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WHY INVEST IN TURKEY? 16.05.2017
10 Reasons to Invest in Turkey
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Robust Economy
Opportunities Domestic market + EU
Strategic Location
Benign R&D Ecosystem
Favorable Demographics
Lucrative Incentives
Liberal Investment Climate
Skilled & Cost-competitive Labor Force
OPEN for BUSINESS
REFORMS
Continuous reform process..
Track record growth and bright future…
Robust Economy
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Actual
Forecast
Average Annual GDP Growth 2003-2016 %
Average Annual GDP Growth 2017-2019 %
5.6
3.4
3.7
3.3
Romania
3.5
3.4
Czechia
2.6
2.7
Hungary
1.8
2.4
13th largest economy in the world
Real GDP Growth
2016 GDP ($ Trillion, PPP) China (1)
21,3
US (2)
18,6
India (3)
8,7 5,2
Germany (5)
4,0
Russia (6)
3,8
Turkey
220
200 Poland 180
3,1
Source: TurkStat, OECD, World Bank, IMF, PPP: Purchasing Power Parity
2019
2018
2017
2016
100
2015
2,0
2014
Turkey (13)
2013
2,2
2012
Italy (12)
120
2011
2,3
2010
Mexico (11)
140
2009
2,7
2008
France (10)
2007
2,8
2006
UK (9)
160
2005
3,0
2004
Indonesia (8)
2003
Brazil (7)
240
2002
Japan (4)
(Index: 2002=100)
Robust Economy
Strong macroeconomic fundamentals, reining in public finance and keeping inflation low…
Gross Public Debt Stock as % of GDP
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Budget Balance as % of GDP
90
0
Turkey EU 28
EU 28
80
-3
70 60
-6
50
-9
40
Turkey
-12
30 20
-15
35
Annual Inflation (%)
30 25 20 15
11,9% as of April 2017
10 5
Source: Eurostat, Ministry of Finance, TURSTAT
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
0
Robust Economy
Turkish has generated significant economic activity‌ invest.gov.tr
Turkish economy has more than tripled over the past 14 years & promising more growth in future
Driven by a robust domestic market and entrepreneurial private sector which has spurred investments and exports
Turkish Economy
Contribution to GDP Growth (%)
(GDP at current prices, $Billion)
2002-2016 857
74
31 22
236
2002
-2
2016 Domestic Consumption
Investment Expenditures
Exports
Stocks
-25 Imports
Source: TurkStat
Domestic market + EU
Turkey’s economic growth has paved the way for emergence of a sizeable middle-class… invest.gov.tr
GDP per capita in countries with population over 50 million
Tripling Income per capita (GDP per capita, current prices)
US (1)
57.436
Germany (2)
$10.807
41.902
UK (3)
40.096
Japan (4)
38.917
France (5)
38.128
Italy (6)
Among countries with population over 50 million, only 8 countries have GDP per capita over $10.000
$3.581
2002
2016
2002 1 million 3.3 million 17.8 million
Source: IMF, TurkStat, Euromonitor
Income Groups (Annual disposal income per capita)
30.507
Korea (7)
27.539
Turkey (8)
10.807
Russia (9)
8.929
Brazil (10)
8.727
2016
High (>$55K)
5 million
Upper-middle ($25K – $55K)
21.2 million
Middle ($10K – $25K)
39.9 million
23 million
Low ($5K – $10K)
21.3 million
Poor (<$5K)
10.8 million 3 million
Emergence of a middle-class in Turkey can be observed in various areas with increasing purchasing powerâ&#x20AC;Ś
Domestic market + EU
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Stock of Automobiles (million of passenger cars registered in traffic)
Annual House Sales 11,4
(million of houses) 1,3
4,6 0,4
2002
2016
Mobile Phone
2008
Broadband Internet
(million of subscribers)
(million of subscribers) 75
23
2002 Source: TurkStat, ICTA
2016
62
0,1
2016
2002
2016
Domestic market + EU
The domestic market is further supported by emerging urban centers across Turkeyâ&#x20AC;Ś
There are more than 20 urban centers with populations over 1 million
Source: TurkStat, 2016
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Domestic market + EU
Domestic market + EU market + Free Trade Area invest.gov.tr
Customs Union with the Access to EU allows direct access to the EU Market
= 510 million people
+ = 355 million people in 27 countries with Free Trade Agreements
+ = 80 million people Source: Eurostat, Population as of 2016, Ministry of Economy * In ratification process
Free Access to
945
million consumers
Strategic Location
to manufacture, export and manageâ&#x20AC;Ś invest.gov.tr
Connectivity with key markets through road, rail, sea and air..
Proximity to 1.6 billion people, $24T GDP & $7T trade at 4 hour flight-distance
Follow and cover markets in 16 time zones from New York to Tokyo
Turkish Airlines connects you to 246 destinations in 120 countries
Strategic Location
to manufacture, export and manageâ&#x20AC;Ś invest.gov.tr
Already a manufacturing & export hub for global companies..
Exporting 85% of its production
Exporting 77% of its production
As well as a management hub managing dozens of countries from Turkey..
80 countries 80 countries 67 countries
Production base for MENA
60 countries 52 countries
Using Turkey as Super Hub
Its largest production facility In the world
35 countries
30 countries
Favorable Demographics
half of population under age 30 invest.gov.tr
TURKEY
EUROPE
70-74 60-64 50-54
40-44 30-34 20-24
10-14 0-4 5
3
1
1
Female
3
G r o u p s ( % )
90+
80-84
80-84
A g e
A g e
G r o u p s ( % )
90+
20-24
70-74 60-64 50-54
40-44 30-34 10-14 0-4
5
5
1
1
Female
Male
Working Age Population (15-64)
3
5
Male
Total Dependency Ratio (%)
(Index: 2014=100)
120
3
(Age 0-14 & Age 65+) / Age 15-64
75
Turkey 110
70
Europe
65 60
100
55
Europe 90 2014
2017
2020
Source: Turkstat, Eurostat, UN, 2016
2023
2026
2029
2032
2035
Turkey
50 45 2014
2017
2020
2023
2026
2029
2032
2035
Skilled & Cost-competitive Labor Force
Turkeyâ&#x20AC;&#x2122;s education system upgraded to support a skilled labor pool..
Number of University Graduates (thousands)
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Number of Graduates from Vocational & Technical High Schools (thousands)
801
515
287 287
2002
2015
Labor Force by Education Level University 10%
2002 High School and below 90% Source: Ministry of National Education, Council of Higher Education, Turkstat
2002
2016
Labor Force by Education Level University 23%
2016 High School and below 77%
Skilled & Cost-competitive Skilled & CostLabor Force competitive Labor Force
7,51
Availability of skills and cost-competitive work-force provides productive capacities..
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Availability of Qualified Engineers, 2016
Availability of Competent Senior Managers, 2016
(10=Available; 0=Unavailable)
(10=Available; 0=Unavailable) 6,76
7,21
6,72
6,42
6,40 5,83
5,37
5,50
5,12
5,05
3,12
Slovakia Czechia Hungary
Poland
37,4
19,4
21,3
21,2 19,2
20,6
Hungary
21,1
21,7
20,4 18,2
Source: IMD World Competitiveness Yearbook Executive Opinion Survey based on an index from 0 to 10; Eurostat, OECD, BLS, Turkstat
2015
2014
2013
2012
6,8
2011
8,4
2007
8,7
Turkey
10,9
Poland
Slovakia
UK
Ireland
USA
France
Germany
11,3
Hungary
31,4
Czechia
34,0
Czechia
Turkey vs. USA (US=100)
2015
40,9
Slovakia Romania
Labor Cost per hour in Manufacturing
Labor Cost per hour in Manufacturing ($) 42,2
Turkey
2010
Poland
2009
Romania
2008
Turkey
Turkey has implemented sweeping reforms in many areas and continues to introduce new reforms…
Reforms
M A J O R R E F O R M S
New FDI Law
Ease of company establishment (Law No: 4884)
Coordination Council for the Improvement of the Investment Environment
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Investment Incentives
Tax Reform (Corporate Tax %20 down from 33%)
Establishment and Operating Licences New Labor Law
R&D and Innovation Incentives
Istanbul Arbitration Center
New Capital Market Law
New Insurance Overhaul of Law Social Security Upgrading System Investment ISPAT Incentives
New Banking Law
Upgrading Investment Incentives
Removing Restrictions on Foreigners’ Purchases of Real Estate
New Commercial Code
New Code of Obligations
Upgrading Investment Incentives
Unifying All Exchanges (Stock, Derivative, Gold, etc.) under BIST
Personal Data Protection Law
Industrial Property Law
…. 2009 2011
37,0
Source: OECD, World Bank
China
0,067
26,0 21,0
Poland
0,072
Increasing use of English for 0,059 business Turkey
0,083
OECD
0,089
Switzerland
Brazil
Canada
Russia
India
China
0,101
Poland
0,166
USA
0,187
Internationallyminded 12,0 10,5 10,0 9,8 people
9,0
7,0
6,5 Turkey
28,9 0,212
Hungary
1 = Closed to FDI 0 = Open to FDI
Down from 38 days in 2002
Czech R.
Down from 0,283 in 2003
Russia
0,327
2017
Number of Days to set up a Company, 2016
Switzerlan d
FDI Regulatory Restrictiveness Index, 2016
2014 2016
2013
2012
Germany
2008
Romania
2007
Austria
2005 2006
India
2004
2003
2001
Liberal Investment Climate
offers protection and ease of doing business.. invest.gov.tr
20
✓Real Estate purchase
0 Afghanistan, Albania, Argentina, Australia, Austria, Azerbaijan, Bangladesh, Belarus, Belgium,
Luxembourg, Bosnia , Bulgaria, China, Croatia, Cuba, Czech R., Denmark, Egypt, Estonia, Ethiopia, Finland, France, Georgia,
Germany, Greece, Hungary, India, Indonesia, Iran, Israel, Italy, Japan, Jordan, Kazakhstan, Kuwait, Kyrgyzstan, Latvia, Lebanon, Libya, Lithuania, Macedonia, Malaysia, Malta, Moldova,
Netherlands
Mongolia, Morocco, , Oman, Pakistan, Philippines, Poland, Portugal, Qatar, Romania, Russia, Saudi Arabia, Senegal,
Serbia, Singapore, Slovakia, Slovenia,
Korea, Spain, Sweden, Switzerland, Syria, Tajikistan, Thailand, Tunisia, Turkmenistan, Ukraine,
UAE, UK,US, Uzbekistan, Yemen
Albania, Algeria, Australia, Austria, Azerbaijan, Bahrain, Bangladesh, Belarus, Belgium, Bosnia, Brazil, Bulgaria,
Canada, China, Croatia, Czech Republic, Denmark, Egypt, Estonia, Ethiopia, Finland, France, Georgia,
Germany, Greece, Hungary, India, Indonesia, Iran, Ireland, Israel, Italy, Japan, Jordan, Kazakhstan, Kuwait, Kyrgyzstan, Latvia, Lebanon, Lithuania,
Luxembourg, Macedonia, Malaysia, Malta, Moldova, Mongolia, Morocco, Netherlands, New Zealand, Norway, Oman, Pakistan, Poland, Portugal, Qatar, Romania, Russia, Saudi Arabia, Serbia, Montenegro,
Singapore, Slovakia, Slovenia, South Africa, Korea, Spain, Sudan, Sweden, Switzerland, Syria, Tajikistan, Thailand, Tunisia, TRNC, Turkmenistan, Ukraine, UAE,
UK, US, Uzbekistan, Yemen
Source: Ministry of Economy, Ministry of Finance, Tax Foundation (Tax competitiveness measures countries’ tax policies five categories: corporate income tax, consumption taxes, property taxes, individual taxes, and international tax rules.)
43,2
53,7
56,5
61,4
64,3
40
✓Guarantee of Transfers
67,4
60
69,6
✓International Arbitration
(Index=100 as most competitive) 70
80
70
✓No restriction on foreign ownership
✓Employment of Expats
2016 International Tax Competitiveness
100
74,8
✓National Treatment
Treaties to avoid Double Taxation with 80 countries
75
Bilateral Investment Protection Treaties with 75 countries
84,6
Foreign Direct Investment Law
Lucrative Incentives
Investors are offered lucrative incentives in many ways.. invest.gov.tr
Manufacturing Incentives
✓ Tax deduction & exemption +
Employment incentives
✓ Payroll & Training support +
Special Zones
Free Zones ✓ Tax deduction & exemption +
Organized Industrial Zones ✓ Developed infrastructure
Services Incentives
✓ Tax deduction for exporting services in; Engineering Architecture Design S o f t w a r e Medical Reporting Accounting Call Center Datacenter EDUCATION Healthcare
Technology Development Zones
✓ To support R&D
R&D and Innovation Incentives
✓ Tax deduction & exemption +
✓ Tax deduction & exemption+
Industry
Academia
Benign R&D Ecosystem
R&D incentives are further supported by a favorable ecosystem..
Number of Researchers (thousands) 200
Turkey
Poland
120
15
Romania
Poland
9
3 Slovakia
0
Selected Foreign Companies conducting R&D in Turkey
Source: OECD, Eurostat, Turkstat
Turkey
6
80
0
Increasing R&D Spending ($ Billion)
12
160
40
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Romania Slovakia
Opportunities
Turkey offers abundant opportunities in a variety of sectors.. invest.gov.tr
A U T O M O T I V E
▪ 17th largest auto producer in the world ▪ 2nd largest auto source to the EU ▪ Production: over 1 million vehicles per year ▪ Market: $25 bn (CAGR: 6%) ▪ Export: $20 bn ▪ Well-developed supplier base
M A C H I N E R Y & E L E C T R I C A L E Q P T.
▪ Largest TV & white goods producer in Europe ▪ Market: $40 bn (CAGR: 6.5%) ▪ Export: $21 bn
TV E N E R G Y
▪ Market: $70 bn (CAGR: 8%) ▪ Growing demand ▪ Energy corridor; proximity to 70% of world’s proven primary energy sources ▪ Untapped renewable sources ▪ Government support to renewables
A G R O F O O D
&
B E V E R A G E
▪ Market: $70 bn (CAGR: 8%) ▪ Export: $17 bn ▪ Turkey exports 1,781 types of agricultural products to 190 countries
Source: Turkstat, Ministry of Science, Technology and Industry, CAGR: 2006-2015, markets as of 2015, exports as of 2016
Opportunities
Turkey offers abundant opportunities in a variety of sectors.. invest.gov.tr
A E R O S P A C E
▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪
&
$15 bn defense spending Market: $5+ bn (CAGR: 12%) Exports: $1.7 bn (CAGR:13%) A civil aviation hub Civilian fleet size: 540 Civilian passengers: 174 mn Well-developed clusters Strong support for joint ventures with foreign investors
F I N A N C E
▪ ▪ ▪ ▪ ▪
P P P
D E F E N C E
Robust growth with double digits Growing interest in Islamic finance Istanbul Financial Center Unsaturated insurance sector Strong presence of foreign investors
▪ ▪ ▪ ▪ ▪
~$150 bn PPP investment (2003-2016) $325 bn PPP investment expected (2017-2023) Transportation Healthcare Energy
P R I VAT E
E Q U I T Y
▪ Growth companies with track record, but need financing for their full potential ▪ Companies on fast track to international growth with lucrative export opportunities ▪ Diversified industrial & service sectors promising growth ▪ Successful family-owned firms with succession issues ▪ Strong int’l PE presence ▪ Entrepreneurial business culture
Source: Turkstat, SIPRI, Undersecretariat for Defence Industries, DHMİ, SHGM, World Bank, PwC, CAGR: 2006-2016, Market and Exports value as of 2016
FDI
Turkey’s value has been appreciated by foreign investors with increasing FDI in Turkey… invest.gov.tr
FDI Inflows ($ Billion)
180
Number of Foreign Companies in Turkey (‘000)
52,8
5,6
15 1973-2002 (30 years)
2002
2003-2016 (14 years)
Most Attractive Sectors by FDI Stock, as of 2015
Breakdown of Manufacturing by FDI Stock, as of 2015 Rubber & Plastic 4,5%
Others 7,3%
Metals 4,6% Information & Communication Services 10,4%
Manufacturing 33,6%
Wholesale & Retail Trade 15,4% Finance 22,9%
Source: CBRT, Ministry of Economy
2016
Chemicals & Pharma 11,1%
Others 10,2%
Food, Beverages & Tobacco 22,6%
Automotive 19,0%
Computers & ElectronicElectrical 13,0%
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Attached to the Prime Ministry Private sector approach with public sector capabilities Acting as your solution partner; OUR SERVICES ISPAT assists investors before, during and after their entry in Turkey, providing them with professional consulting services including but are not limited to: ✓ General and customized business information ✓ Sectoral analysis and reports ✓ Site selection support to find appropriate location/land for your investment ✓ Arrangements of meetings with governmental bodies and other stakeholders ✓ Matchmaking with local partners and establishing business linkages ✓ Facilitating your investment at all stages ✓ Aftercare Services ✓ Project Launch Services ✓ Facilitating your visit to Turkey
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