1. FDI - Where Does Turkey Stand? Orhan Cem Lead Partner, Advisory Services, PwC Turkey  TURKEY WHERE THE OPPORTUNITIES ABOUND ON THE WAY TO SUCCESS February 21-22, 2007

2. PricewaterhouseCoopers Agenda The Outlook What is Turkey's potential in attracting FDI? Where does Turkey stand in the FDI league? “To Do” List

3. PricewaterhouseCoopers Outlook & Potential Turkey is one of the world’s ten “Big Emerging Markets” with GDP of approximately USD380 billion at current prices; based on World Bank estimations Turkey is the 17th biggest economy in the world on a PPP basis. As per the “World 2050” report issued by PwC in March 2006, the Turkish economy will grow with a CAGR of 5.6% from 2005- 2050 and will reach USD4.1 trillion GDP in 2050 (at 2005 prices) and USD40,000 per capita income, becoming the 12th largest economy of the world. In 2006, M&A transactions generated a USD17 bn FDI inflows. FDI is steady in the services sector. Privatizations, M&A activity in the banking sector and foreign purchases of real estate are other factors supporting the continued strength of FDI inflows. 1

4. PricewaterhouseCoopers Growth Potential Finance Sector GSM Sector 2 Deposits / GDP(%) for benchmark countries Loans / GDP(%) for benchmark countries Turkey figures (2005) Penetration per 100 inhabitants (2005) 70 in 2006 Leaseable Area per 1000 inhabitants (2005) Population Turkey offers high growth potential to foreign investors. Retail Sector

5. PricewaterhouseCoopers FDI to Turkey is picking up. Forecasts show that in 2006, FDI inflow / GDP reached 5%. The IIF estimates that Turkey will attract some USD22 bn in FDI which amounts to approximately 10% of global net direct investment to emerging markets in 2007. FDI Comparison 3 Source: PwC Analysis FDI Stock (USD bn) – BRIC and Turkey Source: UNCTAD, World Investment Report, 2006 FDI Inflow (USD mn) –Turkey *As of November FDI / GDP – BRIC and Turkey Source: PwC Analysis

6. PricewaterhouseCoopers Various companies of different origins entered the Turkish market recently ALCOHOL MERSIN PORT IRON& STEEL REFINERY MOBILE Changing Competitive Landscape – Understanding the Profile of FDI More foreign companies entering the market Major sectoral privatizations 4 TOBACCO TURKISH AIRLINES POWER DISTRIBUTION PETRO CHEMICALS IZMIR PORT LOTTERY Expected privatizations

7. PricewaterhouseCoopers Turkey moved up 12 places from last year in the WEF’s “Global Competitiveness Report,” and was ranked 59th among the125 world economies scrutinized by the report. Turkey is most likely an efficiency-driven economy. Competitiveness WEF – Global Competitiveness 2006 Source: World Economic Forum 5

8. PricewaterhouseCoopers Although Turkey has certainly not dealt fully with all the key determinants of competitiveness at its level of development, such as macroeconomic stability, she has made good progress in factors which tend to become increasingly important at more advanced stages of development, such as business sophistication and innovation. Competitiveness Turkey vs BRIC and EU New Entrants Source: World Economic Forum 6

9. PricewaterhouseCoopers Protection of intellectual property Global competitiveness Fight against corruption Corporate Governance More privatization Tight fiscal balance Efficient legal structure Fair tax environment Healthy financial system Well functioning liberal markets Transparency Healthy financial reporting Simple and effective regulation and less bureaucracy Training and education Investment in research and development Innovation Branding Higher value added products Technology Turkey has a long list of homework to be done. These issues are taken as a discount factor on the valuation of Turkish businesses / assets. “To Do” List 7

10. PricewaterhouseCoopers “Laissez faire laissez passer” vs Strategic Approach Macroeconomic environment has improved significantly compared to the past but there is a need for nationwide strategy for FDI. Turkey is mostly attracting FDI through privatizations and M&A deals –asset sales, whereas green field FDI is limited. Question Marks & Concerns 8 Number of Greenfield Investments Source: UNCTAD, World Investment Report, 2006

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