YOIKK Secretariat, 2008 Undersecretariat of Treasury October 19, 2009 İSTANBUL FDI in TURKEY Özge DUMLUPINAR Treasury Expert

YOIKK Secretariat ►Outline  Global Trends in FDI Inflows  Basic FDI Statistics of Turkey  FDI Policy of Turkey FDI in TURKEY

YOIKK Secretariat I. Global Trends in FDI Inflows FDI in TURKEY

YOIKK Secretariat  Fall from a historic high of $1,979 billion in 2007 to $1,697 billion in 2008 (a decline of %14)  Slide continuation into 2009 : Fall in inflows by %44 compared with their level in the same period in Global Trends in FDI Inflows ►FDI inflows: severely affected worldwide by the economic and financial crisis in ►Expectation to fall from $1.7 trillion to below $1.2 trillion in ►Slow recovery in 2010 (to a level up to $1.4 trillion) and 2011 (approaching $1.8 trillion)

YOIKK Secretariat Global Trends in FDI Inflows ►Change in the investment landscape: ►Decline in the numbers and values of cross border M&As in 2008, also decline in greenfield investments in the last quarter. ►Intentions of the majority (%58) of large TNCs to reduce their FDI expenditures in 2009 from their 2008 levels.  Decline in FDI inflows of developed countries by %29  Surge to %43 in global FDI inflows in the share of developing and transition economes in 2008.

YOIKK Secretariat Global Trends in FDI Inflows ►Despite concerns about a possible rise in investment protectionism, greater openness in FDI policies worldwide: ►Trend of scrutinizing foreign investments for national security reasons. ►Expansion in the network of IIAs: signature of 59 new bilateral investment treaties and increase in the number of DTT and international agreements with investment provisons.  During 2008, 110 new FDI –related measures were introduced, of which 85 were more favourable to FDI.  Compared to 2007, the percentage of less favourable measures for FDI remained unchanged.

YOIKK Secretariat II. Basic FDI Statistics of Turkey FDI in TURKEY

YOIKK Secretariat Basic FDI Statistics of Turkey Source: CBRT

YOIKK Secretariat Basic FDI Statistics of Turkey FDI Inflows and Their Distribution by Components Between (USD million) Source: CBRT

YOIKK Secretariat Basic FDI Statistics of Turkey Source: Undersecretariat of Treasury, CBRT Top 5 Inflows in 2008

YOIKK Secretariat Basic FDI Statistics of Turkey FDI Inflows by Sector, 2008 (USD Million) Source: CBRT

YOIKK Secretariat Basic FDI Statistics of Turkey FDI Inflows by Home Country (USD million) Source: CBRT

YOIKK Secretariat Basic FDI Statistics of Turkey Breakdown of Companies with International Capital According to their Country of Origin Source:Undersecretariat of Turkey, Porvisional Data

YOIKK Secretariat Basic FDI Statistics of Turkey FDI Inflows by economy (USD million) RankCountry2008 1United States France China United Kingdom Russian Federation Spain Hong Kong, China Belgium Australia Brazil Turkey Source: WIR 2009

YOIKK Secretariat Basic FDI Statistics of Turkey FDI Inflows by West Asia region (USD million) RankCountry2008 1Saudi Arabia Turkey United Arab Emirates Qatar Oman2.928 Source: WIR 2009

YOIKK Secretariat Basic FDI Statistics of Turkey FDI Stock by economy (USD million) RankCountry2008 1United States France United Kingdom Hong Kong, China Germany Netherlands Spain Belgium Canada China Turkey Source: WIR 2009

YOIKK Secretariat Basic FDI Statistics of Turkey FDI Stock by West Asia region (USD million) RankCountry2008 1Saudi Arabia Turkey United Arab Emirates Lebanon Qatar Source: WIR 2009

YOIKK Secretariat III. FDI Policy of Turkey FDI in TURKEY

YOIKK Secretariat ►Three basic components:  Increasing predictability in the economy  Economic stability  Political stability  Maintaining a functioning free market economy  Creating an investor friendly environment FDI Policy of Turkey

YOIKK Secretariat ►Creating an Investor Friendly Environment: Investment Environment Reform Programme FDI Policy of Turkey Diagnosis on Problem Areas of Investment Environment in Turkey Determination of Priorities with All Relevant Parties Design of an Appropriate Structure Involving the Stakeholders

YOIKK Secretariat ►Creating an Investor Friendly Environment: Two basic platforms based on public-private sector dialogue and cooperation  Coordination Council for the Improvement of Investment Environment (YOİKK)  Investment Advisory Council (IAC) FDI Policy of Turkey

YOIKK Secretariat FDI Policy of Turkey YOIKK STRUCTURE Coordination Council for the Improvement of Investment Environment (YOIKK) Investment Advisory Council Steering Committee Location of Investment Company Establishment Research & Development Foreign Trade & Customs Employment Corporate Governance Licensing Intellectual Property Rights Investment Promotion Taxes and Incentives Foreign Direct Investment Legislation SMEs

YOIKK Secretariat FDI Policy of Turkey YOIKK WORKING PRINCIPLES AGENDA SETTING WORKING OUTCOMES Recommendations of public institutions Recommendations of private sector Assessments in international indices and publications IAC recommendations Technical Committee Action Plans Basic policy guides Twinning Project YOIKK STEERING COMMITTEE TECHNICAL COMMITTEES Draft regulations Institutional capacity building Recommendations related to enforcement Council of Ministers is regularly informed about YOIKK studies.

YOIKK Secretariat FDI Policy of Turkey IAC STRUCTURE  Executives of leading multinational firms,  Heads of international institutions (IMF, World Bank, European Investment Bank),  TOBB, TUSİAD, YASED, TİM Investment Advisory Council of Turkey had 5 meetings so far. V. MeetingJune 18, 2008 IV. MeetingJune 11, 2007 III. MeetingJune 29, 2006 II. MeetingApril 29, 2005 I. MeetingMarch 15, 2004

YOIKK Secretariat ►The main achievements in the investment environment of Turkey:  FDI law  Simplification of Business Start-Up  Investment Support and Promotion Agency of Turkey  Trade Registry Automation Project  Employment Package  Social Security Reform  Regulations on mining and fuel sectors  Minimum living allowance system  Communique on Principles to be Followed by Joint Stock Corporations Subject To Capital Market Law  Increased flexibility in the labor market  Improved infrastructure in strategic sectors  Improved protection for intellectual property rights  New investment incentive system FDI Policy of Turkey

YOIKK Secretariat Fraser Institute/Economic Freedom Index No of countries 141 Ranking of Turkey Transparency International /Corruption Percepitons Index No of countries Ranking of Turkey IMD/World Competitiveness Yearbook No of countries Ranking of Turkey The performance of Turkey in the international investment indices FDI Policy of Turkey WEF/Global Competitiveness Report No of countries Ranking of Turkey

YOIKK Secretariat ►Useful Links   FDI Policy of Turkey

YOIKK Secretariat, 2008 Undersecretariat of Treasury October 19, 2009 İSTANBUL FDI in TURKEY Özge DUMLUPINAR Treasury Expert