World Investment Conference (WAIPA)

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World Investment Conference (WAIPA)

  1. 1. Turkey’s Economic & Investment Outlook May 14, 2014 Mehmet Şimşek Minister of Finance 1
  2. 2. Economic Outlook Investment Opportunities Long-Term Prospects Outline 2
  3. 3. Real GDP Source: Turkstat, Eurostat 120 100,0 85 90 95 100 105 110 115 120 Q1-08 Q2 Q3 Q4 Q1-09 Q2 Q3 Q4 Q1-10 Q2 Q3 Q4 Q1-11 Q2 Q3 Q4 Q1-12 Q2 Q3 Q4 Q1-13 Q2 Q3 Q4 RealGDP(2007Q4=100,s.a.) 3
  4. 4. Real GDP: Turkey vs AMs Source: Turkstat, Eurostat *Poland, Romania, Hungary, Bulgaria, Croatia, Lithuania, Latvia 120 98 100,0 106 85 90 95 100 105 110 115 120 Q1-08 Q2 Q3 Q4 Q1-09 Q2 Q3 Q4 Q1-10 Q2 Q3 Q4 Q1-11 Q2 Q3 Q4 Q1-12 Q2 Q3 Q4 Q1-13 Q2 Q3 Q4 RealGDP(2007Q4=100,s.a.) TURKEY US Euro Area 4
  5. 5. 5 Real GDP: Turkey vs EMs Source: TURKSTAT, IMF 168,8 100,0 152,8 153,0 180,4 159,0 143,8 95 105 115 125 135 145 155 165 175 185 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Turkey Emerging & Developing Europe LatAm. & the Caribbean Developing Asia excl. China & India Russia South Africa TURKEY RealGDP(2002=100)
  6. 6. Upside • Stronger external demand • EU pulling out of recession • Arab Spring becoming less disruptive • TL depreciation Downside • Tighter financial conditions • Geopolitical tensions Growth Outlook 6
  7. 7. Domestic Demand 7 Source: Turkstat, BRSA 0 5 10 15 20 25 30 35 40 45 55 60 65 70 75 80 85 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Consumer Confidence (Left) Total Credit Growth (Right) (Annual,%) (Index)
  8. 8. 8 Source: Bloomberg, Turkstat Index(monthly) (6monthrolling) 20 22 24 26 28 30 32 34 36 30 35 40 45 50 55 60 65 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Eurozone Manufacturing PMI Turkey's Exports to Europe External Demand
  9. 9. Manufacturing Output 9 Note: INDEX= 100 : A stable outlook to the economic activity by the real sector agents covered by the Business Tendency Survey. INDEX > 100 : An optimistic outlook to the economic activity by the real sector agents covered by the Business Tendency Survey. INDEX < 100 : A pessimistic outlook to the economic activity by the real sector agents covered by the Business Tendency Survey. Source: Turkstat, CBT 100 80 85 90 95 100 105 110 115 120 125 130 55 60 65 70 75 80 85 90 95 100 105 110 115 120 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Real Sector Confidence Index (Left) (s.a.) Industrial Production (Right) (s.a.)
  10. 10. PMI remains above 50 10Source: HSBC 51,150,0 30 35 40 45 50 55 60 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14
  11. 11. Job Creation Employmentsince2007(mnpeoples.a.) Source:TURKSTAT 11 26,1 20 21 22 23 24 25 26 27 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14
  12. 12. Unemployment & Labor Participation Rate Source:TURKSTAT 45 46 47 48 49 50 51 52 8 9 10 11 12 13 14 15 16 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 Unemploymen Rate (Left Axis) Labor Force Participation Rate (Right Axis) (s.a.,%) (s.a.,%) 12
  13. 13. Inflation 0 20 40 60 80 100 120 140 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: TURKSTAT (CPI,Annual,%) 13
  14. 14. CBRT’s Inflation Outlook 14 Inflation is to resume downward trend as base effects fade Source: CBRT
  15. 15. Upside • TL Depreciation • Unprocessed food prices Downside • Monetary Tightening • Output Gap • Recent Macroprudential Measures Inflation Outlook 15
  16. 16. (%) Tight Monetary Policy Source: CBRT 16 8,00 12,00 10,00 3 5 7 9 11 13 15 Oct-11 Oct-11 Nov-11 Dec-11 Jan-12 Jan-12 Feb-12 Mar-12 Apr-12 Apr-12 May-12 Jun-12 Jul-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Nov-12 Dec-12 Jan-13 Jan-13 Feb-13 Mar-13 Apr-13 May-13 May-13 Jun-13 Jul-13 Aug-13 Aug-13 Sep-13 Oct-13 Nov-13 Nov-13 Dec-13 Jan-14 Feb-14 Feb-14 Mar-14 Apr-14 CBRT Funding Rate O/N Borrowing O/N Lending Policy Rate
  17. 17. (%) 17 Kaynak: TCMB Interest Rates on Turkish Lira Bank Loans 7 9 11 13 15 17 19 21 23 25 27 29 January-08 April-08 July-08 October-08 January-09 April-09 July-09 October-09 January-10 April-10 July-10 October-10 January-11 April-11 July-11 October-11 January-12 April-12 July-12 October-12 January-13 April-13 July-13 October-13 January-14 April-14 Personal Vehicle Housing Commercial
  18. 18. Macroprudential Measures • Single limit for all credit cards • Higher minimum payment • Limit on # of installments Credit card loans • Higher risk weighting for consumer loans Consumer loans • Compulsory advance payment • Term limit for vehicle and consumer loans Auto & other consumer loans • Lower risk weighting for SME & export credits Other Loans 18
  19. 19. 10,8 7,9 4,1 0,1 -1,3 0,2 1,6 5,5 3,0 0,4 1,0 1,0 1,1 -2,0 0,0 2,0 4,0 6,0 8,0 10,0 12,0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Maastricht Criteria: 3% Achieved Maastricht Criteria except 2009 Source: Ministry of Development BudgetDeficit-to-GDP,% Low Deficit 19
  20. 20. Budget Deficit (2014) 20 Turkey has the 2nd smallest deficit in Europe (exlc. Estonia, Latvia & Luxembourg, three small European economies) Source: IMF, Ministry of Development BudgetDeficit-to-GDP(%,2014) -1,1 -7 -6 -5 -4 -3 -2 -1 0 1 Spain Slovenia UK Cyprus Ireland Croatia Portugal Slovak Rep. France Poland Malta Austria Netherlands Hungary EU Czech Rep. Italy Greece Finland Euro Area Belgium Romania Bulgaria Lithuania Denmark Sweden TURKEY Latvia Estonia Germany Luxembourg Maastricht Criteria: 3%
  21. 21. 74,0 67,7 59,6 52,7 46,5 39,9 40,0 46,1 42,3 39,1 36,2 36,3 33,0 25 30 35 40 45 50 55 60 65 70 75 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Lower Public Debt Debt-to-GDP,% Satisfying Maastricht Criteria since 2004 Maastricht Criteria: 60% Source: Treasury 21
  22. 22. Public Debt (2014) Source: IMF, OECD, Treasury Debt-to-GDP,% 111,8 89,0 33,3 33,0 20 30 40 50 60 70 80 90 100 110 120 OECD EU EMs Turkey 22
  23. 23. Turkey’s Soft Spot 23
  24. 24. Current Account Deficit Source: CBRT 24 (12MonthRolling,USDbn) -80 -60 -40 -20 0 20 40 Jan02 Jul02 Jan03 Jul03 Jan04 Jul04 Jan05 Jul05 Jan06 Jul06 Jan07 Jul07 Jan08 Jul08 Jan09 Jul09 Jan10 Jul10 Jan11 Jul11 Jan12 Jul12 Jan13 Jul13 Jan14 Current Account Current Account excluding Energy Current Account excluding Energy and Gold Net Gold Exports • 2011: -$4.8 billion • 2012: +$5.7 billion • 2013: -$11.8 billion • 2014 Jan-Mar: $1.7 billion
  25. 25. Factors behind high C/A Deficit (2011-13) Strong domestic demand Euro crisis High energy prices Arab Spring 25
  26. 26. Turkey's FX Position Source: CBRT, BRSA, Treasury * Assets: CBRT FX Deposits of Treasury+ CBRT Foreign Assets; Liabilities= Public gross external debt+CBRT Liabilities to Non Residents. Data from CBT dated 8 May., 2014; data from gross external debt stock as of Q4-13 ** Data – Mar. 2014 *** Data - Jan 2014 **** Data - Mar. 2013 *****Data-02.05.2014 Billion $ Assets Liabilities Net Position Public Sector* 138,2 122,8 15,4 Banking Sector** 472,1 470,4 1,7 Real Sector*** 92,7 265,4 -172,8 Short Term 77,3 94,2 -16,9 Household**** 191,0 0,5 190,5 FX Deposit ***** 84,5 26
  27. 27. Firms Source: CBRT No FX Loans 63% FX Loan w/ export earning 25% FX Loan w/o export earning 12% 9,500 firms Total net sales at 71% of GDP. 27
  28. 28. Firms: SMEs and Large Companies Greater amount of FX debt belongs to LARGE COMPANIES 80% out of the 57% of large companies w/ FX debt have export earnings Source: CBRT 28
  29. 29. Households: Low Leverage Source: CBRT, ECB (HouseholdLiabilities,%ofGDP,June2013) No FX exposure 65 23 20 40 60 80 100 120 140 Denmark Netherlands Ireland United Kingdom Portugal Sweden Spain Finland Euro Area Greece Malta Germany France Luxembourg Belgium Austria Italy Estonia Poland Czech Republic Latvia Slovenia Hungary Slovakia Lithuania Turkey 29
  30. 30. Banks: Safe & Sound CapitalAdequacyRatio,% 2002 Mar-14 17,6 2,8 NPLRatioofLoans(%) 15,7 0 5 10 15 20 25 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 Legal Rate: %8 Target Rate 12% Source: BRSA 30
  31. 31. Turkey’s Banks - among the Strongest in EMs 31 Source: World Bank
  32. 32. Source: World Bank, IMF, BRSA Banking Sector: Able to Absorb Shocks Arm Br Bul Col Cro Egy Fr Gre Indo Ire Ita Latv Leb Lith Mex Phil Pol Rom Rus Serb SoAf Sp Tu Ukr Venz 8 10 12 14 16 18 20 22 0 50 100 150 200 250 Private Credit/GDP (%) CAR(%) 32
  33. 33. Investment Opportunities 33
  34. 34. Investment Opportunities 34 Privatizations Finance Energy Transportation Health Education Textiles Machinery Equipment Tourism Agriculture Housing R&D
  35. 35. Privatization Agenda 35
  36. 36. Privatization Agenda: Games of Chance Total market in 2013, $1.1 billion 36 * Distribution of total revenue gained from games of chance.
  37. 37. Privatization Agenda Distribution of networks : $12,7 bn Thermal power plants • 2,213 MW privatized • 8,000 MW in privatization portfolio, incl. powerplants in tender process 37
  38. 38. Privatization Agenda: Thermal Power Plants Kemerkoy Yenikoy Çatalağzı Yatağan 38
  39. 39. Privatization Agenda: Kemerkoy Kalamış Derince Ports 39
  40. 40. Muğla-Bodrum 483 th m2 Isparta-Eğirdir 360 th m2 Antalya- Alanya 237 th m2 İstanbul-Kadıköy 34 th m2 Aydın-Didim 33 th m2 İstanbul-Büyükçekmece 22 th m2 Various Real Estates 40 Privatization Agenda: Real Estate
  41. 41. Financial Markets 41
  42. 42. Turkish Financial Sector Share of Banks in Financial Sector 87.4% 42Source: Central Bank of Republic of Turkey Insurance Companies and Pension Mutual Fund 4.7% Other Financial Institutions 8.0%
  43. 43. Recent Bank Licenses Rabo Bank (2013) Bank of Tokyo Mitsubishi (2012) Bank Audi (2011) 43
  44. 44. Is Turkey under banked? Conventional, maybe? Islamic, probably not 44
  45. 45. 2009 72nd 2014 47th 2018 25th Global Financial Centres Index Source: Global Financial Centres Index 15 45 47 60 63 70 75 77 20 30 40 50 60 70 80 Rio de Jeneiro ISTANBUL Warsaw Mauritius Mexico Prague Budapest (2014)
  46. 46. Sukuk 46 Sep-12: Sukuk issued for $1.5bn in international market Oct-12: Sukuk denominated in TL issued for TL1.6bn Feb-13: Sukuk issued for TL1.5bn Aug-13: Sukuk issued for TL1.8bn Oct-13: Sukuk issued for $1.3bn Feb-14: Sukuk issued for TL1.3bn Similar to eurobonds, internt’l holders are not s.t. w/holding tax
  47. 47. Increasing Savings: Private Pensions 25% State Contribution 1.4 million new participants and TL7.7bn funds since end-2012 47
  48. 48. Average Insurance Spending 48 69 134 40 50 60 70 80 90 100 110 120 130 140 2004 2011 Source: OECD *Direct gross premiums, life and non-life insurance dollarpercapita
  49. 49. Incentives for Global Fund Managers A tax free environment for Global Funds Making it easier to manage assets in Turkey 49
  50. 50. Incentives for Venture Capital Allowing contributions to Venture Capital to be deducted from Corporate & Personal Income Tax Base, up to • 10% of VC Revenues • 20% of VC Capital Tax Relief on Dividends 50
  51. 51. Incentives for Venture Capital Allowing contributions to Venture Capital to be deducted from Corporate & Personal Income Tax Base, up to • 10% of VC Revenues • 20% of VC Capital Tax Relief on Dividends 51
  52. 52. Incentives for Business Angels 52
  53. 53. Energy 53
  54. 54. High Dependence on Energy Imports 72% Total Energy 92% Oil 98% Natural-Gas 54
  55. 55. Source: TURKSTAT, Bloomberg Energy Import Bill (Brent,$pbl) EnergyImports(BillionDollars) 55
  56. 56. Energy Prices to Trend down in the Long-Run BRIC slowing down Renewables Shale gas revolution Energy efficiency gains 56
  57. 57. Energy Prices 57 95 100 105 110 115 120 125 75 80 85 90 95 100 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Index,2010=100 Brent$/bbl,2010Prices Crude oil, avg spot (lhs) Energy Prices (rhs) Source: World Bank
  58. 58. Developing Local & Renewable Resources Source: Ministry of Energy and Natural Resources Electricity Generation Installed Capacity MW % of Total Current Installed Capacity (2013) 64,044 - Renewable Energy 25,596 40.0 Power Plants Under Construction 14,338 - Renewable Energy 10,804 75.4 In 3-to-5 years 78,382 - Renewable Energy 36,401 46.4 58
  59. 59. Renewable Energy OutlookOverthenext decadeinTurkey, • 20,000 MW, wind power generation • 3,000 MW, solar power plants • 600 MW, geothermal power plants • An energy stock market to be established 59
  60. 60. 60 0 6 12 18 24 2010 2011 2012 2013 Module Inverter Other Hardware Soft Cost Costofelectricity,centsperkWh Source: DOE/NREL The Falling Price of Utility-scale Polar Photovoltaic Projects
  61. 61. Turkey’s Solar Energy Potential Atlas 61
  62. 62. Building Nuclear Capacity Akkuyu: JW with Russia Sinop JW with a Japanese-French consortium Working on a 3rd plant 62
  63. 63. Improving Energy Efficiency Industry 20% Transportation 15% Construction 30% 63
  64. 64. Transportation 64
  65. 65. Transportation 2003-12: $75 billion invested 2013-23: $350 billion will be invested 65 Intensity of highway, motorway and railway networks in Turkey is about 1/5th of that in EU
  66. 66. 1,714 Km Total of Motorways 4,387 Km Total of State and Provincial Dual Carriageways Total: 6,101 Km January 1, 2003 2,244 Km Total of Motorways 20,807 Km Total of State and Provincial Dual Carriageways Total: 23,051 Km January 2014 66
  67. 67. İSTANBUL EDİRNE ESKİŞEHİR Polatlı ANKARA KONYA İZMİR SİVAS AFYONKARHİSAR KAYSERİ BURSA ERZİNCAN ERZURUM KARS MERSİN ADANA DİYARBAKIR ELAZIĞ MALATYA ZONGULDAK SAMSUN Bandırma VAN MUŞ BİLECİK ÇANKIRI KIRIKKALE TEKİRDAĞ İZMİT BALIKESİR AYDIN DENİZLİ BURDUR ISPARTA UŞAK MANİSA KARAMAN NİĞDE OSMANİYE K.MARAŞ AMASYA BATMAN MARDİN Yerköy KARABÜK Yenişehir 405 km 212 km 533 km 624 km 105 km Completed (888 km) Under Construction (1796 km) Bidding Phase (454 km) Project Phase (354 km) GAZİANTEP Çobanbey 67 High Speed Railway Projects
  68. 68. Future Railways Investments By 2023 $ 45 billion worth of investment 10,000 km worth of new high speed railway network 4,000 km of new conventional line 68
  69. 69. PPP in Ports Dalaman Marina Datça Marina Gazipaşa Marina Muğla-Ören Marina Kumkuyu Marina Karasu Port Project PPP in Projects under Construction 69
  70. 70. The 3rd Airport in Istanbul, Largest of All 150 million passengers An area of 90 million m2 Construction Cost: €10 billion Rent (25 Years): €22.2 billion 70
  71. 71. Projects of the Century - Under Construction Tube Tunnel 3rd Bridge Izmit Gulf Transit Istanbul-İzmir Highway High-Speed Train through Ankara-Bursa-Istanbul 71
  72. 72. Projects of the Century – Planned Channel Istanbul 72
  73. 73. Healthcare 73
  74. 74. Healthcare: Targets Increase the number of healthcare facilities Enhance the quality of the healthcare services Apply state-of-the-art technologies in the hospital management 74
  75. 75. Healthcare Expenditures Source: The Ministry of Finance 75
  76. 76. Medical Sector in Turkey 76 Turkey’s pharmaceutical market • 6th largest market in Europe • 16th largest in the world (in terms of sales in 2012)
  77. 77. • Rehabilitation centers • Thermal tourism facilities • Nursing houses • Health techno-cities • R&D centers The Ministry of Health is planning to open medical «Free Zones»,, 77 Medical Sector in Turkey
  78. 78. Tax Incentives in Healthcare 18% VAT down to 8% 50% tax relief on CIT & PIT for exports in healthcare PIT and CIT exemption for 5 years on proceeds gained from operating rehabilitation centers Regional Investment Incentives 78
  79. 79. PPP in Healthcare 79 Projects in Funding Phase • Kayseri • Ankara Etlik • Ankara Bilkent • İkitelli • Elazığ • Yozgat • Manisa • Adana • Mersin • Gaziantep • National Public Health Agency Projects in Funding Phase worth almost $6bn Projects in Tendering & Contract Phases • Isparta • Kocaeli • Eskişehir • Bursa • Konya Karatay • İzmir Bayraklı • İstanbul Bakırköy • İstanbul Üsküdar
  80. 80. Education 80
  81. 81. Education: Targets Improving access to and quality of education Having mandatory pre-school education FATiH: Furnishing each school with smart boards Reducing number of students per classroom below 30 Increasing the number of private schools & universities 81
  82. 82. Students (%, Total Population) 82Source: TURKSTAT, Eurostat Included Informal Education
  83. 83. Source: Ministry of Finance Share of Education Budget(%) 83
  84. 84. 12 Years of Mandatory Education Austral. Austria Belg. Canada Chile Czech R. Den. Estonia Finland France Italy Japan Lux Mex New Zeal. Poland Port. Spain Switz. TURKEY UK USA 6 7 8 9 10 11 12 13 14 9,5 9,7 9,9 10,1 10,3 10,5 10,7 10,9 11,1 11,3 11,5 AverageYearsatSchoolofPop’nover25Years Income per Capita (PPP, log) Source: OECD 84
  85. 85. Investment Incentives in Education 18% VAT down to 8% 50% tax relief on CIT & PIT for exports in education PIT and CIT exemption for 5 years on proceeds gained from education services 5th zone incentives for investments in pre-school, elementary, secondary and high school Allocation of public real estate to investors 85
  86. 86. From Crammer Schools to k12 Schools A flexible transition time Tuition support based on parent’s income $regional development Treasury land allocation up to 25 years. Lease of public schools & buildings appropriate for k12 education Eligible for new Investment Incentive Scheme 86
  87. 87. Build-Lease-Transfer Model in Education 40,000 additional classrooms by end-2016. 42 education campuses in 22 cities 87
  88. 88. Textiles 88
  89. 89. Textiles 89 Turquality subsidizes 50%-75% of expenditures Target: 10 Brand in 10 years 7th in the world Exportsintextilesector (Bn$) 7,1 11,1 4 5 6 7 8 9 10 11 12 2005 2012
  90. 90. Machinery Equipment 90
  91. 91. Machinery Equipment 91 The machinery industry in Turkey has been growing • 20% per year since 1990 • 30% per year since 2009
  92. 92. Machinery Equipment - Opportunities for Investors 92 Competitive input costs, esp in land & labor • China like wages in Southeast Anatolia Logistical advantages • Covers Europe, MENA, CEE, CIS & GCC w/in 3 hours of flight Entrepreneurial spirit Skilled labor, incl R&D readiness Targeted incentive programs Extensive supply basis with several regional clusters
  93. 93. Tourism 93
  94. 94. TouristArrivals (Millionpeople) 94 Tourism Source: Ministry of Culture and Tourism Turkey is currently the 6th most popular tourist destination in the world
  95. 95. 95 Tourism Source: Ministry of Culture and Tourism Turkey’sRankingintheWorld (w.r.t.NumberofTouristArrivals)
  96. 96. TourismIncomes(Bn$) 96 Tourism Income Source: TURKSTAT 12,4 13,9 17,1 20,3 18,6 20,9 25,4 25,1 24,9 28,1 29,0 32,3 10 15 20 25 30 35 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
  97. 97. Incentives on Investments in Tourism 18% VAT down to 8% PIT, CIT tax relief and other Incentives • Partial personal witholding tax relief • State contributions to social security premium • Allocation of public property • State contributions to water and energy costs Investment Incentives • Regional supports for hotel investments • 5th zone incentives investments on cultural tourism and investments in tourism preservation and development regions Loans offered by EXIMBANK 97
  98. 98. Agriculture 98
  99. 99. Agricultural GDP 2002 $23,7 billion 11th 2011 $61,8 billion 7th 2023 $150 billion 5th Source: World Bank
  100. 100. Total Agricultural Support Source: Ministry of Finance TotalAgriculturalSupport(BnTL) 100 3,0 13,2 0 2 4 6 8 10 12 14 2002 2014
  101. 101. Agricultural Support • Largest support among OECD countries Source: OECD Biggest agricultural GDP in Europe AgriculturalSubsidies(2012,%,GDP) 101 0,1 0,3 0,3 0,4 0,6 0,7 0,7 0,9 0,9 1,0 1,0 1,2 1,2 2,0 2,1 0,0 0,5 1,0 1,5 2,0 2,5 Australia NewZealand Chile Israel Canada Mexico European union OECD Norway UnitedStates Switzerland Iceland Japan Korea TURKEY
  102. 102. Housing 102
  103. 103. Urban Renewal • 6.5 million new homes • $236 billion total cost Removal of Reciprocity • A source of attraction by global citizens 103 Housing
  104. 104. Research & Development 104
  105. 105. Source: The Scientific and Technological Council of Turkey * % of GDP R&D Spending* 105 •3.00%2023 •1.8%2018 • 0.92%2012 • 0.53% 2002
  106. 106. Patent Applications Source: TPI 106 1.874 12.053 1.000 2.000 3.000 4.000 5.000 6.000 7.000 8.000 9.000 10.000 11.000 12.000 13.000 2002 2013
  107. 107. Trade Mark Applications(2012,Thousand) 86 64 54 44 41 0 20 40 60 80 100 120 TURKEY France Germany Italy Spain England 108* Source: Turkish Patent Institute *TURKEY 2013 Data
  108. 108. Incentives for R&D R&D Expenditure • Corporate income tax relief • Personal income tax relief • State contributions to social security premiums • Exemption from stamp duty • Capital support for young entrepreneurs Strengthening the link b/w R&D and Commercial Activities • 50% tax relief on commercial use of patents, trademarks… • VAT exemption on patents, trademarks… 108 Since 2008, 155 R&D Centers
  109. 109. Global Investors in Turkey 109
  110. 110. International Companies Operating in Turkey Source: Ministry of Economy 110 3.212 4.303 6.342 9.092 12.380 16.082 19.097 21.898 25.170 29.529 33.808 37.199 37.737 0 5.000 10.000 15.000 20.000 25.000 30.000 35.000 40.000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Feb
  111. 111. Foreign Direct Investment Inflows Source: CBRT (Billiondollar) 111 14,8 140,6 0 25 50 75 100 125 150 1980-2002 2003-2014 Mar
  112. 112. Long-Term Prospects 112
  113. 113. GDP per Capita Source: TURKSTAT, Medium-Term Program,PwC 2002 2016 2002 $ 3,492 2013 $10,782 2016 $ 12,670 113 Lower-Middle -Income $1,035-$4,085 Upper-Middle-Income $4,086-$12,615 High-Income $12,615 and up Low-Income $1,035-or less
  114. 114. GDP Source: TURKSTAT, Medium-Term Program,PwC 2002 2050 2002 $ 230 billion 2050 $ 5 trillion 2013 $ 820 billion 2023 $ 2 trillion 114
  115. 115. Priorities for Sustainable Growth Improving Competitiveness Innovation-based Growth Attracting FDI Financial deepening R&D Corporate Governance Building a more Equitable Society Inclusive Growth Education & Skills Childcare & Family Support Flexible Labor Market Improving Quality of Institutions Open-access Growth Rule of Law Independent and Arms- length Regulation Improving Business Climate Public Finance Management 115
  116. 116. Achieving Sustainable Development 10th Development Plan (2014-18) Qualified Individiuals, Stronger Society Innovative Production, Sustainable Growth Liveable Spaces, Sustainable Environment International Cooperation for Development 25 Transformation Programs of High Priority Implemention, Monitoring, and Evaluation 116
  117. 117. Determinants of Long-Term Growth Quality of Institutions Demographics Productivity 117
  118. 118. Improving Quality of Institutions Corruption Perceptions: 2013: 53rd in 177 2002: 65th in 102 Ease of Doing Business: 2013-14: 69th in 185 2006: 84th in 175 Global Competitiveness: 2013: 44th in 148 2005: 71st in 117 Source: WB, WEF, Transparency International 118
  119. 119. Priorities & Strong Reform Agenda Enhancing Competition Deepening Capital Markets Education Improving Labor Market Flexibility Local & Renewable Energy Infrastructure Combatting Shadow Economy Moving up the Value-Chain Narrowing Regional Development Gaps 119
  120. 120. Source: Ministry of EU Affairs 120 EU Accession Process (Chapters) 14 20 0 5 10 15 20 25 Opened Remaining
  121. 121. Corruption Perceptions Index (2002) (65th among 102 countries) 31 44 45 58 59 65 70 73 74 96 20 30 40 50 60 70 80 90 100 Italy Greece Brazil Mexico China TURKEY Argentina India Russia Indonesia Source: Transparency International 121
  122. 122. Corruption Perceptions Index (2013) (53rd among 177 countries) Source: Transparency International 53 69 72 80 80 94 106 106 114 127 40 50 60 70 80 90 100 110 120 130 140 TURKEY Italy Brazil China Greece India Argentina Mexico Indonesia Russia 122
  123. 123. Within the period of 2005-2012, Turkey has ranked higher than Russia, Argentina and Greece.(71st among 117 countries) 31 35 36 38 43 45 47 48 53 54 57 59 67 68 69 71 30 35 40 45 50 55 60 65 70 75 Portekiz Hungary SlovakRep. Italy Poland India Greece China Russia Argentina Brazil Mexico Romania Ukraine Indonesia TURKEY Source: World Economic Forum Global Competitiveness Index (2005) 123
  124. 124. (44th among 148 countries) Source: World Economic Forum Global Competitiveness Index (2013) 29 38 42 44 49 51 55 56 60 63 64 76 78 84 91 104 25 35 45 55 65 75 85 95 105 China Indonesia Poland TURKEY Italy Portugal Mexico Brazil India Hungary Russia Romania SlovakRep. Ukraine Greece Argentina 124
  125. 125. (84th among 175 countries) Source: World Bank Ease of Doing Business (2006) 62 69 70 71 84 93 97 108 111 122 131 132 134 138 60 70 80 90 100 110 120 130 140 Mexico Italy Uruguay Romania TURKEY Argentina Russia China Greece Brazil Indonesia Ukraine Croatia India 125
  126. 126. (69th among 189 countries) Source: World Bank Ease of Doing Business (2013) 53 65 69 72 73 88 89 92 96 112 116 120 126 134 20 40 60 80 100 120 140 Mexico Italy TURKEY Greece Romania Uruguay Crotia Russia China Ukraine Brazil Indonesia Argentina India 126
  127. 127. Favorable Demographics Source: Eurostat Shareof15-24yearsoldinTotalPop.(%) 16,6 7 9 11 13 15 17 19 21 Spain Italy Andorra Slovenia Greece Portugal Bulgaria Germany Czech Republic Serbia Switzerland Ireland Croatia Estonia Latvia France Austria Hungary Luxembourg Finland Netherlands Ukraine Poland Denmark Sweden United Kingdom Slovakia Norway Malta Lithuania Montenegro Iceland Macedonia Georgia Moldova Turkey Azerbaijan 127
  128. 128. 1,7 0,7 0,2 0,0 0,2 0,4 0,6 0,8 1,0 1,2 1,4 1,6 1,8 TURKEY OECD EU-28 AnnualAverageGrowthRate(%,2001-13) Working Age Population Growth Source: OECD, Eurostat, Turkstat 128
  129. 129. Thank You… 129

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