TURKEY BURA KAHRAMAN TRABZON CHAMBER OF COMMERCE AND INDUSTRY - - PDF document

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PROJECT BLACK SEA TRADENET DOING BUSINESS WITH

TURKEY

BUĞRA KAHRAMAN – TRABZON CHAMBER OF COMMERCE AND INDUSTRY WORKSHOP DOBRICH, BULGARIA, 13-14 MARCH 2012

COUNTRY PROFILE

Official name: TURKEY Flag and coat of arms: Legal system: Turkey is a republican parliamentary democracy and constitutional state. The Turkish Grand National Assembly (“TGNA”) forms the unicameral legislature. There are 550 deputies elected every 5 years to the TGNA, but the parliament can decide to call elections before then, or postpone elections for up to one year in case of war. Elections are single stage and use proportional representation. Geographical location: Turkey is situated in Anatolia and the Balkans, bordering the Black Sea, between Bulgaria and Georgia, and bordering the Aegean Sea and the Mediterranean Sea, between Greece and Syria. It is located in the northern hemisphere between the 36º - 42º northern parallel and the 26º - 45º eastern meridian. Frontiers: The territory of Turkey is more than 1,600 kilometers long and 800 km wide, with a roughly rectangular shape. Turkey has land borders of 269 km with Bulgaria, 203 km with Greece, 276 km with Georgia, 325 km with Armenia, 18 km with Azerbaijan (Nahjivan), 529 km. with Iran, 378 km with Iraq and 877 km with Syria.

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COUNTRY PROFILE

Area: Turkey's area, including lakes, occupies 783,562 square kilometers (300,948 sq. mi), of which 755,688 square kilometers (291,773 sq. mi) are in Southwest Asia and 23,764 square kilometers (9,174 sq. mi) in Europe. Relief: Examination of Turkey's topographic structure on a physical map of the world shows clearly the country's high elevation in comparison to its neighbours, half of the land area being higher than 1000 meters and two thirds higher than 800 meters. Waters : Anatolian peninsula covers a large area of Turkey, approximately 97% of the total

• area. It's generally a high plateau covered with several high mountains and mountain ranges

especially in the east of the country. The existence of many valleys and high mountains, snow precipitation and therefore its melting in the Spring, and the climate of different regions favour the formation of lakes and rivers. The main rivers are; Fırat is 2.800km, Dicle is 1.900km, Kızılırmak is 1355km, Yeşilırmak is 519km, Büyük Menderes is 584km. Climate: The coastal areas of Turkey bordering the Aegean Sea and the Mediterranean Sea have a temperate Mediterranean climate, with hot, dry summers and mild to cool, wet winters. The coastal areas of Turkey bordering the Black Sea have a temperate Oceanic climate with warm, wet summers and cool to cold, wet winters.

COUNTRY PROFILE

Natural resources: As a result of the geological structure it is sitting upon, our country is one of the rare countries in the world that can supply a significant portion of its own raw material requirements thanks to the diversity of its minerals. It is ranked 28th in the world in terms of total mining production and 10th in terms of the diversity of mines produced. Turkey is among the leading reserve-rich countries in the world starting with boron, trona, bentonite, marble, feldspar, mangesite, limestone, pumice stone, perlite, strontium and calcite. Oficial language: Turkish is the official language of Turkey. Time zone: Turkey is in the Eastern European Time Zone. Eastern European Standard Time (EET) is 2 hours ahead of Greenwich Mean Time (GMT+2) Religion: Turkey is officially a secular country with no official religion since the constitutional amendment in 1924. Islam is the largest religion of Turkey. Around 99.8% of the population is registered as Muslim (mostly Sunni), followed by other religions as Christians (Oriental Orthodoxy, Greek Orthodox and Armenian Apostolic) and Jews (Sephardi). Currency: The Turkish currency is called Turkish Lira (TL 1), which was introduced, instead of New Turkish Lira as from 1 January 2009. Measuring system : The standard metric system has been accepted in 1931 within the law of “Measurements and Adjustments” and being applied since 1933.

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COUNTRY PROFILE

Administrative organisation : The foundation and principles of the Turkish government are based

• n

Central Administration and Local Administration concepts. Accordingly, the administrative structure of the Turkish Republic is divided into two, namely `Central Administration” and “Local Administrative Institutions”. Central administration: The organization of the Central Administration in the capital consists of the President of the Republic, the Council of Ministers, the Prime Minister, the Ministries and

• ther auxiliary bodies such as the State Council, the Court of Accounts, and the National

Security Council. In Turkey there are three kinds of provincial administrations: province, county, and district. There are 81 provinces in Turkey. Local government organizations: These are public legal personalities that have been established

• utside Central Government to meet the common needs of provincial, municipal, and village
• residents. They have separate legal personalities from that of the State; a certain degree of

autonomy; and their members are locally elected. National holiday and other legal holidays: Eight official holidays in Turkey are established by the Act 2429 of March 19, 1981 that replaced the Act 2739 of May 27, 1935.

COUNTRY PROFILE

History and civilisation Turkish Migration Before the Turkish settlement, the local population of Anatolia had reached an estimated level

• f 12 to 14 million people during the late Roman Period. The migration of Turks to the country
• f modern Turkey occurred during the main Turkish migration across most of Central Asia and

into Europe and the Middle East which was between the 6th and 11th centuries. Mainly Turkish people living in the Seljuk Empire arrived Turkey in the eleventh century. The Seljuks proceeded to gradually conquer the Anatolian part of the Byzantine Empire. In the following centuries, the local population began to be assimilated into the Turkish people. More Turkish migrants began to intermingle with the local inhabitants over years, thus the Turkish-speaking population was bolstered. Seljuq Dynasty The House of Seljuk was a branch of the Kınık Oğuz Turks who resided on the periphery of the Muslim world, north of the Caspian and Aral Seas in the Yabghu Khaganate of the Oğuz confederacy in the 10th century. In the 11th century, the Turkic people living in the Seljuk Empire started migrating from their ancestral homelands towards the eastern regions of Anatolia, which eventually became a new homeland of Oğuz Turkic tribes following the Battle of Manzikert on August 26, 1071.

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COUNTRY PROFILE

History and civilisation (continuation) The victory of the Seljuks gave rise to the Seljuk Sultanate of Rum, a separate branch of the larger Seljuk Empire and to some Turkish principalities (beyliks), mostly situated towards the Eastern Anatolia which were vassals of or at war with Seljuk Sultanate of Rum. Ottoman Dynasty The Ottoman beylik's first capital was located in Bursa in 1326. Edirne which was conquered in 1361[15] was the next capital city. After largely expanding to Europe and Anatolia, in 1453, the Ottomans nearly completed the conquest of the Byzantine Empire by capturing its capital, Constantinople during the reign of Mehmed II. This city has become the capital city of the Empire following Edirne. The Ottoman Empire would continue to expand into the Eastern Anatolia, Central Europe, the Caucasus, North and East Africa, the islands in the Mediterranean, Greater Syria, Mesopotamia, and the Arabian peninsula in the 15th, 16th and 17th centuries. The Treaty of Karlowitz in 1699 marked the beginning of the Ottoman decline. Treaty of Sèvres

• n August 10, 1920 by Allied Powers, which was never ratified. The Treaty of Sèvres would

break up the Ottoman Empire and force large concessions on territories of the Empire in favour

• f Greece, Italy, Britain and France.

Republic of Turkey The occupation of some parts of the country by the Allies in the aftermath of World War I prompted the establishment of the Turkish national movement. Under the leadership of Mustafa Kemal, a military commander who had distinguished himself during the Battle of Gallipoli, the Turkish War of Independence was waged with the aim of revoking the terms of the Treaty of Sèvres. By September 18, 1922, the occupying armies were expelled. On November 1, the newly founded parliament formally abolished the Sultanate, thus ending 623 years of Ottoman rule. The Treaty of Lausanne of July 24, 1923, led to the international recognition of the sovereignty

• f the newly formed "Republic of Turkey" as the successor state of the Ottoman Empire, and the

republic was officially proclaimed on October 29, 1923, in the new capital of Ankara. Mustafa Kemal became the republic's first President of Turkey and subsequently introduced many radical reforms with the aim of founding a new secular republic from the Ottoman past.

COUNTRY PROFILE

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COUNTRY PROFILE

Socio-economic profile Population and structure of population Turkey had 78,785,548 inhabitants by 2011, July and it’s the 17th biggest population of the

• world. The average age of the Turkish people is 28.5 years. 70% of the populations is living in

the cities. Men are forming 50.3% and women are 49.7% of the population. Turkey’s population has a growth rate of 1.235% according to estimations in 2011. Economic profile The Turkish economy has shown remarkable performance with its steady growth over the last eight years. A sound macroeconomic strategy in combination with prudent fiscal policies and major structural reforms in effect since 2002, has integrated the Turkish economy into the globalized world, while transforming the country into one of the major recipients of FDI in its region. The visible improvements in the Turkish economy have also boosted foreign trade, while exports reached USD 114 billion by the end of 2010, up from USD 36 billion in 2002. Similarly, tourism revenues, which were around USD 8.5 billion in 2002, exceeded USD 20 billion in 2010. Turkey, with such a robust economic performance, stood out as the fastest growing economy in Europe and one of the fastest growing economies in the world.

INSTITUTIONAL FRAMEWORK

General consideration on the institutional network

The Republic of Turkey is a democratic secular constitutional republic (although nominally, 98%

• f the population is Muslim, most belonging to the Sunni branch of Islam). The head of state is

the president (currently Abdullah GÜL), elected every seven years by the Grand National

• Assembly. Executive power rests in the Prime Minister (currently Recep Tayyip Erdoğan) and the

Council of Ministers, while Legislative power rests in the 550-seat Grand National Assembly representing 81 provinces. Legal and Political Structure Constitution - The Republic of Turkey adopted its first Constitution in 1924. It retained the basic principles of the 1921 Constitution, notably the principle of national sovereignty. As in the 1921 Constitution, the Turkish Grand National Assembly was deemed the "sole representative of the nation." The second Constitution of the Republic of Turkey was adopted in 1961 and introduced a bicameral Parliament: the National Assembly with 450 deputies and the Senate of the Republic with 150 members elected by general ballot and 15 members elected by the

• President. These two assemblies constitute the Turkish Grand National Assembly. The third

Constitution of the Republic of Turkey was passed in 1982 by a national referendum and is still in effect today.

Legislature - Legislative power is vested in the Turkish Grand National Assembly (TGNA) on

behalf of the Turkish nation and this power cannot be delegated. TGNA is composed of 550 deputies, while Parliamentary elections are held every four years. Deputies represent the entire nation and before assuming office, take an oath.

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INSTITUTIONAL FRAMEWORK

Judiciary - Judicial power in Turkey is exercised by independent courts and high judicial

• rgans on behalf of the Turkish nation. The judicial section of the Constitution is based on the

principle of the rule of law. The judiciary is founded on the principles of the independence of the courts and the security of tenure of judges.

Executive - The executive branch in Turkey has a dual structure. It is composed of the

President of the Republic and the Council of Ministers (Cabinet). President - The President of the Republic is the head of State and represents the Republic of Turkey and the unity of the Turkish nation. The President is elected by popular vote among the Turkish Grand National Assembly members who are over 40 years of age and have completed higher education or among ordinary Turkish citizens who fulfill these requirements and are eligible to be deputies. The President's term of office is five years and one can be elected for two terms at most. Prime Minister and Council of Ministers - The Council of Ministers (Cabinet) consists of the Prime Minister, designated by the President of the Republic from members of the TGNA, and various ministers nominated by the Prime Minister and appointed by the President of the

• Republic. Ministers can be assigned either from among the deputies or from among those

qualified to be elected as a deputy. Ministers can be dismissed from their duties by the President upon the proposal of the Prime Minister when deemed necessary.

LEGAL FRAMEWORK FOR DOING BUSSINESS

Legal base to register a business in Turkey Foreign Direct Investment Law No. 4875 emphasizes the key elements of the liberal investment environment in Turkey. We believe that foreign investment legislation of any country is the representative of the nation's attitude towards international investments. With Turkey's new Foreign Direct Investment Law, our equal (level playing field) and liberal approach to international investments is clearly reflected. Our new law is the "legal guide" to international investors about their rights and

• bligations, with explicit messages.

Types of Companies Incorporated companies such as:

• Joint-stock company (A.S)
• Limited liability company (Ltd.)
• Commandite company
• Collective company
• Unincorporated companies such as:
• Joint-venture
• Business association
• Consortium

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LEGAL FRAMEWORK FOR DOING BUSSINESS

Joint stock company A joint stock company is defined as a corporation having its own trade name and a predetermined amount of capital divided by shares. The liability of the shareholder is limited to their capital. The structure and organisation of joint stock companies is subject to regulation by the Turkish Commercial Code. A minimum of five shareholders, who may be either real persons

• r legal entities, are required for the formation of a joint stock company. The overall share

capital must be a minimum of TRL 50,000TL. Limited Company Limited liability companies may be composed of real persons or legal entities and must consist

• f at least two and no more than 50 partners. The overall share capital must be a minimum of

TRL 5,000TL. Shares held in a limited liability company are non-negotiable and may be transferred only with the approval of the other partners. Transfers must be approved by at least a 75% majority vote, with at least 75% of the total capital represented. Commandite Company It is the company established to operate a commercial enterprise under a trade name. Whereas the liability of some shareholders is limited to the capital subscribed and paid by the shareholder (commanditer), for some shareholders there is no limitation of liability. Legal entities can only be commanditer. No minimum capital is required. The rights and obligations of the shareholders are determined by the articles of association.

LEGAL FRAMEWORK FOR DOING BUSSINESS

Collective Company It is the company established to operate a commercial enterprise under a trade name and, the liability of none of the shareholders is limited only to the capital subscribed and paid by the shareholder. No minimum capital is required. It is mandatory that all the shareholders be real

• persons. The rights and obligations of the shareholders are determined by the articles of association.

Branches and Liaison Offices Foreign companies may also operate through liaison offices or branches provided that they are established in accordance with the relevant legislation. The income

• f a branch is taxed in the same way as resident corporations. Liaison offices may be used to

establish a presence in Turkey, but cannot be involved in any commercial activity and must be funded by the parent company abroad. Representative offices Representative offices should not have any commercial activities. The salaries of the employees should be paid from abroad. A simple permission from the Treasury is required to set up a Rep. Office.

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LEGAL FRAMEWORK FOR DOING BUSSINESS

Joint Ventures or Consortia A joint venture or a consortium may be set up for international contracts to be carried out in

• Turkey. It is a simple formation of a special contract. It can be freely established based only on

the international contract signed. Without any obligation to establish a company, the joint venture or the consortium can carry out the business activities. The only requirement would be registration with the tax office and the Social Security Institution. When the contract is completed, the Turkish joint venture dissolves. Company Establishment procedures To establish a company, the draft Articles of Associations is submitted to the Trade Registry

• Office. Items of the Articles of Associations are examined and the title screening is conducted

for the articles of association. Articles of Associations approved for start-up shall be notarized and an application shall be made to the Trade Registry Office for registration. Registration shall be conducted within 15 (fifteen) days following the notarization.

LEGAL FRAMEWORK FOR DOING BUSSINESS

Documents to start-up a business 1) A Letter of Application addressing the Trade Registry Office 2) A letter of Application addressing the Chamber of Commerce and Industry 3) Articles of Association (whose text is already examined and approved) notarized (6 copies) 4) A Letter of Commitment 5) A Declaration of Chamber Registration 6) Certificates of Identity Register, Certificates of Residence and Authorized Signatory Lists of the founding members of the company (if any, also those of managers appointed or proxies) 2 copies 7) Declaration of Establishment Forms (3 copies) 8) A petition on main area of operation Documents and forms required are available for download at www.gumruk.gov.tr

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INVESTING IN TURKEY

Why Invest In Turkey Turkey is a country offering significant opportunities for foreign investors with its geographically perfect position to function as a gateway between Europe, Middle East and Central Asia. The

• pportunities exist not only in the dynamic domestic market, but also throughout the region.

Hospitality and tolerance being the traditional cornerstones of the Turkish way of life, the country is open to foreign investors with many attractions to offer. The Investment Incentive System in Turkey The investment incentive scheme is continuously being amended to encourage investments in manufacturing and services, the energy sector and exports. Local and foreign investors have equal access to: the general investment incentive regime; incentives for large-scale; investments; region and sector-based incentives; R&D support; support for SMEs; industrial Thesis (SANTEZ) program ; loans for technology development projects; training support; state aid for exports.

INVESTING IN TURKEY

• A. General investment incentive regime

The general investment incentive regime is mainly a tax benefit program, in some cases with credit possibilities. The implementation of the Turkish incentive regime varies depending on the location, scale and subject of investments. The major incentive instruments are: 1) Exemption from customs duties: Customs tax exemption for imported machinery and equipment for projects with an incentive certificate 2) VAT exemption: VAT exemption for locally purchased or imported machinery and equipment for projects with an incentive certificate

• B. Incentives for large-scale investments

Corporate tax rates between 2-10 percent for investments started before 31.12.2011 Social security premium contribution for employers for up to 7 years for investments started before 31.12.2011

• C. Region and sector-based incentives

Corporate tax rates between 2-10 percent for investments started before 31.12.2011 Social security premium contribution for employers paid for up to 7 years for investments started before 31.12.2011

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INVESTING IN TURKEY

R&D support The R&D Law provides special incentives for R&D investment projects in Turkey if a minimum of 50 personnel are employed in an R&D center. The incentives within the new law will remain in effect until 2024 and include:

• 100 percent deduction of R&D expenditure from the tax base if the number of researchers

exceeds 500, then in addition to the 100 percent 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 employees (this item will be effective until December

31, 2023.)

• 50 percent of social security premium exemption for employers for a period of 5 years
• Stamp duty exemption for applicable documents
• Techno-initiative capital for new scientists up to TRY 100,000
• Deduction from the tax base of certain funds granted by public bodies and international
• rganizations

INVESTING IN TURKEY

Support for Technology Development Zones

• The advantages in Technology Development Zones are:
• Offices ready to rent, and infrastructure facilities provided.
• Profits derived from software development and R&D activities are exempt from income and

corporate taxes until 31.12.2023.

• Deliveries of application software produced exclusively in TDZs are exempt from VAT until

31.12.2023.

• Wages of researchers along with software and R&D personnel employed in the zone are

exempt from personal income tax until 31.12.2023.

• 50 percent of the employer’s share of the social security premium will be paid by the

government for 5 years until 31.12.2024.

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INVESTING IN TURKEY

TUBITAK (Scientific and Technological Research Council of Turkey) and TTGV (Turkish Technology Development Foundation) both compensate or grant R&D related expenses and capital loans for R&D projects.

• Projects eligible for TUBITAK incentives:
• Concept development
• Technological research & technical feasibility research
• Laboratory studies in the translation of a concept into a design
• Design and sketching studies
• Prototype production
• Construction of pilot facilities
• Test production
• Patent and license studies
• Activities concerning the removal of post-sale problems arising from product design

INVESTING IN TURKEY

Support for SMEs

• SMEs are companies with less than 250 employees and less than TRY 25 million in revenue or

turnover per year. Incentives granted to SMEs include:

• Exemption from customs duties
• VAT exemption for imported and domestically purchased machinery and equipment
• Credit allocation from the budget
• Credit guarantee support
• In order to meet financial needs of SMEs, a TRY 1 billion fund was transferred to the Credit

Guarantee Fund (KGF) by the Treasury to create credit capacity worth TRY 10 billion. The guarantee limit is TRY 1,000,000 per SME and TRY 1,500,000 for the risk group that the SME related to. KGF covers up to 80 percent of the loan. KOSGEB support to SMEs (www.kosgeb.gov.tr)

• The Small and Medium Sized Industry Development Organization (KOSGEB) makes significant

contributions to strengthening SMEs by various support instruments in financing, R&D, common facilities, market research, investment site, marketing, export and training.

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EXPORT AND IMPORT ACTIVITIES

Foreign trade The Turkish economy has shown remarkable performance with its steady growth over the last eight years. Significant improvements in such a short period of time have registered Turkey on the world economic scale as an exceptional emerging economy, the 16th largest economy in the world and the 6th largest economy when compared with the EU countries, according to GDP figures (at PPP) in 2010. Prior to the recent global recession which hit all economies throughout the world, the Turkish economy sustained strong economic growth for 27 quarters consecutively, making it one of the fastest growing economies in Europe. In 2008, Turkey’s exports and imports reached an all-time high; exports increased by 23 percent, reaching USD 132 billion, while imports rose by 19 percent, hitting USD 202 billion. In 2009, the year of the global financial crisis, Turkey managed to secure USD 102 billion of exports and USD 141 billion of imports. In 2010 exports grew by 12 percent to reach USD 114 billion.

EXPORT AND IMPORT ACTIVITIES

Foreign Trade Statistics Source: Central Bank of the Republic of Turkey

USD million 2003 2004 2005 2006 2007 2008 2009 2010 Exports (FOB) 47,253 63,167 73,476 85,535 107,272 132,002 102,143 113,930 Imports (CIF) 69,340 97,540 116,774 139,576 170,063 201,961 140,929 185,493 Foreign Trade Volume 116,593 160,707 190,251 225,111 277,334 333,963 243,072 299,423 Foreign Trade Balance

• 22,087
• 34,373
• 43,298
• 54,041
• 62,791
• 69,959
• 38,786
• 71,563

Exports / Imports (%) 68.1 64.8 62.9 61.3 63.1 65.4 72.5 61 Exports / GDP (%) 15.5 16.2 15.3 16.2 16.5 17.8 16.5 NA Imports / GDP (%) 22.7 25.0 24.3 26.5 26.2 27.2 22.8 NA

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EXPORT AND IMPORT ACTIVITIES

Exports Exports by Economic Activity: Source: Turkish Statistical Institute (TurkStat)

USD million 2003 2004 2005 2006 2007 2008 2009 2010 Agriculture and Forestry 2,121 2,542 3,329 3,481 3,725 3,937 4,347 4,941 Fisheries 81 103 140 131 158 240 189 156 Mining and Quarrying 469 649 810 1,146 1,661 2,155 1,683 2,677 Manufacturing 44,378 59,579 68,813 80,246 101,082 125,188 95,449 105,518 Other 204 294 384 531 646 507 474 63 Total 47,253 63,167 73,476 85,535 107,272 132,027 102,142 113,929

EXPORT AND IMPORT ACTIVITIES

Imports The Turkish import regime highlights the liberalization of Turkish imports in line with its commitment to complete the Customs Union with the EU, its relationship with EFTA, and its

• bligations under the World Trade Organization (WTO). Turkey has placed special emphasis on its

commitment to reduce customs duties in order to align itself with the Common Customs Tariff. Turkey has made some necessary modifications to its import regime, and by January 1, 1996 the Customs Union with the EU became effective. The basic aims of Turkey’s import policy since the early 1980s can be summarized as follows:

• To reduce protectionist measures in conformity with the new GATT rules
• To reduce bureaucratic procedures
• To secure a supply of raw materials and intermediary goods at suitable prices with certain

quality standards Import Regime of Turkey

• The Turkish Import Regime is based on the Import Regime Decree which was originally

published in the Official Journal, dated 31 December 1995 and No: 22510. At the end of each year, this decree is amended by a Supplementary Decree which specifies the upcoming year's regime details.

• For the year 2010, the Supplementary Decree for the Import Regime Decree - 2009/15710

was published in the Official Journal, dated 31 December 2009 and No: 27449 bis. 2 (came into force as of 1 January 2010).

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SOURCES OF FINANCING BUSINESS ACTIVITIES

General considerations, types of sources Turkey provides various incentives and grants to the investors for the purpose of facilitating larger investments and capital contributions by the local and foreign investors and eliminating the regional imbalances. Public sources – EU, international, national EU FUNDS - From 2007 onwards, EU is channelling its pre-accession funding through one single instrument called the Instrument for Pre-Accession Assistance (IPA). This new instrument is drawn from the European Commission’s experience with previous enlargements and the needs of candidate and potential candidate countries. IPA’s aim is to be a bridge between external assistance and internal policies. IPA objectives are the following:

• Support Turkey in its bid for membership, including the necessary economic, political and

social reforms

• Help prepare the country for the management of structural funds

GRANTS

• KOSGEB (Small and Medium Enterprises Development Organization) - www.kosgeb.gov.tr

– Entrepreneur Support Programme – Objectives: – SME Project Support Program – R&D, Innovation and Industrial Application Support Program

• TKDK (Agriculture and Rural Development Support Institution) - www.tkdk.gov.tr
• Regional Development Agencies (RDA)
• Turkish Technology Development Foundation (TTGV) – www.ttgv.org.tr
• Technology and innovation funding programmes directorate (TEYDEB)
• Industrial Thesis (San-Tez) Program http://sagm.sanayi.gov.tr

SOURCES OF FINANCING BUSINESS ACTIVITIES

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• EU Programs
• Research and Innovation

– European Union Framework Programme FP7 http://www.fp7.org.tr/ – Eureka Programme http://www.eureka.org.tr/

• Human resources development

– ISKUR Skills 10 support Programme http://bbs.beceri.org.tr/BBS/kurs.do – Life-Long Learning Programme

SOURCES OF FINANCING BUSINESS ACTIVITIES

ENTREPRENEURIAL CULTURE

General considerations

Turkey offers quite a sophisticated platform for entrepreneurs. It has a diversified industrial base, a relatively stable political and economic environment, a critical mass of willing early adopters, a considerable talent pool, a strong domestic market and underserved neighbouring markets. Yet, currently only 6 out of 100 people are entrepreneurs – a very low rate given the country’s level of development. Main characteristics of entrepreneurial activity During 2010, 3.73 % of the adult population in Turkey was nascent entrepreneurs and 5.08% new business owners. The TEA was 8.59%, slightly higher than the average of 6% recorded for 2006 –

• 2008. The established business ownership rate (owned and managed a business older than 42

months) was 10.73% indicating that the survival of early-stage businesses in Turkey is much higher than the year of 2008 (5.46%). In terms of motivation, almost 1.43 times as many respondents cited opportunity (4.58%) as opposed to necessity (3.19%) as their reason for starting a business. The male entrepreneurial activity rates (13.45%) are 3.6 times higher than that for females (3.67%). Although there is a slight increase in the number of women active as early-stage entrepreneurs in 2010, Turkey has the 4th highest male/female ratio among the GEM (Global Entrepreneurs Monitor) participating countries.

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LOCAL RESOURCES FOR CROSS BORDER BUSSINESS COOPERATION

Infrastructure

The Turkish infrastructure sector attracts more and more investors every day, focusing

• n

long-term business

• pportunities.The

national and local authorities in Turkey have been implementing numerous infrastructure projects through Public and Private Partnership (PPP) and they are also keen to realize further infrastructure projects in education, energy, defense, health, transportation and

• ther

public services.

LOCAL RESOURCES FOR CROSS BORDER BUSSINESS COOPERATION

The Information and communication Technologies (ICT) The Information and communication technologies (ICT) sector has become an essential part of the economy, in particular social life, since it is directly or indirectly affecting the ever-changing business world. Turkey has increased its interest in the ICT sector further, and started the necessary studies so as to have a voice in the sector in the future. The greatest indicators of these efforts are the new initiatives and R&D Law issued for the investors.

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LOCAL RESOURCES FOR CROSS BORDER BUSSINESS COOPERATION

Environmental Technologies

Investments in environmental technologies are highly supported by government in Turkey. Attracting environmentally friendly investments is also a key objective of the Investment Support and Promotion Agency

• f

Turkey. Turkey’s primary energy sources include hydropower, geothermal, wood, animal and plant waste, solar and wind energy. The Renewable Energy Law was enacted in 2005 in order to encourage renewable energy generation in competitive market conditions. Support Centers The fact that companies have started to give importance to customer relations, that retail channels in the market have increased, that the personal banking is developing and that new technologies are being integrated into business processes have, together, led to the development of the call center sector. Within this framework, the number of personnel working in call centers has significantly increased, and the customer relations field has become more professional, with the result that companies are focusing on their primary line

• f business by outsourcing their customer relations management activities.

LOCAL RESOURCES FOR CROSS BORDER BUSSINESS COOPERATION

Energy

Turkey has become one of the fastest growing energy markets in the world in parallel to its economic growth registered in the last eight years and is rapidly gaining a competitive structure. The Turkish Electricity Transmission Company estimates that Turkey’s demand for electricity will increase at an annual rate of six percent between 2009 and 2023.

Financial Services

Turkey’s financial sector is still in the development stage, with financial services ready for further expansion, driven by solid economic growth along with declining interest rates and inflation. According to the Turkish Banking Regulation and Supervision Agency (BRSA), the Turkish financial sector increased by approximately 20 percent of CAGR between 2002 and 2010.

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LOCAL RESOURCES FOR CROSS BORDER BUSSINESS COOPERATION

Real Estate

The Turkish real estate sector, offering ever-greater opportunities for investors every year, has come to prominence especially in the last

• decade. While the reduction in demand and a downward trend in house

prices have been observed all over Europe, according to TurkStat statistics the number of apartment units sold in Turkey in the second quarter of 2011 increased by 18 percent compared with the same period of 2010, which shows that the country has huge growth potential in the real estate sector. Machinery The machine manufacturing industry holds strategic significance in the development process of countries creating a multiplier effect in economic development by defining the manufacturing skills of other sectors through investment, intermediate goods and the services it

• ffers. The growth of the Turkish machinery sector is backed by highly

competitive and adaptable small and medium-sized businesses (SMEs), which form the bulk of the industrial production in the country.

LOCAL RESOURCES FOR CROSS BORDER BUSSINESS COOPERATION

Healthcare The healthcare system in Turkey has entered a long period of development under the 2003-2013 Health Transformation Program. The purpose of the program is to increase the quality and efficiency

• f the healthcare system and enhance access to healthcare facilities.

Transportation and Logistics Turkey lies between Europe and Asia serving as a bridge geographically, culturally and economically. In Turkey, investments in the transportation system are concentrated on land transportation infrastructure, and the country has developed one of the largest land transportation fleets in Europe. The network of highways has been developed significantly and the highway length now stands at 64,865 km, of which 2,080 km are motorways. At present 95 percent of passengers and 90 percent of goods are conveyed by highway transport. Turkey has a competitive advantage in maritime transport since it is surrounded by seas on three sides with the Mediterranean, the Aegean, and the Black Sea, together with the straits of the Dardanelles and the Bosphorus. The length of Turkey’s coastal borders is 8,333 km.

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LOCAL RESOURCES FOR CROSS BORDER BUSSINESS COOPERATION

Food and Beverage Turkey’s food industry has registered a steady growth in recent years, with the Turkish consumers becoming increasingly demanding, driven by the multitude of choices

• ffered by mass grocery retail outlets. Rising disposable

income and changing consumption patterns, along with the increase in the number

• f

females in full-time employment, have all led to an increase in interest as regards packaged and processed food, such as ready-to-eat meals and frozen food. As the sector is getting more sophisticated, Turkey is becoming one of the largest markets for baked goods with its bread - an important element of the Turkish diet - leading to some of the highest rates of per capita consumption in the world.

LOCAL RESOURCES FOR CROSS BORDER BUSSINESS COOPERATION

Agriculture

With its favorable geographical conditions and climate, Turkey is considered to be one of the leading countries in the world in the field of agriculture and related industries. This impressive position is best attested by rising exports in almost every kind of agricultural products, placing the country amongst the world’s largest producers. The restructuring efforts that began in the early 1980s, alongside a series of reforms such as privatizations and the reduction of trade barriers in the agriculture sector, resulted in a domestic market that is an integral part of the world economy today. Subsequently, agricultural exports, excluding processed food, increased to USD 5 billion in 2010, up from USD 1.7 billion in 2002.

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LOCAL RESOURCES FOR CROSS BORDER BUSSINESS COOPERATION

Tourism

As a country full of traces of various cultures that have influenced their time and geography, Turkey has a cultural heritage with roots going as deep as the first civilizations ever recorded in history. Home to a mosaic

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people that have built empires, the country’s riches are so extraordinarily diverse that visitors can experience a modern way of life, while at the same time catching a glimpse of the distant past.

LOCAL RESOURCES FOR CROSS BORDER BUSSINESS COOPERATION

Source: Ministry of Economy

FOREIGN TRADE BY INTERNATIONAL INDUSTRY STANDARD CLASSIFICATION Million Dolar Export Y E A R 2008 2009 2010 2011 Agriculture and Forestry 3.937 4.347 4.935 5.169 Fishing 240 189 156 186 Mining and Quarrying 2.155 1.683 2.687 2.806 Manufacturing Industry 125.188 95.449 105.467 126.025 Others 507 474 639 786 T O T A L 132.027 102.143 113.883 134.972 Million Dolar Import Y E A R 2008 2009 2010 2011 Agriculture and Forestry 6.392 4.594 6.457 8.895 Fishing 41 31 33 49 Mining and Quarrying 35.650 20.625 25.933 37.331 Manufacturing Industry 150.252 111.031 145.367 183.923 Others 9.628 4.648 7.755 10.636 T O T A L 201.964 140.928 185.544 240.834