Turkey s value proposition and a short note on Turkish Mining Sector (10 November 2016) ABMEC Annual Conference 2016 (Figures and pictures courtesy of Investment Agency of Turkey) www.ishtaradvisory.com

10 Reasons to Invest in Turkey Robust Economy Opportunities Domestic market + EU Benign R&D Ecosystem Strategic Location Lucrative Incentives Favorable Demographics EU Perspective EU OPEN for BUSINESS Skilled & Cost-competitive Labor Force Liberal Investment Climate

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 17 th largest economy in the world with track record growth and bright future 17 th largest economy in the world (GDP, PPP) 2002-2015 Annual GDP Growth, % 4.7 Turkey 3.9 Poland 3.4 Romania 2.6 Czech R. 1.6 Hungary 225 Real GDP Growth (Index: 2002=100) Turkey 200 Poland Romania 175 Czech R. 150 Hungary 125 f o r e c a s t 100 Source: IMF World Economic Outlook, April 2016, TurkStat, OECD, NIS

Domestic Consumption Investment Expenditures Exports Stocks Robust growth has generated significant economic activity supported a vibrant domestic market, lucrative export opportunities and an entrepreneurial spirit of the private sector.. Turkish Economy has more than doubled over the past 13 years & promising more growth in future Turkish Economy has been driven by a robust domestic market, investment and exports Turkish Economy (GDP at PPP, $Billion) 587 2,176 78 Contribution to Real GDP Growth (%) 2002-2015 1,589 907 31 29 681 13 years Next 6 years -2,5-35 2002 02-'15 2015 15-'21 2021 Imports Source: IMF World Economic Outlook, October 2015, TurkStat

Domestic market + EU market + Free Trade Area Access to 944 million Consumers in total Custom Union with the EU allows direct access to the EU Market = 510million people = 79million people and 355 million people in 27 countries with Free Trade Agreements: Source: EUROSTAT, Population figures as end-2014 Ministry of Economy * In ratification process

Turkey s economic growth has paved the way for the emergence of a sizeable middle-class Doubling Income per capita (PPP) $20,438 $10,325 2002 2015 2001 2011 0.6 million 3.9 million 2.6 million 13.4 million 43.6 million High Income Upper-Middle Income Middle Income Low Income Poor 10.6 million 25.8 million 33.9 million 1.4 million 1.4 million Source: IMF, Pew Research; The poor live on $2 or less daily, low income on $2.01-10, middle income on $10.01-20, upper-middle income on $20.01-50, and high income on more than $50; figures expressed in 2011 purchasing power parities (PPP) in 2011 prices.

Turkey s domestic market is further supported by emerging urban centers across Turkey.. 20 cities with population over 1 million

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

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 90 countries Exporting 77% of its production 80 countries Production base for MENA 67 countries Using Turkey as Super Hub Its largest production facility In the world 52 countries 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

A g e G r o u p s ( % ) A g e G r o u p s ( % ) A favorable demographic structure with half of its population under age 30 TURKEY EUROPE 90+ 90+ 80-84 70-74 60-64 50-54 40-44 30-34 20-24 10-14 80-84 70-74 60-64 50-54 40-44 30-34 20-24 10-14 0-4 5 3 1 1 3 5 Female Male 0-4 5 3 1 1 3 5 Female Male 120 Working Age Population (15-64) (Index: 2014=100) 75 Total Dependency Ratio (%) (Age 0-14 & Age 65+) / Age 15-64 Europe Turkey 70 110 65 60 100 Europe 55 50 Turkey 90 2014 2017 2020 2023 2026 2029 2032 2035 45 2014 2017 2020 2023 2026 2029 2032 2035 Source: Turkstat, Eurostat, UN, 2014

Germany EU UK Czech R. Slovakia Hungary Poland Turkey Turkey Poland Hungary Czech R. EU Availability of skilled labor force together with a diligent working culture and costcompetitive edge provides productive capacities.. Availability of Competent Senior Managers, 2014 (10=Available; 0=Unavailable) 6.0 Availability of Qualified Engineers, 2014 (10=Available; 0=Unavailable 7.1 6.8 6.7 5.2 5.2 5.2 6.2 4.1 5.6 Turkey Czech Rep. Romania Poland Hungary Turkey Hungary Romania Czech Rep. Poland 36.1 Labor Cost per Hour in Manufacturing ( ) 2012 Annual Average % Increase in Labor Productivity (2001-2013) 3.1 3.1 3.0 24.9 24.0 2.3 9.7 8.9 7.6 6.9 5.4 1.1 Source: IMD World Competitiveness Yearbook Executive Opinion Survey based on an index from 0 to 10; Eurostat, OECD

China India Russia Canada Brazil US Suisse Poland OECD UK Turkey China Poland India Czech R. Spain German y Suisse Turkey 0.101 0.089 0.083 0.072 0.068 0.061 0.059 0.181 0.166 0.237 0.386 OPEN for BUSINESS Liberal investment climate 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 Double Taxation Agreements with 80 countries FDI Regulatory Restrictiveness Index, 2015 Number of Days to Set up a Company, 2016 0=Open to FDI 1=Closed to FDI 31.4 30.0 29.0 15.0 14.0 10.5 10.0 7.5 Source: World Bank, Ministry of Economy, Ministry of Finance OECD

EU The EU perspective has further improved Turkey s investment climate, adopting the EU standards and regulations.. Turkey is the only country which has Custom Union with the EU EU accession negotiations in many areas including but not limited to: Enterprise & Industrial Policy Financial Control Company Law Intellectual Property Law Free Movement of Capital Taxation as of 2015, Turkey is the EU s fifth biggest trade partner. Total trade volume between Turkey and EU is 140B. Turkey is also Europe s fourth biggest export and sixth biggest import partner. The EU process has also a positive impact on Turkey s business culture: Modern management practices and skilled manager base Increasing use of English for business Internationallyminded people

Lucrative incentives Manufacturing Incentives Employment incentives Special Zones Tax deduction & exemption + Payroll & Training support + Free Zones Tax deduction & exemption + Organized Industrial Zones Developed infrastructure Services Incentives Technology Development Zones R&D and Innovation Incentives Tax deduction for exporting services in; E n g i n e e r i n g A r c h i t e c t u r e D e s i g n S o f t w a r e Medical Reporting Accounting Call Center D a t a c e n t e r EDUCATION H e a l t h c a r e To support R&D Tax deduction & exemption+ Industry Academia Tax deduction & exemption Grants +

R&D incentives are further supported by a favorable ecosystem.. Number of Researchers (thousands) 1 Increasing R&D Spending ($ Billion) 1 175 140 105 Turkey Poland 14 12 10 8 Turkey Poland 70 35 0 Romania Slovakia 2001 2003 2005 2007 2009 2011 2013 Number of Students Enrolled in Doctoral* Studies (Thousand) '13 2 6 4 2 0 Romania Slovakia 2001 2003 2005 2007 2009 2011 2013 Selected Foreign Companies performing R&D in Turkey 80.5 42.3 21.4 11.0 Turkey Poland Romania Slovakia Source: 1 OECD 2 Eurostat *Doctoral or equivalent level

Turkey offers abundant opportunities in the mining sector Major untapped reserves potential Established infrastructure Investor friendly environment Considerations Strong tectonic and magmatic history led to rich underground reserves Tethyan-Laurasia Metallogenic belt covers Turkey high proven potential Mining wealth untapped: Entire Southeastern region which had no drilling since 80s, offers massive potential due to mineral wealth In the other regions, mining has been limited to surface excavations. Big potential with deep drilling In-depth geologic research and data for offered by State Mining Agency (MTA) Reliable power lines and available underground water resources World-leading construction sector offers low cost and on-budget field projects Favorable tax regime corporate tax 4-20% No nationalization threat All mining companies treated same against the law Ownership (transfer) rights clearly defined and protected by law Social permissions have been a challenge, yet recently solved via best practice social programs Sophisticated geology requires expertise and model development professional explorers have an edge SOURCE: McKinsey & Company Team analysis

Turkey Mining Outlook Mining reserves in Turkey (as a percentage of world reserves) Iron Copper Phosphate Gold Silver Chromium Barite Diatomite Perlite Pumice Bentonite Na-Feldspar Marble Boron Salts 0.03% 0.29% 0.57% 0.67% 1.06% 1.44% 4.73% 4.81% 8.70% 9.74% 13.40% 19.14% Turkey is one of the richest countries in the world in terms of minerals. It possesses the largest reserves of several minerals. 40.00% 72.00% SOURCE: General Directorate of Mineral Research and Exploration

MAJOR UNTAPPED RESERVES POTENTIAL Major untapped reserves potential Number of exploration companies Exploration spending USD billions Canada 922 3.0 Chile 110 1,0 Brazil 57 1,0 Turkey 1 28 0.31 In Turkey, exploration have been ignored for a long while leaving many regions virgin especially SouthEast and Northern Turkey 1 Calculated based on the total amount of drillings multiplied by cost of 1M drilling as USD 1K Source: MEG; Ministry of Economy; McKinsey&Company team analysis

Source: CBRT, Ministry of Economy FDI 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) 46.8 15 5.6 1973-2002 (30 years) 2003-2015 (13 years) 2002 2015 Top Investors by FDI stock (%) 14 11,4 11,2 9,7 Top Sectors by FDI Stock (%) 14 Sector Share (%) Manufacturing 33,2 7,2 7,1 6,9 Finance & Insurance 22,1 5,6 5,1 4,8 Information & Communication 13,2 Wholesale & Retail Trade 12,3 Energy 9,9 Mining & Quarrying 2,0 Transportation & Storage 2,0

FDI 2015 has been quite a successful year for Turkey.. FDI Inflows to Turkey ($ Billion) 12.5 +34% 16.8 2014 2015 Top Investors in 2015 ($ Million) Spain 2.178 USA 1.568 China 1.395 Netherlands 1.188 Azerbaijan 786 Russia 747 UK 596 Gulf Countries 457 Germany 387 Japan 360 Malaysia 327 Top Sectors in 2015 ($ Million) Manufacturing 4.111 Financial Services 3.535 Transportation & Storage 1.524 Energy 1.261 Wholesale & Retail Trade 569 Mining & Quarrying 202 Information & Communication Services 150 N o t a b l e i n v e s t o r s i n 2 0 1 5 Source: CBRT

UK is the second largest investor in Turkey with strong commercial and economic relations I n v e s t m e n t T r a d e T o u r i s m 12.4 billion UK FDI 2933 UK companies 13.7 billion trade 2.5 million UK tourists Stock of the UK FDI in Turkey Number of the UK companies in Turkey Exports: 8.8 billion Imports: 4.9 billion British tourists visit Turkey every year Source: CBRT, Ministry of Economy, OECD, ITC Stock of the UK FDI (2014), number of the UK firms (Mar 2016), trade covers goods (2015) and services (2014), tourism: average of the past 5 years.

THANK YOU FOR YOUR ATTENTION Ahmet Iplikci aiplikci@ishtaradvisory.co.uk www.ishtaradvisory.com