Industries to Watch

Turkey,  economically one of the fast growing countries in the world, second after China, is a place where there are a lot of possibilities to invest. Telecom and ICT (computers) business is going and growing well. But also textile, food sector, tourism and transportation sector is doing good!

The housing construction sector in Turkey is also doing very well. In the last years the Turkish government has made the mortgage for buying houses easier. Turkish people can get credit from the bank to pay their mortgage for their house.

Even people who couldn’t afford to buy a house have now the possibility to have their own house.

The country is in a positive mood and everywhere you look you see people who take the advantage to invest in the country but also in their own future! The foreigners have also this possibility to invest. They are welcome!

Before you invest I advise you to know what you want and do your research first. You can get information at the Turkish government or the Turkish consulates in the different countries in the world. But you can also ask to some Turkish organisations/companies or Turkish people you know. If you want, there is enough information to be found.

After you made your mind and got the needed information you can take your chance.  If you do it right you have nothing to lose. Don’t wait too long because you can miss the train!

One tip: Turkish people can be a show off (they like to buy chic and luxury things, which can be expensive) and they like electronics and fashion!

Economic View

Turkey has the world's 15th largest GDP-PPP[ and 17th largest nominal GDP. The country is a founding member of the OECD and the G-20 major economies. During the first six decades of the republic, between 1923 and 1983, Turkey has mostly adhered to a quasi-statist approach with strict government planning of the budget and government-imposed limitations over private sector participation, foreign trade, flow of foreign currency, and foreign direct investment. However, in 1983 Prime Minister Turgut Özal initiated a series of reforms designed to shift the economy from a statist, insulated system to a more private-sector, market-based model.
The reforms, combined with unprecedented amounts of foreign loans, spurred rapid economic growth; but this growth was punctuated by sharp recessions and financial crises in 1994, 1999 (following the earthquake of that year), and 2001; resulting in an average of 4% GDP growth per annum between 1981 and 2003. Lack of additional fiscal reforms, combined with large and growing public sector deficits and widespread corruption, resulted in high inflation, a weak banking sector and increased macroeconomic volatility. Since the economic crisis of 2001 and the reforms initiated by the finance minister of the time, Kemal Derviş, inflation has fallen to single-digit numbers, investor confidence and foreign investment have soared, and unemployment has fallen.
Turkey has gradually opened up its markets through economic reforms by reducing government controls on foreign trade and investment and the privatisation of publicly owned industries, and the liberalisation of many sectors to private and foreign participation has continued amid political debate. The public debt to GDP ratio, while well below its levels during the recession of 2001, reached 46% in 2010 Q3. The GDP growth rate from 2002 to 2007 averaged 7%, which made Turkey one of the fastest growing economies in the world during that period. However, growth slowed to 1% in 2008, and in 2009 the Turkish economy was affected by the global financial crisis, with a recession of 5%. The economy was estimated to have returned to 8% growth in 2010.

In the early years of this century the chronically high inflation was brought under control and this led to the launch of a new currency, theTurkish new lira, on 1 January 2005, to cement the acquisition of the economic reforms and erase the vestiges of an unstable economy. On 1 January 2009, the new Turkish lira was renamed once again as theTurkish lira, with the introduction of new banknotes and coins. As a result of continuing economic reforms, inflation dropped to 8% in 2005, and the unemployment rate to 10%.

One of the fastest growing airline companies in the world, Turkish Airlineswon Europe's Best Airline and Southern Europe's Best Airline awards.

Turkey's economy is becoming more dependent on industry in major cities, mostly concentrated in the western provinces of the country, and less on agriculture. However, traditional agriculture is still a major pillar of the Turkish economy. In 2010, the agricultural sector accounted for 9% of GDP, while the industrial sector accounted for 26% and the services sector 65%.However, agriculture still accounted for 24.7% of employment. In 2004, it was estimated that 46% of total disposable income was received by the top of 20% income earners, while the lowest 20% received 6%.According to Eurostat data, Turkish PPS GDP per capita stood at 49% of the EU average in 2010.

Turkish brands like Beko and Vestel are among the largest producers ofconsumer electronics and home appliances in Europe.

Turkey has taken advantage of the European Union – Turkey Customs Union, signed in 1995, to increase its industrial production destined for exports, while at the same time benefiting from EU-origin foreign investment into the country. Turkey now has also opportunity of a free trade agreement with the European Union (EU) – without full membership – that allows it to manufacture for tarif-free sale throughout the EU market.

By 2009 exports were $110 bn and in 2010 it was $117 bn (main export partners in 2009: Germany 10%, France 6%, UK 6%, Italy 6%, Iraq 5%). However larger imports, which amounted to $166 billion in 2010, threatened the balance of trade (main import partners in 2009: Russia 14%, Germany 10%, China 9%, US 6%, Italy 5%, France 5%).

After years of low levels of foreign direct investment (FDI), Turkey succeeded in attracting $22 billion in FDI in 2007 and is expected to attract a higher figure in following years. A series of large privatisations, the stability fostered by the start of Turkey's EU accession negotiations, strong and stable growth, and structural changes in the banking, retail, and telecommunications sectors have all contributed to a rise in foreign investment.

Turkish Economy

Turkey’s economy recorded impressive 8.8% growth in the second quarter (in 2010), following revised first quarter growth of 11.6%. Turkey’s GDP performed well, despite in the Euro zone and US, thanks to domestic demand and private sector investment spending, and also on the production side, due to respective construction and wholesale & retail investment increases as well financial intermediaries.

For the coming period, we expect moderate Turkish economic performance, as growth expectations for global economies continue to melt. Accordingly, we expect GDP to register 6.2% growth in 2011. The Central Bank of Turkey reduced policy rates to 5.75% from 6.25% in early August on global growth concerns, and is ready to make further expansionary moves should these concerns challenge Turkey’s macroeconomic environment. We expect no further policy rate cuts for the remainder of the year, although the CBT may continue to adjust RRR depending on the pace of lira depreciation. The Central Bank may cut the policy rate by a further 25-50 bps next year,
depending on the global recession.

Market Features and Opportunities

Turkey enjoys a very special location at the crossroads between East and West, overlapping Europe and Asia geographically and culturally

• Turkey offers both domestic and export -oriented market opportunities:
• A huge and growing domestic market (approx. 67 million),
• High-income European markets (approx. 600 million),
• Emerging Russia, Caucasia and Central Asia markets (approx. 250 million),
• Diverse and expanding Middle East and North Africa markets (approx. 160 million).
• Turkey has a customs union with the EU and is in the accession process to be a full member.
• Turkey has Free Trade Agreements with EFTA and 14 countries, and 9 more are on the way.
• Turkey is a member of Black Sea Economic Cooperation, Economic Cooperation Organization (ECO), Organisation for Islamic Conference and Islamic Development Bank.

Turkey is at the center of an economic and political area known as “Eurasia”, where three regions of the world, Europe, the former Soviet Union and the Middle East intersect. The proximity to the Balkans and the rest of Europe as well as to the growing emerging markets in Central Asia, the Middle East and North Africa creates unique business opportunities. The experience of more than 7000 foreign capital establishments, including over 100 of the Fortune Top 500 companies, confirms Turkey as a predominant investment location and export platform. US companies like Coca-Cola, Procter & Gamble and Phillip Morris, as well as international investment institutions like the World Bank Group’s International Finance Corporation already have selected Turkey as a regional base.

Turkey is the leading investor in Caucasian and Central Asian Turkic Republics. Due to her strong cultural and historic ties, Turkey provides privileged access and a perfect base to develop business with these countries.

The international image of Turkey in terms of a destination for investment is generally shaped by the diverse market opportunities, both domestic and export-oriented, that Turkey offers. The potential of these markets covers over 1 billion consumers, including:

• A huge and growing      domestic market (approx. 75 million)
• High-income European      markets (approx. 600 million),
• Emerging Russia, Caucasia      and Central Asia markets (approx. 250      million),
• Diverse and expanding      Middle East and North Africa markets (approx. 160 million).

Huge and Growing Domestic Market

Turkey's population is approximately 75 million. Turkey is projected to continue to constitute one of the largest populations in the Middle East and Eastern Europe. The domestic market is predominantly urban, with at least 17 major cities having a population in excess of 1 million, led by Istanbul, Ankara and Izmir. The population is much younger than European countries, with over 60% of the population below the age of 35. The improving consumption patterns and purchasing power, with a growing middle class, are important features of the domestic market. The average annual GDP growth rate of 4.6 % over the 1995-2000 period, well above many other countries, implies a continuing robust growth potential. With Turkey’s population growth rate having fallen from over 2% to roughly 1.5%, it is on the verge of entering a ‘golden demographic period’ similar to what East Asia experienced in the 1980s, where the productive working population is largest relative to children and retirees, providing the potential for even more rapid income growth.

Only a few emerging markets in the world have the potential of attracting investment both for export as well as for their domestic market. Turkey is in such a privileged position to create a ‘virtuous investment cycle’, with a more competitive domestic business environment further strengthening Turkey as a platform for exports, and exports in turn stimulating firms to upgrade and better serve the domestic market.

Turkey’s five-month export hit record high

ANKARA—Anatolia News Agency

Turkey’s exports in the first five months of the year hit a record high of $60 billion, the economy minister said.

“Sixty billion [dollars] in the first five months is a first for the Turkish Republic and exports in the past 12 months have exceeded $140.5 billion,” Zafer Çağlayan said at a meeting in Ankara yesterday.

While the European Union grew 1.5 percent last year the European growth figure would be at least 0.3 points higher if Turkey was member of the EU, Çağlayan said.

“This clearly demonstrates that it is the EU that needs Turkey, not the other way round,” Çağlayan said. He added that Turkey’s position within the IMF had changed, stressing that the country would have greater representation in the Fund within the next couple of years.

The Turkish business community was very pleased with the country’s focus on exports said Turkish Business and Industry Association President Ümit Boyner, speaking at the Second Trade Undersecretaries Conference yesterday. She said that the majority of Turkey’s macroeconomic problems had been solved and that inflation was beginning to fall to the single digits.

Turkey and Foreign Businesses

American and Turkish firms can do business together in the U.S., Turkeyand third countries, Industry Minister Nihat Ergün said yesterday at a meeting with Nathan Deal, the governor of Georgia, and Chris Cummiskey, commissioner of the Georgia Department of Economic Development.

Noting that small and medium enterprises (SMEs) in the United States also need to break into foreign markets, Ergün said, “[American SME’s] may think that trading with each other in interstate trade is enough, but in fact it is not. American and Turkish firms could do business together in the Turkish market, the American market and in third countries. Americanand Turkish firms active in the same industries should be brought together.”

Turkey has deep-rooted relations with the U.S. federal government, but should enhance its relations with individual American states as well, Ergün said.

The bilateral trade volume between Turkey and the U.S., which is at $20 billion, is still not large enough, Ergün said, adding that the political and defense alliances that exist between the two countries should be reflected in the economic field.

Ergün said next month he will attend a bio-technology congress in Boston, at which Turkey will sign a cooperation protocol with the Massachusetts Institute of Technology, and suggested that similar protocols could be created with CalTech or Georgia Tech, as well.

Turkey’s recently announced incentive scheme is comprehensive and very generous, Cummiskey said, adding, “We have very good universities in the state of Georgia. We have to commercialize the bright ideas that come out of these and [Turkish] universities.”

Overview of Turkey

Turkey's population is approximately 75 million. Turkey is projected to continue to constitute one of the largest populations in the Middle East and Eastern Europe. The domestic market is predominantly urban, with at least 17 major cities having a population in excess of 1 million, led by Istanbul, Ankara and Izmir. The population is much younger than European countries, with over 60% of the population below the age of 35. The improving consumption patterns and purchasing power, with a growing middle class, are important features of the domestic market. The average annual GDP growth rate of 4.6 % over the 1995-2000 period, well above many other countries, implies a continuing robust growth potential. With Turkey’s population growth rate having fallen from over 2% to roughly 1.5%, it is on the verge of entering a ‘golden demographic period’ similar to what East Asia experienced in the 1980s, where the productive working population is largest relative to children and retirees, providing the potential for even more rapid income growth.

Only a few emerging markets in the world have the potential of attracting investment both for export as well as for their domestic market. Turkey is in such a privileged position to create a ‘virtuous investment cycle’, with a more competitive domestic business environment further strengthening Turkey as a platform for exports, and exports in turn stimulating firms to upgrade and better serve the domestic market.

EU Customs Union and Accession Partnership

In 1996, a Customs Union between the European Union and Turkey came into effect, thereby creating the closest economic and political relationship between the EU and any non-member country. Essentially the Customs Union gives Turkey improved access to the group of countries previously known as the Common Market. It guarantees the free circulation of industrial goods and processed agricultural products. Customs duties and charges have been abolished and non-tariff barriers are prohibited. The Customs Union involves harmonization of Turkey's commercial and competition policies including intellectual property laws with those of the European Union and it extends most of the EU's trade and competition rules to the Turkish economy. The chief characteristic of the Customs Union is that goods move freely between the EU and Turkey without being subject to customs duties or quantitative restrictions; it covers all aspects of trade and commercial policy to ensure there is a "level playing field" for Turkish and European firms.

The Helsinki European Council in 1999 launched Turkey’s formal EU accession process based on the same criteria as applied to all other candidate States. This has allowed Turkey to benefit from a pre-accession strategy to stimulate and support its increasing economic and political harmonization to EU standards. EU financial support for the continuing reforms contained in Turkey’s National Program for the Adoption of the Acquis has been formalized in a 2001 Accession Partnership.

In late December 2004 the EU offered to begin membership talks with Turkey starting on October 3, 2005. EU leaders said the aim of the talks - which could take up to 15 years - would be full membership. As part of the agreement, Turkey agreed to extend an existing trade accord to the newest 10 E.U. members, which include Cyprus.

Turkey is a leading party to the Black Sea Economic Co-operation (BSEC) Agreement, together with other regional countries. The BSEC Agreement highlights the need for adoption of a regional strategy for sustainable development – its objective is a free trade zone between the member states.

Established in 1992, the BSEC is composed of 11 countries: Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Turkey and Ukraine. Austria, Egypt, Israel, Italy, Poland, the Slovak Republic and Tunisia have been granted observer status. In 2001, BSEC countries had more than 5 percent of total world trade. More than 5 percent of the world’s population lives in BSEC countries and the total BSEC area is around 20 million square kilometers. These figures indicate the importance of BSEC in the global economic order. It is expected that the significance of the BSEC region in economic and political terms will grow considerably over the coming years due to its geostrategic location, size and command over natural resources – particularly natural gas, oil and coal.

Openness to Global Trade and Investment

In addition to trade agreements with the EU and Black Sea countries, Turkey maintains an extremely liberal trade and investment regime with all countries, in conformity with its membership of international institutions such as the WTO, MIGA and OECD. Turkey has signed additional Free Trade Agreements with EFTA, Hungary, Israel, Romania, Lithuania, Estonia, Czech Republic, Latvia, Slovakia, Slovenia, Bulgaria, Poland, Macedonia, Croatia and Bosnia-Herzegovina. Additional FTAs are being prepared with Albania, Morocco, Tunisia, Egypt, Palestine, Pakistan, South Africa, Mexico and Lebanon. Turkey has signed Bilateral Agreements on the Promotion and Protection of Investments with 67 countries, and is in negotiations with 9 additional countries. These agreements do not bring any new burdens to the concerned countries while providing additional economic and legal assurances to investors.