WITH a robustly growing economy and a young and dynamic population, Turkey offers lucrative investment opportunities for global investors. While international investors find a secure and favorable investment climate in Turkey, they can also equally benefit from all incentives offered to local investors. Once an international company is established in Turkey, then, that company is reckoned as a local company since it has a legal presence in the country. Equal treatment for all global investors is guaranteed by law. With a new law, companies can benefit from so many incentives that include favorable tax deductions, special investment zones, land allocation, exclusive R&D and innovation support, training of workers and so on. More specifically, Turkey had implemented three incentive programs for investors in 2003, 2006 and in 2009, and announced a fourth in April 2012. Each program has been adapted to global economic trends, as well as recent changes in the domestic market. The latest incentives scheme aims to reduce the current account deficit, boost production and reduce dependency on imported intermediate goods. This entails increasing investment support to Turkey's less developed regions, improving efficiency in industry and logistics, and investing in mid and high technologies. Effective Jan. 1, 2012, the program offers investors VAT exemption and corporate tax reduction, as well as social security premium support, interest payment support and land allocation. The program comprises four different schemes: general, regional, large-scale and strategic investment incentives. These will contribute to the structural transformation of Turkey's industries, particularly through strategic investments encouraging domestic production of previously imported goods. The government has redefined the regions across Turkey, decreased the minimum fixed investment amount for large-scale investments and introduced incentives for strategic investments in sectors with a poor balance of trade. Under the new system, the government intends to balance levels of local development, raising investment in the country's less developed areas. To achieve this, it has categorized the regions according to their levels of development. It conducted thorough research to update information on each province's socio-economic ranking and grouped them into six categories. These rankings will be constantly updated as different areas reach new levels of development. The incentives system also prioritizes specific sectors, such as automotive, aerospace and aviation, railroad and maritime freight/passenger transport, pharmaceuticals, education, tourism and mining. As for incentives for strategic investments, the main goal is to support sectors where there is considerable trade deficit, offering strong support regardless of the region, and so reduce the current account deficit. In addition to investment incentives, a unique incentive Turkey offers to global investors is the services offered by the Investment Support and Promotion Agency of Turkey (ISPAT), the official organization for promoting Turkey's investment opportunities to the global business community and providing assistance to investors before, during and after their entry into the country. ISPAT serves as a reference and contact point for all global investors by linking them with both the government and businesses in Turkey. Working on a fully confidential basis and functioning as a private venture, the agency is a reliable and adaptable partner. All of its services are free of charge, and they include, but are not limited to, providing market information, site selection, B2B meetings, coordination with relevant governmental institutions, facilitating legal procedures and applications, such as establishing companies, incentive applications, and obtaining licenses and work permits. “We consider investors as clients and client satisfaction is a top priority for us. Since we do also work under the auspices of the Turkish Prime Ministry, the agency enjoys comparative operational freedom and flexibility,” says ISPAT. Turkey attracted around $110 billion of foreign direct investment (FDI) in nine years, whereas it attracted only $15 billion in the preceding eight decades. What are the reasons for this sudden surge in investment inflow in recent years? Is there any major change in investment legislations? The Turkish economy has shown remarkable performance with its steady growth over the last nine years. A sound macroeconomic strategy, in combination with prudent fiscal policies and major structural reforms in effect since 2002, has integrated the Turkish economy into the global economy, while transforming the country into one of the major recipients of FDI, attracting more than $110 billion over the past nine years between 2003 and 2011, whereas it attracted $15 billion in the preceding eight decades between 1923 and 2002. The structural reforms have paved the way for comprehensive changes in a number of areas. One of these areas was the improvement of investment climate. To this end, Turkey introduced a new foreign direct investment law in 2003, thus becoming more investor-friendly. Also the long-awaited law lifting the reciprocity principle about real estate has recently passed in the Turkish Parliament. The new law easing reciprocity principle for foreign nationals to buy property in Turkey is a welcome step in increasing the FDI inflow to Turkey. The new law will make living and working in Turkey even easier. Foreign investors take a country's living conditions into consideration when deciding on an investment. So they want full ease to come and live. This is because most investing companies transfer their managers and high-ranking staff with their families. The government, together with the private sector, established the Coordination Council for the Improvement of Investment Environment. It is an excellent platform for partnership between private and public sectors, where the stakeholders identify and remove regulatory and administrative barriers to both foreign and local private investments. Now, combine this reformist and pro-business environment with political and economic stability, then you have one of the most attractive investment destinations in the world. Turkey is the fastest growing economy in Europe and one of the fastest growing economies in the world with a real GDP growth of 9.2 percent in 2010 and 8.5 percent in 2011. How did Turkey achieve this? While many economies were unable to recover from the recent global financial crisis, the Turkish economy, as you said, expanded by 9.2 percent in 2010. The robust economic growth continued in 2011, as well, growing by 8.5 percent in 2011 and Turkey became one of the fastest growing economies in the world. How did Turkey achieve this? Well, there are a couple of factors that have enabled Turkey to overcome the economic turbulence in global economy, particularly in Europe. Among these are prudent economic policies, strong public finance fundamentals (The gross public debt stock ratio is less than 40 percent of GDP and the budget deficit is only 1.4 percent of GDP as of 2011.), low household liability, strong regulatory and supervisory framework, flexible and responsive monetary and fiscal policies, and competitive domestic market with a growing demand. Moreover, Turkey has taken measures in the case of declining external demand in Europe, which has been the main export market of Turkey. Throughout the last decade Turkey has taken several actions to diversify its export markets and as a result, the share of its exports to the non-European countries increased from 36 percent to 44 percent. Turkey is the largest commercial vehicle producer in Europe and the 17th largest automobile manufacturer in the world. Which global auto companies have invested in Turkey? What is the total volume of auto production and export? Almost all major global automotive companies, including FIAT, Ford, Honda, Hyundai, MAN, Mercedes-Benz, Renault and Toyota, already have investments in Turkey. International carmakers have been using Turkey as a center of excellence for their global operations both for manufacturing and export. Turkey combines low-cost, large-scale production, good use of technology, and highly skilled workforce to offer the highest quality and faultless production. As such, the Turkish automotive sector has created a benchmark for quality. Turkey produced around 1.2 million motor vehicles in 2011, exporting more than 791,000 units. Together with auto-parts, Turkey's automotive export was more than $18 billion in 2011. Turkey is the 10th largest steel producer in the world. Which are Turkey's main export markets for steel? One of the key areas of investment in Turkey is certainly the iron and steel industry. As the world's 10th largest steelmaker, Turkey produced more than 34 million tons of crude steel in 2011. That also makes Turkey the 2nd largest steelmaker in comparison with the 27 EU countries. Turkey's export of iron and steel was more than $11 billion in 2011. The EU is the main export market, followed by the Middle East. The iron and steel sector is also related to various other main sectors, such as construction, which makes Turkey a vital iron and steel hub for the construction sector in the Middle East. Are there any major Gulf investments in Turkey? The Gulf countries have been a major source of investment in Turkey. There are more than 600 companies from the Gulf Cooperation Council (GCC) countries investing in Turkey. The stock value of their investment is around $10 billion as of 2011. Investors from the Gulf have been active in many sectors, including food, real estate, retail, healthcare, ICT, logistics and so on. We are actively working to further strengthen our relations with the GCC, as we believe there is great potential between Turkey and GCC countries, especially given the strong political and cultural relations between Turkey and the GCC countries. ISPAT has two representatives in the Gulf, one in Saudi Arabia and the other in the United Arab Emirates, which indicates our commitment to attract more investment from the Gulf. Investors from all GCC countries may contact the ISPAT representatives for inquiries about investment in Turkey. What is the total amount of Saudi Arabia's investment in Turkey? Which Saudi companies have invested in the country? In terms of our need and the market share in the energy, petrochemical and construction sectors, Saudi investors have very big potential in Turkish market and also they are very active in Turkey, as around 250 Saudi companies already have operations in the country. These companies have investments in a wide range of areas from energy, automotive and finance to real estate. The stock value of Saudi Arabia's investments in Turkey is around $1 billion as of 2011, while major investors from Saudi Arabia include Saudi Oger Limited, Saudi Cable Company, Al-Manara Investment, Swicorp, ALJ and Astra Polymers. We give utmost importance to our existing Saudi investors and invite all the Saudi investors to invest in Turkey where they can feel at home and get any sort of support from ISPAT or from its representative in Saudi Arabia before, during or after their investment processes. What is the investment size in the Turkish food sector? The food and beverage sector has been one of the most attractive areas in Turkey. The food industry has registered a steady growth in recent years, with Turkish consumers becoming increasingly demanding, driven by the multitude of choices offered by mass grocery retail outlets. The food, beverage and tobacco industry also has the highest share in household consumption in Turkey, with more than a quarter of total household consumption. The strengths of the industry include the size of the market in relation to the country's young population, its sizeable agricultural export market, a dynamic private sector economy, substantial tourism income and a favorable climate. As such, today there are more than 500 foreign companies active in the Turkish food and beverage sector. The stock value of their investment in Turkey has reached $7.6 billion. Turkey continues to lure major global brands. Which global brands have invested in Turkey? Today, there are around 30,000 foreign companies in Turkey. Almost all multinational companies, such as Toyota, HSBC, GE, Mercedes-Benz, Ford, HP, 3M, Bosch, Unilever, Coca-Cola, POSCO, Dow Chemical and Vodafone have invested in Turkey. In addition to manufacturing facilities, multinational companies have also established regional headquarters in the country, thus managing their business operations in the region from Turkey. For example, GE Healthcare moved its regional headquarters from London to Istanbul to run its operations in 80 countries in four major regions — Central Asia, the Middle East, Russia and Africa. Similarly, both Coca-Cola and Microsoft have their regional headquarters in Turkey, managing 94 and 80 countries, respectively. Other companies with regional headquarters in Turkey include Intel, Unilever, Verifone, GlaxoSmithKline, Schneider Electric, Ericsson, Cargill, Volvo, BASF, Roche, Pepsi, Henkel, Sanofi, P&G, Pfizer and so on.
