACROECONOMIC FUNDAMENTALS HAVE BEEN BASED

ON SUCCESSFUL PUBLIC FINANCE MANAGEMENT

Turkey

EU 28

Gross Public Debt Stock as % of GDP

Maastricht

Criteria:

60%

-12

-9

-6

-3

0

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

Maastricht

Criteria:

-3%

Turkey

EU 28

Annual Inflation (%)

2003-2019

CPI: 10.1%

Average Volatility: 4.6%

1988-2002

CPI: 71%

Average Volatility: 18%1973-1987

CPI: 40%

Average Volatility: 23%

End-Year Inflation (%)

invest.gov.trSource: Eurostat, IMF, OECD, CBRT, New Economic Program (Medium-Term Program) 2019-2022

ROBUST ECONOMY

Budget Balance as % of GDP

4

invest.gov.tr5

Turkish economy has more than tripled over the past 16 years and is promising more growth in future

Driven by a robust domestic market and

entrepreneurial private sector which has

spurred investments and exports

DRIVEN BY A DIVERSIFIED STRUCTURE, TURKISH ECONOMY HAS

MORE THAN TRIPLED OVER THE PAST 16 YEARS

Source: TurkStat, *current prices

Turkish Economy (GDP at current prices, $Billion) Contribution to GDP Growth 2002-2019* (%)

236

754

2002 2019

73

3227

-1

-30

Domestic

Consumption

Investment

Expenditures Stocks

Imports

Exports

ROBUST ECONOMY

invest.gov.tr6

10,685

4.6

Stock of Automobiles (millions of passenger cars)

Income per capita(GDP per capita at purchasing power parity)

12.5

2002

27,956

2018 2002 2019

TURKEY’S ECONOMIC GROWTH HAS PAVED THE WAY

FOR EMERGENCE OF A SIZEABLE MIDDLE-CLASS

WITH AN INCREASING PURCHASING POWER

Source: TurkStat, IMF

DOMESTIC MARKET

6

$

$

invest.gov.tr7Source: TurkStat, 2019 (m): million

THE DOMESTIC MARKET IS FURTHER SUPPORTED

BY EMERGING URBAN CENTERS ACROSS TURKEY

invest.gov.tr

24 urban centers with populations over 1 million

DOMESTIC MARKET

invest.gov.tr8

DOMESTIC MARKET + EU DOMESTIC MARKET + EU MARKET + FREE TRADE AREA

Source: Eurostat, Population as of 2019, Ministry of Trade

*In ratification process

Customs Union with the EU

allows direct access to the

EU Market

in 27 countrieswith Free Trade

Agreements

308million in FTA

Area

83million in Turkey

513million in EU

Free access

904Million consumers

+

+

invest.gov.tr9

16TIMEZONES

PROXIMITY TO MAJOR MARKETS

AS WELL AS MANAGEMENT HUB FOR MULTINATIONALS

STRATEGIC LOCATION TO MANUFACTURE, EXPORT AND MANAGE

1.3 billion people and $26T

GDP in Europe, MENA and

Central Asia at 4 hour flight-

distance

CONNECTIVITYTurkish Airlines connects you

to 323 destinations in 127

countries

MANUFACTURING & EXPORT HUB FOR MULTINATIONALS

Exporting 85% of its production

Its largest production facility worldwide

89 countries

60 countries

30 countries

25

countries

Production base for MENA

Exporting 77% of its production

80 countries

80 countries

72 countries

67 countries

63 countries

9

invest.gov.tr10

STRATEGIC LOCATION THE CONVENIENT LOCATION HAS ENABLED

TURKEY TO TAP SIGNIFICANT EXPORT OPPORTUNITIES

WITH INCREASING DIVERSIFIED MARKETS AND PRODUCTS

Exports of Goods in Turkey and World

36

171.4

6,4

18.7

0

5

10

15

20

25

-

50

100

150

200

2002 2004 2006 2008 2010 2012 2014 2016 2018

Tukey ($Billion, LHS)

World ($Trillion, RHS) 7.3%

11%

CAGR

Source: TurkStat, ITC

2019

invest.gov.tr11

Merchandise Exports by Geography

57%

14%

29%

2002

UE28

Middle East and Africa

Other Countries

50%

27%

23%

2019

Number of Export Products over

$1 Billion

359

Turkey’s Share in

Global Exports of Goods

0,5%

0,6%

0,6%

0,7%

0,7%

0,8%

0,8%

0,9%

0,9%

1,0%

1,0%

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

2002 2019

Source: TurkStat, ITC

$36 BILLION

$172BILLION

THE CONVENIENT LOCATION HAS ENABLED

TURKEY TO TAP SIGNIFICANT EXPORT OPPORTUNITIES

WITH INCREASING DIVERSIFIED MARKETS AND PRODUCTS

STRATEGIC LOCATION

invest.gov.tr12

Total Dependency Ratio (%, Age 0-14 & 64+)/Age 15-64)

45

50

55

60

65

70

75

2010 2025

Europe

Turkey

TURKEY

5 3 1 1 3 5

0-4

Oct-14

20-24

30-34

40-44

50-54

60-64

70-74

80-84

Female Male

5 3 1 1 3 5

0-4

Oct-14

20-24

30-34

40-44

50-54

60-64

70-74

80-84

Female Male

Ag

e

Gr

ou

ps

(%

)

Ag

eG

ro

up

s(

%)

Working Age Population (15-64+) (Index: 2014=100)

90

100

110

120

2014 2017 2020 2023 2026 2029 2032 2035

Europe

Turkey

Source: Turkstat, Eurostat, UN, 2019

EUROPE

...HALF OF POPULATION UNDER AGE 32.4FAVORABLE DEMOGRAPHICS

invest.gov.tr12

85+85+

invest.gov.tr13

287

177

891 495

University Vocational & Technical HighSchool

2002 2019

7,35

6,74

5,75 5,65 5,47

4,86 4,92

Tu

rke

y

Po

lan

d

Ro

man

ia

Cze

ch

ia

Bu

lgari

a

Hu

ng

ary

Slo

va

kia

5,72

4,454,18

3,913,39

2,75

Tu

rke

y

Po

lan

d

Cze

ch

ia

Bu

lgari

a

Ro

man

ia

Slo

va

kia

Hu

ng

ary

47,244,4

39,6

31,1

14,9 14,311,5 10,7

7,0 5,6 5,6G

erm

an

y

Fra

nc

e

US

A UK

Cze

ch

ia

Slo

va

kia

Hu

ng

ary

Po

lan

d

Ro

man

ia

Bu

lgari

a

Tu

rke

y

2020 2020

74,7%

25,3%

90%

10%

University High School & Below160

121 113

94

69 62

45 42 41 36 23

Ge

rma

ny

US

A

Fra

nc

e

UK

Slo

va

kia

Po

lan

d

Hu

ng

ary

Cze

ch

ia

Tu

rke

y

Ro

man

ia

Bu

lgari

a

$K, 2018$, 2018

Annual Number of Graduates

(thousands)

Labor Force by Education Level

TURKEY’S EDUCATION SYSTEM HAS BEEN UPGRADED TO SUPPORT A

SKILLED LABOR POOL THAT MEETS BUSINESS REQUIREMENTS..

SKILLED WORKORCE

WITH COST ADVANTAGE

Availability of Qualified Engineers

(10=Available; 0=Unavailable)

Labor Cost per hour

in Manufacturing

Availability of Competent Senior Managers

(10=Available; 0=Unavailable)

Remuneration of Management/Engineer Total base salary plus bonuses and long-term incentives

Source: Ministry of National Education, Council of Higher Education, Turkstat,

IMD World Competitiveness Yearbook Executive Opinion Survey based on an index from 0 to 10; Eurostat, US BLS

6,15

invest.gov.tr14

TURKEY HAS IMPLEMENTED SWEEPING REFORMS IN

MANY AREAS AND CONTINUES TO INTRODUCE NEW REFORMS

MAJOR REFORMS

Coordination Council for

the Improvement of the

Investment Environment

New FDI Law

New Labor Law

Ease of company

establishment

(Law No: 4884)

Establishment and

Operating Licenses

New Banking Law

Tax Reform (Corporate

Tax %20 down from

33%)

ISPAT

New Insurance Law

Investment Incentives

Overhaul of Social

Security System

R&D and Innovation

Incentives

Upgrading Investment

Incentives

New Commercial Code

New Code of Obligations

New Capital

Market Law

Upgrading Investment

Incentives

Removing Restrictions

on Foreigners’

Purchases of Real

Estate

Unifying All Exchanges

(Stock, Derivative, Gold,

etc.) under BIST

Istanbul Arbitration

Center

Personal Data

Protection Law

Upgrading Investment

Incentives

Industrial Property Law

(IPR)

Production Reform

Package

New Labor Courts Code

Amendments to improve

doing business

(Law 7099)

REFORMS

Source: OECD, World Bank

invest.gov.tr15

4037

24,523

21 2017,5 16,6

13 12,5 11,2 10,17

So

uth

Afr

ica

Po

lan

d

Cze

ch

Rep.

Bu

lga

ria

Au

str

ia

Rom

ania

India

Bra

zil

Fin

lan

d

Sp

ain

Jap

an

Russia

Tu

rkey

Down from 38 days in

2002

Number of Days to set up a Company, 2019 FDI Regulatory Restrictiveness Index, 2018

TURKEY HAS IMPLEMENTED SWEEPING REFORMS IN

MANY AREAS AND CONTINUES TO INTRODUCE NEW REFORMS

REFORMS

Down from

0.283 in

2003

0,257 0,251

0,209

0,161

0,089 0,087 0,0830,072 0,065

0,059

Russia

Chin

a

India

Canada

US

A

Bra

zil

Sw

itzerlan

d

Po

lan

d

OE

CD

Turk

ey

1 = Closed to FDI

0 = Open to FDI

invest.gov.tr15

33

40

52

55

61

Turkey

Poland

Hungary

Roma…

Bulgaria

Ease of Doing Business Ranking, 2020

Higher rankings…

Ease of Doing Business Ranking (y-o-y)

60

43

33

2018

2019

2020Higher rankings…

Source: OECD, World Bank

invest.gov.tr16

FAVORABLE AUX AFFAIRESOFFERS PROTECTION AND EASE OF DOING BUSINESS

Foreign Direct Investment Law

BUSINESS-FRIENDLY

Bilateral Investment Protection Treaties with

82 countries

Treaties to avoid Double Taxation with

86 countries

invest.gov.tr17

Total Tax and Contribution Rate, 2019(% of Profit)

International Tax Competitiveness, 2019 (Index=100 as most competitive)

OFFERS PROTECTION AND EASE OF DOING BUSINESSBUSINESS-FRIENDLY36,6

37,9

40,8

42,3 46,1

46,2

46,7 47

48,8

49,7

49,7

51,4 55,1 59,1

59

,2

60,7 65,1 72,2

71,4

71,4

69

68

,6

66,9

66,9

63,7

60,3

60

,1

59,5

57,1

54,2

44

43,5

42,7

Source: Ministry of Trade, Ministry of Treasury and Finance, WB Doing Business Report, Total Tax Rate: Profit or corporate income tax, social contributions and labor taxes paid by the employer, property taxes, turnover taxes and other taxes (such as municipal fees and vehicle taxes). Tax

Foundation (Tax competitiveness measures countries’ tax policies five categories: corporate income tax, consumption taxes, property taxes, individual taxes, and international tax rules.)

invest.gov.tr18

Manufacturing Incentives

Tax deduction & exemption +

Tax deduction for exporting services in;

Engineering

Architecture

Design

Software

Medical Reporting

Accounting

Call Center

Datacenter

Education

Healthcare

Employment

IncentivesPayroll & Training support +

Technology Development Zones

To support R&D

Tax deduction &

exemption +

R&D and Innovation

IncentivesTax deduction & exemption +

Tax deduction & exemption +

Developed infrastructure

Incentives for Service Exporters

INVESTORS ARE OFFERED

LUCRATIVE INCENTIVES IN MANY WAYS

LUCRATIVE INCENTIVES

Exclusive Zones

Free Zones

Organized Industrial Zones Academia

Industry

invest.gov.tr19

Over 100 R&D centers

by foreign companies

R&D INCENTIVES ARE FURTHER SUPPORTED

BY A FAVORABLE ECOSYSTEM

BENIGN R&D ECOSYSTEM

Number of Researchers(thousands)

Increasing R&D Spending($ Billion, PPP)

0

20

40

60

80

100

120

140

160

180

200

220 Turkey

Romania

Poland

0

5

10

15

20 Turkey

Romania

Poland

HungaryHungary

Source: OECD, Eurostat, Turkstat, PPP: Purchasing power parity

invest.gov.tr20

Selected Foreign Companies conducting R&D in Turkey

R&D INCENTIVES ARE FURTHER SUPPORTED

BY A FAVORABLE ECOSYSTEM

BENIGN R&D ECOSYSTEM

invest.gov.tr21

STRONG HEALTHCARE SYSTEM IN THE FIGHT AGAINST COVID-19

PANDEMIC..

RESILIENT HEALTHCARE

SYSTEM

State hospitals, social securityhospitals and institutional hospitalswere merged for use by allcitizens.

An army of medical professionalswas built with the employment ofsome 1.4 million people.

With their modern infrastructure,high-tech devices and qualifiedhealthcare professionals, 12 cityhospitals entered into service in11 provinces. 10 more cityhospitals are under construction.

1,526 hospitals, some 4,000 medicaltreatment facilities and over 15,000primary healthcare centers continueto provide healthcare services withoutany disruption.

Targeting to reach 5,000 at the endof May, Turkey is able tomanufacture domestic ventilatorsto address domestic andinternational demand.

The budget set aside for healthcareservices was increased from 19billion TRY to 190 billion TRY overthe past 17 years.

Healthcare expenditures duringthe past 6 years have grown by14%.

State-of-the art technologyambulance fleets were formed with5,400 fully-equipped vehicles and19 aircrafts.

Having 46 intensive care beds per 100Kinhabitants, Turkey is leading in the listof countries including Germany (34),Austria (29), the US (26), France (16),Canada (13), the UK 11), Spain (10), Italy(9), Denmark (8) and Ireland (5).

Source: Presidency of the Republic of Turkey, Republic of Turkey Ministry of Treasury and Finance, Republic of Turkey Ministry of Health, Turkish Statistical Institute, Republic of Turkey Ministry of Industry and

Technology, Statista,

invest.gov.tr22

TURKEY OFFERS ABUNDANT

OPPORTUNITIES IN A VARIETY OF SECTORS

OPPORTUNITIES

Source: Turkstat, Ministry of Industry and Technology, Sasad, OSD, SBB; export values as of 2018, market values as of 2017, defence industry value as of 2018

AUTOMOTIVE MACHINERY &

ELECTRICAL

EQP.

AEROSPACE &

DEFENCE

ENERGY AGROFOOD INFRASTRUCTUR

E

FINANCE

- 15 th largest

manufacturer

- 1.5 mill ion vehicle

produced

- Market: $24 bil l ion

- Export: $31.2 bil lion

- Largest TV & white

goods producer in

Europe

- Market: $38 bil l ion

- Export: $25 bil lion

- $19 bil l ion defence

spending

- Industry: $8.7 bil l ion

- Export: $2.2 bil lion

- Air passengers: 210

mill ion

- Market: $66 bil l ion

- Growing demand

- Energy corridor

- Untapped renewables

- Market: $80 bil l ion

- Export: $17 bil lion

- Export to around 200

countries

- $127 bil lion PPP

contracts (2003-2018)

- More opportunities in

transport, energy,

health

- Robust growth with

double digits

- Islamic finance to

grow

- Istanbul Financial

Center

OPPORTUNITIES

invest.gov.tr23

TURKEY’S VALUE HAS BEEN

APPRECIATED BY FOREIGN INVESTORS WITH

INCREASING FDI INFLOW TO TURKEY

FOREIGN DIRECT

INVESTMENT (FDI)

Source: CBRT, Ministry of Industry and Technology, Team Analysis *Geographic (adjusted) and sectoral breakdown of cumulative gross inflows of equity FDI from 2003 to 2019

FDI Inflows ($ Billion)

Number of Foreign Companies in Turkey (‘000)

Finance33,4%

Manufacturing24,4%

Energy11,3%

Information & Communication

Services7,7%

Wholesale & Retail Trade

6,6%

Transport & Storage

4,7%

Construction3,3%

Others8,5%

Most Attractive

Sectors

(Cumulative

2003-2018)

15

217

1973-2002 (30 years) 2003-2019 (17 years)

EU66,4%

USA7,6%

Asia17,9%

Other8,1%

Geographic Breakdown of Investments

5.6

74,2

2002 2019

invest.gov.tr24

ASSIST YOU BEFORE, DURING AND AFTER YOUR ENTRY INTO TURKEY

A governmental agency

reporting to the President

Private sector approach with

public sector capabilities

Acting as your

solution partner

General & customized business information & Sectoral analysis & reports

Facilitating your investment at all stages

Site selection support to find appropriate location/land for your investment

Matchmaking with local partners & establishing business linkages

Arrangements of meetings with governmental bodies and other stakeholders

Project launch & Press release Services

Facilitating your visit to Turkey

AFTERSALES

invest.gov.tr2525

/InvestTurkey /invest-in-turkey//InvestTurkey

invest.gov.tr