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INVESTMENT CLIMATE IN TURKEY
Murat ALICI
Act. Deputy Director General for Foreign Investment
Undersecretariat of Treasury
August 23, 2005
Content
Economic Outlook and Potentials
FDI Figures
FDI Regime
Policies to Improve Investment Climate
Economic Outlook
GNP Growth Sources of Growth
15 7,9 9,0
% 5,8
12 9,9 10
10 7,9
5
8 5,9 5,0 0
6
-5
4
-10
2
0
-15
2002 2003 2004 2005P 2002 2003 2004
P: projected
Priv. Investment Priv. Consumption Other GDP Growth
Single-Digit Inflation Declining Debt Burden
%
%
100 100 90,5
80
70,4 80 78,5
70,4
60 60 57,1 52,8 63,5
46,2 48,3 46
38 37,7
40 40 32,3
18,4 9,3 8,0 19,1 22,1
17,5
20 20
0 0
2000 2001 2002 2003 2004
1993-2002 2003 2004 2005P
avr. External Domestic
P: projected
Turkey’s Potential
Demographic Profile Economic Profile
US $
Japan
GDP Per Capita
7.400
7,213
(PPP)
6,937
7.000
Europe EMU 6.600
6.200
Turkey 5.800
5.400
0% 20% 40% 60% 80% 100% 5.000
0-14 14-60 60+ 1999 2000 2001 2002 2003 2004E
Increasingly Open Economy Productivity in Manufacturing Industry
160
150
140
Index
130
120
110
100
2001 Q1
2001 Q3
2002 Q1
2002 Q3
2003 Q1
2003 Q3
2004 Q1
2004 Q3
Productivity Long-Term Trend
Access to diversified markets
RUSSIAN FEDERATION
EUROPE GDP Population
433 billion USD 144 million
GDP Population
11,717 billion USD 576 million
CENTRAL ASIAN AND
CAUCASIAN COUNTRIES
GDP Population
44 billion USD 37 million
MIDDLE EAST AND NORTH AFRICA
GDP Population
690 billion USD 247 million
FDI Figures
Number of Firms with International FDI Inflows
Capital (Cumulative) (milllion USD)
7.000
12.000
6.000
10.000 5.000
11.084 5.000 4.800
4.600
8.000
4.000
6.000
3.000 2.733
6.305
4.000 1.753
2.000
1.046
2.000
1.000
0
0
June 2003 June 2005 1992- 2003 2004 2005(*) 2006(*) 2007(*)
2002
Ave.
(*) Pre-Accession Economic Program
Contribution of FDI to Turkish Economy
Among the top 500 Manufacturing firms number of firms with
international capital rose from 129 in 1998 to 149 in 2004.
Value added of the top-500 (%) Employment figures of the top-500 (%)
60 30
50 25
40 20
30 15
20 10
10 5
0 0
1998 1999 2000 2001 2002 2003 2004 1998 1999 2000 2001 2002 2003 2004
Export figures of the top-500 (%) Sales of of the top-500 (%)
60
50
50
40
40
30 30
20 20
10 10
0 0
1998 1999 2000 2001 2002 2003 2004 1998 1999 2000 2001 2002 2003 2004
FDI Regime
A new legislative framework is in force since June 2003
No Pre-entry Screening Requirement
No Minimum Capital Requirement
National Treatment
Guarantee to Transfer Proceeds
Employment of Expatriate Key Personnel
Protection Against Expropriation
Access to Real Estate
International Dispute Settlement
Bilateral Investment Treaties
With 53 countries in force
Signed with 18 countries
Institutional Framework For Investment Environment
Coordination Council for the
Improvement of Investment Investment
Advisory Council
Environment (CCIIE)
Technical Working Groups
Investment Location Taxes and Investment
Customs and Standards Licensing
Incentives Promotion
Foreign Direct
Company Intellectual Property
Employment Investment SMEs
Establishment Rights
Legislation
Investment Advisory Council
TURKEY
Inaugural Meeting Second Meeting
March 15, 2004 April 29, 2005
TAXATION OF NON-RESIDENTS
FOR PORTFOLIO INVESTMENT
According to Current Legislation, different taxation regimes are applied for
non resident retail investors; investment funds and corporations for their
portfolio investments in Turkey.
For the harmonization of different tax treatments, a new legislation,
which will be effective from 1.1.2006, has been prepared.
According to new legislation, all residents and non residents(*), regardless
of being retail or corporate, will be subject to 15 % tax for the gains at each
transaction; except eurobonds.
(*) Double Tax Treaties are effective.
