Building İstanbul as a Key Financial Center

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Building İstanbul as a Key Financial Center

  1. 1. BUILDING ISTANBUL AS A KEY FINANCIAL CENTERMay 9, 2012Mehmet ŞimşekMinister of Finance1
  2. 2. OutlineREBALANCING ON GOINGISTANBUL AS A FINANCIAL CENTERSHORT-TERM OUTLOOK FOR TURKISH ECONOMYManagingSoft LandingRebalancing2
  3. 3. MANAGING A SOFT LANDING3
  4. 4. Very Strong Recovery, butResim şu anda görüntülenemiyor.ModeratingSource: TURKSTATRealGDP(s.a,,2008Q1=100)9510087111808590951001051101152007-Q1Q2Q3Q42008-Q1Q2Q3Q42009-Q1Q2Q3Q42010-Q1Q2Q3Q42011-Q1Q2Q3Q44
  5. 5. 13weekmovingavg.,y-on-y%A Moderate Credit GrowthSource: Central Bank of Turkey.Note: Credit Growth is adjusted for exhange movements.Pointing to a Soft Landing18,80102030405060OcakŞubatMartNisanMayısHaziranHaziranTemmuzAğustosEylülEkimKasımAralık2012 2011 2007-2011 AverageJan.Feb.Mar.Apr.May.Jun.Jul.Aug.Sep.Oct.Nov.Dec.5
  6. 6. Industrial Production is Softening, but…Source: TURKSTATIndustrialProduction(y-on-y,%)6-30-20-1001020302007-13579112008-13579112009-13579112010-13579112011-13579112012-13
  7. 7. Composite Leading IndicatorSource: Central Bank of Turkeypoints to Recovery in Q270851001152007-12008-12009-12010-12011-12012-17
  8. 8. Real Sector Confidence is RisingSource: Central Bank of Turkey 8507090110130 2007-12008-12009-12010-12011-12012-1
  9. 9. Job-Creating GrowthSource: TURKSTATAdditionalEmploymentsinceend-2007(MnPeople,s.a.)920.00021.00022.00023.00024.00025.0002008-12009-12010-12011-12012-1
  10. 10. UnemploymentRate,s.a.(December2007=100)80901001101201301401502007-122008-122009-122010-122011-12Source: Eurostat, TURKSTATEuro AreaTurkeyEU 27Unemployment at decade low10
  11. 11. REBALANCING11
  12. 12. Rebalancing GrowthContributiontoGrowth,y-on-y%Source: TURKSTAT1216,713,49,42,4-5,2 -5,10,53,2-6-149142011-Q1 2011-Q2 2011-Q3 2011-Q4Domestic DemandNet ExportsNet Exports from being a drag to a positive contributor
  13. 13. Current Account Deficit…12MonthRolling,USDbnSource: Central Bank of Turkey13Large but Narrowing-80-70-60-50-40-30-20-10010202000-12001-12002-12003-12004-12005-12006-12007-12008-12009-12010-12011-12012-1Current AccountNon Energy Current Account
  14. 14. Exports Remain Robust; Imports are Slowing DownSource: TURKSTAT12MonthRolling,y-on-y%-5-4-3-2-10123452008-12009-12010-12011-12012-1Export Import14
  15. 15. With a Healthier Composition of ImportsSource: TURKSTAT12MonthRolling,USDbn15Declining consumption; Robust investment1520253035402008-13579112009-13579112010-13579112011-13579112012-13Capital GoodsConsumption Goods
  16. 16. Improving Terms-of-Trade1688899091929394952011-1234567891011122012-12
  17. 17. REER still Supportive of AdjustmentSource: Central Bank of Turkey808590951001051101151201252003-12004-12005-12006-12007-12008-12009-12010-12011-12012-1Period AverageCPI-DevelopingCountries-BasedREER(2003=100)17
  18. 18. Europe56,6%Other43,4%Exports 200218Diversifying away from Europe?Europe42,6%Other57,4%Exports Feb-2012Source: TURKSTAT
  19. 19. Source: TURKSTATMENA: the new kid on the block1912,126,60510152025302002 2012-Q1ExportstoMENA(%ofTotal)
  20. 20. 832051015202530352000 2011Source: TURKSTATExport DiversificationNumber of Products over $1 billion20
  21. 21. 530051015202530352000 2011Source: TURKSTATNumber of Countries over $1 billion21Export Diversification
  22. 22. ISTANBUL AS A FINANCIAL CENTER22
  23. 23. Strengthening the legal frameworkImproving physical infrastructureSimplifying tax systemProviding financial educationThe Project23Main Objective: Deepening Financial Markets
  24. 24. Strengthening the Legal FrameworkEnhancing regulatory and supervisory frameworkAdopting the best global practices & the EU acquisBuilding institutions24No need to re-invent the wheel
  25. 25. Improving physical infrastructureIstanbul is a 24-7 living city• An exciting place to live & work• Largest city in Europe• History of 8000 years• Work in progress to tackle the trafficPurpose-built financial center• 2.5 million m2 area in Atasehir25
  26. 26. Simplifying tax systemBuilding a Simple and Effective Tax system• Boosting competitiveness• Widening tax base• Increasing tax predictability• Reducing tax rates on financial transactions &intermediation• Unifying tax burden on similar financial transactions26
  27. 27. Improving Financial LiteracyState run programs in countrieslike Australia, Japan, USA & UK27It is all about perception• Stock market – not a casino?• Financial education is key to making informed andeffective decision
  28. 28. Istanbul as a Financial CenterFinancial sector currently employs 200 thousand peopleIstanbul Finance Center is likely to add 150 thousand28
  29. 29. NEW INCENTIVES FOR ISTANBULFINANCIAL CENTER29
  30. 30. Boosting Asset Management in IstanbulVenture CapitalBusiness AngelsIncreasing Private Pensions30
  31. 31. Incentives for Global Fund ManagersA tax free environment for Global Funds31Making it easier to manage assets in Turkey
  32. 32. Incentives for Venture Capital• 10% of VC Revenues• 20% of VC CapitalAllowing Venture Capital to be deducted fromCorporate & Personal Income Tax Base, up to32Tax Relief from Dividends
  33. 33. Incentives for Business Angels3375% income tax relief onAngel Capital100% tax relief forR&D and InnovationIncome & Withholding TaxRelief on divestment of stocks
  34. 34. SukukGlobal issuance: $170 bnTreasury plans to issue SukukSimilar to euro bonds, international holders ofSukuk will not be subject to withholding tax34
  35. 35. Increasing Private Pensions25% State ContributionThe longer you stay in the privatepension, the more is the Statecontribution.35
  36. 36. THANK YOU…36

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