Invest Turkey

REPUBLIC OF TURKEY PRIME MINISTRY
Investment Support and Promotion Agency of Turkey
ISPAT
Investment Climate in Turkey
Beautiful landscape
Combination of contemporary and traditional
Home of many successful people
What about the investment opportunities
AGENDA
TURKEY WITH SOME KEY FIGURES FDI IN TURKEY TOP REASONS TO INVEST IN TURKEY THE AGENCY WHY TURKEY?
Turkey with some key figures
18th largest economy in the world and 7th when compared to the EU Countries in 2011 (IMF)
The largest youth population when compared to the EU countries
50 million internet users (2011)
65 million GSM users (2011)
51 million credit card users (2011)
VOLITAN - Green Dot Award 2008, Miami - International Design Award 2007, New York
Turkey is the 5th largest shipbuilding (units) country as well as the 4th largest mega yacht producer in the world (2009)
VOLITAN Designer Dr. Hakan GRSU & Designer Szm DOAN, TURKEY
Turkey is the 10th largest steel producer in the world and 2nd compared with the EU countries (worldsteel 2011) Turkey is the 17th largest automotive producer in the world (OICA 2011)
- Turkish Airlines is one of the fastest growing airlines in Europe -The best airline in Europe (Skytrax 2011 & 2012)
- 118 million airline passengers in Turkey (2011) - Istanbul Ataturk Airport is the best airport in Southern Europe (Skytrax 2010)
Turkey is the 6th most visited holiday destination in the world (2011)
International Tourist Arrivals

Country 1. France 2. USA 3. China 4. Spain 5. Italy 6. Turkey 7. UK 8. Germany 2011 (million) 79.5 62.3 57.6 56.7 46.1 29.3 29.2 28.4
9. Malaysia
10. Mexico
24.7
23.4
Source: UNWTO ;*Ministry of Culture and Tourism
Out of worlds top 100 best hotels 22 are from Turkey (TUI Holly, 2012)
Its not only a place to work, but also a fascinating place to live.
FDI in Turkey
Soaring FDI Inflows
000
120 100 80
FDI Inflows ($ billion)
Number of Companies with Foreign Capital
110
35 30 25 20 18,7 15 11,7 5,6 6,7 8,8 23,7 21 25,5
29,4
60 40 20 0
15 10
15
5 0
2002
2003
2004
2005
2006
2007
2008
2009
2010
1923-2002 (80 years)
2003-2011 (9 years)
Source: Central Bank of Republic of Turkey & Ministry of Economy
2011
FDI in Turkey
Increasing Confidence in the Turkish Economy Foreign Direct Investment Confidence Index 2012
Source: A.T. Kearney
Top reasons to invest in Turkey

800 700 774
Benchmarking Performance of the Turkish Economy

2011 GDP (Current Prices, $Billion)
514
448 408 279
600
500
Dynamic, Stable & Attractive Economy GDP & Income Key numbers Population International Hub Structural Reforms
400 300 200 248 239 215
190
165
140
100
0
96
54
6 5,2 5 4 3 4,8 4,7 4,6
Annual Average Real GDP Growth (%) 2002-2011

4,5 3,9 3,8 3,7 3,6 3,5
3,4
2,3 2 1 1,5
Source: IMF World Economic Outlook, April 2012;
Benchmarking Performance of the Turkish Economy

Annual Real GDP Growth (%)
10
9,2 8,5 7,5 6,3
9 8 7 6
2010
2011
6,2
6,5
5,5 4,3 4,3 4,4 3,9 3,3 2,7 1,7 1,3 0,4 1,7 1,7
5 4 3 2 1 0
2,7 3,6 4,0
4,2
Slovakia
Poland
Hungary
Turkey
Brazil
Indonesia
Fastest growing economy in Europe

Source: IMF World Economic Outlook, April 2012
Czech Rep.
Bulgaria
Mexico
Russia
Korea

Let your business blossom in a thriving economy and promising future
6
5,2
Average Annual Real GDP Growth (%) Forecast in OECD 2012-2017

4,8
4
3,6 3,6 3,5 3,4 3,3
3,1 2,8 2,8
3,3
2,7
2,6
2,6
2,5
2,5
2,4
2,3
2,3
2,2
2,2
2,1
2,1
2,3
1,9
1,8
1,8
1,7
1,7
1,7
1,7 1,3 1,2
1,0
0
Turkey Chile Australia Norway Mexico Korea Estonia Slovakia Poland Luxembourg Israel US Sweden Ireland New Zealand Czech Rep. OECD Iceland Canada Spain Hungary France Switzerland Finland UK Austria Belgium Slovenia Netherlands Germany Greece Denmark Japan Portugal Italy
The fastest growing economy among the OECD countries

Source: OECD Economic Outlook No.91, June 2012
0,9
Potential of the Turkish Economy
Dynamic, Stable & Attractive Economy

12.000
GDP Per Capita Nominal (USD)
Population Age Labor Force GDP International Hub Structural Reforms
10.469
10.438
10.000
7.586 7.022
10.022 9.240 8.559
8.000
5.764 4.559
6.000
4.000
3.492
2.000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: TURKSTAT

Enriching population eradicating poverty
Dynamic, Stable & Attractive Economy Population Age Labor Force GDP & Income International Hub 20,0 Structural Reforms 15,0 10,0 5,0 0,0 2002 35,0
30,3
Percentage (%) of Poor People Living Less Than $4,3 Per Day
30,0 25,0
23,8 20,9 16,4 13,3 8,4
6,8 4,4 3,7 2,8
2003
2004
2005
2006
2007
2008
2009
2010
2011
Source: TURKSTAT
Real Increase (%) in Household Income 2002-2011

Lowest income group
Dynamic, Stable & Attractive Economy Population Age Labor Force GDP & Income International Hub Structural Reforms
60,5
60
Percentage Increase in Decile (10%) Income Groups

43,2 36,8
45
36,0
34,8
34,2 29,7 27,4 21,2 top income group
30
15
5,2
0
1
Source: TURKSTAT
10
Emergence of a new middle-class
Dynamic, Stable & Attractive Economy
2002 Motor Vehicle Sales (thousands) Number of Motor Vehicles in traffic (million) Airline Passengers (million) Number of Turkish Citizens visiting abroad (million) Stock of Consumer Loans* ($ Billion) Private Consumption per capita ($) Healthcare expenditure per capita ($) 174 8,7 33 3 4,2 188
2011 911 16,1 118 6 129,4 657
Population Age Labor Force GDP & Income

International Hub Structural Reforms
2.390 7.515
Source: OSD, Ministry of Transport, TURKSTAT, CBRT, EIU, Ministry of Development *including credit cards
Household Liability % of GDP

2010
100
90
94
80 70
60 50
64
40 30
20 17
10 0 Turkey Euro Area USA
Source: Central Bank of the Republic of Turkey, European Central Bank , FED, Euro Area; 2009
Stability and High Performance in the Economy

EU Defined General Government Gross Debt Stock (% of GDP)
Dynamic, Stable & Attractive Economy GDP & Income Key numbers
85
EU
80
75
74,0
82,5
Population
70 65 60 55 50 45 40 35
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
39,4
60,9
TURKEY
Maastricht Criteria: 60 %
Source: Treasury, ECFIN

EU Defined General Government Budget Balance (% of GDP)
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 0
Population
-6 -3
TURKEY
-2,5
-1,4
-4,5
EU
-9
-10,2
-12 Maastricht Criteria: -3 %

Source: Treasury, ECFIN

35,0
30,7
30,0 25,0 20,0 15,0 10,0
Annual Inflation
Population
6,4*
5,0 0,0 J 03 A J O J 04 A J O J 05 A J O J 06 A J O J 07 A J O J 08 A J O J 09 A J O J 10 A J O J 11 A J O J12 A J O
* As of November 2012
Source: TURKSTAT

Billion USD
Exports
Population
160 140 120 100 80

63,2 73,5 85,5 107,3 132 114 102,2 135
60 40 20
1 36,1
47,3
0 2002
Source: TURKSTAT
2003
2004
2005
2006
2007
2008
2009
2010
2011
Top reasons to invest in Turkey Product & Market Diversification of Exports
Dynamic, Stable & Attractive Economy GDP & Income Key numbers Population
2002 Number of export products with over $1 billion Number of export markets with over $1 billion Share of top 5 countries in total exports (%) Share of MENA in total exports (%) Share of North America in total exports (%) Share of EU in total exports (%) 9 8 47 13 10 57
2011 32 30 33 26 4 46
International Hub
Structural Reforms
Less dependent on the crisis-ridden markets

Source: TURKSTAT, Products with 2-digit HS Codes, EU includes 27 countries (new members in 2004 were included in 2002 figures)

Increasing export of technology-intensive products
Population International Hub Structural Reforms 60
Compositipon of Exports (%)

100
34,8
80 53,7 51,5
46,1
45,5
41,2
39
39,3
40,4
39,1
40 46,3
20
48,5
53,9
54,5
58,8
61
65,2
60,7
59,6
60,9
0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Tecnology-intensive
Source: TURKSTAT
Labor-intensive

Turkey has the 5th most liberal trade policies in the world (World Trade Indicators 2010)
Customs Union with the EU

Free Trade Agreements with 22 countries: 1. Albania 2. Bosnia & Herzegovina 12. Palestine 13. Switzerland
3. Croatia
4. Egypt 5. Georgia 6. Iceland 7. Israel 8. Lichtenstein 9. Macedonia 10. Morocco 11. Norway
14. Syria
15. Tunisia 16. Montenegro 17. Serbia 18. Chile 19. Jordan 20. Lebonan* 21. Mauritius* 22. South Korea*
Source: Ministry of Economy, * In ratification process
Access to Multiple Markets

(45% global trade)
RUSSIA GDP $1,8 trillion Imports: $324 billion Population: 142 million
1,5 billion people; $25 trillion GDP; $8.2 trillion trade

EUROPE GDP: $19.9 trillion Imports: $6,9 trillion Population: 668 million
Dynamic,
Stable & Attractive Economy
Population
International Hub
Energy
Corridor Reforms
Structural
MENA GDP: $3,3 trillion Imports: $929 billion Population: 647 million
Source: IMF World Economic Outlook and WTO; GDP, Imports and population figures as of 2011
CENTRAL ASIA & CAUCASUS GDP: $350 billion Imports: $84 billion Population: 82 million

Business Capital for Regional HQs Multinational Companies (MNCs)
MNCs
Dynamic,
Stable & Attractive Economy
Population
International Hub
Energy
Corridor Reforms
Structural
Coca Cola GE Healthcare Microsoft Intel Unilever Verifone GlaxoSmithKline BSH Schneider Electric Ericsson Cargill Pfizer Volvo BASF PepsiCo
Number Of Countries Managed From Turkey 94 80 80 67 36 30 30 30 27 22 20 20 18 18 14
Source: Respective Companies
Turkey As An Energy Corridor And Terminal
Dynamic, Stable & Attractive Economy Population International Hub Access to Multiple Markets Energy corridor Structural Reforms
Existing Natural Gas Pipelines Existing Oil Pipelines
Natural Gas Pipelines under Construction Natural Gas Pipelines Underway Proposed Natural Gas Pipelines Oil Pipelines under Construction
Top reasons to invest in Turkey Potential of the Turkish Economy - Young Population Population Pyramid
Age Group 90+ 85-89 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44
TURKEY
Age Group 90+ 85-89 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44
EUROPE
35-39
30-34 25-29 20-24 15-19 10-14 5-9 0-4
35-39
30-34 25-29 20-24 15-19 10-14 5-9 0-4
Female
Male
Female
Male
Source: UN and TURKSTAT, 2011
Half of population in Turkey is under age 30
Skilled Labor Force 2012

Availability of Skilled Labor Force
0 Turkey Poland Hungary Romania China Bulgaria 4,0 4,4 5,6 5,3 1 2 3 4 5 6 6,2 6,1 7
Availability of Qualified Engineers

0
Turkey Poland Hungary Romania China Bulgaria 6,3 6,1 6,0 5,7 5,4
Availability of Compotent Senior Managers

6 8
7,6 Turkey Poland Hungary China Romania Bulgaria 3,5 5,1 4,9 4,7 4,6
6
6,1
Source: IMD World Competitiveness Yearbook 2012, IMD WCY Executive Opinion Survey based on an index from 0 to 10

Productive and Cost-effective Labor Force
Productivity and Unit Wages Index in Industry
(Per Worker; 2005=100)
Dynamic, Stable & Attractive Economy Population Age Labor Force GDP & Income International Hub
130 125 120 115 110 105 100 95 90 85
Productivity Index
119,2
Structural Reforms
101,4
Real Unit Wage Index

2005 Q1 2005 Q2 2005 Q3 2005 Q4 2006 Q1 2006 Q2 2006 Q3 2006 Q4 2007 Q1 2007 Q2 2007 Q3 2007 Q4 2008 Q1 2008 Q2 2008 Q3 2008 Q4 2009 Q1 2009 Q2 2009 Q3 2009 Q4 2010 Q1 2010 Q2 2010 Q3 2010 Q4 2011 Q1 2011 Q2 2011 Q4 2012 Q1 2011Q3 2012Q2
80
Source: TURKSTAT, Ministry of Development

Dynamic, Stable & Attractive Economy Population Age Labor Force GDP International Hub
0 5 3,37 5 6,4 9,2 10
Labor Cost Per Hour ($US) 2010

15 20 25 30 35 40
Turkey Malaysia Brazil Hungary Poland Japan
Structural Reforms
11,2 25,3 26,9 37,9
US
Australia Germany
39
Source: EIU, February 2011; Average cost of labor per hour (pay and non-pay costs).

Days 25 20
Annual average number of sick days per employee in Europe*
22
Dynamic, Stable & Attractive Economy Population Age Labor Force GDP International Hub Structural Reforms
15 10
7,8 8,3 8,3 8,3 9,7 10,8
11,9
5 0
4,6
5,5
5,7
6,6
6,7
Hours 55
50 45 40 35 30
52,9
Hours worked per week of full-time employment Annual average**
42,8
42,2
42,1
41,9
41,6
41,6
41,3
41,5
41,2
40,8
40,4
40,6 38,9
Source: *MERCER - Pan-European Employer Health Benefits Issues Survey 2008, **EUROSTAT 2011: The average number of hours corresponds to the number of hours the person normally works. This covers all hours including extra hours, either paid or unpaid, which the person normally works

Key Elements of Structural Reform Agenda
Dynamic, Stable & Attractive Economy Population International Hub
Public Sector Reform Financial Sector Reform
Social Security Reform

Tax Reform Enhancing Private Sectors Role in the Economy
Structural Reforms
Opening the Key Markets to Competition, and Regulation by Independent Agencies

Improving the Investment Environment Accelerated Privatization
New R&D and Innovation Support Law

Structural Reforms
Dynamic, Stable & Attractive Economy Population
Corporate Income Tax %20 National Treatment
Protection Against Expropriation Guarantee of Transfers
International Hub
Structural Reforms
NewFDI Law & Other Legislation

Freedom to invest Access to Real Estate
Employment of Expatriates
International Arbitration
New Turkish Commercial Code

effective as of July 2012
Dynamic, Stable & Attractive Economy Population Age Labor Force GDP International Hub Structural Reforms
Transparency Accountability Institutionalization Improvement in investment & business environment Adoption of institutional management principles Opportunity to perform legal procedures electronically

Turkey in 2003
25 Romania Russia Bangladesh Bulgaria Poland Morocco Cameroon Turkey Guatemala 27 29 30 30 31 36 37 38 39 35 30 35 40
Improving Doing Business: Number of days to set up a company
Dynamic, Stable & Attractive Economy Population International Hub Structural Reforms
Turkey in 2012
30 25 20 15 10 5 6 13 15 18 18 20 23 27 0 Turkey UK Germany Russia Switzerland Czech Republic Japan India Spain Poland China
28
32 33
Source: World Bank Doing Business Reports

Structural Reforms: Yielding Results & Increasing Competitiveness
Global Competitiveness Index
Dynamic, Stable & Attractive Economy Population International Hub Structural Reforms
Year 2004 2005 2006 2007 2008 2009 2010 2011 2012
Number of Countries
104 117 125 131 134 133 139 142 144
Turkeys Rank
66 66 59 54 63 61 61 59 43
Turkeys Rank (Percentile)

63,5 56,4 47,2 41,2 47,0 45,9 43,9 41,5 29,8
Source: WEF

Increasing Confidence in the Turkish Economy
Investment Grade by Fitch in Nov 2012 Turkeys Sovereign Credit Ratings
S&P
Scale Jan 2010 Feb 2010 Scale
Moodys
Dec 2009 Jan 2010 Scale
Fitch
Dec 2009 Jan 2010 Nov 2012 Scale
JCR
January Februar 2010 y 2010
A2
ABBB+ BBB BBBBB+ BB BBB+ B BCCC+ CCC CCCSD

Source: Respective rating agencies
A3 Baa1 Baa2 Baa3 Ba1 Ba2 Ba3 B1 B2 B3 Caa1 Caa2 Caa3 Ca
ABBB+ BBB BBBBB+ BB BB- Turkey B+ B BCCC+ CCC CCCDDD D
Turkey Turkey
Turkey Turkey
Turkey Turkey
AAA+ AAA AAAA+ A ABBB+ BBB BBBBB+ BB BBB+ B BCCC CC C D
Turkey Turkey

1.600 1.400 1.200 1.000 800 600 400
Increasing Confidence in the Turkish Economy
5-Year CDS Spreads (basis point)

Portugal Ireland Spain Turkey Italy Greece (right axis)
40.000 35.000 30.000 25.000 20.000 15.000 10.000
200
0
Apr-10 Apr-11 Mar-10 Feb-11 Mar-11 Mar-12 Apr-12 Oct-10 Oct-11 Aug-10 Aug-11 May-10 May-11 May-12 Aug-12 Dec-09 Dec-10 Dec-11 Feb-10 Sep-10 Sep-11 Feb-12 Nov-09 Nov-10 Nov-11 Sep-12 Oct-12 Jul-10 Jul-11 Jan-10 Jan-11 Jun-10 Jun-11 Jan-12 Jun-12 Jul-12
5.000
0
Source: Bloomberg
INVESTMENT INCENTIVES IN TURKEY
1. General Incentive System

2. Incentives for Large Scale Investments 3. Regional Incentive System 4. Incentives for Strategic Investments 5. Employment Scheme 6. Research and Development Supports 7. State Incentives for Export
NEW INCENTIVE SYSTEM
1. General Incentives
2. Regional Incentives VAT Exemption Custom Duty Exemption Tax Deduction Employers share for insurance premium payment Land provision Interest Support (except 1st and 2nd regions)
3. Incentives for large-scale Investments
4. Incentives for Strategic Investments
VAT Exemption Custom Duty Exemption
VAT Exemption Custom Duty Exemption Tax Deduction Employers share for insurance premium payment Land provision
VAT Exemption Custom Duty Exemption Tax Deduction Employers share for insurance premium payment Land provision Interest Support VAT Refund
In the 6th Region; income withholding tax and employees share for insurance premium payment

Regional Incentive Map
The Agency
The Agency
The Agency
Attached to the Prime Ministry and reports directly to the Prime Minister Private sector approach Multi-lingual, professional and dedicated project directors ONE STOP SHOP
2 offices (Ankara Istanbul)

Result oriented The EU Negotiation Progress Report shows that the establishment of the Agency is a proof for improvement of the investment climate in Turkey
The Agency The International Network
International representatives network worldwide and strategic partners in Turkey (Embassies, Consulates, Commercial Attaches, NGOs etc)
The Agency
WORLD BANKs GLOBAL INVESTMENT PROMOTION BENCHMARKING REPORT 2009
Among 181 National Investment Promotion Agencies, INVESTMENT SUPPORT and PROMOTION AGENCY of TURKEY ranked as; 15th in the World in terms of General Performance Assessment 5th in the World and 2nd in Europe in terms of Inquiry Handling
The
n TUR KEY Agency
for all potential investors!
Some International Investors in ICT & Electronics
Some International Investors in FMCG & Retail
Some International Investors in Different Sectors
Why Turkey?
Enjoy your potential in Turkey
Why Turkey?
According to the projection by Goldman Sachs, Turkey will be the 9th largest economy in the world and the 3rd largest economy in Europe by 2050. 1.China 2.U.S.A. 3.India 4.Brasil 5.Russia 6.Indonesia 7.Mexico 8.U.K. 9.Turkey 10.Japan
Source: Goldman Sachs, 2008
Why Turkey?
The Most Promising Sectors

Automotive ; Target to produce over 2 mio vehicles within 5 years
Transportation; Highway capacity planned to be trippled up until 2023 with 12 different project Real Estate; Third most attractive real estate investment destination in 2012 (AFIRE); Istanbul is the most attractive real estate investment market in 2012 (PwC, ULI); $22 billion FDI over past 9 years.
Finance; Resillent to the global financial crisis with strong regulatory and supervisory framework, the most attractive sector with $36 billion FDI in the past 7 years; more opportunties with Istanbul Finance Center
Energy; Strategic location for energy terminal and corridor; rapidly growing demand: over $100 billion investment is needed to meet the demand till 2023; privatization and diversification opportunities.
ICT; Fastest growing IT companies in the region are from Turkey, 27 of the 500 fastest growing tech companies in EMEA are Turkish. 2011 winner: Logic Biliim (5-year revenue growth of 28,617% with 412% CAGR).
ON
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REPUBLIC OF TURKEY PRIME MINISTRY

Investment Support and Promotion Agency of Turkey

Investment Climate in Turkey

Combination of contemporary and traditional

Home of many successful people

What about the investment opportunities

Turkey with some key figures

The largest youth population when compared to the EU countries

50 million internet users (2011)

65 million GSM users (2011)

51 million credit card users (2011)

International Tourist Arrivals

Source: UNWTO ;*Ministry of Culture and Tourism

Soaring FDI Inflows

FDI Inflows ($ billion)

Number of Companies with Foreign Capital

35 30 25 20 18,7 15 11,7 5,6 6,7 8,8 23,7 21 25,5

1923-2002 (80 years)

Source: Central Bank of Republic of Turkey & Ministry of Economy

Source: A.T. Kearney

Top reasons to invest in Turkey

Top reasons to invest in Turkey

Benchmarking Performance of the Turkish Economy

400 300 200 248 239 215

6 5,2 5 4 3 4,8 4,7 4,6

Annual Average Real GDP Growth (%) 2002-2011

Source: IMF World Economic Outlook, April 2012;

Top reasons to invest in Turkey

Benchmarking Performance of the Turkish Economy

9,2 8,5 7,5 6,3

Fastest growing economy in Europe

Top reasons to invest in Turkey

Average Annual Real GDP Growth (%) Forecast in OECD 2012-2017

3,1 2,8 2,8

1,7 1,3 1,2

The fastest growing economy among the OECD countries

Top reasons to invest in Turkey

Potential of the Turkish Economy

Dynamic, Stable & Attractive Economy

GDP Per Capita Nominal (USD)

Population Age Labor Force GDP International Hub Structural Reforms

10.022 9.240 8.559

Top reasons to invest in Turkey

6,8 4,4 3,7 2,8

Top reasons to invest in Turkey

Real Increase (%) in Household Income 2002-2011

Percentage Increase in Decile (10%) Income Groups

34,2 29,7 27,4 21,2 top income group

Top reasons to invest in Turkey

Emergence of a new middle-class

Dynamic, Stable & Attractive Economy

2011 911 16,1 118 6 129,4 657

Population Age Labor Force GDP & Income

Top reasons to invest in Turkey

Household Liability % of GDP

10 0 Turkey Euro Area USA

Top reasons to invest in Turkey

Stability and High Performance in the Economy