Sector and PPP. inturkey. Ahmet İhsan ERDEM. Republic of Turkey Prime Ministry Investment Support and Promotion Agency.

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1 Infrastructure Sector and PPP inturkey Ahmet İhsan ERDEM Vice Presiden t Republic of Turkey Prime Ministry Investment Support and Promotion Agency

2 Agenda The Agency Why Turkey? General Infrastructure Outlook Project Highlights Vision

3 The Agency

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

and reports Site selection support to find appropriate location/land for your investment Arrangements of meetings with governmental bodies and other stakeholders Matchmaking with

4 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 invest.gov.tr

5 Why Turkey?

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

6 Track record growth and bright future 17 th largest economy in the world (GDP, PPP) Annual GDP Growth (%) 5.9 Turkey 3.7 Poland 3.5 Romania 2.6 Czechia Real GDP Growth (Index: 2001=100) 275 Turkey Romania Poland Czechia f o r e c a s t Source: TurkStat, IMF

7 Turkey s economic success has been based on strong macroeconomic fundamentals, reining in public finance and keeping inflation at single digits 90 Gross Public Debt Stock as % of GDP 0,0 Budget Balance as % of GDP Turkey EU 28-3,0 60-6,0 50-9, ,0 Turkey EU , Annual Inflation (%) ,53% as of Dec Source: IMF, Ministry of Finance, TURSTAT

8 Turkey s economic growth has paved the way for the emergence of a sizeable middleclass Doubling Income per capita (PPP) $ $ million 3.9 million 13.4 million 43.6 million 2.6 million High Income Upper-Middle Income Middle Income Low Income Poor 1.4 million 10.6 million 25.8 million 33.9 million 1.4 million Source: IMF, Pew Research; The poor live on $2 or less daily, low income on $ , middle income on $ , upper-middle income on $ , and high income on more than $50; figures expressed in 2011 purchasing power parities (PPP) in 2011 prices. * As of September 2015

9 A g e G r o u p s ( % ) A g e G r o u p s ( % ) Favorable Demographics structure with half of its population under age 30 TURKEY EUROPE Female Male Female Male 120 Working Age Population (15-64) (Index: 2014=100) 75 Total Dependency Ratio (%) (Age 0-14 & Age 65+) / Age Europe 110 Turkey Europe Turkey Source: Turkstat, Eurostat, UN, 2014

10 Strategic Location to manufacture, export and manage Connectivity with key markets through road, rail, sea and air.. Access to 1.5 billion people, $27T GDP & $8T trade at 4 hour flight-distance Follow and cover markets in 16 times zones from New York to Tokyo Turkish Airlines connects you to 235 destinations in 113 countries

11 Strategic Location to manufacture, export and manage Already a manufacturing & export hub for global companies.. As well as a management hub managing dozens of countries from Turkey.. Exporting 85% of its production Exporting 77% of its production 90 countries 80 countries Production base for MENA 80 countries 67 countries Using Turkey as Super Hub 52 countries Its largest production facility In the world Besides regional proximity to our clients, İstanbul provides appropriate infrastructure, convenient airport links, and a good quality of life for our staff. Dimitris Tsitsiragos, Vice-President, IFC

12 China India Russia Canada Brazil USA Suisse Poland OECD UK Turkey Poland China India Spain Germany Russia Czech R. Turkey Turkey has implemented sweeping reforms in many areas and continues to Reforms introduce new reforms Coordination Council for the Improvement of the Investment Environment 2001 New FDI Law 2003 Ease of company establishment (Law No: 4884) New Labor Law Establishment and Operating Licences 2004 New Banking Law 2005 Tax Reform (Corporate Tax %20 down from 33%) 2006 ISPAT Investment Incentives New Insurance Law 2007 M A J O R R E F O R M S R&D and Innovation Incentives Overhaul of Social Security System 2008 Upgrading Investment Incentives FDI Regulatory Restrictiveness Index, 2015 Number of Days to set up a Company, New Commercial Code 2011 New Code of Obligations New Capital Market Law 2012 Removing Restrictions on Foreigners Purchases of Real Estate Upgrading Investment Incentives Unifying All Exchanges (Stock, Derivative, Gold, etc.) under BIST 2013 Istanbul Arbitration Center Personal Data Protection Law Upgrading Investment Incentives Industrial Property Law ,386 0,237 1 = Closed to FDI 0 = Open to FDI 0,181 0,166 0,101 0,089 0,083 0,072 0,068 0,061 Down from 0,283 in 2003 Increasing use of English for business 0,059 37,0 28,9 26,0 Internationally- 13,0minded people 10,5 9,8 9,0 Down from 38 days in ,5 Source: OECD, World Bank

Source: Ministry of Economy, Ministry of Finance, Tax Foundation (Tax competitiveness measures countries tax policies five categories: corporate income tax, consumption taxes, property taxes,

. Foreign Direct Investment (FDI) Law National Treatment No restriction on foreign ownership International Arbitration Guarantee of Transfers Real Estate purchase Employment of Expats Bilateral

13 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.) 84, , ,6 67,4 64,3 61,4 56,5 53,7 43,2 Liberal Investment Climate offers protection and ease of doing business.. Foreign Direct Investment (FDI) Law National Treatment No restriction on foreign ownership International Arbitration Guarantee of Transfers Real Estate purchase Employment of Expats Bilateral Investment Protection Treaties with 75 countries 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, Mongolia, Morocco, Netherlands, 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 Double Taxation Agreements with 80 countries International Tax Competitiveness (Index=100 as most competitive) 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, Turkish Republic of Northern Cyprus, Turkmenistan, Ukraine, UAE, UK, US, Uzbekistan, Yemen

14 Turkey s value has been appreciated by foreign investors with increasing FDI in Turkey FDI Inflows ($ Billion) 165 Number of Foreign Companies in Turkey ( 000) 46, (30 years) (13 years) 5, Top Investors by FDI stock (%) Top Sectors by FDI Stock (%) 15 11,4 11,2 9,7 Sector Share (%) Manufacturing 33,6 7,2 7,1 6,9 Finance & Insurance 22,9 5,6 5,1 4,8 Wholesale & Retail Trade 15,4 Information & Communication 10,4 Energy 10,4 Mining & Quarrying 1,9 Transportation & Storage 1,5 Source: CBRT, Ministry of Economy

15 General Infrastracture Outlook

Overview of the Infrastructure Sector The world s investment need for infrastructure is around USD 49 trillion until 2030. The investment gap is expected to be USD 350 billion annually.

16 Overview of the Infrastructure Sector The world s investment need for infrastructure is around USD 49 trillion until The investment gap is expected to be USD 350 billion annually.* Turkey s infrastructure investment need is a total of USD 700 billion between Almost 30 percent of these investments is expected to be made through PPP. A huge potential for private sector. *McKinsey & Co. invest.gov.tr

17 PPP in Turkey Ministry of Development Ministry of Finance Sovereign Wealth Fund of Turkey Privatization Administration PPP Private Sector Treasury Relevant Ministries Public Procurement Authority Local Authorities invest.gov.tr

18 PPP in Turkey Between 1994 and 2016, the total value of PPP projects in Turkey was USD 123 billion. Share of PPP projects by sector ( ) Share of PPP projects by method ( ) Method Share BOT 63% TOR 25% BLT 9% BO 3% Type Share Airports 54,7% Power Generation 20,5% Roads 11,1% Healthcare Facilities 8,6% Ports 2,1% Marinas 1,4% Industrial Facilities 1,1% Customs 0,3% Railways 0,2% Source: Ministry of Development invest.gov.tr

19 Selected Completed and On-going Projects

20 MARMARAY WORLD S DEEPEST IMMERSED TUBE TUNNEL! Total Cost: 3,75 billion USD invest.gov.tr

NORTHERN MARMARA HIGHWAY PROJECT Kınalı 88 Km

The other parts of the highway in both Asian

21 NORTHERN MARMARA HIGHWAY PROJECT Kınalı 88 Km 169 Km İzmit Adapazarı Total Cost: 6 billion USD Yavuz Sultan Selim Suspension Bridge with 115 km highway was completed in The other parts of the highway in both Asian and European sides are under construction. invest.gov.tr

22 EURASIA TUNNEL Total Cost : USD 1.25 Billion

23 ISTANBUL IZMIR HIGHWAY Highway Length : 421 km Total Cost : USD 6.5 Billion

THE 3 rd AIRPORT FOR ISTANBUL - PPP project - 150 Million passenger

24 THE 3 rd AIRPORT FOR ISTANBUL - PPP project Million passenger capacity/year - 25 year concession - Tendered for 22 billion EURO invest.gov.tr

25 Selected Projects on the Pipeline

bridge) 2023 meters main span including railway (will be the longest in the

26 DARDANELLES STRAIT BRIDGE CROSSING & HIGHWAY PROJECT 1 st Section: 300 km (Kınalı Tekirdağ Çanakkale Balıkesir) 2 nd Section: 52 km (including the bridge) 2023 meters main span including railway (will be the longest in the world). Source: Ministry of Transportation, Maritime Affairs and Communications invest.gov.tr

THE 3-STOREY GRAND ISTANBUL TUNNEL PROJECT The

Asian and European sides under the Bosphorus.

6.5-km-long tunnel will sit 110 m below sea level and

3 1 2 1 2 3 Marmaray Eurasia Tunnel Grand Istanbul

27 THE 3-STOREY GRAND ISTANBUL TUNNEL PROJECT The three-storey subsea tunnel will connect Istanbul s Asian and European sides under the Bosphorus. A railway between two highways for motor vehicles The 6.5-km-long tunnel will sit 110 m below sea level and will be the first of its kind in the world Marmaray Eurasia Tunnel Grand Istanbul Tunnel Source: Ministry of Transportation, Maritime Affairs and Communications

CANAL ISTANBUL (KANAL ISTANBUL) - Planned to be built on

Connects the Black Sea to the Marmara Sea - 43 km long -

Estimated cost: 7-10 Billion US dollars Source: Ministry

28 CANAL ISTANBUL (KANAL ISTANBUL) - Planned to be built on the outskirts of the European side of the city - Connects the Black Sea to the Marmara Sea - 43 km long - Preliminary studies of the project are going on - Estimated cost: 7-10 Billion US dollars Source: Ministry of Transportation, Maritime Affairs and Communications invest.gov.tr

Tender scope: 3,000 m main breakwater, 2,000 m side breakwater, 15 million m 3 dredging, and port

29 CONSTRUCTION OF NEW PORTS FILYOS PORT Project final capacity : 25 million tons/year Infrastructure tender by equity was already completed. Tender scope: 3,000 m main breakwater, 2,000 m side breakwater, 15 million m 3 dredging, and port construction. Project phase is continuing. Superstructure works are planned with BOT. Source: Ministry of Transportation, Maritime Affairs and Communications invest.gov.tr

Capacity of the port will be 1+1+2 million TEU in three phases (estimated cost: EUR 610 million) Potenital to expand up to 12 million TEU.

30 CONSTRUCTION OF NEW PORTS Çandarlı Port Çandarlı Port will serve to Aegean region and will be hub for transit cargo. The project will be tendered with BOT model. Capacity of the port will be million TEU in three phases (estimated cost: EUR 610 million) Potenital to expand up to 12 million TEU. The breakwater (1500 meters) and fuel dock (85 meters) were already constructed by the government with a total cost of EUR 165 million. Rail and road connections to the port area are being constructed by the government. Source: Ministry of Transportation, Maritime Affairs and Communications

CONSTRUCTION OF NEW PORTS MERSIN CONTAINER PORT 1st phase capacity : 1.9 million TEU 2nd phase capacity : 3.4 million TEU At the 5th phase the capacity could reach 11.4 million TEU. Feasibility study and environmental assessment report stages completed.

31 CONSTRUCTION OF NEW PORTS MERSIN CONTAINER PORT 1st phase capacity : 1.9 million TEU 2nd phase capacity : 3.4 million TEU At the 5th phase the capacity could reach 11.4 million TEU. Feasibility study and environmental assessment report stages completed. Project phase is continuing. The main breakwater and 600 m port will be constructed by equity. Source: Ministry of Transportation, Maritime Affairs and Communications invest.gov.tr

32 Vision 2023

33 Vision 2023 Turkey has set specific targets to achieve by 2023, centennial of the Republic invest.gov.tr

34 Logistics Infrastructure ,101 km dual carriageways 1,714 km highways 11,000 km railways 39 airports 31 ports Source: Ministry of Transportation, Maritime Affairs and Communications invest.gov.tr

Logistics Infrastructure 2016 24,813 km dual carriageways 2,489 km highways 12,531 km railways 1,213 km high speed

35 Logistics Infrastructure ,813 km dual carriageways 2,489 km highways 12,531 km railways 1,213 km high speed railways 55 airports 71 ports Source: Ministry of Transportation, Maritime Affairs and Communications invest.gov.tr

Logistics Infrastructure 2023 39,096 km dual carriageways 7500 km highways 13,931 km railways 10,000 km high speed railways Source: Ministry of Transportation, Maritime Affairs and

36 Logistics Infrastructure ,096 km dual carriageways 7500 km highways 13,931 km railways 10,000 km high speed railways Source: Ministry of Transportation, Maritime Affairs and Communications 60 airports including the 3rd airport in Istanbul 76 ports 20 integrated health campuses Canal Istanbul: 43 km artificial waterway connecting the Black Sea to the Sea of Marmara invest.gov.tr

37 invest.gov.tr THANK YOU!

Turkey Country Profile

Turkey Country Profile EU Tax Centre June 2018 EU Tax Centre June 2018 Turkey Key tax factors for efficient cross-border business and investment involving Turkey EU Member State Double Tax Treaties No