How to do business in Turkey?               Investors guideOctober 2011
Table of contents    1. Turkey in general                                                                  1             1...
Table of contents         8.8. Liaison Offices                                                78         8.9. Mergers, Acqu...
Message of the president                                                                                      Turkey is a ...
Message from the chairman ofthe executive boardForeign Economic Relations Board of Turkey (DEİK)was founded in 1988 to pro...
Foreword                                                                               We closely observe that Turkey is g...
Another new legislative development parallel          We strongly believe that with the guidance of DEIKto the new Turkish...
1. Turkey in general            1.1. Geography, political and economic                Turkey has been a parliamentary demo...
1.3. Currency                                             Not only does this project decrease red tape spent              ...
2. Turkish economy           2.1. Main economic indicators                                             The Turkish economy...
2.2. International Trade Indicator                              2004            2005               2006                  2...
Principal Destinations of Exports                            Principal Origins of Import (Thousand $-2010)    (Thousand $-...
Foreign Direct Capital Inflows by Origin of Countries (million $)                      In 2003 when the new investment law ...
3. Industrial and service outlook            3.1. Transportation and defense                             With the influence...
Air                                              2005         2006          2007           2008          2009 Number of ai...
Turkey has targeted to become a center for railway     Domestic and international flights are operated by    freight travel...
Defense                                                       But the imbalance between the local productionTurkish defens...
The prime mover on the aerospace side of               Also, a private company Yonca Onuk designed and     Turkeys defense...
3.2. Automotive                                        Automotive Production (Amount)According to International Organizati...
3.3. Financial Services Industry (FSI) in                               There are 48 banks, 9,581 branches and 180,038    ...
2010 was a very profitable year for the banking        3.4. Consumer Businesssector where the net profit rose 8.7% to 21.93b...
The sector has over 25 thousand enterprises,            Furniture sector is a very important sector in                    ...
3.5. Energy & Resources                                        There are currently two existing and one planned           ...
Energy Market Regulatory Authority (“EMRA”)                        Turkey’s demand for electricity is growing           is...
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
How to do business in turkey 2011
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  1. 1. How to do business in Turkey? Investors guideOctober 2011
  2. 2. Table of contents 1. Turkey in general 1 1.1. Geography, political and economic background 1 1.2. Current political administration and government structure 1 1.3. Currency 2 1.4. Population 2 1.5. E-Government in Turkey 2 1.6. International relations 2 2. Turkish economy 3 2.1. Main economic indicators 3 2.2. International Trade 3 2.3. Foreign Direct Investments 5 3. Industrial and service outlook 7 3.1. Transportation and defense 7 3.2. Automotive 12 3.3. Financial Services Industry (FSI) in Turkey 13 3.4. Consumer Business 14 3.5. Energy & Resources 16 3.6. Life Science and Health Care 18 3.7. Construction 20 3.8. Telecommunication and IT 21 3.9. Tourism 23 4. Incentives and financing 25 4.1. Types of Incentives Available 25 4.2. Investment Incentives 25 4.3. Export-Oriented Incentives 35 4.4. Other Tax/Non-Tax Incentives 37 4.5. Financing 39 5. Business regulations and requirements 41 5.1. Foreign Investment Rules 41 5.2. Foreign Trade 43 5.3. Registration and Licensing 45 5.4. Price Controls and Competition Law 45 5.5. Exchange Controls 46 5.6. Accounting Principles and Statutory Books 48 6. Major highlights of the New Turkish Commercial Code 49 6.1. Enterprise Law 49 6.2. Company Law 51 7. Employment law and practice 63 7.1 Employees’ Rights and Remuneration 63 7.2. Social Security and Unemployment Insurance Payments 65 7.3. Termination of Employment 66 7.4. Labor Management Relations 67 7.5. Employment of Foreign Individuals 67 8. Choice of business entity(*) 71 8.1. Principal Forms 71 8.2. General Rules for Establishment of Companies by Foreign Shareholders 72 8.3. Corporations 73 8.4. Limited Liability Companies 76 8.5. Branches 77 8.6. Partnerships 77 8.7. Joint Ventures 782
  3. 3. Table of contents 8.8. Liaison Offices 78 8.9. Mergers, Acquisitions, Conversions, De-mergers, Share Swaps 789. Corporate income taxation 79 9.1. Entities Liable for Corporate Income Tax 79 9.2. Residence and Non-Residence 79 9.3. Taxable Income 79 9.4. Corporate Income Tax Rates 80 9.5. Dividend Withholding Tax 80 9.6. Treatment of Losses 80 9.7. Participation Exemption 80 9.8. Capital Gains Taxation 81 9.9. Controlled Foreign Companies (CFC) 81 9.10. Transfer Pricing 81 9.11. Cost Sharing/Cost Allocations 82 9.12. Anti-Tax Haven Rules 83 9.13. Thin Capitalization Rules 83 9.14. Taxation of Branches of Foreign Companies 85 9.15. Liquidation 85 9.16. Assessments, Payments and Tax Audits 8610. Individual income taxation 87 10.1. Residence and Non-Residence 87 10.2. Taxable Income 87 10.3. Individual Income Tax Rates 88 10.4. Assessments and Payments 8811. Withholding taxes and double tax relief 89 11.1. Major Withholding Tax Rates 89 11.2. Double Tax Treaty Relief 89 11.3. Unilateral Relief 9212. Other taxes 93 12.1. Value Added Tax 93 12.2. Special Consumption Tax (SCT) 94 12.3. Property Tax 95 12.4. Inheritance and Transfer Tax 95 12.5. Stamp Tax 95 12.6. Motor Vehicle Tax 95 12.7. Bank and Insurance Transaction Tax 96 12.8. Special Communication Tax 9613. How Deloitte can help? 97 13.1.Corporate Income Tax Certification 98 (Compliance) Services What is Tax Certification (Compliance)? 13.2.Financial Services Industry Tax Advisory Services 98 13.3.International Tax Advisory Services 99 13.4.Mergers and Acquisitions 99 13.5.Taxation of Individuals 100 13.6.Indirect Tax Services 100 13.7.Transfer Pricing Services 100 13.8.Tax and Customs Litigation Consultancy Services 101 13.9.Customs and Foreign Trade 10114. Dış Ekonomik İlişkiler Kurulu (DEİK) 102 Foreign Economic Relations BoardAppendix: Useful Links and addresses 103 1
  4. 4. Message of the president Turkey is a manufacturing country, a major producer of a diverse range of industrial project. Turkey exports more than 200 countries and has a foreign trade volume reaching to 300 billion dollars. Two thirds of Turkish exports go to the advanced industrial countries of the European Union, North America, and the OECD. Turkey is the sixth largest trading partner of the European M. Rifat Hisarcıklıoğlu Union. President of DEIK (Foreign Economic There are many opportunities in Turkey for global Relations Board of investors in particular. In the last 8 years, Turkey Turkey) and Union has implemented several structural reforms of Chambers and in order to improve conditions for investors. Commodity Exchanges Consequently, only in the last 5 years, it attracted of Turkey (TOBB) foreign direct investment over 70 billion dollars. 26 thousands foreign enterprises operate in Turkey. It is my great pleasure to introduce this “Investors’ We welcome foreign investors and promise them Guide for Turkey”, written in collaboration a vital and exciting environment in which they can with Deloitte, intended to introduce Turkey to look forward to sharing the opportunities of rapid the global business community and provide key growth. Companies well-established here will be information about current economic issues, the able to reap the rewards, while late-comers will investment environment, and the general business have missed the opportunities I mentioned. framework of our country. From its establishment till today, Foreign Economic The opportunities are real and very exciting. Turkey Relations Board (DEİK) has been a trail-blazer already ranked as the 15th largest economy in the in establishing new links between the Turkish world and ranked 6th largest economy in Europe business community and its counterparts in terms of purchasing power parity. Turkey has elsewhere. DEİK plays the leading role as an been one of the fastest growing of the OECD intermediary between Turkish private sector countries for many years. Recent researches and global business community. DEİK, with its predict that Turkish economy will be the second 100 business councils; local, regional and global biggest in Europe, after the UK by 2050. network; its professional team, is ready to support Therefore, it is often labeled as the BRIC of Europe. and guide your business initiatives in Turkey. I very much hope that this investors’ guide will succeed The figures tell their own story. Turkey has the in its aim of encouraging business people to take largest free market economy between Italy and advantage of the enormous opportunities which China. Turkish multinationals are rising stars of are to be found in Turkey today. On this occasion, global market. There are 24 Turkish companies I would like to thank Deloitte most sincerely within the list of 100 biggest companies in to cooperate with us in preparing this valuable Islamic world. Turkish contracting industry is the investors’ guide. second biggest of the world, after China. Turkish contractors are currently handling overseas projects worth a total of 190 billion dollars at the end of 2010.2
  5. 5. Message from the chairman ofthe executive boardForeign Economic Relations Board of Turkey (DEİK)was founded in 1988 to promote the economicand commercial relations of Turkish private sectorabroad along with the broader goal of ensuringthe overall integration of the Turkish economy intothe global economy.As a consequence of the economic liberalizationpolicies of the 1980s, Turkey became a prominentactor in international trade as well as an attractivehub for foreign direct investments. In fact, DEİKhas earned considerable credit for achievement asan institution that makes every effort to open the Rona YırcalıTurkish economy up to the world economy. Chairman of DEİK Executive BoardIn this new era, the priorities of DEİK includefostering production of goods and serviceswhich have high added value and competitivepower, providing market diversity and depth, Deloitte’s commitment to Turkey’s commercial,contributing in attracting the investments involving industrial and financial development as well ashigh technology to Turkey; and supporting the integration to the global economy serves as antrademark of Turkish brands and providing them exemplary model in terms of forging businessthe opportunity to have activities in the global relationships among foreign and domesticarena. investors. Based on our shared vision and strong commitment to Turkey’s development, I amIn addition to its routine meetings, DEİK organized confident that Deloitte and DEIK will collaboratemore than 539 activities, 458 in Turkey and 81 on more projects in the near future. In thisabroad, and hosted 39 Presidents and Prime respect, I sincerely thank, Deloitte, once again, forMinisters of various countries in the previous year. joining us in our endeavor to illuminate foreignAdditionally, DEİK coordinated very significant businessmen and investors abroad about themeetings where many of the most distinguished business opportunities and legal framework inpersons in the world could meet with Turkish and particular and the Turkish economic situation inforeign businessmen. general.“Investors’ Guide for Turkey” which has been I hope that Turkey will be promoted because ofprepared in cooperation with Deloitte is a very this publication, and new projects, enterprises,useful publication for both the new and the and cooperation will be established which willcurrent investors in Turkey. Deloitte’s local and render Turkey one of the biggest economies in theglobal expertise in tax and consulting as well as 25 world. I sincerely believe that with the guidance ofyears of business experience in Turkey are some DEİK as a pioneering organization serving Turkey’sof the valuable assets Deloitte brought to our integration into the world, Turkey will becomeinvaluable partnership. further involved with the world. 3
  6. 6. Foreword We closely observe that Turkey is getting more and more in line with the global business standards as a result of the economic liberalization policies of the 1980’s followed by harmonization of tax, investment and business related legislation with the global applications through the enactment of the new Customs Law in 1999, new Law for Foreign Direct Investment in 2003 as well as the New Corporate Income Tax Law in 2006 and finally the new Turkish Commercial Code published in the Official Gazette on 14 February 2011, the majority of Articles of which will enter into force on 1 July 2012. The New Corporation Tax Law is important since it has introduced Güler Hülya Yılmaz rules governing “Disguised Profit Distribution Tax Partner through Transfer Pricing” for transactions Deloitte Turkey between related parties in line with the Transfer Pricing Guidelines of the Organization for It is a great pleasure for Deloitte Turkey to Economic Cooperation and Development (OECD) cooperate with the Foreign Economic Relations as well as those rules governing “Controlled Board of Turkey (“DEIK”) once again to contribute Foreign Companies”. Finally, the official to the development of Turkey’s economic, publication of the new Turkish Commercial commercial, industrial and financial relations with Code (Law No. 6102) has introduced the use of foreign countries as well as international business Turkish Accounting Standards in line with the organizations and communities. DEIK plays a International Financial Reporting Standards (IFRS), very important role in achieving the integration audit requirements and a number of new rules of Turkey’s economy into the global economy. about the establishment, organization and legal This integration requires development of business operations of different types of legal entities, relations with foreign countries and attraction rights and obligations of shareholders as well as of foreign direct investment into Turkey as well mergers, de-mergers, conversions, liquidations. as maintaining the investments in Turkey. In this respect, DEIK acts as a very strong intermediary between the public and private sectors through its close working relations with both sides.1
  7. 7. Another new legislative development parallel We strongly believe that with the guidance of DEIKto the new Turkish Commercial Code is the as a pioneering organization serving for Turkey’senactment of the new Code of Obligations integration into the global economic environment,(Law No. 6098) published in the Official Gazette Turkey will gain more and more importance as anon 4 February 2011 so as to enter into force as emerging and fast developing country and thus,of 1 July 2012. These legislative developments in will undertake more and more critical roles that itTurkey in accordance with the global standards are already deserves in the global arena.all important for foreign investors. It is more andmore important for all foreign investors in today’s The information provided in this Guide is notglobal economic environment which has recently exhaustive and unless otherwise indicated, isfaced a crisis of unknown depth and duration, to based on the relevant tax and legal legislationvery carefully take into consideration and analyze and conditions existing at April 2011. Investorsthe prevailing tax and business related regulations are advised to consult with professionals, suchwhen making their investment decisions to assess as independent and certified accountants andthe inherent risks and opportunities in initiating, consultants as well as legal counsel before makingmaintaining, developing, restructuring and ceasing their investment decisions and/or taking anytheir operations in a particular country. formal action. Professionals of Deloitte Turkey would be pleased to provide any support neededOnce again it is a great pleasure and honor for in this respect.Deloitte Turkey to closely cooperate with DEIK forpreparation of this investment guide in an attemptto provide foreign investors with a concise tax and Yours sincerely,business guide to help them with their investmentdecisions.We hope that the Guide will provide potentialand existing investors with an overview of what ispossible when structuring an investment in Turkeyand which factors must be considered whendeciding whether to acquire an existing Turkishcompany. 2
  8. 8. 1. Turkey in general 1.1. Geography, political and economic Turkey has been a parliamentary democracy since background 1923 and she is a secular republican parliamentary democracy based on division of power between The Republic of Turkey covers about 814,578 km2, various ruling bodies. at the junction between Europe and the Middle East. Turkey is composed of seven geographical Its unicameral parliament, The Grand National regions: Marmara Region, Black Sea Region, Assembly of Turkey (TBMM) which includes 550 Mediterranean Region, Eastern Anatolia Region, seats representing the 81 Turkish provinces is Southeastern Anatolia Region, Aegean Region the legislative body. The legal framework of the and Central Anatolian Region. She has coastline Republic is based on the 1981 Constitution. The of about 8,000 kilometers. The Anatolian Land President is elected by direct elections for a term is surrounded by the Black Sea in the North, the of 4 years, while the members of the Parliament Aegean and Marmara Sea in the West and the are elected for a 4-years period. The Republic of Mediterranean Sea in the South. The capital city is Turkey has a tripartite legal system. Civilian and Ankara which is located in the Central Anatolian military jurisdiction is separated. Region. Turkey’s neighbors are: Greece, Bulgaria, Georgia, Azerbaijan, Armenia, Iran, Iraq and The main executive body is the Council of Syria. Turkey’s geographical coordinates puts its Ministers, consisting of a Prime Minister and time scale two hours ahead of “Greenwich Mean twenty six ministers. Independent Courts have Time” (GMT) and the table below shows the time the judicial power. Turkey is a secular state. The differences between Turkey and the major world freedom of worship for all religions is protected cities. under the Constitution. City hours ahead or behind Turkey 1.2. Current political administration and government structure Berlin -1 Paris -1 The current President of the Republic of Turkey is Mr. Abdullah Gül who was elected in August Rome -1 2007. The current Prime Minister is Mr. Recep London -2 Tayyip Erdoğan who was re-appointed after the New York -7 general elections held in June 2011. He is the head Los Angeles -10 of the Justice and Development Party (AKP) which Singapore +6 has won the Parliamentary majority in June 2011 elections. Tokyo +7 Sydney +8 The official language is Turkish, therefore all the official documents which are to be submitted to the government authorities must be in Turkish. English is used as an international language in trade and business circles. Turkish culture and economy has strong ties with both the Western and Eastern countries. Therefore her links with both sides are very strong and well established.1
  9. 9. 1.3. Currency Not only does this project decrease red tape spent in bureaucratic transactions causing loss of timeThe domestic currency is the Turkish Lira (TL). and money, but it also provides security for citizens and the State. Turkey finalized the infrastructure of1.4. Population the main e-government portal through which all public services could be accessed and utilized sinceBy the end of 2010, Turkey’s population is the beginning of 2010.73.7 million. Approximately 76.3% of Turkey’spopulation lives in cities while 23.7% lives in 1.6. International relationssuburbs and the process of urbanization isexpected to continue for the foreseeable future. The Republic of Turkey attaches great importance in establishing strong and lasting regional andAbout 1/3 of the population is concentrated in international ties based on mutual understandingMarmara region. The most populated cities of and cooperation. She actively participates in aTurkey are İstanbul (about 13.3 million), Ankara wide range of leading regional and international(about 4.8 million) and İzmir (about 3.9 million). organizations such as the United Nations, the North Atlantic Treaty Organization (NATO),The population growth rate, which has decreased Organization for Economic Cooperation andsharply, has been about 1.27% in the last decade; Development (OECD), World Trade Organizationdemographers project the population to increase (WTO), Economic Cooperation Organizationto 80-85 million in the next 20 years, which (ECO), Organization for the Islamic Conferencecompares with the largest current EU member (OIC), Black Sea Economic Cooperation (BSEC),state Germany that has 81.8 million inhabitants International Bank of Reconstruction andtoday, but whose population is projected to Development (IBRD),International Monetary Funddecrease to around 80 million by the year 2020. (IMF), the Group of Twenty Finance Ministers and Central Bank Governors (G20 Developing Nations),1.5. E-Government in Turkey and Asian Development Bank.E-government project in Turkey is coordinated Turkey is in the EU Customs Union since 1996 andby the Prime Ministry of Turkey and a Public an EU accession country since October 2005. InCommittee. After Turkey signed the e-Europe Helsinki European Council Summit in Decemberproject which was discussed in European Union 10-11, 1999, Turkey was officially recognizedLeaders Conference held in mid-2001, the Prime without any precondition as a candidate stateMinistry of Turkey gave a start to the project. to EU on an equal level with other candidate states. The Accession Partnership for Turkey wasMERNIS is one of the big steps of the prepared within the framework of Turkey’s abilitye-government project which identifies every to fulfill the Copenhagen political criteria. Incitizen with an identity number, which eases December 2002 EU declared that if Turkey fulfillsmost operations in social life and state-related the Copenhagen political criteria, it would openoperations. This step has been effective from accession negotiations with Turkey by DecemberNovember 1, 2006. During the transition period 2004. At the European Council on Decemberbetween 1 November 2006 and 1 January 2007, 16-17, 2004 the Council decided to openboth the identity number and tax number were accession negotiations on October 3, 2005. Theused together by the citizens. By the beginning negotiations are open-ended and are not expectedof 2007 only identity number has began to be to finish before ten years.valid. With this identity number, a citizen is able toidentify himself/herself e.g. in tax offices, universityapplications, bank operations shortly in all staterelated operations. 2
  10. 10. 2. Turkish economy 2.1. Main economic indicators The Turkish economy has grown steadily over 26 quarters of 2001-2007 with an average rate of Its diversified economy, proximity to Europe, 6.6%. After the 2001 financial crisis, Turkey made Middle East, North Africa and Eurasia, integration important structural reforms which have led to with European markets, young and vibrant improve her financial system. Therefore, Turkey work force, crisis experienced businessmen and has relatively less affected by the global crisis. Also economy management makes Turkey one of the previous crisis experience of Turkish businessmen most powerful economies in the region. and economy officials make Turkey more resilient to the global financial crisis today. As a result of Being the commercial center of Southeastern this, Turkey was the only country in 2009, who Europe, Middle East and Eurasia, Turkey is received two point upgrade in her credit rating, becoming an increasingly important economic and after a 4.7% decrease in GDP, Turkey grew and diplomatic country in the region. Between 8.9% in 2010. 2001 and 2007, before the effects of financial crisis started, Turkey’s GDP have increased by 242% totaling to US $ 657 billion and by 2009 she became the 16th largest economy (Gross GIP) in the world. 2007 2008 2009 2010 2011 2011 1.Quarter 2.Quarter GDP (billion $/in current prices) 656.6 741.8 617.6 735.3 182.8 203.6 GDP Growth Rate (%) 4.5 1.1 -4.7 8.9 11.6 8.8 GDP per Capita (Nom.$) 9,333 10,436 8,511 10,079 - - FDI Inflow (billion $) 22.1 19.5 8.4 8.9 3.1 2 Unemployment (%) 9,9 10,3 13,1 11.9 10.8 9.2 Consumer Price Inflation (%) 8.61 10.54 6.53 6.4 3.99 6.24 Export (billion $) 107.2 132 102.1 114 31.4 34.2 Import (billion $) 170 201.8 140.9 185.5 56.1 63.7 External Debt (billion $) 249.4 280.4 268.4 289.4 298.7 309.6 Source: TUIK, Central Bank of Turkey, Treasury of Turkey Economic Indicators Forecast Economic Indicator 2011 2012 GDP (billion $/nominal) 763.8 836.3 GDP Growth Rate (%) 4.6 4.8 GDP Per Capita ($/PPP) 13,862 14,780 Export (billion $) 135.6 140.5 Import (billion $) 200.9 205.5 Source: The Economist Intelligence Unit Forecasts, May 20113
  11. 11. 2.2. International Trade Indicator 2004 2005 2006 2007 2008 2009 2010 Export (Thousand $) 63,167,153 73,476,408 85,534,676 107,271,750 132,027,196 102,128,759 113,979,452 Import (Thousand $) 97,539,766 116,774,151 139,576,174 170,062,715 201,963,574 140,926,023 185,541,037 Volume (Thousand $) 160,706,919 190,250,559 225,110,850 277,334,464 333,990,770 243,054,782 299,520,489 Balance (Thousand $) -34,372,613 -43,297,743 -54,041,498 -62,790,965 -69,936,378 -38,797,264 -71,561,585Source: TUIKBetween 2001 and 2008, foreign trade has In 2010, Turkey mainly exported to Germany,increased by 359% and exports have increased by France, United Kingdom, Italy and Iraq whereas it321%. After having a record high level of foreign mainly imported from Russia, Germany, China, thetrade with 334 billion US $ in 2008, because of United States and Italy.global economic crisis it declined to 243 billion US$ in 2009. But it bounced back to 299.5 billion US$ in 2010. Automotive, iron and steel, textile andclothing, machinery, and agriculture are the majorexport items, while oil and natural gas, machinery,automotive, and chemicals are the major importitems.Main Exports (Thousand $-2010) Main Imports (Thousand $-2010) Vehicles other than railway 13,814,541 Mineral fuels and oils 38,496,313 Machineries, mechanical appliances, 9,415,320 Machineries, mechanical appliances, 21,266,385 boilers and; parts thereof boilers and ; parts thereof Iron and steel 8,761,259 Iron and steel 16,118,937 Articles of apparel and clothing 7,741,746 Electrical machinery and equipment 14,641,856 accessories knitted Vehicles other than railway 13,419,375 Electrical machinery and equipment 7,530,930 Plastics and articles thereof, 9,730,441 Articles of iron and steel 4,855,137 Pharmaceutical products 4,410,051 Articles of apparel and clothing acc.not 4,639,898 Organic chemicals 4,400,320 knitted Optical instruments and apparatus 3,437,712 Mineral fuels and oils 4,505,851 Cotton. cotton yarn and cotton fabric 3,385,770 Pearls, precious stones, coin 3,748,594 Copper and articles thereof 3,299,333 Plastics and articles thereof, 3,717,427 Pearls, precious stones, coin 3,036,955 Fruit 3,494,049 Paper and paperboard 2,819,742 Salt, sulphur, earth, plastering mat., lime, 2,509,387 Aluminum and articles thereof 2,487,587 cement Rubber and articles thereof 2,321,648 Aluminum and articles thereof 1,917,185 Man-made staple fibers 2,089,035 Rubber and articles thereof 1,896,002 Articles of iron and steel 1,966,776 Other made-up textile articles 1,838,930 Miscellaneous chemical products 1,795,419 Furniture 1,786,756 Inorganic chemicals 1,423,788 Cotton. cotton yarn and cotton fabric 1,449,871 Cereals 1,056,747 Preparations of vegetables and fruits 1,491,632 Man-made filaments 1,250,359 Source: TUIK Ships, boats and floating structures 1,114,331Source: TUIK 4
  12. 12. Principal Destinations of Exports Principal Origins of Import (Thousand $-2010) (Thousand $-2010) Russian Federation 21,599,569 Germany 11,486,808 Germany 17,549,159 United Kingdom 7,238,433 China 17,180,806 Italy 6,508,644 USA 12,318,752 France 6,055,125 Italy 10,203,727 Iraq 6,041,861 France 8,176,579 Russia Federation 4,631,496 Iran 7,644,782 USA 3,770,779 Spain 4,840,061 Spain 3,563,472 South Korea 4,764,048 UAE 3,337,659 United Kingdom 4,680,610 Iran 3,043,426 Ukraine 3,832,744 Romania 2,599,020 Romania 3,449,178 Netherlands 2,462,185 India 3,409,938 Saudi Arabia 2,219,407 Japan 3,297,783 Israel 2,082,969 Belgium 3,213,712 Switzerland 2,057,082 Netherlands 3,155,980 Belgium 1,960,441 Switzerland 3,153,699 Azerbaijan 1,551,212 Kazakhstan 2,470,966 Bulgaria 1,497,832 Saudi Arabia 2,437,156 Greece 1,456,212 Algeria 2,274,924 Ukraine 1,260,892 Source: TUIK Source: TUIK 2.3. Foreign Direct Investments Foreign Direct Capital Inflows (million $) In the last six years in particular, Turkey has started to 25,000 draw increasing amounts of foreign capital thanks to a 19,137 20,000 17,639 rapid recovery from the 2001 crisis, large 14,747 privatization projects, prolonged stability coinciding 15,000 with the excessive liquidity in international markets 8,535 and the beginning of EU accession process. Turkey was 10,000 6,252 6,529 15th most attractive economy for the location of FDI 5,000 in UNCTAD´s World Investment Prospects Survey 2008- 2010. Turkey also ranked 65th out of 183 economies in 0 Ease of Doing Business Rank of the World Bank (June 2005 2006 2007 2008 2009 2010 2010), 46th out of 128 economies in Forbes Doing FDI Inflows Business Index. Source: Central Bank of Turkey Being the world’s 16th and Europe’s 6th largest economy (PPP), Turkey has recently been home to numerous significant investments by attracting more than 89.1 billion US $ for the last 6 years.5
  13. 13. Foreign Direct Capital Inflows by Origin of Countries (million $) In 2003 when the new investment law was ratified, there were about 6.500 foreign companies operating in 2008 2009 2010 Turkey. By the end of 2010, this number has increased European Countries 11,367 5,234 5,166 to 25,800. Germany 1,237 498 598 The cumulative sector breakdown of foreign capital France 679 617 600 financed companies between 1954-2010 shows that Netherlands 1,343 718 498 30% of these companies operate in wholesale and retail United Kingdom 1,335 350 240 sectors; 17% of them operate in manufacturing sector Italy 249 314 56 and 16% of them operate in real estate, renting and Other EU Countries 6,233 2,431 2,918 business activities sectors. Construction (9%); transport, Other European Countries 291 306 256 storage and communications (9%); hotels and (excl.EU) restaurants (7%); other community, social and personal service activities (5%); mining and quarrying activities African Countries 82 2 0 (2%); agriculture, hunting, fishing and forestry (2%) and U.S. 868 260 320 electricity, gas and water supply (2%) constitute other Canada 23 52 56 sectors. Central and South America & Caribbean 60 19 5 Asia 2,220 599 933 The Turkish companies have become important investors abroad and have recently accomplished significant Gulf Countries 1,963 209 442 projects and have bought world’s leading brands Near and Middle East 96 78 46 including “Godiva”,” Razi”, “Trader Media East” and Other Asian Countries 161 312 445 “Grundig”. Moreover, the Turkish contractors have Other 2 86 49 undertaken projects accounting for 21.5 billion US $ Total 14,622 6,252 6,529 in 2009 and 15.2 billion US $ in 2010. Accordingly, 33 Turkish contracting firms partake among the world’sSource: Central Bank of Turkey largest 225 contracting firms ranking in 2010 which was 31 in 2009.Foreign Direct Capital Inflows According to Sectors (million $) The Turkish companies have invested in the sectors of Sectors 2009 2010 banking, white goods and telecommunication in Eastern Agriculture, Hunting, Forestry and Aquaculture 49 83 Europe, energy, consumer goods, industry, tourism, finance and logistics in Eurasia, chemicals, industry and Mining 89 196 logistics in the Gulf countries and food, textile and Manufacturing Industry 1,565 867 automotive in the Middle East. Food, Beverage and Tobacco 196 149 Textile 77 82 Turkish Outflow Investments (million $) Chemicals 336 102 Year Investment Machinery 220 64 2001 604 Automotive 225 39 2002 283 Other 511 431 2003 505 Electricity, Gas, Water 2,126 2,063 2004 815 Construction 208 372 2005 1,065 Wholesale and Retail 389 389 2006 1,677 Hotels and Restaurants 54 113 2007 2,275 Transportation, Telecommunication & Logistics 391 210 2008 2,604 Financial Intermediary Institutions 666 1,630 2009 2,040 Real Estate 560 368 2010 1,820 Other Social and Personal Services 155 238 2003-2010 12,801 Total 6,252 6,529 1991-2010 16,495Source: Central Bank of Turkey Source: Central Bank of Turkey 6
  14. 14. 3. Industrial and service outlook 3.1. Transportation and defense With the influence of economical development and the EU accession period, the modernization Transportation of transportation sector has been already kicked off through privatizations and foreign direct Turkey enjoys a privileged position at the investments. Turkish Ministry of Transportation crossroads among Europe, Caucasus, Middle East had 64 ongoing projects in 2010 on infrastructure and Central Asia. As a result of being a regional and many privatizations have been realized mostly logistics base, Turkey’s transportation sector through build-operate-transfer (BOT) contracts. partakes among principal sectors in terms of Moreover, Transportation Master Plan Strategy economic growth and employment. Report has been prepared for the Turkish Ministry of Transportation, which encompasses numerous project proposals on infrastructure, traffic and management of transport modes. Turkish transportation sector statistics Railways 2005 2006 2007 2008 2009 Length of railway (km) 10,973 10,984 10,991 11,005 11,405 Passenger train kilometer 26,284 25,545 25,079 23,339 23,698 Goods traffic (Thousand tons) 19,195 20,185 21,404 23,491 21,813 Source: TUIK Road 2005 2006 2007 2008 2009 Length of motorway 1,667 1,908 1,908 1,922 2,036 Length of State road 30,740 30,728 30,743 30,784 30,770 Length of Provincial road 26,642 26,635 27,282 27,525 27,693 Number of road motor vehicles (thousand) 11,145 12,227 13,022 13,765 14,316 Freight transportation and the circulation on the state roads, provincial roads and motorways (Tonne/km) 166,831 177,399 181,330 181,935 176,455 Passenger transportation and the circula- tion on the state roads, provincial roads and motorways (Passenger/km) 182,152 187,593 209,115 206,098 212,464 Source: TUIK7
  15. 15. Air 2005 2006 2007 2008 2009 Number of aircrafts 202 245 250 262 297 Seat capacity 38,600 42,894 40,017 41,634 47,972 Freight carried domestic lines (ton) 315,858 373,055 414,192 399,213 484,833 Freight carried international lines (ton) 933,697 973,934 1,131,833 1,130,464 1,241,512 Domestic air traffic (unit) 264,805 343,956 365,136 385,053 419,422 International air traffic (unit) 286,687 286,713 323,432 356,127 369,047 Number of passengers domestic lines 20,502,516 28,799,878 31,970,874 33,546,000 41,226,959 Number of passengers international lines 35,042,957 32,884,325 38,381,993 40,840,000 44,281,549Source: TUIK Sea 2005 2006 2007 2008 2009 Loading (thousand tones) 19,904 21,463 16,941 14,386 13,518 Unloading (thousand tones) 24,745 23,901 19,619 16,020 12,113Source: TUIKIn order to realize a nostalgic dream, the revival ofthe historical Silk Road as a part of international The Turkish Government aims to modernizetransportation is the agenda. Turkey has a primary existing roads and launch new projects. Therole as a natural bridge within the Silk Road estimated cost for modernization and constructionproject, which links the Asian economies with of the roads (until 2023) is 166 billion TL. As a parthigh shares in world trade and Europe, due to of the Silk Road project, construction of Black Seaits strategic geographic location, its proximity to Ring Highway, which has a total length of 7,140the international transport routes, its renovated kilometers and crosses the borders of 12 Black Seatransport infrastructure and strong road fleet. Economic Cooperation (BSEC) member countries,Road transport is the main means of freight and is in the agenda. To ease traffic jam in İstanbul,passenger transportation. It constitutes 80.63% construction of a third Bosphorus Bridge and anof the freight transportation and 89.59% of the underwater tunnel are in progress. Bridges thatpassenger transportation. Turkey has the largest span İstanbul Strait will be privatized as well.and newest transportation fleet in Europe with1,400 road transportation companies and 45,000vehicles. 8
  16. 16. Turkey has targeted to become a center for railway Domestic and international flights are operated by freight traveling by realizing and completing the state-owned company, Turkish Airlines (THY) as Strait Rail Tube Crossing and Commuter Railway well as some private airlines. Upgrading (MARMARAY) Project, which will connect Turkey to the Trans-European Network. There are 67 airports in Turkey: The total length of the Project is approximately 76 km and total amount is estimated as 3 billion • 41 airports are being operated, 23 of them are US $. Once the project is completed, Turkey will open to both domestic and international flights, become an essential center for railway freight and 18 of them are open only to domestic among Europe, Central Asia and the Middle East. flights. Developing rails for more freight cargo is required. 23.5 billion US dollars is allocated for railways by • 12 airports are only open to protocol and 2023. military. Turkey also has a leading role in Kars-Tbilisi-Baku • 10 airports which are open to only private use Railway Project, which is an alternative route within the contemporary Silk Road. Known as • 4 airports which are only open to use of Turkish the ‘Iron Silk Road’, Kars-Tbilisi-Baku Railway Aviation Association. Project creates an alternative route to the existing West-East corridor through Iran. The total length The estimated cost for airport modernization of the project is 124 kilometers. 92 kilometers will and construction is TL 4 billion. Construction of pass through Turkey and the rest will pass through airports in Bingöl, Iğdır, Hakkari Yüksekova, Şırnak, Georgia. Kütahya, Afyon, Uşak, İstanbul, Çukurova, Eskişehir and Diyarbakır takes place among upcoming projects. İstanbul-İzmit, İzmir, Adana-Mersin and Samsun are the major ports for domestic and international freight and passenger transportation. In order to increase quality and productivity, ports of Bandırma, Derince, Iskenderun, and İzmir will be privatized. Also ship construction is a big sector in Turkey and she is on the 5th place in the world in ship construction orders and super yacht construction. Apart from aforementioned transportation projects, 10 logistics villages will be built in Halkalı, Köseköy, Kayseri, Samsun, Eskişehir, Balıkesir, Yenice, Erzurum, Mersin and Aydın.9
  17. 17. Defense But the imbalance between the local productionTurkish defense sector is developing very fast in and the imports led Turkey to pursuit of a stablethe last decade. Turkey spends 3-4 billion US $ local defense industry infrastructure. In May 2004,annually in arms procurement. The proportion SSM decided to cancel three major projects,of defense systems produced locally was 25% including the multi-billion dollar attack and tacticalin 2003 and 52.1% by the end of 2010. On the reconnaissance (ATAK) helicopter programme,other hand, annual Turkish defense export reached and instead introduced a new procurement modelto the level of 853.5 million US $ in 2010. to boost ailing local industry. The initial goal was to increase the proportion of defense systemsTurkey has traditionally made modest efforts to produced locally to 50% by the end of 2010,become self-sufficient in basic defense industrial which had successfully been achieved. The nextactivities. Starting in the second half of the 1970s stage proposes an increase in exports of defensethese capabilities were expanded through several products and services to around 1 billion US $ pervital investments, particularly into the defense year by 2011 from the 196 million US $ exportelectronics and aerospace fields. In 1985 a in 2004. SSM targets 1.8 billion US $ worth ofgovernment entity charged with coordinating and defense exports by 2016.financing the development of the defense industrywas established under secretariat for defenseindustries (SSM). Since its establishment in 1985the SSM has been entrusted with the responsibilityof a fairly large number of defense industryprojects, valued over 30 billion dollars. 10
  18. 18. The prime mover on the aerospace side of Also, a private company Yonca Onuk designed and Turkeys defense industry is TAI (TUSAS Aerospace built most of the fast patrol craft in service with Industries). It has been co-producing the needed the Coast Guard. air planes and helicopters by the Turkish Air Force. Another Turkish company ASELSAN has established Besides Turkish companies there are many itself as the leading electronic systems house foreign companies that work for Turkish defense in Turkey as well as having a major capability in industry. Imtech, RMK Marine Shipyard, German radars and optronic systems. ROKETSAN is one of Minehunter Consortium of Abeking & Rasmussen the few companies in Europe with the capability to and Lurssen Werft and Dearsan Shipbuilding design, develop and manufacture artillery rocket and Repair Company are some of them. Beneath systems (ARS). FNSS Savunma Sistemleri is the the surface, the Golcük shipyard has experience largest manufacturer of tracked armored fighting working under the license of Germanys vehicles (AFVs) in Turkey. Another company Howaldtswerke-Deutsche Werft (HDW) in Otokar has developed and placed in production constructing submarines. a complete range of 4x4 and 6x6 light armored tactical vehicles. Makina ve Kimya Endustrisi Turkish defense industry is expected to continue its Kurumu (MKEK) is the main manufacturer of growth in the future due to Turkey’s geographic ammunition, small arms and other weapons in and strategic position. At the same time with Turkey and is also a major subcontractor to other the new legislations and incentives for the local Turkish defense contractors. TLFC has extensive defense industry to grow, Turkey’s export and facilities involved not only in the upgrading of import in the sector is projected to be more AFV and artillery systems but also in production. balanced in the future as well. It has upgraded over 4,000 tanks and the center has developed and put into production specialized versions including ambulances, command post and engineer squad vehicles. The main repository of naval shipbuilding and repair experience remains resident within state-owned hands at Naval Shipyard. The navys other major surface acquisition is the locally designed and built 12 MilGem corvette ships. The first of the 12 Milgems, which is a corvette class warship, has joined the Turkish Navy in 2011.11
  19. 19. 3.2. Automotive Automotive Production (Amount)According to International Organization of Motor 2007 2008 2009 2010Vehicle Manufacturers (OICA) Turkey is the 16th Automobiles 634,883 621,567 510,931 603,394automotive manufacturer in the world and Commercial Vehicles 464,531 525,543 358,674 491,1636th in Europe. Also she is Europe’s largest light Tractor 33,518 24,807 14,861 30,425commercial vehicle and 3rd bus manufacturer. The Total 1,132,932 1,171,917 884,466 1,124,982Turkish automotive sector includes productionof trucks, buses, trailers, midi and mini buses Source: Automotive Manufacturers’ Association (OSD)and passenger cars with a capacity of 1.5 millionvehicles. Except the global financial crisis year2009, the manufacturing numbers are in a steady Automotive Exportsrise in recent years. 2007 2008 2009 2010Domestic production in Turkish automotive sector Production 1,132,951 1,171,917 884,466 1,124,892has started in 1967. Over the years, industry Export 829,879 920,763 637,855 763,670imported foreign models and produced them Export/Production (%) 73 79 72 68for domestic market under the protection of Source: Automotive Manufacturers’ Association (OSD)high tariffs. As Customs Union came into effectin 1996, tariff protection for the industry hadfinished. After this point, many global brandssuch as Honda, Toyota and Hyundai joined thealready existing brands like Renault, Ford, Fiat inTurkish automotive industry. Today, there are 17manufacturers and 4,000 component makers inTurkey. Prior to the crisis they were employing over300,000 people.Automotive sector exports 70% of its productionand 90% of the exports goes to Europe. Transportvehicle and component industry is the leadingsector in Turkish exports. It was 16,8 billion US$ in 2009 and 17.4 billion US $ in 2010 (15.3%of the Turkish export). Turkish automotive exportincreased 15.6% during 2010. 12
  20. 20. 3.3. Financial Services Industry (FSI) in There are 48 banks, 9,581 branches and 180,038 Turkey employees in Turkish banking system by the end of 2010. Total assets of the banking sector are 655 Turkish banking sector mostly dominates the billion US dollars, which was 561 billion US dollars Turkish financial system. 85.8% of the financial by the end of 2009. During the global financial system’s assets were held by the banking sector. crisis in 2009, the number of branches increased By the end of 2010, volume of the financial sector by 207 (2.9%), employee number increased by assets were as big as 103.6% of the Turkish GDP. 1,551 (0.8%). Even in 2008, when the global Major reforms were carried out in the finance and financial crisis got deeper and many European and banking sectors between 1999 and 2002. American banks got smaller, 277 new branches opened and 1,551 new employees hired. “The Banking Sector Restructuring Program” was initiated in May 2001 with the aim of modifying the banking sector into a sound and competitive structure consistent with sustainable growth. Banking legislation was adjusted to international regulations, BIS recommendations and European Union banking directives. Also in line with the previous principles and the BASEL (Banking Supervision and Auditing) Committee principles, a banking law was issued in 2005 to regulate the sector. With the new structure of the banking system and improvements in the Turkish economy, Turkish banking sector had significant growth in the bank’s balance sheets and changes in their structure. Main Indicators of the Turkish banking sector and National Income Billion US $ 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Loans 29 51 28 30 48 74 112 149 234 218 254 333 Deposit 44 102 81 84 111 143 181 211 295 259 333 391 Total Assets 67 155 116 130 179 229 296 346 485 434 539 655 GDP 227 266 195 232 303 392 482 529 649 730 615 736 Source: Banks Association of Turkey (BAT), BRSA, Turkstat, IMF,13
  21. 21. 2010 was a very profitable year for the banking 3.4. Consumer Businesssector where the net profit rose 8.7% to 21.93billion TL (13.9 billion $). Total loans were 525.9 Turkey is a major market for consumer productsbillion TL with a 33.9% increase at the end of with 73.7 million population and a vivid export2010, which was nearly half of the total assets. sector. Textile and clothing, agriculture, whiteWhereas deposits grew 19.9% to 617 billion TL. goods, furniture, cosmetics and jewelry are theAlso total assets grew 20.8%. prominent sectors in consumer products.Although global financial crisis affected Turkish Turkey is a major textile and clothing producerbanking sector, it had some advantages in country in the world with over 40,000 producerscomparison to other countries. These are; and 2.5 million workers. Cotton clothing, knitted clothing, woven clothing and accessories as well• There is no toxic product, as home textile products constitute main products in the sector. Thanks to strong leather sector of• Turkish banking sector is conventional, wide Turkey, footwear industry is a well-developed spread, mainly constituted from deposits and industry as well. Its well established industry have a wide spread of customer net, focuses on Europe, Middle East and Eurasia regions. Turkey is one of the world’s leading• Weight of the individual loans is not much in the manufacturer of floor-coverings including hand- GDP, woven and machine-made rugs and mats. Also Turkey has a high quality cotton yarn.• Turkish banking sector started very late to the mortgage system and the interest rates are fixed, In recent years textile and clothing sectors faced fierce competition from far eastern countries.• Due to some politic and financial developments, Especially lifting of the quotas in 2005 affected the Turkish banking sector pushed on the brakes export sector as well as the domestic sector. The starting from the beginning of 2007 and, sectors are moving more towards higher quality production and spend great deal of energy on• Turkish banking sector has crisis experience. branding. In order to achieve the move towards more sophisticated products, companies benefit from the government’s design and technology incentives. As a result of this effort and the changing conditions of the sector after the world financial crisis, the sector’s exports increased 12.6% in 2010 after a 16% fall in 2009. Agriculture and food industry is one of the leading sectors of Turkey with rich resources, huge potential of fish products and livestock. Edible nuts, frozen fruits and vegetables, confectionery products, poultry, dairy products, oil and vast variety of fresh vegetables and fruits are produced in Turkey and are exported to numerous countries. Also, Turkey is the world leader in the production of dried figs, hazelnuts, sultanas/raisins and dried apricots. 14
  22. 22. The sector has over 25 thousand enterprises, Furniture sector is a very important sector in with an average five hectares farm size. With Turkey with its huge export potential. Metal office 5.7 million workers the sector employs 25% of furniture, wooden furniture, seats for automobiles Turkey’s total work force. This ratio was over and seats convertible into beds constitute the 35% at one decade ago. Although Turkey has major items of production and export in the sector. relatively small enterprises and land per enterprise, There are approximately 30 thousand companies due to its favorable ecological conditions, large in furniture production business who export to food importer neighboring countries and a large over 170 countries in the world. Also 32 thousand domestic population with rising income, the sector companies are in furniture retail business. The is expected to grow in the future. sector employs over 500 thousand people. The production realized was over 9.5 billion dollars Turkey is Europe’s second largest producer of in the sector with 1.4 billion US $ export. Turkish white goods with production of refrigerators, furniture was exported to 173 different countries washing machines and other household in the world in 2010. There are six furniture appliances. In addition to establishing production companies in the top 500 industrial establishments units in the Eastern Europe, Eurasia and Asia, like of Turkey. These companies are: Merkez Çelik, Russia, Romania and China, some of the Turkish Boytaş Mobilya, Merinos Halı, İstikbal Mobilya, white goods and electronic appliances producers Grammer Koltuk Sistemleri and Yataş Yatak ve also bought world’s leading brands. Over 2 million Yorgan Sanayi. people work in the sector and 2010 production was 18.4 million pieces where 13.7 million of Around 1,400 companies operate in the cosmetics them were exported. There are over 50 producers sector. Shampoos, depilatories, products for and over 500 hundred white goods parts suppliers bath, lip and eye make-up products, deodorants, in the sector. perfumes and baby care products are major items in the sector. The sector had a volume of 2 billion US dollars. Turkey partakes among Consumer Product Exports $ world’s leading laurel and olive oil soap producers. 2006 2007 2008 2009 2010 Many successful brands came out from the soap Textile 19,440,858 22,599,459 22,826,789 19,162,627 21,568,974 producers in recent years. They achieved high Agriculture volume of exports. Some of these companies and Forestry 3,480,539 3,725,212 3,936,710 4,347,482 4,939,552 are Evyap, Eczacıbaşı, Canan Kozmetik, Kopaş Kozmetik, Kurtsan İlaçları, Hunca Kozmetik, White Goods 2,005,000 2,532,000 2,766,000 2,578,000 - Aromel Kozmetik, Hobi Kozmetik, Kosan Kozmetik, Furniture 788,153 1,067,523 1,387,061 1,198,575 1,414,700 Dündar Kozmetik, Erkul Kozmetik and Rosense Cosmetics 774,862 848,010 1,074,889 1,030,714 1,136,084 Kozmetik. Also many international companies Jewelry 639,352 979,079 3,631,108 4,641,351 2,072,842 produce different cosmetic products in Turkey. Source: TURKSTAT, DTM, BEYSAD Given its cultural heritage of jewelry, Turkey ranks The main producer brands in the sector are: among world’s top three gold jewelry producers Arçelik, Beko, Altus and Aygaz under Arçelik and exporters with her powerful modern and group; Profilo, Bosch and Siemens under classical techniques in the sector. Her gold BSH-Profilo Group, Vestel under Vestel Group; production capacity is 400 tons per year. The Ariston and Indesit under Indesit Group. With the sector employs 250 thousand people, where 6 high priority given to innovation in the sector, thousand producers and 35 thousand jewelry world’s fastest washing machines and dish- stores are active. İstanbul Gold Exchange was washers have been developed in Turkey. formed in 1995. Currently it has 85 members. Also The sector exports most of its production. İstanbul Gold Refinery started its production in 2002.15
  23. 23. 3.5. Energy & Resources There are currently two existing and one planned major oil pipeline in Turkey. Existing ones areTurkey is an important energy consumer as Baku-Tbilisi-Ceyhan (BTC) and Iraq-Turkey crude oilwell as an important hub for energy supplies pipelines which bring oil from Azerbaijan and Iraq.transportation. Turkey’s primary energy BTC’s capacity is 1 million barrels per day (bpd).consumption was 105 million TEP by the end With some technical changes it will first reachof 2009. 28.9% of this energy was produced at to 1.2 million bpd and eventually to 1.6 millionhome and the rest was imported. Between the bpd. Capacity of the Iraq - Turkey pipeline is 1.6years 1990 and 2009 primary energy consumption million bpd. Also Trans - Anatolian pipeline projectincreased 3.7% on an average in Turkey which is is planned to carry Russian and Kazakh oil fromthe highest average among the OECD members. North of Turkey to the South. From Ceyhan, a bigAlso Turkey was the second in demand increase port in the South of Turkey where the oil Transfor natural gas and electricity in the world - Anatolian pipeline ends, the oil will be shippedafter China. Between 2010 and 2020, primary to other parts of the world. Tupras refinery is inconsumption is expected to rise 4% annually Ceyhan too. The crude oil is refined at Tupras(average annual increase expectation for the world and refined products are sold both domesticallyis 1.8%). Total 130 billion US $ of investment and internationally. There are couple of newis needed in the energy field by 2020 to meet projects to build other refineries in Turkey are onTurkey’s energy needs. planning level as well. So, Ceyhan area on the Mediterranean coast has become a focal point of the international crude oil trade.Energy Consumption in Turkey According toResources (2009) (%) When we look at the natural gas pipelines’ length, they increased from 4,510 km in 2002 to 11,441 km by the end of 2010. Currently 67 cities has natural gas grid in Turkey. There are two Russian- Turkish natural gas pipelines (West and Black sea), 31% 29% one Azerbaijani-Turkish natural gas pipeline (Baku- Petroleum Tbilisi-Erzurum) and one Iranian-Turkish natural gas Renewable Resources 5% pipeline transmitting natural gas to Turkey. Coal 35% Natural Gas Total 31.9 billion cm3 natural gas imported from these pipelines and in LNG form from AlgeriaSource: Turkish Ministry of Energy and Natural Resources and Nigeria in 2010. Already one fourth of Azeri natural gas goes to Greece. Also Nabucco gas pipeline agreement had signed in 2009, whichExcept coal (mostly lignite), currently Turkey has will connect Central Asian natural gas to Centralvery limited mineral resources. She imports almost Europe through Turkey. Turkey is building aall of its petroleum (91%) and natural gas (98%) link to the Egyptian - Jordan - Syria - Lebanonneeds and one fifth of its coal need (2010). TPAO gas pipeline. The link will be connected to the(The Turkish Petroleum Corporation) has invested Turkish natural gas network. Talks for building a500 million US $ in exploration of Black Sea region pipeline connecting Katar natural gas to Turkey iswhere 10 billion barrels of potential reserves continuing. Another under sea pipeline is plannedthought to be lying. With this goal TPAO has to be built between Ceyhan and Israel. The gasestablished partnerships with Petrobas, Exxonmobil from the pipeline will be transferred to India fromand Chevron. Although she mostly imports her Red Sea by ship.oil and natural gas, Turkey is becoming a hubfor energy supplies. 16
  24. 24. Energy Market Regulatory Authority (“EMRA”) Turkey’s demand for electricity is growing is the main authority in energy market and fastest after China in the world. Between provides independent regulation and supervision 2002 and 2007 annual average growth in to the electricity, natural gas, petroleum and LPG electricity demand grew 8%. In 2007, electricity markets. All market activities are conducted under consumption grew 8.8% and reached to 190 licenses issued by EMRA. billion kWh. However in 2008 with the effects of the global crisis increase rate fell to 4.3% Turkey realizes 91% of her oil import from four and became 198.1 billion kWh. As iron, steel, countries, namely Iran, Russian Federation, Saudi cement and textile industries slowed down, the Arabia and Iraq. commercial use of electricity decreased further. As a result of this electricity consumption in 2009 was 194.1 billion kWh. And as the effects of the global Turkey Main Resources of Oil (2009) crisis started to lessen electricity consumption increased to 209.5 billion kWh. 12% Kazakhstan 12% Main Resources in Electiricity Production (2009) 4% Italia 2% 1% Syria 49.33% 28.76% 1% Nigeria 23% 1% Coal Libya, Azerbaijan, Georgia Hydroelectric Russia Federation Other Iran 41% Natural Gas Saudi Arabia 18,46% Source: Energy Market Regulatory Authority 3,45% Source: Turkish Ministry of Energy and Natural Resources Turkey makes her natural gas import from five countries; Iran, Russian Federation, Azerbaijan, Algeria and Nigeria. Turkey has 49,524.1 MW installed capacity as of the end of 2010. 32,278.5 MW of it is thermic, 15,831.2 MW of it is hydraulic, 1320.2 MW of it 15% 14% is wind and 94.2 MW of it is geothermal. During 2010, approximately 5,000 MW new capacity Azerbaijan added. Meanwhile, gross electricity demand was 13% Algeria 210.4 billion kWh and the supply was 211.2 billion Nigeria kWh. Also 1.1 billion kWh electricity is imported 3% Russia Federation and 1.9 billion kWh electricity is exported. In the Iran next decade, average 7.5% increase on electricity 55% demand is expected. Source: Energy Market Regulatory Authority17

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