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

2. YOIKK Secretariat 2008 2 ►Outline  Global Trends in FDI Inflows  Basic FDI Statistics of Turkey  FDI Policy of Turkey FDI in TURKEY

3. YOIKK Secretariat 2008 3 I. Global Trends in FDI Inflows FDI in TURKEY

4. YOIKK Secretariat 2008 4  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 2008. Global Trends in FDI Inflows ►FDI inflows: severely affected worldwide by the economic and financial crisis in 2008. ►Expectation to fall from $1.7 trillion to below $1.2 trillion in 2009. ►Slow recovery in 2010 (to a level up to $1.4 trillion) and 2011 (approaching $1.8 trillion)

5. YOIKK Secretariat 2008 5 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.

6. YOIKK Secretariat 2008 6 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.

7. YOIKK Secretariat 2008 7 II. Basic FDI Statistics of Turkey FDI in TURKEY

8. YOIKK Secretariat 2008 8 Basic FDI Statistics of Turkey Source: CBRT

9. YOIKK Secretariat 2008 9 Basic FDI Statistics of Turkey FDI Inflows and Their Distribution by Components Between 1995-2008 (USD million) Source: CBRT

10. YOIKK Secretariat 2008 10 Basic FDI Statistics of Turkey Source: Undersecretariat of Treasury, CBRT Top 5 Inflows in 2008

11. YOIKK Secretariat 2008 11 Basic FDI Statistics of Turkey FDI Inflows by Sector, 2008 (USD Million) Source: CBRT

12. YOIKK Secretariat 2008 12 Basic FDI Statistics of Turkey FDI Inflows by Home Country 2007-2008 (USD million) Source: CBRT

13. YOIKK Secretariat 2008 13 Basic FDI Statistics of Turkey Breakdown of Companies with International Capital According to their Country of Origin Source:Undersecretariat of Turkey, Porvisional Data

14. YOIKK Secretariat 2008 14 Basic FDI Statistics of Turkey FDI Inflows by economy (USD million) RankCountry2008 1United States316.112 2France117.510 3China108.312 4United Kingdom96.939 5Russian Federation70.320 6Spain65.539 7Hong Kong, China63.003 8Belgium59.680 9Australia46.774 10Brazil45.058 20Turkey18.198 Source: WIR 2009

15. YOIKK Secretariat 2008 15 Basic FDI Statistics of Turkey FDI Inflows by West Asia region (USD million) RankCountry2008 1Saudi Arabia38.223 2Turkey18.198 3United Arab Emirates13.700 4Qatar6.700 5Oman2.928 Source: WIR 2009

16. YOIKK Secretariat 2008 16 Basic FDI Statistics of Turkey FDI Stock by economy (USD million) RankCountry2008 1United States2.278.892 2France991.377 3United Kingdom982.877 4Hong Kong, China835.764 5Germany700.471 6Netherlands644.598 7Spain634.788 8Belgium518.940 9Canada412.268 10China378.083 40Turkey69.871 Source: WIR 2009

17. YOIKK Secretariat 2008 17 Basic FDI Statistics of Turkey FDI Stock by West Asia region (USD million) RankCountry2008 1Saudi Arabia114.277 2Turkey69.871 3United Arab Emirates69.420 4Lebanon24.170 5Qatar22.055 Source: WIR 2009

18. YOIKK Secretariat 2008 18 III. FDI Policy of Turkey FDI in TURKEY

19. YOIKK Secretariat 2008 19 ►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

20. YOIKK Secretariat 2008 20 ►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

21. YOIKK Secretariat 2008 21 ►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

22. YOIKK Secretariat 2008 22 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

23. YOIKK Secretariat 2008 23 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.

24. YOIKK Secretariat 2008 24 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

25. YOIKK Secretariat 2008 25 ►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

26. YOIKK Secretariat 2008 26 Fraser Institute/Economic Freedom Index 200620072008 No of countries 141 Ranking of Turkey 80 9490 Transparency International /Corruption Percepitons Index 200620072008 No of countries 163180 Ranking of Turkey 606458 IMD/World Competitiveness Yearbook 200720082009 No of countries 55 57 Ranking of Turkey 48 47 The performance of Turkey in the international investment indices FDI Policy of Turkey WEF/Global Competitiveness Report 200720082009 No of countries 131134133 Ranking of Turkey 536361

27. YOIKK Secretariat 2008 27 ►Useful Links  www.hazine.gov.tr  www.yoikk.gov.tr FDI Policy of Turkey

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