REPUBLIC OF TURKEY PRIME MINISTRY

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1 REPUBLIC OF TURKEY PRIME MINISTRY Investment Support and Promotion Agency of Turkey ISPAT Investment Climate in Turkey

2 Beautiful landscape

3 Combination of contemporary and traditional

4 Home of many successful people

5 What about the investment opportunities

6 AGENDA TURKEY WITH SOME KEY FIGURES FDI IN TURKEY TOP REASONS TO INVEST IN TURKEY THE AGENCY WHY TURKEY

7 Turkey with some key figures

8 16 th largest economy in the world and 6 th when compared to the EU Countries in 2009 (IMF) The largest youth population when compared to the EU countries

9 35 million internet users (2010) 62 million GSM users (2010) 46 million credit card users (2010)

10 VOLITAN - Green Dot Award 2008, Miami - International Design Award 2007, New York Turkey is the 5 th largest shipbuilding (units) country as well as the 3 rd largest mega yacht producer in the world (2008) VOLITAN Designer Dr. Hakan GÜRSU & Designer Sözüm DOĞAN, TURKEY

11 Turkey is the 10 th largest steel producer in the world and 2 nd compared with the EU countries (worldsteel 2009) Turkey is the 17 th largest automotive producer in the world (OICA 2009)

- Turkish Airlines is one of the fastest growing airlines in Europe; the leader in traffic and capacity growth in Europe (AEA, 2009) - Fleet Plan for 2009-2023; purchase 105 aircrafts - The best

12 - Turkish Airlines is one of the fastest growing airlines in Europe; the leader in traffic and capacity growth in Europe (AEA, 2009) - Fleet Plan for ; purchase 105 aircrafts - The best airline in Southern Europe; sole 4-star airline in Europe (Skytrax 2009) million airline passengers in Turkey (2009) - Istanbul Ataturk Airport is the best airport in Southern Europe (Skytrax 2010)

13 The proportion of the Turkish female academic staff is higher than the European average

Turkey is the 7 th most visited holiday destination in the world (2009) International Tourist Arrivals Country 2009 (million) 1. France 74.2 2. USA 54.9 3. Spain 52.2 4. China 50.9 5. Italy 43.

14 Turkey is the 7 th most visited holiday destination in the world (2009) International Tourist Arrivals Country 2009 (million) 1. France USA Spain China Italy UK Turkey* Germany Malaysia Mexico 21.5 Source: UNWTO ;*Ministry of Culture and Tourism Out of world s top 100 best hotels 20 are from Turkey (TUI Holly, 2009)

15 It s not only a place to work, but also a fascinating place to live.

16 FDI in Turkey

2002 2003 2004 2005 2006 2007 2008 2009 2001 2002 2003 2004 2005 2006 2007 2008 2009 Strengthening upward trend in FDI Inflows $ Billion FDI Inflows 25 20.2 20 22.0 18.

17 Strengthening upward trend in FDI Inflows $ Billion FDI Inflows Number of Companies with Foreign Capital Source: Central Bank of Republic of Turkey & Treasury

18 Turkey is the 15 th most attractive FDI destination for according to the World Investment Prospects Survey Source: UNCTAD

19 Top reasons to invest in Turkey

20 Top reasons to invest in Turkey Billion USD Benchmarking Performance of the Turkish Economy Dynamic, Stable & Attractive Economy GDP Key numbers Population International Hub Structural Reforms % Annual Average Real GDP Growth Source: IMF World Economic Outlook, April 2010; *TurkStat

21 Top reasons to invest in Turkey Let your business blossom in a thriving economy and promising future The fastest growing economy among the OECD countries Source: OECD Economic Outlook No.86

Defined General Government Gross Debt Stock (% of GDP) Population

22 Top reasons to invest in Turkey Stability and High Performance in the Economy Dynamic, Stable & Attractive Economy GDP Key numbers EU Defined General Government Gross Debt Stock (% of GDP) Population International Hub Structural Reforms Source: Treasury Maastricht Criteria: 60 %

23 Top reasons to invest in Turkey Stability and High Performance in the Economy Dynamic, Stable & Attractive Economy GDP Key numbers Population International Hub Structural Reforms EU Defined General Government Budget Balance (% of GDP) Maastricht Criteria: -3 % Source: Treasury

24 Top reasons to invest in Turkey Stability and High Performance in the Economy Dynamic, Stable & Attractive Economy GDP Key numbers Billion USD 140 Exports and Tourism Revenues 132 Population International Hub Exports Tourism Revenues Structural Reforms Source: TURKSTAT

25 Top reasons to invest in Turkey Turkey has the 5 th most liberal trade policies in the world (World Trade Indicators 2009) Dynamic, Stable & Attractive Economy GDP Key numbers Population International Hub Structural Reforms Customs Union with the EU Free Trade Agreements with 17 countries: 1. Albania 2. Bosnia & Herzegovina 3. Croatia 4. Egypt 5. Georgia 6. Iceland 7. Israel 8. Lichtenstein 9. Macedonia 10. Morocco 11. Norway 12. Palestine 13. Switzerland 14. Syria 15. Tunisia 16. Montenegro 17. Serbia

Economy GDP Key numbers Annual Inflation Population

26 Top reasons to invest in Turkey Stability and High Performance in the Economy Dynamic, Stable & Attractive Economy GDP Key numbers Annual Inflation Population International Hub Structural Reforms * As of September 2010 Source: TURKSTAT

27 Top reasons to invest in Turkey Potential of the Turkish Economy - Young Population - Population Pyramid Dynamic, Stable & Attractive Economy Age Group TURKEY Age Group EUROPE Population Age Labor Force GDP International Hub Structural Reforms % % Female Male Female Male Source: UN and TURKSTAT, 2010 Half of population in Turkey is under age 29

28 Top reasons to invest in Turkey Potential of the Turkish Economy - Young Population - Favorable Demographics Population by Age Groups (2008) Dynamic, Stable & Attractive Economy Turkey Slovakia 16% 26% 72% 67% 7% 12% Population Age Labor Force GDP EU 27 Poland Romania Hungary 16% 15% 15% 15% 67% 71% 70% 69% 17% 13% 15% 16% International Hub Russia Spain 15% 15% 72% 69% 14% 17% Structural Reforms Czech Republic Ukraine 14% 14% 71% 70% 15% 16% Italy 14% 66% 20% Germany 14% 66% 20% Bulgaria 13% 69% 17% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0-14 Age Age +65 Age Source: EUROSTAT 26% of populations is under age 15

29 Top reasons to invest in Turkey Availability of the Skilled Labor Force Dynamic, Stable & Attractive Economy Population Age Labor Force GDP International Hub Structural Reforms Source: IMD World Competitiveness Yearbook 2009, IMD WCY Executive Opinion Survey based on an index from 0 to 10

Wages Index in Industry (Per Worker; 2005=100) Population Age Labor

30 Top reasons to invest in Turkey Productive and Cost-effective Labor Force Dynamic, Stable & Attractive Economy Productivity and Unit Wages Index in Industry (Per Worker; 2005=100) Population Age Labor Force GDP International Hub Structural Reforms Unit Wage Index Source: TURKSTAT

Top reasons to invest in Turkey Productive and Cost-effective Labor Force Dynamic, Stable & Attractive Economy Labour Productivity Growth (%) Annual Average (2002 2009) Population Age Labor

31 Top reasons to invest in Turkey Productive and Cost-effective Labor Force Dynamic, Stable & Attractive Economy Labour Productivity Growth (%) Annual Average ( ) Population Age Labor Force GDP International Hub Structural Reforms Source: Economist Intelligence Unit (EIU), February 2010; Efficiency of labor measured in terms of output per worker (real GDP per person employed).

32 Top reasons to invest in Turkey Productive and Cost-effective Labor Force Dynamic, Stable & Attractive Economy Labor Cost Per Hour ($US) 2009 Population Age Labor Force GDP International Hub Structural Reforms Source: EIU, February 2010; Average cost of labor per hour (pay and non-pay costs).

number of sick days per employee in Europe (2008) *

Labor Force GDP International Hub Structural Reforms

Annual average (2009)** Source: *MERCER -

33 Top reasons to invest in Turkey Productive and Cost-effective Labor Force Days Annual average number of sick days per employee in Europe (2008) * Dynamic, Stable & Attractive Economy Population Age Labor Force GDP International Hub Structural Reforms Hours Hours worked per week of full-time employment Annual average (2009)** Source: *MERCER - Pan-European Employer Health Benefits Issues Survey 2008 **EUROSTAT 2009

34 Top reasons to invest in Turkey Potential of the Turkish Economy Dynamic, Stable & Attractive Economy Population Age Labor Force GDP 12,000 10,000 8,000 GDP Per Capita Nominal (USD) 9,234 7,583 7,021 10,440 8,590 International Hub Structural Reforms 6,000 4,000 3,492 4,559 5,764 2, Source: TURKSTAT

Top reasons to invest in Turkey Access to Multiple Markets Total 1,5 Billion People $ 22 Trillion GDP Dynamic, Stable & Attractive Economy Population International Hub Access to Multiple Markets

35 Top reasons to invest in Turkey Access to Multiple Markets Total 1,5 Billion People $ 22 Trillion GDP Dynamic, Stable & Attractive Economy Population International Hub Access to Multiple Markets Energy Corridor Structural Reforms EUROPE GDP $ 18.3 Trillion Population 660 million RUSSIAN FEDERATION GDP $ 1,2 Trillion Population million Source: IMF World Economic Outlook April 2010 MIDDLE EAST AND NORTH AFRICA GDP $ 2,4 Trillion Population 602 million CENTRAL ASIA & CAUCASUS GDP $ 230 billion Population 80 million

36 Top reasons to invest in Turkey Key Elements of Structural Reform Agenda Dynamic, Stable & Attractive Economy Population International Hub Structural Reforms Public Sector Reform Financial Sector Reform Social Security Reform Tax Reform Enhancing Private Sector s Role in the Economy Opening the Key Markets to Competition, and Regulation by Independent Agencies Improving the Investment Environment Accelerated Privatization New R&D and Innovation Support Law

under Construction Natural Gas Pipelines Underway Proposed Natural Gas Pipelines Population

37 Top reasons to invest in Turkey Turkey As An Energy Corridor And Terminal Dynamic, Stable & Attractive Economy Existing Natural Gas Pipelines Existing Oil Pipelines Natural Gas Pipelines under Construction Natural Gas Pipelines Underway Proposed Natural Gas Pipelines Population International Hub Access to Multiple Markets Energy corridor Structural Reforms Oil Pipelines under Construction

38 Top reasons to invest in Turkey Structural Reforms Dynamic, Stable & Attractive Economy Population Corporate Income Tax %20 Protection Against Expropriation International Hub Structural Reforms National Treatment NewFDI Law & Other Legislation Guarantee of Transfers Freedom to invest Access to Real Estate Employment of Expatriates International Arbitration

39 Top reasons to invest in Turkey INVESTMENT INCENTIVES IN TURKEY 1. General Incentive System 2. Large Scale Investments 3. Region and Sector-Based Incentive System 4. Employment Scheme 5. Research and Development Supports 6. State Incentives for Export

between 2-10% Social Security Premium Contribution for Employers up to 7

40 Top reasons to invest in Turkey The Incentives Granted According To The Region, Sector and The Scale of The Investment: Reduced Corporate Tax: between 2-10% Social Security Premium Contribution for Employers up to 7 years Interest Support Land allocation for investments Zone 1 Zone 2 Zone 3 Zone 4

41 The Agency

42 The Agency The Agency Attached to the Prime Ministry and reports directly to the Prime Minister Private sector approach Multi-lingual, professional and dedicated project directors ONE STOP SHOP 2 offices (Ankara Istanbul) Result oriented The EU Negotiation Progress Report shows that the establishment of the Agency is a proof for improvement of the investment climate in Turkey

43 The Agency The International Network 15 representatives 21 countries International representatives network worldwide and strategic partners in Turkey (Embassies, Consulates, Commercial Attaches, NGO s etc)

44 The Agency WORLD BANK s GLOBAL INVESTMENT PROMOTION BENCHMARKING REPORT 2009 Among 181 National Investment Promotion Agencies, INVESTMENT SUPPORT and PROMOTION AGENCY of TURKEY ranked as; 15 th in the World in terms of General Performance Assessment 5 th in the World and 2 nd in Europe in terms of Inquiry Handling

45 The n TURKEY Agency for all potential investors!

46 Some International Investors in ICT & Electronics

47 Some International Investors in FMCG & Retail

48 Some International Investors in Different Sectors

49 Why Turkey?

50 Enjoy your potential in Turkey

51 Why Turkey? According to the projection by Goldman Sachs, Turkey will be the 9 th largest economy in the world and the 3 rd largest economy in Europe by China 2.U.S.A. 3.India 4.Brasil 5.Russia 6.Indonesia 7.Mexico 8.U.K. 9.Turkey 10.Japan Source: Goldman Sachs, 2009

52 Why Turkey? Scale Janurary 2010 Increasing Confidence in the Turkish Economy Turkey s Sovereign Credit Ratings S&P Moody s Fitch JCR February December January December January Scale Scale Scale A A2 A A- A3 A- AAA+ AAA AAA- January 2010 February 2010 BBB+ Baa1 BBB+ BBB+ BBB Baa2 BBB BBB BBB- Baa3 BBB- BBB- BB+ Ba1 BB+ Turkey BB+ BB Turkey Ba2 Turkey BB BB Turkey BB- Turkey Ba3 Turkey BB- Turkey BB- Turkey B+ B1 B+ B+ B B2 B B B- B3 B- B- CCC+ Caa1 CCC+ CCC CCC Caa2 CCC CC CCC- Caa3 CCC- C SD Ca DDD D D A+ A A- Source: Respective rating agencies

53 Why Turkey? The Most Promising Sectors Automotive ; Target to produce over 2 mio vehicles within 5 years Energy ; The total amount of investment needed to meet the energy demand in Turkey until 2023 is $ 130 billion Real Estate ; Istanbul is the first-ranked development market in 2009 (Emerging Trends in Real Estate Europe 2009 Report - PWC & ULI) Agriculture ; Concerning Southeastern Anatolia Project, $ 26.7 billion investment is required until 2012 Transportation; Highway capacity planned to be trippled up until 2023 with 12 different project Finance ; In 2009, the net profit of the banking sector has increased by 50% comparing with The real growth rate of the financial sector of Turkey was 8.5% in 2009 despite the global financial crisis. ICT & IT ; IT Market growth rate exceeds 220 % within the last decade and reaches to $28,1 billion turnover. Source: TEDAŞ, OSD, GAP Authority, Ministry of Transportation, BDDK, Interpro Media

54 ON

55 THANK YOU FOR YOUR ATTENTION

Republic of Turkey Prime Ministry. Investment Support and Promotion Agency of Turkey ISPAT. Investment Environment of Turkey

Republic of Turkey Prime Ministry Investment Support and Promotion Agency of Turkey ISPAT Investment Environment of Turkey Ahmet Cüneyt Selçuk Chief Project Director AGENDA The Agency Turkey with some