Republic of TurkeyPrime Ministry

Investment Support and Promotion Agency of

TurkeyISPAT

Investment Climate of Turkey

Ahmet İhsan ErdemVice President -

Head of Investor Services Department

AGENDA

• The Agency

• Turkey With Some Key Figures

• Top Reasons to Invest in Turkey

• Investment Environment

• Turkey & Arab Countries Relations

The Agency

Established in 2006

Attached to the Prime Ministry andReports directly to the Prime Minister

Private sector approach

ONE STOP SHOP approach

Guidance on; Laws, Regulations, Site Selection, Sectoral Reports, Local Market Players, Potential Partners

Confidentiality, Free of Charge

2 offices (Ankara – Istanbul)

REPUBLIC OF TURKEY PRIME MINISTRYINVESTMENT SUPPORT AND PROMOTION AGENCY

invest.gov.tr

ANKARA ISTANBUL

REPUBLIC OF TURKEY PRIME MINISTRYINVESTMENT SUPPORT AND PROMOTION AGENCY

invest.gov.tr

www.invest.gov.tr

Available in 12 languages including

Arabic

User-friendly «Invest in Turkey» app

for iOS and Android devices.

All aspects of doing business,

investment opportunities,

incentives, key facts and more

about Turkey.

Website & Mobile Apps

REPUBLIC OF TURKEY PRIME MINISTRYINVESTMENT SUPPORT AND PROMOTION AGENCY

The International Network

invest.gov.tr

REPUBLIC OF TURKEY PRIME MINISTRYINVESTMENT SUPPORT AND PROMOTION AGENCY

invest.gov.tr

• ISPAT chairs the World Association of Investment Promotion Agencies

• WAIPA was established in 1995

• 244 national and sub-national agencies from 162 different countries

• HQ of WAIPA will be relocated from Geneva to Istanbul

Turkey With Some Key Figures

Turkey is the 17th largest economy in the World

(6th when compared to EU Countries – IMF/2013)

will continue to increase and reach 93,4 million in 2050

76,667,864

Turkey has the largest youth population when compared to

the EU countries

57 million credit cardusers (2013)

70 million GSM users (2013)

33 million broadband internet subscribers (2013)

Turkey is the 17th largest automotive producer in the World and 6th largest when compared to the EU countries

(OICA 2013)

Turkey is the largest TV manufacturer in Europe

Turkey is the 8th largest steel producer in the World and

2nd largest whencompared to the

EU countries

Source: Worldsteel Association, 2013

INTERNATIONAL TOURIST ARRIVALS

Country 2012(million)

1. France 83.0

2. USA 67.0

3. China 57.7

4. Spain 57.7

5. Italy 46.4

6. Turkey 35.7

7. Germany 30.4

8. UK 29.3

9. Russia 25.7

10. Malaysia 25.0Source: UNWTO

Out of World’s top 100 best hotels 22 are from Turkey (TUI Holly, 2012)

Turkey is the 6th most visited holiday destination in the World (2012)

Top reasons to invest in Turkey

One of the biggest emerging economies

invest.gov.trSource: IMF

GDPGROSS DOMESTIC PRODUCT

5% annual average growth in the last 11 years

0

300

600

900820

516 488

351312

277

198 190132

9953

2013 GDP (Current Prices, $Billion)

Turk

ey

Chi

le

Rus

sia

Slov

akia

Pola

nd

Kore

a

Bra

zil

Sout

h Afr

ica

Rom

ania

Cze

ch R

ep.

Mex

ico

US

Hun

gary

EU28

Japa

n

0

1

2

3

4

54.9

4.64.3 4.1 4.0

3.73.5 3.4 3.4

2.6 2.5

1.8

1.1 1.1 0.9

Average Annual Real GDP Growth (%) 2002-2013

Source: OECD Economic Outlook No.93

Turk

ey

Austra

lia

Mex

ico

Slov

ak R

ep.

Icel

and

Pola

nd US

Swed

en

Austri

a

Spai

n

Hunga

ry

Finl

and

Denm

ark UK

Belgi

um

Greec

e

Germ

any

Japa

n0.0

1.0

2.0

3.0

4.0

5.0

6.0

5.14.8

3.6 3.6 3.5 3.4 3.3 3.3

2.9 2.8 2.8 2.8 2.7 2.6 2.6 2.5 2.5 2.4 2.3 2.3 2.2 2.2 2.1 2.1 2.1 2.0 1.9 1.9 1.8 1.8 1.7 1.7 1.61.4

1.2

Average Annual Real GDP Growth (%) Forecast in the OECD Countries

2012-2017

Turkey will be the fastest growing economy among the OECD countries

invest.gov.tr

GDP GrowthFuture Projection by the OECD

Turkey is located in the center of the most promising markets of the World

4h

You can access to multiple markets from Turkey

(Total 56 Nations, 1,5 Billion People $ 25 Trillion GDP)

Multinational Company

Number of Countries Managed from Turkey

Coca Cola 90 GE Healthcare 80 Microsoft 76 Intel 67 Unilever 36 Verifone 30

Schneider Electric 27

Ericsson 22 Cargill 20 Pfizer 20 Volvo 18 BASF 18 PepsiCo 14 P&G 11 LG Electronics 9 Adobe 9

invest.gov.tr

Turkey as Regional Hub

Source: TURKSTAT

Exports

invest.gov.tr

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130

20

40

60

80

100

120

140

160

36

152Billion USD

Manufacturing industry constitutes 93% of Turkey’s total export

invest.gov.trSource: TURKSTAT, Products with 2-digit HS Codes, EU includes 27 countries (new members in 2004 were included in 2002 figures), *Data for 2012

Product & Market Diversification of Exports

2002 2013

Number of export products with over $1 billion* 9 35

Number of export markets with over $1 billion 8 34

Share of top 5 countries in total exports (%) 47 32

Share of MENA in total exports (%) 13 24

Share of EU in total exports (%) 57 41

Exports

Customs Union with the EU:

There is free circulation of goods between Turkey and 28 European Union member countries.

Source: Undersecretariat of Foreign Trade, * In ratification process

EU Customs Union and FTAs

invest.gov.tr

1. Albania 7. Israel 13. Switzerland 19. Jordan 25. Moldavia*

2. Bosnia & Herzegovina 8. Lichtenstein 14. Syria 20. South Korea

3. Croatia 9. Macedonia 15. Tunisia 21. Mauritus *

4. Egypt 10. Morocco 16. Montenegro 22. Lebanon*

5. Georgia 11. Norway 17. Serbia 23. Ghana*

6. Iceland 12. Palestine 18. Chile 24. Malaysia*

Free Trade Agreements with 25 countries:

Investment Environment

invest.gov.tr

National Treatment

=

Guaranteeof Transfers

Access to Real Estate

International Arbitration Employment

of Expatriates

Freedom to Invest

Protection Against Expropriation

The New Commercial Code

Structural Reforms

Corporate Income Tax

%20

Structural Reforms

Source: World Bank Doing Business Reports

Romania

Russia

Bangladesh

Bulgaria

Poland

Morocco

Cameroon

Turkey

Guatemala

25 27 29 31 33 35 37 39

27

29

30

30

31

36

37

38

39

Turkey in 2003Improving Doing Business:

Number of days to set up a company

Turkey

UK

Germany

Russia

Switzerland

Czech Republic

Japan

Spain

India

Poland

China

05101520253035

6.0

12.0

14.5

15.0

18.0

19.5

22.0

23.0

27.0

30.0

33.0

Turkey in 2013

Incentive System

NEW INCENTIVE SYSTEM

1. General Incentives2. Regional Incentives

3. Incentives for large-scale Investments

4. Incentives for Strategic Investments

VAT Exemption

Custom Duty Exemption

VAT Exemption

Custom Duty Exemption

Tax Deduction

Employer’s share for

insurance premium

payment

Land provision

VAT Exemption

Custom Duty Exemption

Tax Deduction

Employer’s share for

insurance premium

payment

Land provision

Interest Support (except 1st

and 2nd regions)

VAT Exemption

Custom Duty Exemption

Tax Deduction

Employer’s share for

insurance premium

payment

Land provision

Interest Support

VAT Refund

FDI inflows to Turkey

invest.gov.trSource: The Central Bank of Turkey & Ministry of Economy

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

5.66.7

8.8

11.7

15.016.1

19.1

21.9

25.2

29.5

33.8

37.0

‘000 Number of Companies with Foreign Capital

1923-2002 (80 years) 2003-2013 (11 years)0

15

30

45

60

75

90

105

120

135

15

137

FDI Inflows ($ billion)

More than 4.000 of them are from Arab

countries

Increasing Confidence in the Turkish Economy

invest.gov.trSource: The Central Bank of Turkey & Ministry of Economy Source: Respective rating agencies

Turkey’s Sovereign Credit RatingsS&P Moody’s Fitch JCR

Scale Jan 2010 Feb 2010 Mar 2013 Scale Dec

2009Jan

2010May 2013 Scale Dec 2009 Jan

2010Nov

2012 Scale Jan 2010

Feb 2010

May 2013

A A2

A AAA+

AAA AAA-

A- A3

A- A+

A A-

BBB+ Baa1 BBB+ BBB+

BBB Baa2 BBB BBB BBB- Baa3 Turkey BBB- Turkey BBB- TurkeyBB+ Turkey Ba1 Turkey BB+   Turkey BB+ BB Turkey Ba2 BB BB   TurkeyBB- 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

Investment Grade by Fitch in Nov 2012

Investment Grade by Moody’s in May 2013

Investment Grade by JCR in May 2013

Turkey & Arab CountriesBilateral Economic Relations

FDI inflows to Turkey

invest.gov.trSource: CBRT

Arab investors are among the top investors in Turkey, over the past decade, they have invested over $10 billion in Turkey

FDI Flows from Arab Countries into Turkey ($ Million, equity)

Cumulative 2004-2013

United Arab Emirates 3.931

Saudi Arabia 2.114

Kuwait 1.379

Lebanon 1.099

Qatar 743

Bahrain 522

Jordan 180

Libya 98

Other countries 12

TOTAL 10.078

Major M&As in TurkeyM&As deals with over $100 million

invest.gov.trSource: Deloitte, E&Y

Year Acquirer Origin Target Sector Stake Deal Value (US$ million)

2005 Saudi Oger Saudi Arabia Türk Telekom Telecommunication 55% 6.550,0

2007 National Commercial Bank Saudi Arabia Türkiye Finans Katılım Bankası Financial Services 60% 1.080,0

2008 Abraaj Capital UAE Acıbadem Sağlık Hizmetleri Healthcare 54% 586,7

2013 Commercial Bank of Qatar Qatar AlternatifBank Financial Services 71% 448,0

2007 St, Martin's Property Kuwait Cevahir Shopping Center Real Estate 50% 393,0

2012 Burgan Bank Kuwait Eurobank Tekfen Financial Services 99% 359,0

2006 Saint Gobain Isover ve Alghanim Industries France-Kuwait İzoGlass Sanayi ve Ticaret A.Ş. Insulation 61% 171,3

2007 Abraaj Capital Limited UAE Acıbadem Sağlık Hizmetleri Healthcare 22% 162,5

2007 National Bank of Kuwait Kuwait Turkish Bank Financial Services 40% 160,0

2007 Global Investment House Kuwait FFK Fon Leasing Financial Services 60% 120,0

2013 Jadwa Investment Company Saudi Arabia Cemre İnşaat Construction 37% 100,0

ON

Thank you very much for your attention..