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“SILK ROAD”

“SILK ROAD”. FROM CHINA TO TURKEY. WHY TURKEY? A N OVERV I EW OF TURK I SH ECONOMY  & TURK I SH-CH I NESE B I LATERAL RELAT I ONS. Serah Kekeç Commercial Counselor Embassy of the Republic of Turkey. CONTENT. TURKISH ECONOMY IN GENERAL WHY TURKEY? - Investing in Turkey

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“SILK ROAD”

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  1. “SILK ROAD” FROM CHINA TO TURKEY

  2. WHY TURKEY? AN OVERVIEW OF TURKISH ECONOMY  & TURKISH-CHINESE BILATERAL RELATIONS Serah Kekeç Commercial CounselorEmbassy of the Republic of Turkey

  3. CONTENT TURKISH ECONOMY IN GENERAL WHY TURKEY? - Investing in Turkey - Sectors for Cooperation TURKEY – CHINA BILATERAL RELATIONS

  4. Turkey is the 16th largest economy in the World (6th when compared to EU Countries – IMF/2011)

  5. Growth Performance (2012) • Turkey has quickly recovered from the global financial crisis and among the least affected countries from currenteconomic uncertainties • Turkey has the highest economic growth rate in Europe • Average annual growth rate between 2002 and 2012is 5.2% • Real GDP growth for 2011 has been realized as 8.8% • Real GDP growth for 2012 realized as 2.2%.

  6. GDP (2012,Current prices, Billion $) The biggest economy in the region %5.0 annual average growth in the last 10 years (US: %1.6, EU: %1.0, Poland: %4.3) Source: IMF

  7. GDP Per Capita Source: Dollar value is from TURKSTAT, PPP GNI value from World Bank • Since 2002 GDP per capita has tripled from 3,492 USD to 10,497 USD. According to Purchasing Power Parity (PPP) GNI per capita surpassed 18 thousand USD.

  8. Inflation (Annual Percent Change) Source: TURKSTAT • Annual inflationin 2013 was realized as 7.40% and 6.97% according to CPI and PPI, respectively.

  9. General Government Gross Debt Stock Turkish Government’s gross debt stock to GDP ratio is %36,1 while the EU27 average is %85,1 (Q3 - 2012) Maastricht Criteria %60 Source: Eurostat, Treasury

  10. General Government Budget Balance Turkish Government’s budget balance to GDP ratio is -% 2 while the EU27 average is -%4,5 (Q3 - 2012) %3 Maastricht Criteria Source: Eurostat, Treasury

  11. Unemployment Rates (%) • In December 2013, unemployment rate was 10.0% and seasonally adjusted unemployment rate was 9.4%. • In 2013, unemployment rate was 9.7%. • Seasonally adjusted unemployment rate in Euro Area was 12.0% and 10.8% in (EU28) in January 2014. In terms of unemployment ratio Turkey outperformed 14 EU countries according to current data. • After Russia, Germany, England and France, Turkey has the 5th largest labor force among the European countries. (2012, World Bank)

  12. Policy Orientation • The year 2023 would be the centenary of Turkish Republic’s establishment. Therefore we set up a challenging vision for 2023. By year 2023, we do intend; • to take place among the top 10 economies in the world, • to achieve an annual export level of 500 billion USD and • to raise per capita income to 25 thousand USD. • Medium Term Program (2013-15) aims to sustain economic growth, to decrease the current account deficit, and to preserve macroeconomic and financial stability.

  13. Foreign Direct Investment Inflows • FDI inflows (cumulative) Companies with Intr.Capital (cumulative) • 1923-2002 : 15 billion USD 6.000 • 2003-2012 : 122,4 billion USD 30.000 • A.T. Kearney FDI Confidence The Global Competitiveness • Index Rankings IndexRankings • 2010  23 2011-2012  59 • 2012  13 2012-2013  43

  14. Turkey’s Foreign Trade (Billion US$)

  15. Turkey’s Foreign Trade (Billion US$) * Actual (Source: TURKSTAT) **Forecast: Medium Term Programme, Ministry of Development- 10/09/2012) Major EXPORT Partners - 2012; Germany (%9), Iraq (%7), Iran (%7), UK (%6), UAE (%5), Russian Fed. (%4), Italy (%4) Major EXPORT Items - 2012; Automotive and autoparts, Machinery, Iron & Steel, Electrical Appliances, Clothing Major IMPORT Partners-2012; Russia (%11), Germany (%9), China (%9), USA (%6), Italy (%6), Iran (%5), Fransa (%4) Major IMPORT Items-2012; Petroleum & Gas, Machinery, Automotive & Autoparts,

  16. Turkey has the 5th most liberal trade policies in the world (World Trade Indicators 2009) • Customs Union • with the EU Free Trade Agreements with 20 countries:

  17. WHY TURKEY?

  18. Why Turkey? Growth Markets Brazil Russia India China Mexico Korea Turkey Indonesia • Dynamic, Stable and Attractive Economy • (The Fastest Growing Economy among OECD Countries)

  19. Why Turkey? Potential of Young Population (2010) Source: World Bank (2011), TURKSTAT (2012)

  20. Productive and Cost-Effective Labor Force (The longest hours worked per week of full-time employment-annual average in Europe(2012))* Why Turkey?

  21. A potential market with 74 million consumers Increasing GDP Per Capita (10,444 USD per capita income 2011) Fast Growing Country (2010-8,9%, 2011-8,5%) (According to OECD, Turkey is expected to be the fastest growing OECD country for the years 2011-2017 with 6,7% average) Why Turkey?

  22. EUROPE GDP – $ 18.4 Trillion Population – 666 million RUSSIAN FEDERATION GDP – $ 1,5 Trillion Population - 142 million Why Turkey? International HubAn important partner because of its proximity to huge marketsPreferential market access to the European Union and 19 FTA partners MIDDLE EAST AND NORTH AFRICA GDP – $ 2,8 Trillion Population – 636 million CENTRAL ASIA & CAUCASUS GDP – $ 290 billion Population – 80 million 4h

  23. Why Turkey? • Turkey As An Energy Corridor And Terminal Existing Natural Gas Pipelines Existing Oil Pipelines Natural Gas Pipelines under Construction Natural Gas Pipelines Underway Proposed Natural Gas Pipelines Oil Pipelines under Construction An important bridge between energy suppliers (Russia, Iran, Azerbaijan) and consumers (EU)

  24. Why Turkey? Structural Reforms Corporate Income Tax %20 National Treatment Protection Against Expropriation Guarantee of Transfers NewFDI Law & Other Legislation Freedom to invest Access to Real Estate Employment of Expatriates Int’l Arbitration

  25. Policies to bring together international capital with Turkey’s assets • FDI Regime • National treatment • No pre-entry screening /minimum capital requirements • Right to acquire real estate • Guarantee to transfer proceeds • Right to employ key expatriate staff • Right to access international dispute settlement • Bilateral Investment Treaties with 86 countries • Double Taxation Agreements with 78 countries • Customs Union with the EU • Free Trade Agreements with 19 countries • Improving investment climate : Moving target for the government since 2002 • Streamlining procedures for investments and eliminating administrative and bureaucratic hurdles in line with changing priorities and needs of business • Political ownership • Making full use of public-private dialogue through permanent platforms (Coordination Council for Improvement of Investment Climate, Investment Advisory Council)

  26. The New Investment Incentives Program Support Measures Regional Investment Incentive Scheme Large Scale Investment Incentive Scheme Strategic Investment Incentive Scheme General Investment Incentive Scheme - Customs Duty Exemption - VAT Exemption - Income Tax Withholding Allowance Support (In Region 6) - Customs Duty Exemption - VAT Exemption - Tax Deduction - Social Security Premium Support (Employer’s Share) - Land Allocation - Interest Support - Income Tax Withholding Allowance Support (In Region 6) - Social Security Premium Support (Employee’s Share) (In Region 6) - Customs Duty Exemption - VAT Exemption - Tax Deduction - Social Security Premium Support (Employer’s Share) - Land Allocation - Income Tax Withholding Allowance Support (In Region 6) - Social Security Premium Support (Employee’s Share) (In Region 6) - Customs Duty Exemption - VAT Exemption - Tax Deduction - Social Security Premium Support (Employer’s Share) - Land Allocation - Interest Support - VAT Refund - Income Tax Withholding Allowance Support (In Region 6) - Social Security Premium Support (Employee’s Share) (In Region 6) 26

  27. The New Investment Incentive Scheme 5 2 3 3 1 4 4 1 4 3 5 5 2 2 5 3 1 2 1 5 4 5 3 6 4 2 2 1 5 5 2 3 3 3 1 5 4 • V.A.T. Exemption (for the imported and domestically provided Machinery and Equipment) • Customs Duty Exemption (for the imported Machinery and Equipment) • Reduced Corporate Income Tax (C.I.T. between %2 - %10) • Social Security Premium Support (Both Employer’s and Employee’s Share, for 2 – 12 years) • Land Allocation • Interest Support • Income Tax Withholding Allowance • VAT Refund for Construction Expenses

  28. 28 Turkey-China Bilateral Relations

  29. Turkey-China Trade Relations 1. Phase : A Remote Trade Partner Export-2000 : 96 Million US $ Import-2000 : 1,34 BillionUS $ Volume : 1,44 BillionUS $ Balance : 1,24 BillionUS $ 2. Phase : Ever-increasing Trade Relations Export -2005 : 550 Million US $ Import-2005 : 6,88 BillionUS $ Volume : 7,43 BillionUS $ Balance : 6,33 BillionUS $ 3. Phase : One of the Main Trade Partners Export-2010 : 2,26 Million US $ Import-2010 : 17,18 Million US $ Volume : 19,44 Million US $ Balance : 14,92 MillionUS $

  30. Turkey’s Export to China (The first 10 product groups) (million US$)

  31. Turkey’s Imports from China (The first 10 product groups) (million US$)

  32. FAVOURABLE SECTORS FOR BILATERAL COMMERCIAL AND INVESTMENT RELATIONS TELE COMMUNICATION ENERGY TRANSPORTATION MINING IRON & STEEL AUTOMOTIVE & AUTOPARTS INDUSTRIES CONSTRUCTION IT & SOFTWARE NATURAL & PRECIOUS STONES FURNITURE LEATHER ARTICLES TEXTILE MACHINE & EQUIPMENT AGRICULTURE TOURISM

  33. Turkey-China Economic Relations MAIN GOAL: Deepened Commercial and Economic Cooperation Sustainable Relations Strategic Partnership - Sustainable and Mutually Beneficial Trade Relations - Consolidation of Relations Through Economic Cooperation * Reciprocal Investments * Reciprocal Investments to State Bonds * Strengthening Financial Cooperation * Improving relations in the banking sectors and opening branches * Cooperation in the 3rd countries in the contracting sector * Cooperation in the infrastructure projects Sectoral Cooperation (energy, transportation, telecomunication etc. ) * Cooperation in the fields of Energy and Transportation * Cooperation in tourism - Improvement of cooperation in the regional and multilateral platforms

  34. Political Determination • Xi Jingping, Vice President of PRC, Turkey visit in February 2012 • *Official Meetings and Business Forum • *Important Agreements • - R. Tayyip Erdoğan, Prime Minister of Turkey, China visit in April 2012 • * Offical Meetings, Business Forum, Investment Forum • *Important Agreements • Important Agreements • * Financial Technical Cooperation Agreement • * Swap Agreement • * Protocol on Banking Cooperation • *Tobacco Protocol • *Letter of Intent for Nuclear Cooperation • * Agreement on Food Safety

  35. THANK YOU FOR YOUR ATTENTION !

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