Investment Promotion Agencies (IPA'S) Best Practices and new challenges

1. Forum organized by:

2. FREE ZONES IN TURKEY
MINISTRY OF ECONOMY
DIRECTORATE GENERAL OF FREE ZONES,
OVERSEAS INVESTMENT AND SERVICES
26 November 2014

3. ECONOMIC OUTLOOK OF TURKEY

4. Turkish Economy expanded by 4.1% in 2013 and 3.3% in the first half
of 2014.
Turkey ranks as the 17th largest economy in the World and 6th in
Europe.
Since 2002 GDP per capita has tripled from USD 3,492 to USD 10,807
in 2013.
USD 151.8 billion export and USD 251,6 billion import in 2013.
ECONOMIC OUTLOOK OF TURKEY

5. Turkey has a population of 76.7 million
Half the population is under the age 30.4
Customs union with the EU since 1996 and Free Trade Agreements
(FTA) with 20 countries
Accession negotiations with the EU
A natural bridge between both East-West and North-South axes, thus
creating an efficient and cost effective outlet to major markets
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ECONOMIC OUTLOOK OF TURKEY

6. FREE ZONE EXPERIENCE OF TURKEY

7. 7
Free Zones Are Fenced-in Regions That;
•Have special regulatory treatment for the operating users in order to
promote exports of goods and services
•Are Regarded as Outside of Domestic Tariff Area Thus Having No Customs
Duty or Value Added Tax
•Operate Under Single Bureaucratic Window
•Have No Exchange Limitations
WHAT IS A FREE ZONE?

8. 8
Basic Objectives of the Foundation and
Operation of Free Zones
• Promoting export oriented investment and production.
• Accelerating foreign direct investment and technology access.
• Directing enterprises towards export.
• Developing international trade.

9. 9
Phase 1- APPLICATION:
Public or Private, Feasibility, If Accepted Phase 2
Phase 2- LEGISLATION
The Issuance of Council of Ministers Decision
Phase 3- CONTRACTS
The Signing of Contracts Between GD and the Developer
Phase 4- INAUGURATION
Fences, The Administrative Buildings,
The Official Inauguration of the Zone
PROCEDURE FOR SETTING UP A FREE ZONE

10. 10
Manufacturing
General Trading
R&D, Software
Soring and Packaging
Banking and insurance
Assembly & Disassembly
Maintenance services
ACTIVITIES OFFICIAL ZONE ADMINISTRATION
The Director of
the Zone (ME)
Customs
Officer
The Developer
Post office,
Banks and Etc
The Police
Customs
Inspector

11. 11
• First Model
Public Land
Infrastructure
by Public
• Mersin (1985)
• Antalya (1985)
• Second Model
• Final Model
Public Land
Infrastructure
by Private
Sector
• Ege (1987)
• İstanbul AHL (1990)
• Trabzon (1990)
• Adana(1992)
• Samsun (1995)
• Rize (1997)
• İstanbul Trakya (1990)
• İst. End.-Tic.(1992)
• Mardin (1994)
• Avrupa (1996)
• İzmir (1997)
• Kayseri (1997)
• Gaziantep (1998)
• Denizli (2000)
• Bursa (2000 )
Private Land
Infrastructure
by Private
Sector
•80s • First Half of 90s •End of 90s

12. 12
TYPES OF USERS
INVESTOR
- 30 years for users who build
their own working premises.
- 45 years for
manufacturer-investor users
TENANT
15 years for tenant users.
20 years for manufacturer
tenant users.

13. TURKISH FREE ZONES
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14. AN OVERVIEW OF TURKISH FREE ZONES
19 Free Zones
2,292 Companies
548 Foreign
1,744 Domestic
 3,027 Licenses
 928 Manufacturing
 1,466 General Trading
 633 Others
 57,010 Employment
 370 Foreigners
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15. AN OVERVIEW OF TURKISH FREE ZONES
Total trade volume in 2013 was 23.2 Billion USD.
FREE ZONES
$7.5 Billion $5.2 Billion
$7.7 Billion $2.9 Billion
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16. ADVANTAGES of TURKISH FREE ZONES

17. ADVANTAGES OF TURKISH FREE ZONES
• Opportunity to Benefit from Tax Advantages for
Manufacturers
The earnings of the manufacturer users, generated through the sales of
the goods they produced in the free zones, are exempted from the
income or corporate taxes.
The wages of the workers employed by the users that export at least 85
percent of the FOB value of the goods they produce in the free zones are
exempted from income tax. The Council of Ministers can reduce this rate
to 50 percent.
The transactions and arranged documents related to the activities
carried out in the free zones by the manufacturer users are exempted
from stamp duties and fees.
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18. ADVANTAGES OF TURKISH FREE ZONES
•Opportunity of Medium and Long Term Planning
The validity period of an operating license is:
o 15 years for tenant users.
o 20 years for manufacturer tenants.
o 30 years for investor users who build their own premises.
o 45 years for manufacturer investors.
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19. ADVANTAGES OF TURKISH FREE ZONES
• Opportunity to Transfer Profits
The revenues and earnings from free zone activities can be freely transferred to
Turkey or abroad without need for any permission.
• Facilitation of Foreign Trade
Since the goods sold from Turkey to free zones are subject to export regime, free
zone users can buy goods and services from Turkey without paying value added
tax. On the other hand, trade between free zones and third countries is not
subject to foreign trade regime.
• No Time Limitation
Goods can remain in the zones without any time limit.
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20. ADVANTAGES OF TURKISH FREE ZONES
• Trade Free from Customs Duty Procedure
The goods in free circulation can be sent to Turkey or to the EU countries from
the free zones without any customs duty payment. Moreover, no customs duty is
applied on the goods of third country origin at the entrance into the free zones
and exit to the third countries.
• Easy Access to EU Countries
Since free zones are part of the Turkey-EU Customs Territory, the goods in free
circulation can be sent to the EU countries with an A.TR certificate. Customs
duties for the goods of third country origin are also not paid at the entry into the
free zones. However, the goods of third country origin that are not in free
circulation can be sent to the EU countries with an A.TR certificate only after the
customs duties are paid over the rates determined in the Common Customs
Tariff.
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21. ADVANTAGES OF TURKISH FREE ZONES
• Reduced Bureaucratic Procedures and Dynamic Management
During application and operation processes, bureaucracy is minimized.
Professional private sector companies manage free zones.
• Strategic Locations
Turkish Free Zones are close to the EU and Middle East markets, are adjacent to
the major Turkish ports on the Mediterranean, Aegean and Black Sea, and have
easy access to international airports and highways.
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22. SOME VIEWS FROM FREE ZONES IN
TURKEY

23. EUROPEAN FREE
ZONE
• Date of Establishment: 1996
• Area: 1,908,959 m2
• Occupancy Rate: 77%
• Number of Companies: 141
• Number of Licenses: 177
• Employment: 3.322
• Trade Volume (2013):
2,439,926,960 USD
www.asb.com.tr
TURKISH FREE ZONES
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24. ISTANBUL ATATÜRK
AIRPORT FREE ZONE
• Date of Establishment: 1990
• Area: 183,913 m2
• Occupancy Rate: 94%
• Number of Companies: 158
• Number of Licenses: 183
• Employment: 1.258
• Trade Volume (2013):
1,797,351,762 USD
www.isbi.com.tr
TURKISH FREE ZONES
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25. ISTANBUL INDUSTRY
AND TRADE FREE ZONE
• Date of Establishment: 1992
• Area: 465,898 m2
• Occupancy Rate: 88%
• Number of Companies: 402
• Number of Licenses: 505
• Employment: 4.164
• Trade Volume (2013):
3,367,670,613 USD
www.desbas.com.tr
TURKISH FREE ZONES
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26. ISTANBUL THRACE
FREE ZONE
• Date of Establishment: 1990
• Area: 357,802 m2
• Occupancy Rate: 54%
• Number of Companies: 186
• Number of Licenses: 258
• Employment: 2.094
• Trade Volume (2013):
1,723,960,611 U
www.isbas.com.tr
TURKISH FREE ZONES
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27. TUBITAK-MAM
TECHNOLOGY
FREE ZONE
• Date of Establishment: 1999
• Area: 360.000 m2
• Occupancy Rate: 22%
• Number of Companies: 25
• Number of Licenses: 26
• Employment: 2.443
• Trade Volume (2013):
233,651,980 USD
AN TURKISH FREE ZONES
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28. AN TURKISH FREE ZONES
ANTALYA FREE ZONE
• Date of Establishment: 1983
• Area: 447,668 m2
• Occupancy Rate: 98%
• Number of Companies: 112
• Number of Licenses: 177
• Employment: 3,710
• Trade Volume (2013):
902,378,841 USD
www.asbas.com.tr
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29. TURKISH FREE ZONES
AEGEAN FREE ZONE
• Date of Establishment: 1987
• Area: 1,737,893 m2
• Occupancy Rate: 99%
• Number of Companies: 196
• Number of Licenses: 2768
• Employment: 18.017
• Trade Volume (2013):
4,680,236,011 USD
www.esbas.com.tr
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30. TURKISH FREE ZONES
MERSIN FREE ZONE
• Date of Establishment: 1983
• Area: 570,365 m2
• Occupancy Rate: 100%
• Number of Companies: 397
• Number of Licenses: 588
• Employment: 9.377
• Trade Volume (2013):
3,552,257,006 USD
www.mesbas.com.tr
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31. Date of Establishment: 27.04.2000
Area: 537.998 m2
Occupancy Rate: % 91
Number of companies: 111
Employment: 7.940
2013 Trade Volume: 1.907.170.950 USD
TURKISH FREE ZONES
BURSA FREE ZONE
• Date of Establishment: 2000
• Area: 537,998 m2
• Occupancy Rate: 91%
• Number of companies: 109
• Number of Licenses: 155
• Employment: 8.644
• Trade Volume (2013):
1,907,170,950 USD
www.buseb.com
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32. THANK YOU
REPUBLIC OF TURKEY
MINISTRY OF ECONOMY
Directorate General of Free Zones, Overseas Investment and Services
solakz@ekonomi.gov.tr
Tel: +90 312 212 5890
Fax: +90 312 212 8906