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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.

				
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