#1PRESIDENCY OF THE REPUBLIC OF TÜRKİYE INVESTMENT OFFICE WHY INVEST IN TÜRKİYE? INVEST.GOV.TR February 2024#210 REASONS TO INVEST IN TÜRKİYE WHY INVEST IN TÜRKİYE? 10 reasons to invest in Türkiye $ R ROBUST ECONOMY DOMESTIC + ACCESSIBLE MARKETS STRATEGIC LOCATION FAVOURABLE DEMOGRAPHICS CONTINUOUS REFORM PROCESS LUCRATIVE BUSINESS-FRIENDLINESS INCENTIVES BENIGN R&D ECOSYSTEM ว SKILLED AND COMPETITIVE LABOR FORCE SECTORAL OPPORTUNITIES invest.gov.tr | 02#3ROBUST ECONOMY TRACK RECORD GROWTH AND BRIGHT FUTURE WITH PROVEN RESILIENCE 11th largest economy in the World RANKING OF ECONOMIES BY GDP AT PPP 2003 2019 2022 AVERAGE ANNUAL GDP GROWTH (%) 2002-2022 REAL GDP GROWTH (INDEX: 2002=100) 1. USA 1. CHINA 1. CHINA 2. CHINA 2. USA 2. USA 5.4 TÜRKİYE 300 3. JAPAN 3. INDIA 3. INDİA 280 4. GERMANY 4. JAPAN 4. JAPAN 5. INDIA 5. GERMANY 5. GERMANY 260 6. RUSSIA 6. RUSSIA 6. RUSSIA 3.9 POLAND 240 7. FRANCE 7. INDONESIA 7. INDONESIA 8. UK 8. BRAZIL 8. BRAZIL 220 9. BRAZIL 9. UK 9. UK 3.6 ROMANIA 200 10. ITALY 10. FRANCE 10. FRANCE 180 11. MEXICO 11. MEXICO 11. TÜRKİYE 12. INDONESIA 12. ITALY 12. ITALY 3.1 BULGARIA 160 13. SPAIN 13. TÜRKİYE 13. MEXICO 140 14. CANADA 14. S.KOREA 14. KOREA 15. S.KOREA 15. SPAIN 15. CANADA 2.5 CZECHIA 120 16. S.ARABIA 16. CANADA 16. SPAIN 100 17. IRAN 17. STRES 18. TÜRKİYE 18. S.ARABIA IRAN 17. S.ARABIA 2.3 HUNGARY 18. EGYPT Source: TurkStat, IMF, PPP: Purchasing Power Parity, 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 ว TÜRKİYE POLAND ROMANIA BULGARIA CZECHIA HUNGARY invest.gov.tr | 03#4ROBUST ECONOMY STRONG MACROECONOMIC FUNDAMENTALS BASED ON SUCCESSFUL PUBLIC FINANCE MANAGEMENT Gross Public Debt Stock as % of GDP + 70 60 2222854320 100 90 EU 27 0 3 Maastricht Criteria: 60% -6 6 Budget Balance as % of GDP Türkiye -12 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Source: IMF, Ministry of Treasury and Finance ว Türkiye EU 27 Maastricht Criteria: F 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 -3% invest.gov.tr | 04#5ROBUST ECONOMY TRIPLING SIZE OF THE ECONOMY OVER THE PAST 20 YEARS Turkish economy has more than tripled over the past 20 years and is promising to be on the growing trend Turkish Economy (GDP at current prices, $Billion) Robust domestic market and entrepreneurial private sector spurred investments and exports Contribution to GDP Growth 2002-2022 (%) Source: TurkStat 906 86 29 29 26 ว invest.gov.tr | 05 2002 2022 Domestic Consumption Investment Expenditures Exports -20 -21 Stocks Imports 236#6DOMESTIC MARKET IMPRESSIVE ECONOMIC GROWTH LEADING TO A SIZEBLE MIDDLE CLASS WITH INCREASING PURCHASING POWER Income per capita (GDP per capita, current prices at purchasing power parity) 8 $10,988 $ 39,301 Stock of Automobiles (millions of passenger cars) 4.6 14.4 Turkish Aviation Passenger (millions of passengers ) 33.8 214 ケイ イケ ケイ 2002 Source: TurkStat, Ministry of Transport and Infrastructure and IMF 2022 2002 2022 2002 2023 invest.gov.tr | 06#7DOMESTIC MARKET DOMESTIC MARKET FURTHER SUPPORTED BY EMERGING URBAN CENTERS Total Population in 2023 85.4 Million İstanbul 15.7 Million Ankara 5.8 Million İzmir 4.5 Million Bursa 3.2 Million Antalya 2.7 Million Konya 2.3 Million Adana 2.3 Million Şanlıurfa 2.2 Million Gaziantep 2.2 Million Kocaeli 2.1 Million Mersin 1.9 Million Diyarbakır 1.8 Million Hatay 1.5 Million Manisa 1.5 Million Kayseri 1.4 Million Samsun 1.4 Million Balıkesir 1.3 Million Tekirdağ 1.2 Million Aydın 1.2 Million Van 1.1 Million Kahramanmaraş 1.1 Million Sakarya 1.1 Million Muğla 1.1 Million Denizli 1.1 Million Eskişehir 0.9 Million Mardin 0.9 Million Trabzon 0.8 Million Ordu 0.8 Million Afyonkarahisar 0.8 Million Erzurum 0.7 Million Malatya 0.7 Million Sivas 0.7 Million Batman 0.6 Million Tokat 0.6 Million Adıyaman 0.6 Million Elazığ 0.6 Million Zonguldak 0.6 Million Kütahya 0.6 Million Kütahya 0.6 Million Şırnak 0.6 Million Çanakkale 0.6 Million Osmaniye 0.6 Million Çorum 0.5 Million İzmir İstanbul Bursa Ankara Antalya Konya Adana Source: TurkStat, 2023 ว 24 urban centers With Populations over 1 million invest.gov.tr | 07#8DOMESTIC + ACCESSIBLE MARKETS DOMESTIC MARKET + EU MARKET + FREE TRADE AREA Customs Union with the EU allows direct access to the EU Market Source: IMF; Ministry of Trade, TurkStat, World Bank, Population as of 2022 *in ratification process 4 446 MILLION in EU C NORWAY ISRAEL *SUDAN LIECHTENSTEIN SWITZERLAND ICELAND BOSNIA AND HERZEGOVINA PALESTINE MACEDONIA MOROCCO TUNISIA ALBANIA EGYPT GEORGIA MONTENEGRO SERBIA CHILE MAURITIUS MALAYSIA SOUTH KOREA "LEBANON MOLDOVA FAROE ISLANDS SINGAPORE VENEZUELA UNITED KINGDOM *QATAR KOSOVO UAE FREE ACCESS 1 BILLION CONSUMERS 477 MILLION in FTA AREA C⭑ 85 MILLION in TÜRKİYE in 29 countries with Free Trade Agreements invest.gov.tr | 08#9STRATEGIC LOCATION Working Hours Intersect with 16 Time Zones HUB FOR MULTINATIONALS TO MANUFACTURE, EXPORT AND MANAGE PROXIMITY TO MAJOR MARKETS 1.3 billion people and $28T GDP in Europe, MENA and Central Asia at 4 hour flight-distance CONNECTIVITY Turkish Airlines connects you to 342 destinations in 129 countries MANUFACTURING & EXPORT HUB FOR MULTINATIONALS AS WELL AS MANAGEMENT HUB FOR MULTINATIONALS Cargill 66 countries Microsoft 70 countries Nestle Production base for MENA BOSS HUGO BOSS Its largest production facility worldwide B/S/H/ 89 countries GE GE Healthcare 22 countries RENAULT Exporting 75% of its production KNAUF 80 countries TOYOTA Exporting 85% of its production Ford Exporting 87% of its production SANOFI 14 countries gsk 30 countries 9 invest.gov.tr | 09 C#10STRATEGIC LOCATION MERCHANDISE EXPORTS BY GEOGRAPHY 2002 Other; 28% EU; 48% Other; 30% 2023 EU; 41% North $36 BILLION $256 BILLION America; 10% North America; 7% MENA; 23% MENA; 14% STRATEGIC LOCATION AND ENHANCED PRODUCTION CAPABILITIES ATTRACTING MULTINATIONALS TO INVEST FOR EXPORT NUMBER OF EXPORT PRODUCTS OVER USD 1 BILLION 1,1% 1,0% 0,9% 0,8% 9 54 0,7% 0,6% 0,5% 2002 2023 TÜRKİYE'S SHARE IN GLOBAL EXPORTS OF GOODS 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 270 220 EXPORTS OF GOODS IN TÜRKİYE AND THE WORLD 254,2 255.8 225,2 25 169,6 24,5 170 20 22,1 120 17,5 15 Türkiye Records All-Time ANNUAL AVERAGE GROWTH OF EXPORTS (2002-2022) C+ Türkiye 10.3% The World 6.9% 70 10 High 6,5 -Türkiye ($Billion, LHS) Exports 20 36 World ($Trillion, RHS) 5 in 2023 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 -30 0 Source: TurkStat, ITC ว invest.gov.tr | 10#11FAVORABLE DEMOGRAPHICS HALF OF POPULATION UNDER AGE OF 33.5 CREATING DYNAMIC LABOR FORCE AND FISCAL DISCIPLINE Age Groups (%) TÜRKİYE EUROPE 85+ 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 Age Groups(%) 85+ 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 25-29 20-24 20-24 15-19 15-19 10-14 10-14 5-9 5-9 0-4 0-4 ୮ 5 3 1 3 5 5 3 1 1 3 5 ■Female ■Male Female ■Male 120 110 100 90 90 WORKING AGE POPULATION (15-64+) (Index: 2014=100) TÜRKİYE 75 70 10 99 65 60 60 TOTAL DEPENDENCY RATIO (%, Age 0-14 & 65+)/Age 15-64) EUROPE ว 55 TÜRKİYE 50 EUROPE 45 T T 2014 2017 2020 2023 2026 2029 2032 2035 2010 2015 2020 2025 2030 2035 Source: Turkstat, Eurostat, UN, 2019 invest.gov.tr | 11#122022 University 1000 800 600 400 200 287 0 ANNUAL NUMBER OF GRADUATES (thousands) 904 SKILLED AND COMPETITIVE LABOR FORCE ■2002 ■ 2023 1 177 0 University Vocational & Technical High School LABOR FORCE BY EDUCATION LEVEL 27,9% 10% 002 90% 72,1% 430 Czechia High School & Below 74,2 69,1 66,0 63,6 52,8 USA Source: Ministry of National Education, Council of Higher Education, Turkstat, IMD World Competitiveness Yearbook Executive Opinion Survey based on an index from 0 to 10, Numbeo France Germany UK Czechia Hungary Türkiye Romania AVAILABILITY OF QUALIFIED ENGINEERS (10=Available; 0=Unavailable) 2023 Poland Slovakia COST OF LIVING INDEX 2023 (New York=100) UPGRADED EDUCATION SYSTEM TO ENABLE A SKILLED LABOR POOL AND ADDRESS BUSINESS REQUIREMENTS 7 7 2023 6 6,70 6 6,64 6,49 6,05 6,03 5,74 5 5,63 5 5,54 5,10 4 st 4 4,40 4,30 4,00 3,85 3 32- 3,11 2 1 0 48,0 47,5 44,7 40,3 38,4 27,1 Slovakia Poland Bulgaria Romania Türkiye Germany SU USA Hungary France Bulgaria 153 Czechia Türkiye AVAILABILITY OF COMPETENT SENIOR MANAGERS (10=Available; 0=Unavailable) Poland Romania Bulgaria REMUNERATION OF MANAGEMENT/ENGINEER Total base salary plus bonuses and long-term incentives 122 108 91 HU UK Slovakia Poland 77 19 61 33 43 Hungary Czechia 40 40 36 34 Türkiye Romania Bulgaria invest.gov.tr | 12 22 $K, 2019 Slovakia Hungary ว#13REFORMS 2001 Thanks to stability established over the last two decades, Türkiye remains committed to implementing major reforms nearly every 18-24 months across various areas. داره New FDI Law New Labor Law Ease of company establishment (Law No: 4884) 2004 2006 2008 0000 ၁ 2011 2013 2016 2018 2020 2022 New Capital Market Law Upgrading Investment Incentives Industrial Property Law (IPR) Tech-Driven Industry Establishment of European Green Deal Working Group Green Deal Action Plan Production Reform Package Initiative Ease of Doing Business Reform Package I Paris Agreement FDI Strategy New Insurance Law Upgrading Investment New Banking Law Investment Incentives Incentives Removing Restrictions on Foreigners' Purchases of Real Estate Istanbul Arbitration Center New Labor Courts Code Overhaul of Social Security System New Commercial Code New Code of Obligations Unifying All Exchanges (Stock, Derivative, Gold, etc.) under BIST Personal Data Protection Law Coordination Council for the Improvement of the Investment Environment Establishment and Operating Licenses Tax Reform (Corporate Tax %20 down from 33%) Investment Office R&D and Innovation Incentives 2003 L 2005 TAX 2007 8= 2009 999 Upgrading Investment Incentives 2012 2014 2017 Amendments to improve doing business (Law 7099) BBB Ease of Doing Business Reform Package II Amendments to the Capital Market Law (Introduction of Global Standards) Istanbul Financial Centre Law The law on the regulation of electronic commerce 2019 2021 invest.gov.tr 13#14Türkiye Poland Hungary Romania Bulgaria Source: OECD, World Bank South Africa Poland REFORMS 40 40 37 NUMBER OF DAYS TO SET UP A COMPANY, 2020 24,5 23 23 21 Czech Rep. Bulgaria Austria Romania 20 20 17,5 16,6 India Brazil Finland 13 Spain 12,5 Japan 11,2 10,1 EASE OF DOING BUSINESS RANKING, 2020 33 40 Russia CONTINOUSLY IMPLEMENTING SWEEPING REFORMS IN MANY AREAS 0,3 Down from 38 days in 2002 7 0 Türkiye Higher rankings... 2020 52 55 61 2018 2019 FDI REGULATORY RESTRICTIVENESS INDEX, 2020 0,262 0,2 0,214 0,207 0,161 0,1 .0 Russia USA 1 = Closed to FDI 0 = Open to FDI Down from 0.283 in 2003 0,089 0,081 0,083 0,072 0,064 0,059 Brazil Switzerland Poland OECD EASE OF DOING BUSINESS RANKING (Y-O-Y) 33 Higher rankings... 43 60 invest.gov.tr | 14 Türkiye C#15BUSINESS-FRIENDLINESS Protection of International Investors by FDI Law TOTAL TAX AND CONTRIBUTION RATE*, 2019 (% of Profit) USA 36,6 Hungary 37,9 Poland 40,8 Türkiye 42,3 Czechia 46,1 Russia 46,2 Japan 46,7 Spain 47 Germany 48,8 India 49,7 Slovakia 49,7 Austria 51,4 Mexico 55,1 Italy 59,1 China France Brazil 59,2 60,7 65,1 OFFERING PROTECTION AND EASE OF DOING BUSINESS Bilateral Investment Protection Treaties with 88 countries 81,2 Treaties to avoid Double Taxation with 89 countries INTERNATIONAL TAX COMPETITIVENESS**, 2023 (Index 100 as most competitive) Source: Ministry of Trade, World Bank, Tax Foundation Foreign Direct Investment Law 2003, *Total Tax Rate: Profit or corporate income tax, social contributions and labor taxes paid by the employer, property taxes, turnover taxes and other taxes (such as municipal fees and vehicle taxes). (Tax competitiveness measures countries' tax policies five categories: corporate income tax, consumption taxes, property taxes, individual taxes, and international tax rules.) Czechia Türkiye 78,6 Hungary Slovakia Austria 75,0 74,3 65,3 USA 65 Korea 61,6 Japan 61,5 Mexico 60,1 Ireland 58,9 UK 56,1 55,8 invest.gov.tr | 15 55,3 49,1 48,4 ว#16- LUCRATIVE INCENTIVES OFFERING LUCRATIVE INCENTIVES IN MANY WAYS MANUFACTURING INCENTIVES Tax deduction & exemption + EMPLOYMENT INCENTIVES Payroll & Training support + INCENTIVES FOR SERVICE EXPORTERS Tax deduction for exporting services in; • Accounting TECHNOLOGY DEVELOPMENT ZONES To support R&D Tax deduction & exemption + . Engineering • Architecture Call Center • Design • Datacenter • Software • Education • Medical Reporting • Healthcare INDUS USTRY ACADEMI R&D AND INNOVATION INCENTIVES Tax deduction & exemption + EXCLUSIVE ZONES Free Zones Tax deduction & exemption + Organized Industrial Zones Developed infrastructure invest.gov.tr | 16 C#17BENIGN R&D ECOSYSTEM R&D INCENTIVES ARE FURTHER SUPPORTED BY A FAVORABLE ECOSYSTEM 300 250 200 150 100 50 50 0 NUMBER OF RESEARCHERS (thousands) 2008 ALMOST 700 INTERNATIONAL COMPANIES OPERATING IN TECHNOPARK AND R&D CENTERS Türkiye Poland 30 25 25 20 20 Hungary 700 15 15 10 Romania 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Source: OECD, Turkstat, PPP: Purchasing power parity, Ministry of Industry and Technology INTERNATIONAL COMPANIES 5 0 INCREASING R&D SPENDING ($ Billion, PPP) ว Türkiye Poland 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Hungary Romania invest.gov.tr | 17#18BENIGN R&D ECOSYSTEM R&D INCENTIVES ARE FURTHER SUPPORTED BY A FAVORABLE ECOSYSTEM SELECTED INTERNATIONAL COMPANIES CONDUCTING R&D IN TÜRKİYE Ford ZENTIVA HUAWEI A SANOFI COMPANY FIAT SOCAR H BOSCH ALSTOM Alcatel-Lucent RENAULT AMGEN SIEMENS METAIR MULU TOYOTA A MAGNA DAIKIN INDESIT Mercedes-Benz AKO Unilever AVL B/S/H/ BRIDGESTONE ISUZU Johnson Controls NOVARES IMANI Ravago +JOTUN TOYOINK (GSYUASA Valeo TOYOTETSU MARELL Gestamp IRELLI G GUMLINK CONFECTIONERY COMPANY Mando SEOYON E-HWA Hitachi Kokusai Electric Inc. DÖHLER AKANSAI PAINT ALESCO CEVA tpí COMPOSITES Panasonic RUDOLF GROUP monitise CAPAROL ว invest.gov.tr | 18#19SECTORAL OPPORTUNITIES OFFERING ABUNDANT OPPORTUNITIES IN A VARIETY OF SECTORS AUTOMOTIVE 13th largest manufacturer in the World, 4th in Europe (2022) 1.4 million vehicle produced (2023) • Export: $35.0 billion (2023) . MACHINERY & ELECTRICAL EQP. • Largest TV & white goods producer in Europe • • AEROSPACE & DEFENCE $10.6 billion defence spending (2022) Exporting 75% of its production Revenue: $76 billion (2022) • Export: $5.5 billion (2023) • Air passengers: 182 million (2022) ENERGY 6th largest electricity market ⚫ in Europe with more than 100 GW %54 renewable energy share of electricity capacity (2022) Türkiye generated 3.5 GW new capacity in 2022 AGROFOOD 10th largest agriculture producer in the World, 1st in Europe (2022) Agriculture & Food Industry Market: $78 billion Export: $27.6 billion (2023) İstanbul is the 1st city in Europe by passenger traffic 4th in the world in geothermal energy capacity Source: World Bank, TurkStat, Presidency of Strategy and Budget, TİM (Türkiye Exporters Assembly), OSD, OICA, TURKSBESD, SIPRI, EMRA, TUBİSAD OPPORTUNITIES • Export: $30 billion Export to around 200 countries • INFRASTRUCTURE ICT C $195 billion PPP contracts (1986-2022) More opportunities in transport, energy, health Market size: $24.7 billion (2022) Export: $1.7 billion (2022) Employment: 213K of which 49% are R&D personnel (2022) Technology startups attracted $3.2 billion investment in 2021-2022. invest.gov.tr | 19#20FOREIGN DIRECT INVESTMENT (FDI) FDI INFLOWS ($ BILLION) EXCEPTIONAL INCREASE IN FOREIGN INVESTMENT BOOSTED BY THE VALUE TÜRKİYE OFFERS NUMBER OF INTERNATIONAL COMPANIES IN TÜRKİYE 300 250 200 150 100 50 0 15 1973-2002 (30 years) 262 2003-2023 (20 years) GEOGRAPHIC BREAKDOWN OF INVESTMENTS (2003-2023) Asia 18,0% Other 1,2% North America 8,2% Europe 72,6% Source: CBRT, Ministry of Industry and Technology, Team Analysis *Geographic (adjusted) and sectoral breakdown of cumulative gross inflows of equity FDI from 2003 to 2021 5.6 2002 ('000) 80,5 2023 MOST ATTRACTIVE SECTORS (CUMULATIVE 2003-2023) Construction 3,0% Transport & Storage 4,8% Others 9,1% Information & Communication Services 8,5% Finance 30,7% Wholesale & Retail Trade 9,4% Energy 10,3% Manufacturing 24,2% ว invest.gov.tr | 20#21INVEST IN TÜRKİYE PRIVATE PUBLIC ASSIST YOU BEFORE, DURING AND AFTER YOUR ENTRY INTO TÜRKİYE PRIVATE SECTOR APPROACH WITH PUBLIC SECTOR CAPABILITIES A GOVERNMENTAL AGENCY REPORTING TO THE PRESIDENT CUSTOMIZED CONSULTING COORDINATION WITH STAKEHOLDERS BUSINESS FACILITATION TAILOR-MADE DELEGATION VISITS ACTING AS A SOLUTION PARTNER PARTNERSHIP DEVELOPMENT ASSISTANCE ว NEWS SITE SELECTION SUPPORT PROJECT LAUNCH ONGOING SUPPORT invest.gov.tr | 21#22PRESIDENCY OF THE REPUBLIC OF TÜRKİYE INVESTMENT OFFICE f/InvestTurkey /InvestTurkey in /invest-in-Turkey/ invest.gov.tr