Turkey: Land of Opportunities

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Turkey: Land of Opportunities

  1. 1. TURKEY: LAND OF OPPORTUNITIESApril 26, 2012Mehmet ŞimşekMinister of Finance1
  2. 2. OutlineNear-Term Outlook forTurkish EconomyChallenges and RisksInvestment Opportunities2
  3. 3. Near-Term Outlook for Turkish EconomySoft LandingRebalancingBack to High Growth3
  4. 4. Attaining a moderate growthNarrowing current account deficitSoft Landing4
  5. 5. Very Strong Recovery, butsome moderation is neededSource: TURKSTATRealGDP(s.a,,2008Q1=100)9510087111808590951001051101152007-Q1Q2Q3Q42008-Q1Q2Q3Q42009-Q1Q2Q3Q42010-Q1Q2Q3Q42011-Q1Q2Q3Q45
  6. 6. 13weekmovingavg.,y-on-y%Moderate Credit GrowthSource: Central Bank of Capital.Note: Adjusted for exhange movements.Managing a Soft Landing15,80102030405060OcakŞubatMartNisanMayısHaziranHaziranTemmuzAğustosEylülEkimKasımAralık2012 2011 2007-2011 AverageJan.Feb.Mar.Apr.May.Jun.Jun.Jul.Aug.Sep.Oct.Nov.Dec.6
  7. 7. Industrial Production is Softening, butleading indicators point to recovery in Q2Source: TURKSTATYear-on-Year(%)-25-20-15-10-505101520252007-147102008-147102009-147102010-147102011-147102012-1 7
  8. 8. Composite Leading IndicatorSource: Central Bank of Turkeydoes NOT point to hard landing7075808590951001051101152007-13579112008-13579112009-13579112010-13579112011-13579112012-138
  9. 9. Real Sector Confidenceedging upSource: Central Bank of Turkey 94050607080901001101201302007-13579112008-13579112009-13579112010-13579112011-13579112012-13
  10. 10. -1011223344Oca.08Mar.08May.08Tem.08Eyl.08Kas.08Oca.09Mar.09May.09Tem.09Eyl.09Kas.09Oca.10Mar.10May.10Tem.10Eyl.10Kas.10Oca.11Mar.11May.11Tem.11Eyl.11Kas.11Oca.12Job Creation Supportive of GrowthSource: TURKSTATAdditionalEmploymentSince2007(MnPeople,s.a.)10
  11. 11. UnemploymentRate,s.a.(December2007=100)80901001101201301401502007-12482008-12482009-12482010-12482011-12Source: Eurostat, TURKSTATEuro AreaTurkeyEU 27Unemployment at decade low11
  12. 12. Rebalancing12
  13. 13. 15,05,9-5,21,9-6-149141H -2011 2H -2011Domestic Demand Net ExportsRebalancing GrowthContributiontoGrowth,%Source: TURKSTAT13
  14. 14. Current Account Deficit is Large, but12-mC/A(USDmn)Source: Central Bank of Turkey-80.000-70.000-60.000-50.000-40.000-30.000-20.000-10.000010.00020.0002002-1592003-1592004-1592005-1592006-1592007-1592008-1592009-1592010-1592011-1592012-1Overal C/A Non-Energy C/A14narrowing
  15. 15. REER is still supportive of adjustmentSource: Central Bank of Turkey2003=10080901001101201301401502003-147102004-147102005-147102006-147102007-147102008-147102009-147102010-147102011-147102012-1CPI Based REERCPI (Developing Countries) Based REERCPI (Developed Countries) Based REER15
  16. 16. Main Challenges and RisksMain ChallengeManaging & fixingcurrent accountimbalanceRisksHigh international oilpricesGeopolitical risksEurozone debt crisis16
  17. 17. Managing & Fixing Current Account DeficitRemedies•Short-Term•Medium-Term•Long-Term17
  18. 18. Short-Term RemediesTightMonetaryPolicyAbandoningReciprocityImprovingInvestmentClimate18
  19. 19. Medium-TermNewInvestmentIncentiveSchemeMoving upthe ValueChainIncreasingSavingsReducingDependencyon ImportedEnergy19
  20. 20. New Investment Incentive SchemeObjectives:- Reduce regional development gaps- Reduce current account deficit- Promote efficient allocation of resources to high value-added investmentsGeneralIncentivesRegionalIncentivesIncentives forLarge ScaleProjectsIncentives forStrategicInvestments20
  21. 21. Strategic InvestmentsCorporate Tax ReductionIncome Tax ReductionSocial Security Premium ReliefAllocation of Investment LandInterest Rate SubsidyVAT RefundVAT ExemptionCustoms Duty Exemption21
  22. 22. Boosting R&D InnovationCreatingBrand NamesMoving up the Value Chain22
  23. 23. Why is R&D so significant for us?The share of high and medium-hightechnology sectors in production and inexport is lowBoosting R&DSource: Ministry of Development27,672.435,664.401020304050607080High and Medium-High Low and Medium-LowProduction Export23
  24. 24. •0.842010•0.532002R&D spending to GDP rose by 58 %Source: The Scientific and Technological Council of Turkey24
  25. 25. Industrial Design Applications36,578 applications in 2011Up by 80 % since 2002Ranking 3rd in EuropeSource: TPI25
  26. 26. Trademark Applications• 36,5782002• 117,4442011Source: Turkish Patent Instıtute26
  27. 27. Increasing Savings27
  28. 28. New incentives for deepening FinancialMarketsMeasures to extend the Maturity ofDepositsEnhancing the status of Istanbul as aRegional Financial Center28Increasing Savings
  29. 29. Incentives for venture capitalIncentives for business angels29
  30. 30. Reducing Dependency on Imported Energy30
  31. 31. Source: Ministry of Development, BloombergHigh & Rising Energy Imports(BrentType,Dollar/Barrel)EnergyImports(BillionDollars)02040608010012001020304050602002 2003 2004 2005 2006 2007 2008 2009 2010 2011Energy Import Oil Prices9235411131
  32. 32. Investments in EnergyCurrent installed capacity: 53,360 MWUnder Construction: 40,035 MW• Hydro Carbon: 19,492 MW• Hydroelectric Power Plant: 15,582 MW• Other Renewables: 4,958 MWTOTAL: 93,595 MW32
  33. 33. Long-TermImprovingQuality ofHuman CapitalEnhancingPhysicalInfrastructureIncreasingLaborUtilization33
  34. 34. Improving Quality of Human Capital34
  35. 35. We againallocated thelargest shareto education inthe 2012budget.Resources Allocated to EducationSource: Ministry of FinanceEducation is our priority.BillionTL35
  36. 36. Improving Girls’ Education2002 201191 girls per100 boys100.4 girls per100 boys36
  37. 37. Improving Quality of EducationWith Fatih Project, we are providing our children withBroadband Internet AccessSmart BoardsTablet PCsOther Information Technology Tools37
  38. 38. Enhancing Physical Infrastructure38
  39. 39. 1,714 KmTotal of Motorways4,387 KmTotal of State andProvincial DualCarriagewaysTotal: 6,101 KmDual CarriagewayNetwork(January 1, 2003)2,236 KmTotal of Motorways18,991 KmTotal of State andProvincial DualCarriagewaysTotal: 21,227 KmDual CarriagewayNetwork(March 15, 2012)Before 2003, only 6 cities were connected to each other via dual carriageway. Now, we have 74 cities21,227 Km3,125 Km3,061 Km27,413 KmDual carriageways put into serviceDual carriageways under constructionDual-carriageways to be put out to tenderTotal39
  40. 40. Investing in Railways AgainPRE-REPUBLIC RAILWAY NETWORK 4,136 km MAINLINEEARLY YEARS OF THE REPUBLIC (1923-1950) 3,764 km MAINLINE (134 km on annual average)1951-2002 945 km MAINLINE (18 km on annual average)2003 DEN GÜNÜMÜZE KADAR (2010 dahil) 1.076 km ANAHAT (Yılda Ortalama 135 km)UNDER CONSTRUCTION 2,047 km MAINLINE2003-2010 1,076 km MAINLINE (135 km on annual average)İSTANBULEDİRNEESKİŞEHİRPOLATLIANKARAKONYAİZMİRSİVASAFYONKAYSERİBURSA ERZİNCANERZURUMKARSMERSİNADANA GAZİANTEPDİYARBAKIRELAZIĞMALATYAZONGULDAKSAMSUNBANDIRMAVANTATVAN2010 : 11.940 km ( Konvansiyonel + Yüksek Hızlı )AdapazarıSource: Ministry of Transport2010:11.940 km (Conventional+High Speed)40
  41. 41. High Speed Railway Projects41İSTANBULESKİŞEHİR POLATLIANKARAKONYASİVAS212km533km405kmYOZGATHST Lines under Construction: ESK-İST and ANK-SİVASCompleted High Speed Train (HST) Lines: ANK-Eskişehir and ANK-KonyaYerköyHST at tender phase : Ankara-İzmir and Ankara-BursaAFYONİZMİRMANİSA 624kmBURSABİLECİK110 km
  42. 42. Passenger Traffic at the AirportsNumber of FlightsSource: General Directorate of State Airports Authority0200.000400.000600.000800.0001.000.0001.200.0001.400.0002003 2011154.218292.816218.405462.881156.582579.488529.2051.335.185Overflıght International Domestic Total020.000.00040.000.00060.000.00080.000.000100.000.000120.000.000Domestic International9.147.43958.258.32425.296.21659.362.14534.443.655117.620.469Domestic International Total42
  43. 43. Increasing Labor Utilization43
  44. 44. 44010203040506070OECD Turkey61,827,2Source: TURKSTATEnhancing the Employment of WomenLabourForceParticipationRate(women)
  45. 45. Putting our House in OrderCombattingcorruptionCreating a levelplaying fieldImprovinginternationalcompetitiveness45
  46. 46. Combatting CorruptionCorruption Perceptions Index020406080100120140160TURKEYITALYBRAZILCHINAGREECEINDIAARGENTINAINDONESIAMEXICORUSSIA616973 758095 100 100 1001432011(among 183 countries)2002(among 102 countries)0102030405060708090100ITALYGREECEBRAZILMEXICOCHINATURKEYARGENTINAIDNIARUSSIAINDONESIA3144 455859 657073 7496Source: Transperancy Intenational46
  47. 47. 020406080100120ITALYMEXICOARGENTINARUSSIAGREECECHINATURKEYINDONESIAINDIABRAZIL707377 79 8091 93115 116 119020406080100120140MEXICOTURKEYITALYCHINAGREECEARGENTINARUSSIABRAZILINDONESIAINDIA537187911001131201261291322006(among 155 countries)2012(among 183 countries)Source: World Bank 47Creating A Level Playing FieldEase of Doing Business
  48. 48. 0102030405060708090CHINAITALYINDONESIABRAZILINDIAMEXICOTURKEYRUSSIAARGENTINAGREECE2643465356 5859668590Within the period of 2005-2012, Turkey has ranked higher than Russia, Argentina and Greece.2005(among 125 countries)2012(among 142 countries)01020304050607080ITALYINDIAGREECECHINARUSSIAARGENTINABRAZILMEXICOINDONESIATURKEY384547485354 57596971Source: World Economic Forum48Improving International CompetitivenessGlobal Competitiveness Index
  49. 49. We are Making ProgressSource: TreasuryNumberofCompanieswithInternationalCapital(Cumulative,inThousands)5,66,78,811,71516,219,322,125,429,4 29,6051015202530352002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Feb49Over 2200 British Companies
  50. 50. Foreign Direct Investment InflowsSource: Central Bank of TurkeyBilliondollar14,8109,60204060801001201980-2002 2003-201150
  51. 51. EU  Engine of Change51
  52. 52. When the Two Worlds MeetCombining expertise = Attractive opportunities52A Dynamic Emerging Market An Innovative Mature Economy
  53. 53. Significant Opportunities & Broad Range of SectorsFinancial Services (Fund Management, etc)Green Technologies (Energy, Environment & Water)InfrastructureEducation & TrainingAutomotiveHealth CareITT53
  54. 54. Let’s Do More Business Together54We can do better togetherAfricaMiddle EastCentral AsiaBalkans

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