turkey country & education sector report

Country & Education Sector Profile

Republic of Turkey

Educational Holding Group

March 2010

http://www.universities-weblog.com/50226711/istock_4641886.jpg

Country & Education Sector Profile Republic of Turkey


Chamber of Commerce,

P.O. Box 27215, Safat,

13133, Kuwait

Tel: +965-2224-0453

Fax: +965-2240-7048

http://edu.com.kw/

Adel Ansari

Investment Analyst

Investment Department



Summary

This Report was prepared to look at investment opportunities in Turkey, in field of education.

The report provides details of Turkey as an investment destination by understanding the current,

economic, political & legal situation in the country and analyzing future prospects. It also looks in

detail in the education sector of the country.

Turkey is one of the major economies of EU and has strong fundamentals, although it has been

impacted by current financial crisis it is slated to overcome it. The education sector in the

country face challenges in terms of meeting the high standards set by the EU countries. There is a

good education infrastructure however it is not sufficient to fulfill the growing need for

education. Government of Turkey has pushed for more participation by private sector, which

currently only contributes 4 % of the total education infrastructure; there are still great unmet

demands.

K -12 level is also lagging in some regions and with a huge base population as the target, it forms

an attractive target sector. Istanbul with a significant gap in School education, and high Per

Capita Income has good opportunity for high quality private education.


Topic Page Number

1.0 Country Brief

1.1 Country Summary 6

1.2 Demographics 6

1.3 Political Stability 7

1.4 Economic Stability 7

1.5 Impact of Financial Crisis 8

2.0 Economy

2.1 Macroeconomic Indicators

2.1.1 Gross Domestic Product 9

2.1.2 Per Capita – Gross Domestic Product 10

2.1.3 Inflation 11

2.1.4 Public Finance 12

2.1.5 Labor Force 13

2.1.6 Foreign Direct Investment 14

3.0 Education Sector

3.1 Education System 16

3.2 Education Expenditure 18

3.3 Education Statistics

3.3.1 Enrollment Rate 21

3.3.2 Eligible Population 21

3.4 School Statistics

3.4.1 Students Growth Rate 21

3.4.2 Gap Analysis- Eligible Population 21

3.4.3 Gap Analysis – Eligible Population Grade wise 22

3.4.4 Number of Schools 23

3.4.5 Gap Analysis- Number of Schools 23

Contents


3.5 Regional Analysis

3.5.1 Regional Analysis – Eligible Population 24

3.5.2 Number of Schools 25

3.5.3 Regional Gap Analysis- Number of Schools 26

3.5.4 Regional Gap Analysis- GDP per Capita 27

3.5 Gap Analysis – Quality & Occupancy

3.6.1 Students School Ratio 28

3.6.2 Students Teacher Ratio 29

3.6.3 The Estimated Gap 29

3.6.4 Affordability vs. Gap 30

3.7 Sectoral Analysis

3.7.1 Sector wise Breakdown- Number of Schools 32

3.7.2 Sector wise Breakdown- Number of Student 32

3.8 Higher Education Statistics

3.8.1 Eligible Population 33

3.8.2 Higher Education Brief 33

3.8.3 Higher Education – Number of Students Growth Rate 34

3.8.4 Higher Education Analysis- Eligible Population 34

3.8.5 Higher Education – Enrollment Rate 35

3.8.6 Higher Education – Number of Students Breakdown 36

3.8.7 Higher Education Gap Analysis 36

4.0 Strategy

4.1 Overview 38

4.2 Target Sector Analysis 38

4.3 Target Region Analysis 39

5.0 Analysis

5.1 SWOT Analysis 40

6.0 Legal

6.1 Laws for Foreign Direct Investment 41

6.2 Taxation Laws 42


1.1 Country Summary

Turkey is a new country in old land; it was formed from the remnants of Ottoman Empire. It is a democratic,

secular, and constitutional republic. Its political system was established in 1923 under the leadership of

Mustafa Kemal Ataturk, following the fall of the Ottoman Empire in the aftermath of World War I. Turkey

joined the UN in 1945 and in 1952 it became a founding member of NATO; it holds a non-permanent seat on

the UN Security Council from 2009-10. In 1964, Turkey became an associate member of the European

Community.

Turkey is a bridge between east and west, it is strategically located. Geographically, Turkey is located in

between Asia and Europe. The smaller northwestern portion (Thrace) is part of Europe, while the larger

portion (Anatolia) is part of Asia. Turkey’s proximity to Europe in west and Russia, Iran and Syria in east makes

it important for peace and understanding. Also because of its location it has become an important transit

route for gas.

Ankara is the capital city of Turkey and second largest city after Istanbul. The official language of Turkey is

Turkish however other minority languages such as Kurmanji (Northern Kurdish) are also spoken by large

number of people. Turkey is a secular state with no official state religion; the Turkish Constitution provides for

freedom of religion and conscience. However the majority of population is Muslim, according to 2009 data on

the world's Muslim populations, around 98% of the total population in Turkey are Muslim.

Turkey is a dynamic emerging-market economy and a member of the Organization for Economic Co-operation

and Development (OECD). Turkey has the 15th largest GDP in terms of Purchasing Power Parity; its GDP Per

Capita in terms of Purchasing Power Parity is much higher at US$ 13,111 which indicates that Turkey is an

upper middle income country. Over 70 percent of its population lives in urban areas Turkey successfully

recovered from a deep economic crisis in 2001.

Source: World Bank

Country Brief

http://en.wikipedia.org/wiki/Democracy

http://en.wikipedia.org/wiki/Secular_state

http://en.wikipedia.org/wiki/Constitutional_republic

http://en.wikipedia.org/wiki/Politics_of_Turkey

http://en.wikipedia.org/wiki/Mustafa_Kemal_Atat%C3%BCrk

http://en.wikipedia.org/wiki/Secular_state

http://en.wikipedia.org/wiki/State_religion

http://en.wikipedia.org/wiki/Turkish_Constitution

http://en.wikipedia.org/wiki/Freedom_of_religion


1.2 Demographics

Turkey’s population in 2009 was 72.56 million compared to 71.52 million in 2008 and 70.59 million in 2007.

The Turkish population since 2000 has grown at an average of 1.35%.

The population breakdown shows that in 2009 around 31.37 million of this population was less than 24 years

which was around 43 % of the total population and also around 17.93 million was in 25 - 39 age groups.

The population projection estimates that Turkish population will grow to 83.5 million by 2025. Despite a

significant demographic shift expected in Turkey the under 24 population by 2025 is estimated to be around

30.8 million.

71. 08 72. 7

76. 6

80. 26

83. 57

60.

65.

70.

75.

80.

85.

2008 2010 2015 2020 2025

Chart 3: Total Population Projections (In Millions)

Mid-year Total Population Projections

By 2025 the population under 24 is estimated to be around 30.8 million

Source: Turkstat

70.59

71.52

72.56

69.50

70.00

70.50

71.00

71.50

72.00

72.50

73.00

2007 2008 2009

Chart 1: Total Population ( In Millions)

Total Population

(Source: Turkstat)

6.16 6.20

6.50

6.23

6.28 17.93

15.82

7.44

Chart 2: Population Breakdown- 2009 ( In Millions)

0 to 4 5 to 9 10 to 14 15 to 19

20 to 24 25-39 40-59 60+

Total Population under 24 was 31.37 million or 43% of the Total Population

(Source: Turkstat)


1.3 Political Stability

Turkey is a parliamentary representative democracy, since its foundation as a republic in 1923. The head of

state is the president; however the executive powers stay with Prime Minister. After a period of one-party

rule, 1950 election saw multi party system prevailing. Since then, Turkish political parties have multiplied.

Turkey is the founding member of NATO and is a temporary member of UN Security Council. Turkey’s internal

politics is stable; as per foreign relations Turkey has conflict with Kurd fighters based in Iraq. In 2007 Turkey

launched an airstrike and followed it by ground invasion against Kurd fighters in northern Iraq. Turkey also has

an ongoing conflict with Cyprus over northern Cyprus; it maintains its troops in the island. None of its conflicts

are grave and threaten an immediate disturbance; overall Turkey is a political stable country.

1.4 Economic Stability

Turkey is closely related with world economy and has proximity with Europe and Asia alike. It has a track

record of good economic management and structural reform that drives its long-run economic prospects. Due

to its close relations with the world economy, through both trade and financial channels, Turkey was also

seriously affected by the global recession since the fourth quarter of 2008.

Over 70 percent of its 72.5 million people live in urban areas. Agriculture accounts for only 9 percent of its

GDP, industry for 22 percent, and services for 69 percent. Turkey’s economy is among the world’s 20 largest,

with a GDP in 2008 of over US$790 billion. GDP per capita now exceeds US$9,300. Extreme poverty (those

living at below US$1.25 per day) is minimal in Turkey, but poverty remains significant around 18.5 percent in

2007. Turkey although going through crisis like most of the world economies still remains stable with sound

fundamentals.

Source: World Bank, International Monetary Fund

1.5 Impact of Financial Crisis

Turkey is not strange to macroeconomic crisis. The previous crisis in 2001 saw public debt climbed to 80% of

the GDP. The Turkish economy showed resilience and was out of the crisis. However the current crises are far

more widespread and need a consolidated effort from all the major economies in the world to crawl back to

normalcy.

Turkey is an open economy with trade contributing more than 50% of GDP and exports in 2008 were nearly a

quarter of GDP, with more than half the export going to EU. Since EU is itself in deep recession there is sharp

decline for goods from Turkey, this has in turn affected investment & credit flow adversely. Portfolio flows

too turned negative with an outflow of nearly $5 billion in 2008.

The slow recovery of export sector and some protectionist measures by major economies have made it even

more difficult for Turkey. However, Turkey has been among the country that has not suffered as much as

worse hit economies. With positive data coming out of USA and other major economies recovery has begun

and with effective management by Turkish authorities using their previous experience of similar situation,

Turkey is poised to be among the first in EU to recover. The fundamentals of the economy remain strong.


Young and Dynamic Population with over 31 million people (43% of the total Population) under the

age of 24.

Despite Demographic Shift, the population under 24 will remain significant.

It is Parliamentary Representative Democracy and overall is politically stable.

Strong Economic Fundamentals and closely integrated with world economy.

Among world’s 20 largest economy with a GDP of over US$ 790 Billion.


2.1 Macroeconomic Indicators

2.1.1 Gross Domestic Product

Turkey has the 15th largest GDP in terms of Purchasing Power Parity and 17th largest in terms of Nominal GDP.

The Nominal GDP in 2008 was at US $729 billion.

The ongoing global economic downturn has hit Turkey hard. Real GDP growth rate was just 0.9% in 2008 as

against 4.7 % in the previous year and was lower than the average Real GDP growth from 2004 -2007 of

around 7.3%.

This implies stagnant per capita income; also the Turkish economy contracted in the fourth quarter of 2008 by

6.2 percent relative to one year earlier and year-on-year quarterly growth fell further to -13.8 percent in the

first quarter of 2009, However by mid 2009 there were signs of recession bottoming out and positive data was

flowing in from US. Despite these positive signs, the Turkish economy is expected to shrink. IMF estimates a

steep decline in Real GDP growth rate in 2009.

The government’s response has combined monetary easing with foreign-exchange liquidity and confidence

building measures in the financial sector (banks are well-capitalized and well-regulated), some employment

measures, and temporary tax cuts.

On comparison it shows that Turkish Economy has not been hit as badly as some other OECD high income

economies or Euro economies; it has performed better than others in the area. Turkish Nominal GDP growth

was higher than the High Income OECD average of 0.69%, Euro area average of 0.73% and world average of

2.01 %.

Source: IMF, World Bank.

39

2.2

1

48

2.6

9

52

9.1

9

64

9.1

3

72

9.9

8

59

3.5

3

59

0.7

0

61

0.4

7

63

8.4

2

67

3.7

5

71

0.8

3

9.4%8.4%

6.9%

4.7%

0.9%

-6.5%

3.7% 4.0% 3.5% 3.5% 3.5%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

-

100.00

200.00

300.00

400.00

500.00

600.00

700.00

800.00

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Chart 4: Gross Domestic Product

Gross domestic product, current prices (US $ Billions)

Real Gross Domestic Product Growth Rate (Percentage)

Source: International Monetary Fund (IMF)

*IMF Staff estimation from 2009 onwards

Economy


2.1.2 Gross Domestic Product - Per Capita

Turkey saw a surge in GDP Per Capita Income (Current Prices) from 2004 onwards, in 2008 it was at 10,479

US$. It’s GDP Per Capita in terms of Purchasing Power Parity is much higher at US$ 13,139 making it an upper

middle income country.

Due to financial crisis the growth has been downward. IMF estimates that in 2009 the nominal GDP to shrink

by US $ 593 billion and further to US$ 590 billion by 2010. However the GDP Per Capita as per Purchasing

Power is estimated to remain strong.


2.1.3 Inflation

Turkey has witnessed high inflation rates throughout its period of development. It has been one major area of

concern for the Turkish economy. Annual Inflation which was at around 8.3% in 2007 rose to over 10% at the

end of 2008 remaining above the upper limit of uncertainty band. The events in global economy became main

determinant of inflation throughout 2008 which became 11.1 percent by September 2008. Despite the

considerable increase in exchange rate in last quarter of 2008, the effect of this on prices remained below

levels of previous years, due to slowdown in import prices.

In the first quarter of 2009 positive development on cost based effects and further slowdown in economic

activities , the annual rate of inflation maintained its downward trend. By March it reached a level of 7.89%

which was well within the uncertainty band, IMF projected the annual rate to further go down to 6.2% by end

of year. However Inflation dropped to 5.73% in June below the lower bound of uncertainty band set at 6.8%.

5,8

62 7,1

08

7,7

67 9

,42

2

10

,47

9

8,4

27

8,2

95

8,4

78

8,7

69

9,1

53

9,5

51

9,8

44

11

,00

6

12

,10

7

12

,89

1

13

,13

9

12

,33

9

12

,84

9

13

,40

5

13

,96

6

14

,57

7

15

,21

3

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Chart 5: GDP - Per Capita

Gross domestic product per capita, current prices (US$)

Gross domestic product based on purchasing-power-parity (PPP) per capita (US$)

Source: International Monetary Fund (IMF)

*IMF Staff estimation from 2009 onwards


The future forecast projected by IMF for Turkey projects that average consumer prices will decline in price rise

and has projected it to be at around 4% till 2014.

However, commodity price have picked up during April and May this year amid hopes of an earlier than

expected recovery, higher demand boosted by China & India and weaker dollar.

The outlook of inflation in Turkey much depends like all the major economies on growth and recovery of

economies across. After reeling under high inflation for a long timer the financial crisis has for once got

Turkey’s inflation rate within uncertainty band but this may not be very desirable for the Turkish economy as it

looks to push itself out of the financial downturn with increased demand, internally as well as globally.

Source: International Monetary Fund, Turkstat

2.1.4 Public Finance

Central Government budget revenue and primary expenditure rose by 9.7 and 12.9 percent respectively in

2008. As the rise in total expenditure became 10.7 percent, the ratio of expenditures covered by revenues

decreased by 0.9 percentage points compared to 2007.

Table 1: Government Budget Performance (In Billion TL)

2007 2008 % Change Jan-Apr 2008 Jan- Apr 2009 % Change

Expenditures 204.1 226 10.7 70.2 87.4 24.5

Interest Expenditure 48.8 50.7 3.9 17.9 21.1 17.9

Primary Expenditure 155.3 175.3 12.9 52.3 66.3 26.8

Revenues 190.4 208.9 9.7 64.8 6748 4

Tax revenues 152.8 168.1 10 53.2 51 -4.1

Revenues to Expenditure 93.3 92.4 -0.96 92.3 77.1

Budget Deficit -13.7 -17.1 24.8 -5.4 -20.1 272.2

Primary Surplus 35 33.6 -4.1 12.5 1.1 -91.2 Source: Central bank of Turkey

8.75%

10.44%

6.20%6.78%

5.74%

4.66%4.00% 4.00%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

2007 2008 2009 2010 2011 2012 2013 2014

Chart 6: Inflation (Current & Projected)

Average Consumer Price (Percentage change)

Source: IMF, Turkstat


In 2008 the largest increase in primary item was due to capital expenditure because of investment GAP. Tax

revenue went down on account of low domestic demand. However the central government budget deficit was

just below target due to increase in capital funds at TL 7.3 billion were transferred from Privatization and

unemployment fund. In 2009, there was a trend of an evident increase in budget deficit, which is because of

fiscal measures taken by Turkey to alleviate the effect of downturn. In first four months of 2009 while

expenditure increased by 24.5 percent revenues just rose by 4 percent. The ratio of expenditure covered by

revenues went sharply down to just 77.1 percent. Primary and interest expenditure increase had the maximum

impact as they rose by 26.8 and 17.9 percent respectively.

However this has been an extraordinary period with fiscal measure taken against financial crisis had their

implication on budget deficit.

Source: Central Bank of Turkey, International Monetary Fund

The ratio of public net debt stock to GDP declined and became 28.6 percent at the end of2008. The domestic

debt stock included in 2008 was TL floating Rate debt 42.5% TL fixed rate debt 45.9% .CPI indexed bonds at

3.2% and FX indexed bond at 6.4%. This composition didn’t change much in 2009.

Given the current economic development, rising budget deficit is a worldwide phenomenon. In the first four

month of 2009 the central government budget was parallel to the macroeconomic developments and to fiscal

measure enforced to contain the financial crisis.

Source: Central Bank of Turkey

13

.4

6.5

4 1.4

2.1

35

.6

35

.1

30

28

.1

26

.5

49.00

41.60

34.0029.50 28.60

0

10

20

30

40

50

60

2004 2005 2006 2007 2008

Chart 8:Public Debt (% of GDP)

Net External Debt Net Domestic Debt Total Public debt

Source: Central Bank of Turkey


2.1.5 Labor Force

Out of total economically active population of around 39 million in 2008, 21 million people of age over 15

years were employed. The unemployment rate in 2008 was around 10.7 %, higher than last year’s rate of 10

percent. Turkey has since 2004 had a high unemployment rate, with the average unemployment rate of 10.2

percent for last 5 years. Still Turkey is the 5th largest labor force amongst EU countries. Turkey has a young

and dynamic labor force with the average age of 28.5 years

Table 2: Labor Force Breakdown Industry wise (In '000)

INDUSTRY GROUP 2004 2005 2006 2007 2008

Agriculture& Fishing 7,400 6,493 6,087 4,867 5,016

Mining 104 118 130 127 115

Manufacturing 3,801 4,083 4,187 4,088 4,233

Electricity, Gas, water 83 79 92 97 92

Construction 1,029 1,171 1,267 1,232 1,242

Wholesale & Retail 3,307 3,610 3,731 3,568 3,576

Hotels & Restaurant 872 937 1,000 989 999

Transport & Storage 1,100 1,131 1,162 1,135 1,089

Financial 237 238 237 249 259

Real estate 549 634 773 806 910

Public Administration & defense 1,252 1,246 1,225 1,260 1,265

Education 818 905 907 869 920

Healthcare 469 530 590 561 594

Other community services 583 871 942 890 884

Unemployed seeking their first job 612 553 490 430 394

Unemployed previously employed 1,886 1,967 1,956 1,946 2,217

Unemployed 2,498 2,519 2,446 2,376 2,611 Source: International Labor Organization

39,550 40,330 41,085 39,169 39,813

21,791 22,046 22,330 20,738 21,194

2,498 2,519 2,446 2,376 2,611

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

2004 2005 2006 2007 2008

Chart 9: Labor Force (in '000)

Economically Active Populationbetween age ( 20-64)

Total employment over 15 years

Total Unemployment

Source: International Labor Organisation


Agriculture has historically employed a large number of labor forces however it is declining as more and more

labor force move towards other employment avenues. It has reduced from 34% of total labor force to around

23 % in 2008. Other important sector for employment has been manufacturing. Manufacturing in 2008

employed around 4.2 million of the total labor force which was around 20% of the total labor force as against

18 percent in 2004. Manufacturing has increased its share when it comes to employment; however it is the

hardest hit sector by financial crisis hence large number of unemployment in this sector is inevitable.

Source: Turkstat, International Labor Organization

2.1.6 Foreign Direct Investment

Table 3: Foreign Direct Investment (Millions of USD)

2005 2006 2007 2008

FDI Flows

Inward 10,031 20,185 22,046 18,198

% Gross Fixed Capital Formation 17.10 15.60 12.30

Outward 1,064 924 2,106 2,585

% Gross Fixed Capital Formation 0.80 1.50 1.70

Net FDI Inflows 8,967 19,261 19,940 15,613

Average Net FDI Inflow last 4 years 15,945 Source: United Nations Conference on Trade and Development (UNCTAD)

FDI inflow has been steady in Turkey; the average FDI inflow reached a high of US$ 22 Billion in 2007, however

due to financial crisis the FDI inflow has been affected. The net inflow for 2008 was at US$ 15 billion for the

year 2008 compared to over US $ 19 billion last year. Turkey has seen good FDI inflows and hence it is an

important part of current account deficit. The inflows further decreased in 2009 averaging about 1 Billion US$

for first 2 months. The Central Bank of Turkey has set a target of US$ 10 Billion for 2009, which would account

for 40-50 percent of current deficit.

Turkey also dropped 10 places in World Bank Doing Business Report in ease of doing business. Turkey was

ranked at 73 out of 183 economies for the year 2010 as compared to 63 for the year 2009.

Source: Reuters, World Bank


Turkish economy has had its share of crisis since 2001 and recently it has been impacted by global meltdown,

however it has shown resilience and strong fundamental. Turkey has the 15th largest economy in the world

and has a high GDP Per Capita Income of US$ 9,300. It is poised for recovery earlier than any other EU

countries.

Inflation has been a problem for Turkish economy. Current situation has helped it curb inflation but it is not

desirable. As economy starts recovering the government will have to maintain a check on inflation.

Overall with strong FDI flow and positive signs, Turkey is set to continue being an emerging market and better

placed than most of the other EU neighbors. This growth will fuel the need for better and bigger education

infrastructure.

Among 20 Largest Economies in the world with GDP of over US$ 790 Billion in 2009

An upper middle income group country with GDP per capita of over US$ 13,000 in 2009

Historically high inflation however got in control due to global meltdown. It is expected to rise once

demand grows and economic growth picks up.

High unemployment rate of 10.7% in 2008

Average FDI inflow for last 4 years was around US$15.9 Billion


3.1 Education System

The Turkish National Educational System is composed of two main sections: Formal Education and Non-formal

Education.

Formal Education

Formal education is the regular education of individuals in a certain age group and given in schools. This

includes Pre-Primary education, Primary education, and Secondary education and Higher education

institutions.

Pre-Primary education

Pre-Primary education is an optional education for children between 3-5 years of age who are under

the age of compulsory primary education.

Primary Education

With a new Law in 1997, eight years of Primary school is compulsory today (former system was five

years of compulsory primary school, followed by three years of middle or junior high school

education). Primary education is compulsory for all boys and girls at the age of 6-14, and is given free

of charge in public schools. These schools provide eight years of uninterrupted education. There are

also private (and paid) schools under State control.

Secondary Education

Secondary education covers general, vocational and technical high schools) that provide four years of

education (used to be 3 years until 2005).It is optional for students from 15-19 years of age. General

high schools prepare students for higher learning institutions. Some of the secondary schools and the

private secondary schools have foreign language preparatory classes.

Higher Education

Graduates of the high schools can attend universities if they can pass admission exams. Universities,

faculties, institutes, higher education schools, conservatories, vocational higher education schools,

police and military academies and colleges, and application-research centers are considered as Higher

Education institutions.

Non Formal Education

Non-formal education in Turkey is offered by a network of training centers that are supervised by the Ministry of National Education (MEB). Non-formal education services aim to teach reading-writing, help to continue education of students for finish their incomplete education, teach balanced nutrition and a healthy life style, teach people from various professions the knowledge and skills they need to improve themselves, and so on.

Education Sector

http://www.allaboutturkey.com/university.htm

http://www.allaboutturkey.com/info.htm

http://www.allaboutturkey.com/health.htm


The Turkish National Education System

27

26

25

24

23

22

21

20

19

18

17

16

15

14

13

6

5

3

Age

Pre Primary Education (Kinder Garten & Nursery)

2 years

Primary Education (Compulsory)

8 years

Preparatory Class ( Optional in Some Schools)

Age (6-14)

Secondary

(Normal /general)

4 years

Secondary

(Science High School)

4 years

Secondary

(Vocational/ Technical)

5 years

Preparatory Class (Compulsory for some University)

Age (6-14)

Under Graduate

(General/ Vocational)

4 years

Under Graduate

(Diploma)

5 years

Masters

2 years

Masters

(Medical Specialization)4 years

Doctorate

3 years

Open Education

Source: Governorship of Kocaeli- Turkey


3.2 Education Expenditure

Government lays strong emphasis on education and is committed to improve education for all. Turkish

government allocates funds from Central Government Budget for Ministry of National Education (MONE) and

Higher Education Council (HEC), which overlook disbursement of allotted funds. On an average the Turkish

Government for last three years provides funds close to 3.15% of GDP every year to MONE and HEC. There has

been a consistent increase in the government expenditure on education from 22.4 Billion Turkish Lira (TL) in

2006 to 36.65 Billion TL in 2009 at an average growth rate of 18%.

The Total Government expenditure on education in 2009 was 13.98% of Total Central Government and 3.30%

of the Total GDP. This indicates that there was no change in government policy towards education despite the

financial crisis. The government continued with same levels of expenditure as percentages of Total Budget and

GDP.

0

10

20

30

40

2006 2007 2008 2009

16

.56

21

.35

22

.91

27

.885

.84 6

.58

7.3

1 8.7

7

Chart 10: Budget allocation for Education ( Billion TL)

Ministry of National Education Budget Higher Education Council Budget

22.4

36.65

30.2227.9

Source: Ministry of National Education ( MONE)

12.80%13.57% 13.58% 13.98%

3.00% 3.30% 3.00% 3.30%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

2006 2007 2008 2009

Chart 11: Education Expenditure Percentages

Total Education Budget Percentage of Central govt. budget

Total Education BudgetPercentage of GDP



Table 4: Ministry of National Education Budget Description ( Billion TL)

Budget Breakdown 2007 2008 2009

Total MONE budget 21.35 22.91 27.88

Personnel Expenditure 13.48 15.4 18.48

Insurance Premium 3.16 1.81 2.13

Goods & Services 1.19 2.21 2.86

Current Transferable 1.9 2.07 2.47

Capital Expenditure 1.48 1.26 1.5

Capital Transfers 0.106 0.147 0.419 Source: Ministry of National Education

The budget breakdown shows the total breakdown of expenditure of the allotted budget to Ministry of

National Education (MONE). MONE on an average for last three years spends around 65% of the total allotted

budget on Personnel i.e. staff and teachers salary and around 10% on insurance premium. MONE also spends

on an average around 6% every year on capital expenditure to fill the gap in education.

Table 5: Higher Education Council Budget Description ( Billion TL)

Budget Breakdown 2007 2008 2009

Total Higher Council budget 6.58 7.31 8.77

Personnel Expenditure 3.41 3.85 4.572

Insurance Premium 0.77 0.505 0.565

Goods & Services 1.026 1.36 1.561

Current Transferable 0.0856 0.0992 0.2092

Capital Expenditure 1.28 1.49 1.863 Source: Ministry of National Education

Higher Education Council (HEC) has on an average spent around 52% on personnel i.e. staff and teachers for

last three years. HEC has been active in fulfilling the education gap as it has allocated on an average around

20% of the total expenditure on capital expenditure.


The investment made by Ministry of National Education (MONE) in 2009 was around 1.5 Billion Turkish Lira

(TL) compared to 1.29 Billion TL in 2008 and 1.49 Billion TL in 2007. The investments by MONE were 0.13% of

GDP in 2009 and 0.575 of the Total Central Government Budget in 2009. The total investment of central

government in 2009 was around 13 Billion TL and compared to around 8 Billion TL a substantial increase of

over 50%. However out of this total investment of central government in 2009 around 5.3 % was investment

made by MONE in education as stated above in the chart.

3.3 Education Statistics

3.3.1 Enrollment Rate

The enrollment rate for primary is higher as it is compulsory however the enrollment rates for secondary drop

below 60%.

1.2

4

1.4

9

1.2

9

1.5

0.22% 0.23%

0.18%

0.13%

0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

00.20.40.60.8

11.21.41.6

2006 2007 2008 2009

Chart 12: Investment Budget of Ministry of National Education ( Billion TL)

Investment Budget of MONE ( Billion TL) MONE Investment %of GDP


89.8 90.197.4 96.5

56.6 56.5 58.6 58.5

0.0

20.0

40.0

60.0

80.0

100.0

120.0

2006 2007 2008 2009

Chart 13: Enrollment Rate in Schools

Primary Secondary

Source: Turkstat


3.3.2 Eligible Population Breakdown

The population eligible for school education is between the age brackets of 3 – 19 years. Below is the grade

wise breakdown of the eligible population.

Table 6: Eligible Population (Millions)

Pre Primary (3 to 5)

Primary (6 to 14)

Secondary (15 to 19) Total

2007

3.60

11.56

6.16

21.32

2008

3.66

11.53

6.19

21.37

2009

3.70

11.46

6.23

21.40 Source: Turkstat

3.4 Schools Statistics

3.4.1 Number of Students

*Note: 2007 is the base year for Growth Rate

The total number of students throughout all schools in Turkey up till secondary has grown to over 15.3 million

in 2009 from 14.82 million in 2008. The growth Rate for 2009 was 3.61% compared to negative growth of

0.38% in 2008.

14.87 14.82

15.35

14.50

14.60

14.70

14.80

14.90

15.00

15.10

15.20

15.30

15.40

2007 2008 2009

Chart 14: Number of Students- Turkey

Number of Students( Millions)

Source: Turkstat


3.4.2 Gap Analysis- Eligible Population

The total number of existing students in all the schools across Turkey when compared to population eligible for

education (age group of 3-19) gives a gap in number of students who need education. The total eligible

population for schools in 2009 was around 21.40 million while only 15.35 million were accommodated by all

schools across Turkey.

3.4.3 Gap Analysis – Eligible Population - Grade wise

There was a total gap of around 6.05 million students in the age group of 3-19 i.e. 6.05 million children didn’t

have access to formal schools. Out of the 6.05 million the highest gap was in pre –primary and secondary

education, leaving around 2.90 million children this may be because pre primary education is optional,

however importantly around 1 million students every year would graduate to primary education level.

Primary education had minimal gap, the reason was that primary education for 8 years is made compulsory

and free by Turkish government. At secondary level there is a high gap of around 2.40 million students, this is

because the student dropout rate is higher as secondary education is not made compulsory by government.

14

.87

14

.82

15

.35

21

.32

21

.37

21

.40

-

5.00

10.00

15.00

20.00

25.00

2007 2008 2009

Chart 15: Gap Analysis - Number of Students- Turkey

Number of Students( Millions) Eligible for Education- Age 3-19 ( Millions)Gap

( millions)

6.456.56 6.05

Source: Turkstat

0.8

0

10

.71

3.8

4

3.7

0

11

.46

6.2

3

-

2.00

4.00

6.00

8.00

10.00

12.00

14.00

Pre Primary ( 3-5) Primary (6-14) Secondary (15 -19)

Chart 16: Gap Analysis (2009) - Grade wise

Number of Students ( Millions) Eligible Population ( Millions)

2.902.40

0.75

Gap( millions)

Source: Turkstat


3.4.4 Number of Schools

The total number of Schools in 2009 increased to over 66,000 across Turkey from 64,879 in 2008.

The average number of students per school was 232 in 2009, 228 in 2008, and 235 in 2007. Hence the average

number of students to schools for last three years is 232.

The Total number of schools in 2009 was 66,097 out of which Primary grade schools were around 33,769 and

only 8,675 schools in Secondary Grade. The average number of students in pre primary schools was very low at

34 students per school because this is an optional stage of education, whereas the average students per school

for primary was around 317 and even higher for secondary education which was 442 students per school. This

shows that there is lack of infrastructure for secondary schools.

63

,26

5 6

4,8

79

66

,09

7

61,500 62,000 62,500 63,000 63,500 64,000 64,500 65,000 65,500 66,000 66,500

2007 2008 2009

Chart 17: Number of Schools- Turkey

2007 2008 2009

228

Average Number of Students Per School

Source: Turkstat232

235

23,653

33,769

8,675

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Pre Primary Primary Secondary

Number of Schools by Grade- 2009

Number of Schools

Source: Turkstat

Average Number of Students Per School

34

317

442


3.4.5 Gap Analysis – Number of Schools

Considering the total eligible population entitled for education as 21.4 million in 2009 (Refer to chart 15), out

of which only 15.35 million are accommodated by 66,097 schools. Also, considering the average number of

students per school for the last three years as 232, (Refer to chart 17) it shows that, if all the eligible

population were to be accommodated at the rate of 232 students per school then there is requirement for

additional 26,179 schools other than the existing 66,097 schools all across to fulfill the need of education for

all the population entitled for it.

3.5 Regional Analysis

3.5.1 Regional Gap Analysis – Eligible Population

The highest difference between number of existing students and eligible population for education is in Central

Anatolia , Istanbul and Southeastern Anatolia of 1.06 million, 0.90 million and 1.54 million respectively in each

of provinces.

63

,26

5

64

,87

9

66

,09

7

91

,94

1

92

,16

4

92

,27

6

-

20,000

40,000

60,000

80,000

100,000

2007 2008 2009

Chart 18: Gap Analysis- Number of Schools- Turkey

Number of Schools Required Number of Schools

28,67626,17927,285

Gap

Source: Turkstat

1.7

4

1.4

1

2.2

0

1.4

6

1.8

8

2.6

1

2.0

0

2.0

4

2.3

6

2.0

4

3.2

6

2.1

8

2.1

5

3.5

2

2.3

1 3.5

8

-0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00

Chart 19:Gap Analysis - Number of Students (2009 ) Regionwise

Number of Students ( Millions) Eligible Population ( Millions)

0.62

1.54

0.31

0.90

0.270.72

1.06

0.63

Gap(Millions)

Source: Turkstat


However the highest numbers of students are in Istanbul which is 2.6 million students in all the schools

throughout Istanbul, this is mainly because apart from being the largest city and former political capital of the

country, Istanbul has always been the centre of Turkey's economic life, this is because of its location as a

junction of international land and sea trade routes. Istanbul is also Turkey's largest industrial centre; it employs

approximately 20% of Turkey's industrial labor and contributes 38% of Turkey's industrial workspace. Hence

Istanbul has a high population as it attracts people from all around Turkey.

The total population in Istanbul for 2009 was around 12.9 million with population in age group of 3-19 (eligible

population) at 3.52 million which was only second to Southeastern Anatolia at 3.58 million of eligible

population.

Southeastern Anatolia had the highest gap in number of students and eligible population which was around

1.54 million; this can be attributed to the economy of Southeastern Anatolia which is largely based on

stockbreeding, agriculture and also some oil production because of which Per Capita Income in Southeastern

Anatolia is lower than the average national Per Capita Income. Hence affordability for private education is low

and public infrastructure is insufficient.

3.5.2 Number of Schools

Central Anatolia has the highest number of Schools at 9,725 followed by Eastern Anatolia with 9,528 schools

and Black Sea with 9,076 schools. Istanbul has lowest number of Schools at 4,802 Schools whereas Istanbul has

the highest number of Students of 2.6 million students, hence Istanbul has the highest number of Students per

school of 544 and the National average of all schools across Turkey is 232 Students per School. This implies

that Istanbul has more number of students per school than the other regions, which means that the schools

are burdened.

8,439 9,076

9,725 9,528

7,575

4,802

8,098 8,854

207 155

226

154

248

544

247 231

-

100

200

300

400

500

600

-

2,000

4,000

6,000

8,000

10,000

12,000

Chart 20:Average Number of Students Per School- Regionwise

Number of Schools(2009) Average Number of Students per School(2009)

Source: Turkstat

http://en.wikipedia.org/wiki/Trade_route


3.5.3 Regional Gap Analysis – Number of Schools

Considering the average number of students per school (refer to chart 20), the total number of schools

required in each region to accommodate all the eligible population (refer to chart 19) in those regions are

stated above in the chart.

This implies that the highest gap in number of schools, in Southeastern, Central and Eastern Anatolia Regions.

3.5.4 Regional Analysis – Affordability vs. Gap

11

,43

0

13

,10

4

14

,43

5

14

,19

5

8,6

72

6,4

58

9,3

49

15

,53

7

8,4

39

9,0

76

9,7

25

9,5

28

7,5

75

4,8

02

8,0

98

8,8

54

-2,000 4,000 6,000 8,000

10,000 12,000 14,000 16,000 18,000

Chart 21: Gap Analysis - Number of Schools (2009)


2,9912,9912,991

6,683

1,251

1,656

1,097

4,6674,710

4,028

Source: Turkstat

2,9

91

4,0

28

4,7

10

4,6

67

1,0

97

1,6

56

1,2

51

6,6

83

9,740

7,551 8,276

4,376

10,109 10,216

7,343

5,369

-2,000 4,000 6,000 8,000

10,000 12,000

Chart 22: Gap Analysis - Per Capita Income to Gap in Schools

2009 Gap In Schools 2009 Nominal GDP per capita in US $

Source: Turkstat, IMF

*Per Capita Estimates based on previous years.


When comparing the gap in schools to GDP per capita of the regions, it shows the affordability of the region to

fulfill the gap. Istanbul has the highest GDP per capita income of US$ 10,216 and also it has a significant gap in

number of schools. Aegean and Marmara also have a high GDP Per Capita and a Significant Gap, whereas

Southeastern Anatolia has high gap but low GDP Per Capita.

3.6 Gap Analysis- Quality & Occupancy

3.6.1 Students School Ratio:

Average Number of Students per School determines the standard of infrastructure of Schools in the region.

While most of the region have the students to school ratio around the overall average of 232, Istnabul has a

very high students to school ratio of 544. This implies that the school infrastructure in Istanbul is burdened,

catering to over 2.6 million population with just around 4,802 schools.

207 155

226 154

248

544

247 231

-100 200 300 400 500 600

Chart 22: Average Number of Students per School(2009)

Average Number of Students per School(2009)

Source: Turkstat


3.6.2 Students Teacher Ratio:

The Students Teacher Ratio gives an indication of the quality of education of a school. The overall average

number of students to teachers in Turkey was around 23 in 2009. Istanbul and Southeastern Anatolia had a

very high Student to Teacher ratio of 29 and 30 respectivley. This implies that the quality of education in these

regions have been compromised and there is need to increase the school infrastructure and bring in more

human resources to fulfill the gap qualitatively.

3.6.3 The Estimated Gap in School

As per above analysis, it indicates that Istanbul though does not show a huge gap in number of school, the

schoos in Istanbul are low on quality of education when compared to other regions. The School Infrastructure

in Istanbul is also burdenedwith more number of students per school. Hence to analyse the actual gap in

number of Schools the same quality benchmark which is across Turkey, needs to be considered.

91

,16

0

76

,75

1

11

4,2

96

59

,48

9

88

,52

7

91

,40

9

91

,13

5

66

,99

1

19 18 19

2521

29

22

30

05101520253035

-20,000 40,000 60,000 80,000

100,000 120,000 140,000

Chart 23: Student Teacher Ratio (2009)

Number of Teachers Students to Teacher Ratio

Source: Turkstat

10

,19

0

8,7

79

14

,05

1

9,4

04

9,2

66

15

,15

6

9,9

74

15

,45

5

8,4

39

9,0

76

9,7

25

9,5

28

7,5

75

4,8

02

8,0

98

8,8

54

-2,000 4,000 6,000 8,000

10,000 12,000 14,000 16,000 18,000

Chart 24: Gap Analysis - Number of Schools (2009) National Benchmark


1,751

6,601

1,876

10,354

1,691(124)

4,326

(297)

Gap

Source: Turkstat


Considering the last three years average number of students per school of all schools across Turkey (as in chart

17) of 232, we can estimate the gap in number of schools in each region. If all the eligible population were to

be accommodated at the rate of national benchmark (chart 17) then each region will require the above stated

number of schools. Requirement for new primary schools was highest in Istanbul at around 8,000 schools.

The assumption considered in the above analysis is that in future all regions will have standard students to

school ratio.

The average number of students per school is not similar across regions (chart 20), hence some regions such as

Eastern Anatolia and Black sea (which have the students to school ratio less then national benchmark of 232),

show negative gap. Regions such as Istanbul which had the highest student to school ratio of 544 show the

highest gap.

3.6.4 Regional Analysis – Affordability vs. Gap

When comparing the gap in schools to GDP per capita of the regions, it shows the affordability of the region to

fulfill the gap. Istanbul has the highest GDP Per Capita Income of US$ 13,326 and also it has the highest gap in

number of schools of over 10,000. This implies that Istanbul can sustain the demand for a high quality private

education and should be the most likely target for investments in quality private schooling.

1,7

51

(29

7)

4,3

26

(12

4)

1,6

91

10

,35

4

1,8

76

6,6

01

13,217

10,176 11,594

5,873

3,614

13,326

10,042 8,897

(2,000)-

2,000 4,000 6,000 8,000

10,000 12,000 14,000 16,000

Chart 25: Gap Analysis - Per Capita Income to Gap in Schools

Gap In Schools GDP per capita in US $

Source: Turkstat


3.7 Sectoral Analysis

3.7.1 Sector wise Breakdown – Number of Schools

*Note: the above figures do not include Pre – Primary Schools.

Turkish education system gives private sector equal opportunity; however as evident it is highly dependent on

Public sector as it is free; however private schools have an enormous opportunity to expand.

There is a vast difference in number of schools in private and public sector. There were over 40,727 public

schools across all classes as compared to around 1,717 schools in private sectors. The Private schools have

risen steadily at an average rate of around 8% for last 3 years.

41,116 40,775 40,727

1,474 1,598 1,717

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

2007 2008 2009

Chart 26: Number of School- Sectorwise Breakdown

Public Private

The share of Private sector is around mere 4% , There is a vast opportunity

for Private sector to expand its share.

Source: Turkstat


3.7.2 Sector wise Breakdown- Number of Students

*Note: the above figures do not include Pre – Primary Schools Students

There are currently over 14.1 Million students in Public Schools while a marginal 0.35 million are in private.

There is a great demand to increase the school infrastructure further and demand for quality private education

is only set to increase.

13.93 13.80 14.19

0.30 0.32 0.35

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

2007 2008 2009

Chart 27:Number of Students - Sectorwise Breakdown

Public (Millions) Private (Millions)

Source: Turkstat


3.8 Higher Education Statistics

3.8.1. Eligible Population

The population eligible for Higher Education in the age brackets of 20 – 23 years was around 5.02 million in

2009.

Table 7: Eligible Population for Higher Education ( Millions)

Higher Education ( 20-23)

2007 4.99

2008 5.01

2009 5.02

3.8.2 Higher Education Brief

Since the passage of the Higher Education Law (No. 2547), the administration of higher education in Turkey

was comprehensively restructured and centralized. All higher education institutions were tied to the Council of

Higher Education (YÖK, COHE). COHE is a fully autonomous national board of governors and sets Turkish higher

education policies and strategies.

Until 1984, there were no private universities in Turkey. Higher Education Law allowed non-profit foundations

to establish universities that must be accredited periodically. The law requires all the private institutions,

governed by individual boards of trustees and completely autonomous in financial and administrative matters

(including setting tuition fees and salary scales and appointing rectors and deans), to comply with the

academic requirements set forth by the Council of Higher Education.

Student admissions are to be through the central admissions system, based on a competitive student selection

and placement examination, and the requirement that at least 10 percent of students must be admitted on

scholarships provided by the institutions themselves. Private universities are eligible for state funding for up to

half of per student funding at state universities. However, to qualify for such state aid, private institutions

must demonstrate performance at par with state universities. The Council of Higher Education closely

monitors the situation by measuring the numbers of students and publications per full-time faculty.

In terms of both the number of institutions and the share of total enrollments, private higher education in

Turkey falls way below the numbers commonly encountered in the Asia-Pacific rim, and Central and Eastern

Europe. Yet, the growth of private higher education in Turkey has been smooth.

Currently as per Council of Higher Education, As of October 2009, there are 137 universities out of which 92

universities were Public Universities and 45 Private nonprofit universities. Apart from these 137 universities

there were two higher institutes of technology and five private post-secondary vocational schools that are not

attached with any university. There are estimated 2.9 million students currently studying across all the 137

universities including technical, vocational and open study courses.

Table 8: Number of Universities

Universities in 2009

Public Universities 92

Private (Non Profit) 45


3.8.3 Higher Education – Number of Students Growth Rate

The total number of students in all the 137 universities for all the programs i.e. undergraduate, vocational and

all the open courses was around 2.9 million (estimated as per 2007 numbers) in 2009. The number of students

increased, by over 15% over 2008.

3.8.4 Higher Education Analysis – Eligible Population

The total Eligible population in the age group of 20 -23 was around 5.02 millions in 2009 whereas all the higher

education institutions accommodated only around 2.9 million students for the year 2009.

2.2

2

2.5

6

2.9

8

13.05%

15.28%16.41%

0.00%2.00%4.00%6.00%8.00%10.00%12.00%14.00%16.00%18.00%

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

2007 2008 2009

Chart 28: Number of Students Growth Rate

Number of Students ( milions) Growth Rate (%)

2.222.56

2.98

4.99 5.01 5.02

0.00

1.00

2.00

3.00

4.00

5.00

6.00

2007 2008 2009

Chart 29: Higher Education Analysis- Eligible Population

Number of Students ( milions) Eligible for Education (20-23)( millions)Gap(Millions)

2.77

2.042.45

Source: Council of Higher Education, University of KOC- Report, Turkey- UK Seminar


3.8.5 Higher Education – Enrollment Rate

The current existing gap in higher education can be determined by difference in number of seats available and

students applying for higher education, currently Turkish Higher education infrastructure offers close to

910,000 new seats in both regular and open category while students who applied were close to 1.45 million in

2009. The gap between applications and enrollment is around 0.5 million. This gives an excellent opportunity

for private universities to fulfill the gap and also provides opportunities to start alternative courses to

accommodate the students who could not get through.

The GDP per capita for Turkey in terms of Purchasing Power Parity was US$ 12,339 in 2009. This puts Turkey in

high income countries and shows that it has good purchasing power. It can be ascertain that the affordability

for any private higher education is there.

1.681.78

1.65

1.45

0.60 0.630.76

0.91

0.000.200.400.600.801.001.201.401.601.802.00

2006 2007 2008 2009

Chart 30: Education -New Enrollment to Applications

Applications ( Millions) New Enrolled ( Millions)

The Current existing gap between students applied and available seats is 0.54 million

1.681.78

1.65

1.45

0.60 0.630.76

0.9112,107

12,891

13,139

12,339

11,40011,60011,80012,00012,20012,40012,60012,80013,00013,20013,400

0.00

0.50

1.00

1.50

2.00

2006 2007 2008 2009

Chart 31: Affordability for Higher Education

Applications ( Millions)

New Enrolled ( Millions)

Gross domestic product based on purchasing-power-parity (PPP) per capita (US$)

Source: IMF


3.8.6 Higher Education – Number of Students Breakdown

The total numbers of students in Higher Education across 137 universities in 2009 were around 2.9 million, out

of which around 30% were in vocational courses and over 64% were in undergraduate courses. The total

number of students in vocational courses was around 0.89 million. Students enrolled in Post graduates courses

were around 0.18 million.

Out of the total 2.98 million students in 2009 over 1.04 million students were enrolled in Open University

courses conducted by Anadolu University. Only around 1.94 million of total students were enrolled in regular

courses (including vocational) across Turkey.

1.38

1.64

1.91

0.14 0.15 0.18

0.70 0.770.89

0.00

0.50

1.00

1.50

2.00

2.50

2007 2008 2009

Chart 32: Number of Students Breakdown - Course wise

Undergraduate (Millions) Post Graduate (Millions) Vocational (Millions)

1.38

1.67

1.94

0.85 0.901.04

0.00

0.50

1.00

1.50

2.00

2.50

2007 2008 2009

Chart 33: Number of Students Breakdown - Typewise

Regular (Millions) Open (Millions)


3.8.7 Higher Education – Gap Analysis

The average number of students per university for 2.9 million students in 137 universities was around 21,771

students. Hence to fulfill the gap of 0.54 million students (chart 27) there is a need for around 25 universities.

Higher Education Gap

Source: Council of Higher Education, University of KOC- Report, Turkey- UK Seminar.

*Note: Data estimated as per the percentage of students in Vocational & Regular.

**Note: Number of Students Include Under Graduates (1.9 Millions) & Post Graduates (0.17 Million)

***All Data as of 2009

Higher Education

Number of Higher Education Institutions (Universities)

(137)

Vocational

Number of Students: (0.89 Million)

Applications*: 0.43 Million

New Enrollment*: 0.29 Million

Regular

Number of Students**: (2.08 Million)

Applications*: 1.01 Million

New Enrollment*: 0.61 Million


4.1 Overview of Gap

There are gap at all levels of education from K-12 to Higher education level. The opportunities for educational

investment in Turkey are vast.

At School level there is an estimated gap of over 26,000 schools which needs to be fulfilled. There are a total of

over 21 million eligible populations out of which only around 15 million students are accommodated in some

66,000 schools. This gap in number of existing students and eligible population is even more startling in

regions like Istanbul and Central Anatolia. The existing school infrastructure in these areas is also not sufficient

to fill the gap.

Higher education needs a lot of boost from private sector to fulfill the gap between supply and demand. The

difference between eligible population for higher education and existing number of students was huge at 2.04

million while only 2.9 million students were accommodated, There is an immediate gap in number of

applicants and new enrollment of 0.5 million. This shows that Turkey has to immediately increase the current

existing infrastructure for higher education to fulfill this gap.

Turkey is categorized in the middle income country group. It has a high Per Capita Income (Nominal) of US$

9,340 while Per Capita Income in terms of Purchasing Power Parity is as high as US$ 13,111. Turkey has the

buying power for quality private education.

4.2 Target Sector Analysis

As the demand for education is not met by the current existing schools & universities, there are still great

unmet demands for education. The Government of Turkey in recent times has pushed forward to increase the

participation rate for education, especially in higher education. It has set a target of 65% enrollment rate in

higher education by 2020.The government has high focus on science and technology higher education, the

number of colleges in the field have risen to 27 in the last decade and also number of new enrollment has

doubled. The government’s effort to include private sector has helped ease the burden of public sector, the

number of non profit private universities from being nonexistent until 1984 have risen tremendously to 45.

For a developing country like Turkey, it is of utmost important to improve human skills by expanding higher

education and making sure that there is enough sources for conducting scientific and technological researches.

University & K 12 investment looks very attractive. K-12 education in parts of Turkey is lacking and needs more

infrastructure to fulfill the government goals hence making private participation crucial at K -12 level.

Strategy

At K-12 level there is a huge base line population of 3-19 years of close to 21 million and an

estimated gap of over 6 million.

K -12 levels will require another close to 26,000 schools in future to fill the gap in education.

The share of Private Sector is around 4% which is estimated to significantly increase as government

puts in more effort for public-private partnership.

K -12 gives an enormous opportunity to private sector for growth.

As Turkey is an unknown territory, the initial investment should be moderate and once, when well

versed with the market future diversification in higher education can be considered.

All the above suggest a good opportunity in Turkey for K-12 level private education


4.3 Target Region Analysis

Per Capita Income and gap in number of schools give an indication of opportunities present for high quality

private education. As evident from the above graph Istanbul, Marmara, Aegean and Central Anatolia provide a

good opportunity for high quality schools as these regions have a much higher Per Capita Income. The regions

also have significant school gap. Hence these regions are most likely investment targets. Among all the regions,

Istanbul has an enormous gap of around 10,354 schools and hence gives more & better opportunities.

1,751

(297)

4,326

(124)

1,691

10,354

1,876

6,601

9,740

7,551 8,276

4,376

10,109 10,216

7,343

5,369

(2,000)

-

2,000

4,000

6,000

8,000

10,000

12,000

Gap Analysis - Per Capita Income to Gap in Schools

2009 Gap In Schools 2009 Nominal GDP per capita in US $

Source: TurkstatMost likely InvestmentTarget

Istanbul is the largest city in Turkey and one of the major centers of the world.

It has a significant gap at K-12 level and also has the high GDP per capita to support the demand for

high quality private education.

Istanbul should be a prime target for an initial investment and in future the Istanbul model can be

replicated in other potential regions for diversification.


5.1 SWOT Analysis

Strengths

Strong Economic Fundamentals

High Government expenditure on education of close to 3.3 % of GDP.

A young Dynamic Population with over 43% population in under 24 age bracket

A high GDP per capita income and high disposable income.

Formidable Education system, with compulsory primary education

FDI laws at par with international standards.

Economic and political stability in the country.

Weakness

Historical high inflation.

Failure in long term planning.

Slow growth rate of education infrastructure.

High dropout rates after primary education

Government expenditure in education still

lowers the EU average.

Opportunities

High Gap in Supply and Demand for

Education.

Requirement for close to 66,000 schools and around 25 universities to fulfill education gap.

Demand for High quality education as level of qualification for workers increases

Private sector contribution in Education is only around 4%.

Low enrollment rates for secondary education

Ministry of National Education Investment in education sector has increased however still needs investment from private sector to fulfill the education gap.

Threats

Vulnerable towards Global Financial crisis

Government policy shift may limit private investment in education.

Current Decline in GDP growth rate may curb spending on education

Dependency on global economies

Increasing unemployment rate may increase dropout rates for school.

Volatile exchange rate movements

Recent increase in inflation.

Analysis


6.1 Laws Governing Foreign Direct Investment

Under the Turkish FDI law (Law Number 4875)

Freedom to Invest and National treatment

a) Unless stipulated by international agreement and other special law

Foreign investors are free to make foreign direct investment in Turkey

Foreign Investors shall be subject to equal treatment with domestic investors

b) Foreign Direct investment shall not be expropriated or nationalized, except for public interest and upon

compensation with due process of law.

c) Foreign investors can freely transfer abroad: net profits, dividends, proceeds from sale or liquidation of all or

any part of investment.

All the sectors are fully accessible to foreign investors except the below stated sectors which are only partially

or completely not accessible to foreign investors. Education sector is free from regulations on limit of

investment and it is fully accessible to foreign investors.

Media, radio and television broadcasting

Petroleum

Passenger-cargo air transportation

Airport ground handling services

Management of airports

Transportation railways infrastructure services

Port management

Transportation in coastal waters and rivers

Yacht ports management

Real estate acquisition

Foreign Companies

Commercial companies having legal personality established in foreign countries according to the laws of those

countries are able to acquire real estate or limited rights in Turkey provided they operate pursuant to the

special laws such as tourism encouragement law, the petroleum law, the industrial law etc. other foreign legal

entities apart from mentioned commercial companies such as foreign charities, foreign foundations and

foreign societies cannot buy property in turkey.

Companies established/ Participated by foreign nationals (FDI companies)

Legal entities established or participated in Turkey by foreign investors can acquire real estate or limited rights

in Turkey in line of operational purposes set in company’s article of association. If these properties are

acquired by another company established in turkey by foreign nationals or a Turkish company owning a

property is acquired by foreign investors same rule applies.

Source: Turkish Embassy, London (active link)

Legal

http://www.turkisheconomy.org.uk/investment/fdi.htm


6.2 Taxation Laws

Income Tax structure for Corporate Tax:

Taxable Income

The corporate tax is levied on the income and earning derived by corporations and corporate bodies. The

Corporate Tax Law sets provisions and rules applicable to the income resulted from the activities of

corporations and corporate bodies.

Determination of Net Taxable Income:

Net corporate income is defined as the difference between the net worth of assets owned at the beginning

and at the end of the fiscal year. In addition to the expenses in Income Tax Code allowed to be deducted from

revenues, the followings may also be deducted regarding to the determination of business profit, by

corporations:

Expenses related to the issuance of stocks and shares;

Initial organization and establishment expenses;

Expenses incurred for general board meeting as well as expenses made for mergers dissolutions, and

liquidations;

Profits shares accrued to active partners of partnerships in commendams limited by shares;

Profit shares accrued to partners by participation banks for participation accounts;

Research and development deductions calculated as %40 of new technology and know-how research

expenses realized within business.

In determining net corporate income, the following deductions are not allowed:

Interests paid or accrued on the basis of equity;

Interest, exchange difference and other costs paid or accrued on the basis of disguised capital;

Disguised earning distributed by transfer pricing;

Any kind of reserves;

The corporate tax, fines, tax penalties and late payment penalties and interest.

Leased or registered motor vehicles’ depreciation and other expenses not related with business

activities;

Corporate income tax is applied at 20 % rate on the corporate earnings.

Source: Revenue & Administration. (Active Link)

http://www.gib.gov.tr/index.php?id=469


6.3 Government Incentive

An investor in education sector certificate can benefit from the following incentives:

Tax reduction

Investment loans

Investment premiums

Access to education development funds

Loans with low interest rates and long maturity

Partial customs duty exemption

Source: FAQ Investment in Turkey Guide – (active link)

Turkey is an emerging economy with a young and dynamic population. It is closely related with world economy and hence was affected by global meltdown. However as the world shows sign of coming through the recession Turkey is also poised for a recovery. Education will play a crucial role in Turkey’s future as it looks to further trade with world economies. Turkey will require quality skilled labor force to achieve its objective as manufacturing and financial hub for Asia and Europe. There is a vast gap in supply and demand of education at all levels and hence government looks upon private sector to play an important role in fulfilling the gap, Turkey is keen to invite more foreign investment in education and has all the laws governing these investments at par with international standards. K -12 provides a good opportunity as it has a huge base line population of over 21 million and the current school infrastructure is not able to accommodate all. There is an estimated gap of around 26,000 schools. Further Istanbul should be a prime investment destination as it has significant gap in number of school and also has the highest GDP per capita implying that it can sustain high quality education. Turkey is a good opportunity however it still is an unknown territory for which initial investments should be limited. Further investments can be evaluated based on returns from the initial investments.

Conclusion

http://www.invest.gov.tr/en-US/Pages/Default.aspx

turkey country & education sector report

Documents

higher education gap

school education

education expenditure

education system16

field of education

higher education statistics

higher education brief33

good education infrastructure