1. 1 ICT in Turkey April 2nd, 2011 CICA Business Forum Aydın Ersöz

2. 2 About TÜBİSAD (Turkish Informatics Industry Association)  Established in 1979  Largest NGO of Turkish private ICT Sector  Has a group of members comprising nearly 200 ICT Companies  Member companies hold more than 95% of the country's turnover in the ICT Industry

3. 3 Mission & Priorities To foster ICT in becoming one of the fundamental industryies contributing to Turkey’s economic growth and to promote collective interests of the member companies Promote the penetration of ICT among Turkish SMEs Improve the quantity and quality of high skilled workforce Realize the benefits of new economy including convergence and digital media potential Influence the regulations and National IT Policies for a healthy, competitive and sustainable ICT market in Turkey Encourage the government for digital transformation Increase the awareness of strategical importance of ICT among private and public sectors 1 2 3 4 6 5

4. 4 More Dynamic Than Any ICT Market in the EU….. Adoption of ICT is Increasing... ICT Market ( Billion USD )

5. 5 High Share of Telecom… Source: EITO in collaboration with PAC, IDC and IDATE The ICT market of Turkey by segment 2011: Total 29,5 bln. $ Information Technology 21%Telecommunication 79%

6. 6 ICT Spending by countries

7. 7 ICT Spending by sectors

8. 8 Fixed-Mobile-Broadband Subscribers Fixed Line Penetration %21,4 10,9 Million Broadband Subscribers 63,8 M Mobile Subscribers with 86,5% penetration

9. 9 Trends (growth in %) Source: EITO in collaboration with IDATE EITO – European Information Technology Observatory Data Services Are Booming…

10. Supports And Incentives Granted For ICT The Turkish government has supported IT industry by establishing technology development zones, in which corporation tax and employee income tax exemptions are granted. Location BasedOperational Technology Development Zones Law: Income tax, corporate tax, value added tax and a part of the insurance premium of the personnel are covered. The company has to established in a technology development zone. Corporate Tax Law: Income tax of goods or software produced with an R&D activity is covered. The company has to be established in a technology development zone. Undersecretariat of Foreign Trade Covers a part of the cost of the project for R&D activities. Undersecretariat of Tresaury: Covers the cost of the value added tax for investment projects Small and Medium Industry Development Organization: Financial assistace, consultancy services Technology Development Foundation of Turkey: Covers a part of the cost of the project The Scientific and Technological Research Council of Turkey: Financial assistance, covers a part of the cost of the project Law on supporting R&D Activities: Income tax, corporate tax, value added tax and a part of the insurance premium of the personnel are covered.

11. Turkey’s Strengths in R&D and Innovation 11 Source: Investment Support and Promotion Agency of Turkey Technology Development Zones (Technoparks) 18 active TDZs 13 TDZs being constructed Exemption from income & corporate taxes until December 31, 2013 Small R&D Facilities Pilot Study Exemption from VAT until December 31, 2013

12. 12 Why Turkey ? IT Labor Costs (Euro)* Acceptable Turnover Rate / Employee Loyalty* Over 24.7 million young, well-educated and motivated professionals Labor productivity with an annual average growth of 4.4 % between 2002-2009 5th largest labor force compared to EU countries Talent to be at the client area in a shortest time period easy access to 1 Billion population via 4 hours flight, direct flight to 200 different cities 7/24 access facility through the strong telecommunication infrastructure The government has plans to work with private organizations to promote IT education

13. 13 The Turkish ICT sector is a fast growing sector with a CAGR of 14% between 2005 and 2009. Future trends, global and local developments present more opportunities for the coming years. Future of ICT in Turkey ? Demand of Private & Public sector is increasing...  Pressure on profit margins will increase IT outsourcing demand  Banking regulations and Basel requirements will increase ICT investments  Multinational FINANCE  High IT investment plan from Health, Education and Defense Ministries  Aggressive market growth target of $ 160 Billion by 2023 – GOVERNMENT  3G Licencing, all operators eager to take advantage of value-added services  Reduction in tax for data services will help the spread of mobile internet  Broadband penetration presents an excellent opportunity for growth TELECOM BRANDS IN TURKEY

14. Turkish ICT Industry – An Example 14

15. Population of 75 million %60 of population below 35 years of age High levels of Mobile and internet penetration and usage Forecasting strong growth in IT Potential Areas of Collaboration: Turkey as a Market 15

16. “Near-Shoring” in Turkey – Software Development – BPO – Remote Support and Services – Help Desk and Call Center – Qualified human resources – Tax exemption in Technoparks – Proven model Potential Areas for Collaboration: Near Shoring 16

17. Electronic Payment Systems Loyalty Mobile VAS Telco OSS/BSS... Turkey has considerable knowhow in a number of specialized areas, presenting opportunities for application and investment. Potential Areas of Collaboration: The Turkish Software Industry 17

18. Turkey has historical and cultural ties to the Caucasian, Central Asian and Middle Eastern regions Many international IT companies such as Microsoft, Oracle, Intel, Trendmicro... manage and/or support one or more regions out of Turkey Potential Areas of Collaboration: Turkey as a Base for Regional Operations 18

19. 19 ICT Expenditures by Region

20. 20 Total ICT Spending in CICA

21. New R&D Law 100% R&D expenditures deduction from tax base, if the number of researchers exceed 500, in addition to 100% deduction, half of the R&D expenditure increase incurred in the operational year compared to the previous year will also be deducted Income withholding tax exemption for the employees 50% of social security premium exemption for the employees 21 Techno-initiative capital for new scientist up to TRY 100,000 (USD 62,200) Deduction of some certain funds granted by public bodies and international organizations from tax base of the R&D company Special Incentives within New R&D Law At least 50 employees Source: Investment Support and Promotion Agency of Turkey