DOING BUSINESS IN RUSSIA, TURKEY, ITALY

THE OPPORTUNITIES IN RUSSIA FOR FOREIGN COMPANIES FLAVIO RAMELLA Chairman of the board

Map Russia – A VERY BIG COUNTRY

Macroeconomics data

Russia – A BIG Country in movement

Russia is ranked first among the G8 countries in terms of economic growth the previous year. The growth of Russia's gross domestic product in 2012 was 4.1%.

(Germany is in second place, with a GDP growth of 3%. Closes the ranks Canada with -2.3%) commercial trade amounted to 821.3 billion USD exports to USD 516.0 billion (+30% compared to 2010) imports to USD 305.3 billion (+33.4% compared to 2010) balance trade balance amounted to USD 210.7 bn

Dati macroeconomici

The main trading partners in 2012 (in millions of U.S. dollars)

CSI; 122560 Altri; 280097

Giappone; 29705 USA ; 31206 Turchia; 31803

Cina; 83505

Germania; 71850 Olanda; 68491 Italia; 45983

Macroeconomics data

Russia – a BIG Country

Russia is generally associated to the group of so-called BRIC countries, along with China, India and Brazil, with respect to these countries, however, stands out for a few essentials, demographic, historical and social as well as economic terms.

It is the largest country among the four for the extension of the territory, but is also the least populated.

It is the only one of the four that had never known the colonial rule of any European powers.

It has for decades been the center of a geopolitical system opposite to the western economy and military. "Comecon"

Macroeconomics data Forecast 2012-2016 There will be 150 million new rich in the global market, of which 75% will come from emerging countries:

Cina

Messico

India

Brasile Russia

The macroeconomic framework is moving towards a new balance: world imports of affordable luxury will spend 387 billion to 504 billion euros

growth of over 20% - Russia =among the top three markets together with the UAE and China in the areas of affordable luxury :

Importazioni 2016

Var %

2012 procapita income

(miliardi di Euro)

2012-2016

Russia

22.278

43

8.874

24

Emirati Arabi

9.658

53

46.584

14

Cina

7.575

57

3.566

60

in Dollars

Var % 2012-2016 (p costanti)

Fonte: Ministero Sviluppo Economico

La Federazione Russa Customs Union between Belarus, Kazakhstan and Russia

The Customs Union between Russia, Belarus and Kazakhstan was established formally on 1 January 2010.

In July 2010 came the final ratification of the Customs Code Act by Belarus.

The elimination of customs controls within the Union was launched with effect from 1 July 2011.

The creation of a single economic space is started on 1 January 2012.

La Federazione Russa

Russia – a BIG Country

Between 2014 and 2020, the Russian Federation will host:

2014 – XXII Giochi Olimpici Invernali a Sochi 2018 – Mondiali di Calcio 2014-2020 – Formula 1 nella zona di Sochi

HOTELS

Experts agree that in Russia there are still missing many beds and that the hospitality industry is still in its infancy of its development. The hospitality industry continues to be a niche almost vacant for investors. In large Russian cities are mostly hotels of international level, but the class of hotel "three star " is severely lacking. However, today there is an increasing trend in the number of investment projects for the construction and reconstruction of the hotels of the middle class.

But it is in Sochi ( Krasnodar Region ) , on the occasion of the Winter Olympics , there will be more investment. The International Olympic Committee has in fact reviewed the need for 24 thousand rooms ranging from 3-5 stars, where guests will be accommodated , official delegations and representatives of the Federation, etc. .

In Russia , the sector of furniture for hotels is much more interesting for manufacturers of office furniture , whose style is more similar to those normally used in hotels than those used in the furnishing of residential housing . In addition, cooperation with hoteliers , you need the experience of the types of supplies contract type normally used for offices.

Restaurants and bars

Even in the catering market, particularly the bar, the furniture and furnishings have one of the most promising marketing channels. These sales are associated with an increase in the number of market participants in restaurants, especially fast-food restaurants. There is the development of the overall construction of shops and recreational spaces matched and, therefore, a strong demand for equipment for the food tasting.

Another element is the diversity of formats catering: Yes, there are completely different approaches to the expectations in the choice of food: great restaurant, small bar for a snack bar for fast-food, restaurants with national cuisine of the various countries, nightclubs, etc.. There need furniture of different price categories, with varying degrees of exclusivity.

What Russia is looking for

Mechanicsinstrumental Textile

fornitures

Russia Food stuff liquors

Fashion and design All production realized with materials, manufacturing, quality design

Opportunities in Russia for foreign companies

Russia – a BIG market With a population of almost 143 million people , Russia is the eighth retail market in the world and is one of the fastest growing markets : the Russian GDP grew by 4.1 % in 2012 , strong signs of recovery economy after the crisis period in 2009.

The Russian market is in constant growth thanks to some key factors such as population growth , changing lifestyles that have led to an increase in purchases .

In addition to continued growth, Russia is an excellent place in which to invest as the market is not yet saturated.

The Russian market is dominated by imports which represent the 80/95 % of the market share. The low quality products or aimed at a mass consumers are imported mainly from China and India , the products of high quality and aimed at buyers with a high purchasing power are imported from Europe.

European companies have excellent opportunities to operate in the market medium / high.

Italian exports to Russia in 2012 increased by 17.8%.

Opportunities in Russia for foreign companies

Geographical factors

Geography is an important element in the evaluation of the Russian market.

The economic profile of Russia is closely related to the characteristics of a vast territory and rich resources, as well as of contrasts and contradictions.

There are significant regional differences due to the large geographical distances and differences in the size of the market and in consumer spending.

Consequently, the Russian retail market can not be considered as a single market.

Russia – a BIG Country in movement

Moscow and St. Petersburg The population of Moscow is comparable to that of Hungary with over 11 million inhabitants.

S. Petersburg is the second largest city with 4.9 million people. In addition to these two cities, the country has 12 other cities with a population of over one million inhabitants.

Moscow and St. Petersburg represent less than 20% of the Russian population, but constitute a separate market, with levels of income and consumption patterns substantially higher than the rest of the country.

Even here the barriers are higher, due to market saturation and the presence of a consolidated system of specialized suppliers, able to manage access to almost all types of products, from consumer goods to industrial .

Gaining visibility in Moscow involves substantial investment whose return will never be immediate

Russia – a BIG Country in movement

Outside Moscow In the peripheral areas of the Federation can find more opportunities, especially where there are natural resources and / or local authorities particularly active and collaborative.

The cost involved to get the products at your destination are high, due to the lack of adequate infrastructure for transport, storage and storage of products.

The dispersion of potential customers to the formation of economies of scale, eroding operating margins of the business.

Russia – a BIG Country in movement

Geo-economical areas

– – – –

– –

"Great Urals" (Ekaterinburg, Cheljabinsk, Perm, Izhevsk, Bashkortostan, Kirov etc.) - Production area of mining and heavy industry, especially engineering, in part related to the military sector.

"Kuban and southern Russia" (Krasnodar, Rostov-na-Donu, Volgograd) - area of agricultural production and food processing industry.

"Western Siberia" (Omsk, Tomsk, Novosibirsk) - District of science and technology.

"Eastern Siberia" (Novosibirsk, Krasnoyarsk, Irkutsk) - production area of wood (taiga), which is developing the furniture industry and timber for building.

"Central Region" (around Moscow) - all industrial sectors, substantial foreign investment.

"District automotive" (middle course of the Volga in Samara, Tatarstan, Ulyanovsk) - transportation industry.

Russia – a BIG country in movement

Specila Ecomics Zones (SEZ) – Established by federal law in 2005 , as part of a project to promote the attraction of investments and modernization of the production system in the Russian Federation and especially in some regions particularly suitable for the presence of resources , facilities or logistics facilities.

– To date defined four types of SEZs , which differ in the allocation of tasks and the minimum threshold of their investment, then stand SEZ for industrial , technological , tourism and port . Are currently three active SEZ of the first type , four in the second , seven in the third and three in the fourth , a total of seventeen areas .

– The status of SEZ is recognized by decree by the Ministry of Economic Development and entails for companies established a series of administrative facilities , tax and customs , including the exemption from duties and taxes for materials , equipment and components used for the production of export goods .

– Between 2006 and 2010 there were more than 230 investors in the SEZs from 18 countries .

Russia – Market approach Approach to the market, before they can build up their facilities, the exporting company must then face the choice of the distribution system.

The characteristics of the territory and the structure of the market means that the distribution appears often concentrated in a small group of operators, with a position of advantage over the producers and to the final destination of the goods.

In many cases, moreover, the figures importers and distributors find themselves joined in the same legal person, who then has one instrumental in negotiating power to allow or deny access of products to the market.

In the GDO is a strong presence of large foreign groups, especially French (Auchan, Carrefour, Leroy Merlin), covering a major part of the market for consumer products.

An alternative channel for the food sector is the one of the top restaurants industry, very present in the capital and all major cities.

Russia – a BIG country in movement Investment activities The flow of foreign investment still has ample room for growth . The situation today is more favorable than in the past, but it should be borne in mind some important aspects.

The registration of a company joint venture or wholly foreign , or of a branch or representative of a commercial subsidiary does not in itself special burdens in terms of time and cost . The process may, however, be made longer if you plan to carry out activities subject to certification.

The most significant commitment to the foreign firm , the organizational and financial point of view , is the one connected to the personnel and, in particular , to a general manager of the local structure .

The administrative system for the management of residence permits and work is still characterized by lack of transparency , also because of the presence of different sets of rules.

Towards the U . E. the general principle applied is the reciprocity with the treatment of Russian citizens in Europe, then applies a system of annual quotas by category and territory.

Geographical presence of Russian companies by Federal Districts Numero totale delle aziende di small business: 1.347.700

Numero totale delle aziende russe: 4.771.904

PRL - 4%PIL PRL - 10%PIL

15 % PRL - 38%PIL

37 % 31 %

4% PRL - 14%PIL

PRL - 16%PIL

15 %

PRL - 8%PIL

4%

15 %

9% 11 %

7%

19 %

14 %

9%

PRL - 10%PIL

11 %

- Centrale - Meridionale

- Siberiano - degli Urali

- Nordoccidentale

- del Volga

- Estremo Oriente

Fonte: Rosstat * Prodotto Regionale Lordo

Distribution of Russian Companies by economical sector mila

17.2; 0% 85.9; 2%

26; 0%

agricoltura, caccia e silvicoltura

190.6; 4% 222.1; 5% 408.3; 9% 2.7; 0%

775.4; 16%

426; 9%

101.2; 2%

industria manufatturiera (eccetto produzione del coke e dei prodotti petroliferi) produzione del coke e dei prodotti petroliferi costruzione commercio all'ingrosso e al minuto; riparazione dei veicoli, motocicli, domestici trasporti e telecomunicazioni educazione altri servizi comunali, socieli e servizi personali attivitĂ finanziaria operazioni con immobili,affitto e servizi

315.7; 7%

alberghi e ristoranti estrazione dei fossili

165.2; 3% 238; 5%

1797.6; 38%

produzione e distribuzione dell'energia elettrica, gas ed acqua altri Fonte: Rosstat

Russian Federation

Problems and prospects NOT TO DO !

Getting unprepared on the basis of general information or tips through "agents" improvised.

Identify Russia with Moscow.

Act alone without the assistance of the proper institutions in the country.

Subscribe with importers or distributors exclusive agreements and for the whole territory of the Russian Federation.

TO DO ...

Evaluate potential of the product compared to local demand.

Use appropriate means of communication.

Establish a structured program of business promotion (fairs, advertising ...).

Start a human relationship, but coded with partners of secure standing.

Use of consultants accredited professionals.

Take the Russian market as a strategic medium term one.

TURKEY COUNTRY PRESENTATION FATIH AYÇIN Secretary General

CAMERA DI COMMERCIO ITALIANA IN TURCHIA

TURKEY

Surface : 779.452 Kmq Population: 75.6 million inhabitants (2012) Capital : Ankara Language : Turkish Money : Turkish Lira

CAMERA DI COMMERCIO ITALIANA IN TURCHIA

• • • • •

TURKEY IS

A Strategic Point: A gateway for trade, energy and communication An active global player A positive market for investment A successful economy: With a young population (average 28 years) and well qualified A competitive exporter With well-developed infrastructure A large and expanding market (7-8% per year)

CAMERA DI COMMERCIO ITALIANA IN TURCHIA

• • • • • • • • • •

TURKEY:A GLOBAL PLAYER

A member of EU A Member of the World Trade Organization A founding member of the United Nations (UN) A founding member of the OECD A candidate country for EU membership A founding member of the Black Sea Economic Cooperation A founding member of the Alliance of Civilizations A member of NATO Free trade agreements A founding member of the European Council

CAMERA DI COMMERCIO ITALIANA IN TURCHIA

• •

• •

IMPORTANT POINTS TO UNDERLINE

In 2012 , the total number of international projects undertaken by Turkish contractors were 517 in 48 countries, with a total value of $ 26.6 billion With 33 Turkish contractors among the top 225 contractors, companies as Alarko, Ant yapı, Atlas, Beta Tek, Cengiz, Çalık Enerji, TAV, Doğuş, ENKA, Eser, GAMA, Gap, IC İbrahim Çeçen, Kayı, Kontek, Limak, Makyol, Mapa, Metag, Nata, Nurol, Onur, Polimeks, Rasen, Rönesans, STFA, Summa, TACA, Tekfen, Tepe, Yapı Merkezi, Yenigün, Yüksel.

Between 1972 and 2012, about 700 Turkish contractors have completed over 7,000 projects in 100 countries.

With a market size of $ 20 billion, the communications sector in Turkey is one of the largest in Europe.

- 67.2 million users of the GSM operator - 50 million Internet users

•

The ICT has a total market value of 27.3 billion USD, with an annual growth rate of 4.2%.

CAMERA DI COMMERCIO ITALIANA IN TURCHIA

IMPORTANT POINTS TO UNDERLINE

• 56.7 million credit card users • In 2012, over 32 million tourists visited Turkey, making it the seventh most visited country in the world.

• 20 of the 100 best hotels in the world are from Turkey.

• The regional headquarters of many multinational companies are located in Turkey.

CAMERA DI COMMERCIO ITALIANA IN TURCHIA

• •

IMPORTANT POINTS TO UNDERLINE

•

Facebook users in the world: 1 billion Facebook users in Turkey: 32.4 million (more than average worldwide) (2013) Twitter users in the world: 555 million (President Obama and President Gul are the users of twitter) Twitter users in Turkey: 10 million

• •

In Turkey, there are more than 400 TV channels These channels are watched from more than 45 countries

•

Since 2002 in Turkey have been created 3.7 million jobs

•

CAMERA DI COMMERCIO ITALIANA IN TURCHIA

MACROECONOMIC DATA VALUE %

2010

2011

2012

2013 previsions

per capita income (purchasing power)

Dollars

15.546

16.771

17.156

19.000

Unemployment rate

%

11.9

9.8

9.0

9.0

Inflation rateconsumer

%

6.40

10.45

6.16 (2012)

4

Rate of growth of GDP

%

+9.2

+8.5

+3.2

+4

Total import

Billions of $

185.492

240.833

236.536

104.789 (5 months)

Total export

Billions of $

113.929

134.954

152.560

62.828 (5 months)

Net trade balance

Billions of $

-71.563

-105.879

-83.976

-41.961 (5 months)

Import from Italy

Billions of $

10.202

13.448

13.344

5.040 (5 months)

Export to Italy

Billions of $

6.508

7.855

6.375

2.893 (5 months)

Trade deficit

Billions of $

-3.694

-5.593

-6.969

- 2.147 (5 months)

Foreign Direct Investment to Turkey

Billions of $

9.1

15.7

12.4

15 (2013 prev.)

CAMERA DI COMMERCIO ITALIANA IN TURCHIA

MACROECONOMIC DATA

Labour cost (min.) :400 € (gross monthly)+60€(social contribution)=cost for company=460€ monthly Income tax : 15 - 40 % Petroleum products(Cost in € per liter) –Unleaded : 1.75 € / Lt. Electricity (Cost in € per KW/h)- for industrial customers- 0.080 € KW/h Water (Cost in € per m3) – 2.7 € / m3 for industrial customers

CAMERA DI COMMERCIO ITALIANA IN TURCHIA

POPULATION OF TURKEY POPULATION (000)

POPULATION (000) 100 000

50 000

0

Growth between 1994-2012 %

1994

60.637

1995

61.763

1,9%

1996

62.909

1,9%

1997

64.064

1,8%

1998

65.215

1,8%

1999

66.350

1,7%

2000

67.420

1,6%

2001

68.365

1,4%

2002

69.302

1,4%

2003

70.016

1,0%

2004

71.152

1,6%

2005

70.231

-1,3%

2006

70.302

0,1%

2007

70.586

0,4%

2008

71.517

1.3%

2009

72.561

1,5%

2010

73.722

1,6%

2011

74.724

1,4%

2012

75.627

1,2%

Medium

1.27%

CAMERA DI COMMERCIO ITALIANA IN TURCHIA

INDUSTRIAL CAPACITY

85 82,1 81,24 80,3 80 78,1 75,4 75 73

70

65

60

68,9

73,6

CAMERA DI COMMERCIO ITALIANA IN TURCHIA

FOREIGN DIRECT INVESTMENT TO TURKEY TOTAL $/ML

25000,0

20000,0

15000,0

10000,0

5000,0

TOTAL $/ML 2001

3.352

2002

1.137

2003

1.752

2004

2.847

2005

9.650

2006

18.135

2007

22.000

2008

18.200

2009

8.400

2010

9.100

2011

15.700

2012

12.400

2013 prev

15.000

-

CAMERA DI COMMERCIO ITALIANA IN TURCHIA

FOREIGN TRADE OF TURKEY IN 2012 (000,000 USD) (000,000 usd, 2012)

30000,0 25000,0 20000,0 15000,0 10000,0 5000,0 ,0 Germany

Russia

China 2012 Export

Italy

US

France

2012 Import

2012 Export

2012 Import

Total

%

Germany Italy Russia China France US

13.132 6.375 6.683 2.833 6.202 5.614

21.399 13.344 26.619 21.295 8.589 14.131

34.531 19.719 33.302 24.128 14.791 19.745

8,9% 5,1% 8,6% 6,2% 3,8% 5,1%

Total

152.560

236.536

389.096

Variation 2011 vs 2012 -6,5% -34,1% 37,8% 13,3% -28,3% 23,1%

CAMERA DI COMMERCIO ITALIANA IN TURCHIA

FOREIGN TRADE BETWEEN ITALY AND TURKEY ($ MILLION) (000,000 usd, last 10 years)

16 000 14 000 12 000 10 000 8 000 6 000 4 000 2 000 -

2003

2004

2005

2006

2007

Esportazione

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

2008

2009

2010

2011

2012

Importazione

Export

Import

3.166 4.648 5.601 6.752 7.480 7.816 5.890 6.505 7.851 6.375

5.446 6.865 7.523 8.663 9.967 11.008 7.673 10.139 13.449 13.344

Total 8.612 11.513 13.124 15.415 17.447 18.824 13.563 16.644 21.300 19.719

Change (2003-2012) 33,7% 14,0% 17,5% 13,2% 7,9% -27,9% 22,7% 28,0% -7,4%

Cumulative about 2.5 times (2003-2012)

CAMERA DI COMMERCIO ITALIANA IN TURCHIA

EXPORT PRODUCTS OF TURKEY 2012

• • • • • • • • • •

Automotive Chemicals Clothing and apparel Steel Electric and electronic Textile and raw materials Ferrous and non-ferrous metals Agriculture Machinery Mining

Amounts in billions of $ 19.1 17.5 16.1 15.5 11.8 7.8 6.3 5.8 5.3 4.2

CAMERA DI COMMERCIO ITALIANA IN TURCHIA

IMPORT PRODUCTS OF TURKEY 2012 • • • • • • • • • •

Amounts in billions of $ Energy 60.1 Machinery 26.3 Iron and Steel 19.6 Electrical machinery and equipments 16.3 Motor vehicles 14.5 Plastic and plastic goods 12.5 Gold, Silver, Jewelery 8.5 Organic chemical product 5.1 Measuring optical control devices 4.1 Pharmaceutical product 4.0

CAMERA DI COMMERCIO ITALIANA IN TURCHIA

FOREIGN CAPITAL COMPANIES IN TURKEY (2012)

•

The total number of companies with foreign capital is 33.288

•

The number of EU27 companies established in Turkey are 16.415

•

The main investor countries in Turkey are : GERMANY (5.258 companies) (Bosch, Mercedes, Deutsche Bank, Siemens, Allianz) ENGLAND (2.477 companies) (BP, HSBC, Diageo, Tesco) NETHERLANDS (2.132 companies) (Shell, Philips, Unilever, ING Bank) ITALY (1.015 companies) (FIAT, Pirelli, Unicredit, Banca Intesa) RUSSIA (Gazprom, Lukoil) USA (Ford, Microsoft, Cocacola, Pfizer, DHL, P&G) FRANCE (Renault, BNP Paribas, Groupama, Carrefour, AXA)

CAMERA DI COMMERCIO ITALIANA IN TURCHIA

• • • • • •

ONGOING PRIVATIZATIONS

Distribution of gas and electricity Plant for the production of sugar Motorways and ports National Banks National Lottery Turk Telekom

CAMERA DI COMMERCIO ITALIANA IN TURCHIA • • • • • • • • • • • • • • • • • • •

BOOMING SECTORS

Sectors with a greater chance of developing over the next three years are: Energy&Enviroment Machinery and equipment Automotive Iron and steel Plastic and derivatives Defense Building and Construction Insurance/Banking/Textile Infrastructure Chemicals / Cosmetic Mega projects of Turkey : Construction of a third airport in Istanbul; (it will be the largest airport in the world with a capacity of 90 million passengers and will cost € 7 billion) (BOT project) Construction of a third bridge in Istanbul which will connect the European part of the city with the Asian; (A project that costs $ 3 billion) Construction of a highway of 430 km. which will connect Istanbul and Izmir (A project that costs $ 6 billion and the company Astaldi is a part of the consortium); (BOT project) Construction of 2-3 nuclear power plants; Construction of railway network (TCDD); Construction of rail link between the airports of Istanbul Atatürk and Sabiha Gökçen; Privatization in energy sector; Privatization of various ports Construction of tunnel and metro network in Istanbul

In 2013 there is a estimated budget of a total of $ 13 billion for the program of privatization. (Bridges and highways, distribution of electricity and central heating)

CAMERA DI COMMERCIO ITALIANA IN TURCHIA

FREE TRADE AGREEMENTS

• 19 Free Trade Agreements: The member countries of EFTA (Iceland, Norway, Switzerland, Lichtenstein), Israel, Macedonia, Croatia, Bosnia and Herzegovina, Palestine, Tunisia, Morocco, Syria, Egypt, Albania, Georgia, South Korea, Montenegro, Jordan and Chile • Free trade agreements under negotiation: Lebanon, South Africa, Mexico, and the Cooperation Council for the Arab countries.

• Free trade agreements for which the talks have been initiated: Algeria, Ukraine, Mercosur (Brazil, Argentina, Uruguay, Paraguay, Venezuela), the ACP countries (Ethiopia, Congo, Djibouti, Cameroon, Kenya, Gabon).

CAMERA DI COMMERCIO ITALIANA IN TURCHIA

• •

RIGHTS OF FOREIGN INVESTORS

Free transfer of funds, dividends Acquisition of real estate properties Companies may freely acquire real property through a legal entity established by or with the participation of foreign investors in Turkey.

• Dispute Resolution Through the organs of national and international arbitration.

• Evaluation of non-cash capital The non-cash capital is valued according to the rules of the commercial Laws of Turkey.

• Work permits and residence permits for foreigners • Construction of a liaison office: Liaison offices may be established without commercial activities.

CAMERA DI COMMERCIO ITALIANA IN TURCHIA

•

TURKEY IS :

1° largest exporter in the world : HAZELNUTS, FIGS, DRIED FRUITS, TOBACCO, TRAVERTINE, CRYSTAL, CEMENT, ALUMINIUM, SUPERSULFATE, BARS AND RADIATORS (IRON AND STEEL) • 2° largest exporter in the world and 1° largest exporter in Europe of : UNDERWEAR (IN GENERAL),GLASS PRODUCTS, REFRIGERATORS • 2° largest exporter in Europe of : COTTON FABRICS • 3° largest exporter in the world :APRICOTS,CHERRIES, MANDARIN ,ORANGES AND FRESH GRAPEFRUIT • 3° largest exporter in the world and 1° largest exporter in Europe of : T.SHIRTS • 3° largest exporter in the world and 2° largest exporter in Europe of : SOCKS AND CARPETS • 3° largest exporter in the world and 3° largest exporter in Europe of : CARS WITH DIESEL ENGINE

CAMERA DI COMMERCIO ITALIANA IN TURCHIA

• •

• • • • • • •

TURKEY IS:

4° largest exporter in the world of : TOMATOES , OLIVE OIL 4° largest exporter in the world and 3° largest exporter in Europe of : DOMESTIC WASHING MACHINES, VEHICLES FOR THE TRANSPORT OF PASSENGERS 5° largest exporter in the world and 3° largest exporter in Europe of : FUR CLOTHING 6° largest exporter in the world and 3° largest exporter in Europe of : CLOTHING & ACCESSORIES KNITTED OR CROCHETED 6° largest exporter in the world and 4° largest exporter in Europe of : BATHROOM CERAMIC SANITARY 7° largest exporter in the world of : COTTON YARN 8° largest exporter in the world and 3° largest exporter in Europe of: UPHOLSTERED FABRIC, LACE AND TAPESTRY 8° largest exporter in the world and 1° largest exporter in Europe of : GOLD 9° largest exporter in the world and 5° largest exporter in Europe of : TRUCK

CAMERA DI COMMERCIO ITALIANA IN TURCHIA

•

SECTOR ANALYSIS

METALWORKING

Turkey is a strong country in the field of Mechanical Engineering.In Turkey there is a presence of large manufacturers in the automotive, electrical and other machineries.The production of high-quality products increases the importance of the industry, business opportunities and joint-venture possibilities with various countries. Turkey is the largest exporter of refrigerators in Europe.

•

MACHINERY

Turkey imports a large part of machinery from Italy following Germany.(Machineries for agriculture, wood processing, textiles and industry that needs automation.) Over the last ten years, the Mechanics sector grew by nearly 20% annually Thanks to small and medium-sized companies highly competitive, as well as the availability of a high qualified man power and low labor cost.Turkey also imports machinery from China, Germany, Italy, France and the United States, for a value of 22.3 billion USD.

•

ENERGY&ENVIRONMENT

As an industry present in the environmental strategy for integration with the EU, Turkey must make an investment of $ 130 billion by 2023. Offers great opportunities in the renewable energy sector, due to geographical location and potential for wind energy.

CAMERA DI COMMERCIO ITALIANA IN TURCHIA

•

SECTOR ANALYSIS

TEXTILE & CLOTHING

There are big Turkish companies work for the markets of Germany, Italy, USA, Japan.Beside this , there are multinational companies prefered Turkey due to low cost and high quality.

•

AUTOMOTIVE

Many international brands (of passenger cars , tractors, vans, trucks) are present in Turkey.Turkey also imports cars and spare parts mainly from Germany, Italy and France. The demand is always growing thanks to the young population

•

TOURISM

Turkish Airlines, is named the fourth biggest European Airline and best economy class.

Expected 33 million foreign tourists in 2013 and an income more than 30 billion $.

CAMERA DI COMMERCIO ITALIANA IN TURCHIA

ITALIAN CHAMBER OF COMMERCE IN TURKEY

•

It is an institution recognized by the Italian Government in 1973 and a member of Assocamerestero (Unioncamere)

•

Established in 1885

•

It has almost 700 member companies

•

Supports and assists Italian&Turkish companies operating or wishing to operate in Turkey or in Italy through a series of direct services or through selected partners

•

ONE OF THE MOST RELIABLE REFERENCE FOR ITALIAN AND TURKISH COMPANIES IN TURKEY AND IN ITALY

CAMERA DI COMMERCIO ITALIANA IN TURCHIA

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REPRESENTED ITALIAN CHAMBERS OF COMMERCE IN OUR CHAMBER IN TURKEY

Consortium of 9 Chambers of Commerce : Milano, Torino, Firenze, Padova, Vicenza, Modena, Salerno, Catania, Roma CC Trieste CC Brindisi Campania Region CC Napoli CC Crotone Unioncamere Calabria CC Varese CC Trento CC Frosinone Federexport Piemonte Brescia Export Lodi Export AICE – Italian Association of Foreign Trade CNA Servizio Estero Reggio Emilia CNA Modena – Newexplora SIMEST Consorzio Casabruzzo Confindustria Bari BAT

CAMERA DI COMMERCIO ITALIANA IN TURCHIA

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2012 ACTIVITIES OF THE CHAMBER

Have been processed 2,000 requests for cooperation and partnership between Italian and Turkish companies In 2012 had been organized with partner Italian Chambers of Commerce 50 workshops : 40 in Turkey and 10 in Italy 5.000 B2B meetings had been realized. The main sectors of the workshopswere:ICT,Energy,Enviroment,Logistics, Metalworking ,Electronic,Food,Furniture, Automation,Automotive.

The Chamber has participated in 18 major fairs in Milan and Verona and Padua, Bologna with a total of more than 300 Turkish exhibitors, more than 150 Turkish buyers.

The Chamber has participated in 11 exhibitions Turkish in Turkey.

(Hostech, WIN, IdealHome, Zuchex, IBATECH, Sodex, Yapı, Beauty Eurasia, Ankiros, Packaging, Logitrans.)

CAMERA DI COMMERCIO ITALIANA IN TURCHIA

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OUR SERVICES

Assistance&Information Market&Partner research Starting a business in Turkey(estabilishing a company) Legal and tax assistance Staff research Analysis of productive sectors Financial informations Interpreting , Translation Support for fairs and exhibitions Conferences, seminars and trade missions Organization of workshops and B2B Meetings

CAMERA DI COMMERCIO ITALIANA IN TURCHIA

THANK YOU FOR YOUR ATTENTION!!!

TURKEY INVESTMENT INCENTIVES YEŞIM BAYAM PAKBEŞE Commercial Counsellor

INVESTMENT INCENTIVE SCHEMES

q General Investment Incentive Scheme q Regional Investment Incentive Scheme q Large Scale Investment Incentive Scheme q Strategic Investment Incentive Scheme

56

SUPPORT MEASURES q q q q q q q q

Customs Duty Exemption VAT Exemption Tax Reduction Social Security Premium Support (employer’s share) Land Allocation Interest Support VAT Refund Income tax witholding allowance and social security premium support (employee’s share)

57

SUPPORT MEASURES General Investment

Regional Investment

Large Scale Investment

Strategic Investment

VAT Exemption

ü

ü

ü

ü

Customs Duty Exemption

ü

ü

ü

ü

Tax Deduction

ü

ü

ü

Social Security Premium Support (Employer’s Share)

ü

ü

ü

Interest Support

ü

Land Allocation

ü

Support Measures

ü ü

ü ü

VAT Refund Only For Region 6 (The Least Developed Region) Income Tax Withholding Support Social Security Premium Support (Employee’s Share)

ü

ü

ü

ü

ü

ü

ü 58

SUPPORT MEASURES qVAT Exemption: Value added tax exemption for machinery and equipment imported and/or locally provided qCustoms Duty Exemption: Customs duty exemption for machinery and equipment imported qTax Deduction: tax reduction between 30% to 90% contribution rates between 15% to 65%

September 2013

Ministry of Economy

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SUPPORT MEASURES qInterest Rate Support: For investment loans, a certain portion of the interest share covered by the Ministry q3-7 percentage points for TL credits q1-2 percentage points for foreign currency credits qLand Allocation: state land allocated to the investments qVAT Refund: VAT collected on the building & construction expenses will be refunded (only for strategic investment projects with a fixed investment cost of at least TL 500 Million)

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SUPPORT MEASURES For the additional employment created by the investment q Social Security Premium Employer’s Share certain portions of labor wages corresponding to amount of legal minimum wage covered by the Ministry. Available up to 12 years q Social Security Premium Employee’s Share certain portions of labor wages corresponding to amount of legal minimum wage covered by the Ministry (only for Region 6) Available for 10 years q Income Tax Withholding exemption exemption from income tax withholding (only for Region 6) Available for 10 years 61

GENERAL INVESTMENT INCENTIVE SCHEME Regardless of the region where investment is made, the scheme is available for all investment projects provided that: – Investment subject is not excluded from the investment incentives programs – Requirement of minimum fixed investment amount is met §

1 Million TL in Regions I and II

§

500 Thousand TL in Regions III, IV, V and VI

q Customs duty exemption q VAT exemptions § income tax withholding allowance will be available on portions of labor wages corresponding to amount of legal minimum wage only in Region 6 62

REGIONAL INVESTMENT INCENTIVES SCHEME q Rates of support measures have been differentiated according to the level of development of the regions q Investment subjects to be supported have been identified q Minimum investment amounts are defined for certain investment subjects in each region seperately. If it is not defined then the minimum investment amount is; ยง 1 Million TL in Regions I and II ยง 500 Thousand TL in Regions III, IV, V and VI

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REGIONAL MAP

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REGIONAL BREAKDOWN OF PROVINCES Region 1 Provinces

Region 2 Provinces

Region 3 Provinces

Region 4 Provinces

Region 5 Provinces

Region 6 Provinces

Ankara

Adana

Balıkesir

Afyonkarahisar

Adıyaman

Ağrı

Antalya

Aydın

Bilecik

Amasya

Aksaray

Ardahan

Bursa

Bolu

Burdur

Artvin

Bayburt

Batman

Eskişehir

Çanakkale

Gaziantep

Bartın

Çankırı

Bingöl

İstanbul

Denizli

Karabük

Çorum

Erzurum

Bitlis

İzmir

Edirne

Karaman

Düzce

Giresun

Diyarbakır

Kocaeli

Isparta

Manisa

Elazığ

Gümüşhane

Hakkari

Muğla

Kayseri

Mersin

Erzincan

Kahramanmaraş

Iğdır

Kırklareli

Samsun

Hatay

Kilis

Kars

Konya

Trabzon

Kastamonu

Niğde

Mardin

Sakarya

Uşak

Kırıkkale

Ordu

Muş

Tekirdağ

Zonguldak

Kırşehir

Osmaniye

Siirt

Kütahya

Sinop

Şanlıurfa

Malatya

Tokat

Şırnak

Nevşehir

Tunceli

Van

Rize

Yozgat

Yalova

Sivas 8 PROVINCES

13 PROVINCES

12 PROVINCES

17 PROVINCES

16 PROVINCES

15 PROVINCES

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TAX REDUCTION TAX REDUCTION IN REGIONAL INVESTMENT INCENTIVE SCHEME Regions

Rate of Contribution to Investment (%)

Tax Reduction Rate (%)

Region 1

15

50

Region 2

20

55

Region 3

25

60

Region 4

30

70

Region 5

40

80

Region 6

50

90

66

SOCIAL SECURITY PREMIUM SUPPORT (employer's share)

Regions Region 1 Region 2 Region 3 Region 4 Region 5 Region 6*

For investment projects to For investment projects be started till Dec. 31th to be started after Jan. 2013 1st 2014

2 years 3 years 5 years 6 years 7 years 10 years

3 years 5 years 6 years 7 years

* In OIZs in Region 6, the support will be implemented for 12 years

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INTEREST SUPPORT Support Rate Regions

Maximum Amount of Support (Thousand TL)

TL Loans

Loans in Foreign Currency

Region 1

-

-

-

Region 2

-

-

-

Region 3

3 Points

1 Point

500

Region 4

4 Points

1 Point

600

Region 5

5 Points

2 Points

700

Region 6

7 Points

2 Points

900 68

REGIONAL INVESTMENT INCENTIVE SCHEME summary

OIZ: Organized Industrial Zones 69

LARGE SCALE INVESTMENT INCENTIVE SCHEME Goals ₋ Improvement of Technology and R&D Capacity ₋ Provide competitive advantage in international trade Incentive measures

§

q

VAT Exemption

q

Customs Duty Exemption

q

Tax Reduction

q

Social Security Premium Support

q

Land Allocation

in Region 6 Income Tax Witholding Support and Social Security Premium Employee’s Share Support 70

INVESTMENT SUBJECTS No

Investment Subjects

Minimum Investment Amount (Million TL) 1000

1

Refined Petroleum Products

2

Chemical Products

200

3

Harbours and Harbour Services

200

4

Automotive OEM and Side Suppliers

4-a

Automotive OEM Investments

4-b

Automotive Side Suppliers Investments

50

5

Railway and Tram Locomotives and/or Railway Cars

50

6

Transit Pipe Line Transportation Services

50

7

Electronics

50

8

Medical, High Precision and Optical Equipment

50

9

Pharmaceuticals

50

10

Aircraft and Space Vehicles and/or Parts

50

11

Machinery (including Electrical Machines And Equipments)

50

12

Integrated Metal Production

50

200

71

TAX REDUCTION TAX REDUCTION IN LARGE SCALE INVESTMENT INCENTIVE SCHEME Regions

Rate of Contribution to Investment (%)

Tax Reduction Rate (%)

Region 1

25

50

Region 2

30

55

Region 3

35

60

Region 4

40

70

Region 5

50

80

Region 6

60

90 72

LARGE SCALE INVESTMENT INCENTIVE SCHEME summary

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Goals q “Input Supply Strategy� supporting production of intermediate and final products with high import depedence to reduce the current account deficit q encouraging the high-tech and high value added investments to strengthen international competitiveness

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Eligibility criteria for Strategic Investments q to be made for production of intermediate and final products ยง

with high import depedence

ยง

of which more than 50% are supplied by imports

q with a minimum investment amount of 50 Million TL q with a minimum 40% value added (This condition is not applicable to refined petroleum production investments and petrochemicals production investments) q With an import of at least 50 Milyon $ in the last one year period (This condition is not necessary for goods with no domestic production) 75

STRATEGIC INVESTMENT INCENTIVE SCHEME summary

76

PRIORITY INVESTMENTS Following investments will benefit from the terms and rates of the support measures of Region 5 even they are made in Regions 1, 2, 3, 4 q Tourism investments q Mining Investments q Specific pharmaceutical investments (bio-technologic and oncology pharma, blood products) q Defense Industry investments (minimum investment amount 20 Million TL) q Railroad and maritime transportation investments q Test facilities (automotive, space or defense industries) q International fair-exhibition center investments with a minimum covered area of 50.000 m2 q School investments by private sector q R&D Project investments q Electricity generation investments

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CLUSTERING AND R&D INVESTMENTS Following investments will benefit from more beneficial one level up regional rates and terms for tax reduction and support to employer’s share of social security premium in any region: q Investments made in the Industrial Zones q Joint Investments by multiple (at least 5) companies operating in the same sector which integrate with each other

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INVESTMENT CLIMATE IN TURKEY 10 REASONS TO INVEST IN TURKEY SOUND ECONOMIC PERFORMANCE CENTRAL LOCATION YOUNG DYNAMIC POPULATION

ENERGY CORRIDOR

QUALIFIED COMPETITIVE LABOR

LOW TAX RATES

LIBERAL INNOVATIVE CLIMATE

CUSTOMS UNION WITH EU

INFRASTRUCTURE

BIG DOMESTIC MARKET

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Time Required to Start a Business

Source: Invest In Turkey

Ă˜ The required time to start a business is 6 days in Turkey 48

Skilled Labour Availability

Source: Invest In Turkey

Ă˜ Scoring is between 0 and 10.

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The Sectoral Breakdown of Foreign Investments (Million $) AGRICULTURE INDUSTRIAL SECTORS Mining and Quarrying Manifacturing Production and Distribution of Electricity, Gas, SERVICES SECTOR TOTAL

2010 2011 2012* 32 38 25 7,965 5,466 3,837 146 214 85 3,573 4,329 3,283 4,244 923 469 8,058 4,497 2,846 16,055 10,002 6,708

2013* 14 1,848 185 899 764 2,075 3,937

January- June 2013

*January-June

Source: CBRT

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Investment Certificates Certificates Issued 2011 2012 2013*

2.779 2.332 3.058

Amount of Fixed Investments (Million TL) 34.879 25.465 46.154

Potential Employment (People) 77.804 69.487 107.500

*January-July

CERTIFICATES ISSUED Region I Region II Region III Region IV Region V Region VI Various TOTAL 2011 890 541 433 371 268 270 6 2.779 2012 829 445 363 286 168 238 3 2.332 2013* 1.090 516 421 316 308 390 17 3.058 *January-July

Source: Turkish Ministry of Economy, General Directorate of Incentive Implementation and Foreign Investment

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MINISTRY OF ECONOMY General Directorate of Incentives Implementation and Foreign Direct Investment tesvik@ekonomi.gov.tr

EMBASSY OF THE REPUBLIC OF TURKEY Office of the Commercial Counsellor bratislava@ekonomi.gov.tr

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OVERVIEW OF THE INDIAN ECONOMY AND RELATED OPPORTUNITIES SAURABH S. PANWAR Vice-president