IMPROVEMENT OF INVESTMENT IMPROVEMENT OF INVESTMENT ENVIRONMENT ENVIRONMENT

&& IMPACT on FDI IMPACT on FDI

February 2009February 2009

Cavit DAĞDAŞCavit DAĞDAŞ

Deputy UndersecretaryDeputy Undersecretary

Undersecretariat of Treasury Undersecretariat of Treasury

Prime MinistryPrime Ministry

Undersecretariat for TreasuryUndersecretariat for Treasury

Undersecretariat of Treasury

OUTLINEOUTLINE

Improving Investment Climate: Why?

Improvement of Investment Climate Turkey’s Experience Coordination Council for the Improvement of Investment Environment (YOIKK)

Investment Advisory Council (IAC)

Major Achievements

Indicators of the Success

FDI Statistics of Turkey

International Indices and Reports

Future Agenda

Undersecretariat of Treasury

IMPROVING INVESTMENT CLIMATE

WHY?

Undersecretariat of Treasury

INVESTMENT

CLIMATE

COMPETITIVENESS

FDI

GLOBALIZATION

Predictability

Economic Stability

Political Stability

Free Market Economy

Investor-friendly framework

Improving Investment Climate: Why? Improving Investment Climate: Why?

Undersecretariat of Treasury

IMPROVEMENT OF INVESTMENT CLIMATE

TURKEY’S EXPERIENCE

Undersecretariat of Treasury

Improvement of Investment Climate: Turkey’s ExperienceImprovement of Investment Climate: Turkey’s ExperienceImprovement of Investment Climate: Turkey’s ExperienceImprovement of Investment Climate: Turkey’s Experience

Diagnosis on Problem Areas of Investment Environment in Turkey

Determination of Priorities with All Relevant Parties

Design of an Appropriate Structure Involving the Stakeholders

Undersecretariat of Treasury

Location of Investment

Company Establishment Employment

Foreign Trade& Customs

Licensing

Intellectual Property Rights

Taxes and Incentives

Foreign Direct Investment Legislation

Investment Promotion SMEs

Coordination Council for the Improvement of Investment Environment (YOIKK)

Steering Committee

Investment Advisory Council

Corporate GovernanceResearch &

Development

Improvement of Investment Climate: Turkey’s ExperienceImprovement of Investment Climate: Turkey’s ExperienceImprovement of Investment Climate: Turkey’s ExperienceImprovement of Investment Climate: Turkey’s Experience

Undersecretariat of Treasury

Investment Advisory CouncilInvestment Advisory Council

Executives of leading multinational firms,Executives of leading multinational firms,

Heads of international institutionsHeads of international institutions

(IMF, World Bank, European Investment (IMF, World Bank, European Investment Bank) andBank) and

TOBB, TUSIAD, YASED, TIM. TOBB, TUSIAD, YASED, TIM.

V. MeetingV. Meeting June 18, 2008June 18, 2008

IV. MeetingIV. Meeting June 11, 2007June 11, 2007

III. MeetingIII. Meeting June 29, 2006June 29, 2006

II. MeetingII. Meeting April 29, 2005April 29, 2005

I. MeetingI. Meeting March 15, 2004March 15, 2004

Investment Advisory Council of Turkey had 5 meetings so far.

Improvement of Investment Climate: Turkey’s ExperienceImprovement of Investment Climate: Turkey’s ExperienceImprovement of Investment Climate: Turkey’s ExperienceImprovement of Investment Climate: Turkey’s Experience

Undersecretariat of Treasury

MAJOR ACHIEVEMENTS

Undersecretariat of Treasury

Major AchievementsMajor Achievements

Investment Support and Promotion Agency of Turkey

Simplification of Business Start-Up

www.invest.gov.trwww.invest.gov.tr

Indicators of Business Start-Up

TurkeyTurkey OECD OECD AverageAveragePre-Pre-

RefomRefom20020077

No. of No. of procedures procedures

1313 66 66

Day Day 3838 66 14.914.9

FDI Law

No Pre-entry Screening Requirement No Minimum Capital Requirement National Treatment

Undersecretariat of Treasury

INDICATORS OF SUCCESS

Undersecretariat of Treasury

Indicators of Success - FDI StatisticsIndicators of Success - FDI Statistics

1,1 1,82,8

10,0

22,2

17,7

20,2

3,4

0

2

4

6

8

10

12

14

16

18

20

22

24

2001 2002 2003 2004 2005 2006 2007 2008

Increased FDI Inflows...

USD Billion

Source: Turkish Treasury, Provisional Data

Undersecretariat of Treasury

72428.271

10.884

14.053

21.079

17.682

5.294

0

4.000

8.000

12.000

16.000

20.000

24.000

1954-2002 2003 2004 2005 2006 2007 2008

Upward Trend in Number of Companies with International Capital (Cumulative)

Source: Turkish Treasury, Provisional Data

Indicators of Success - FDI StatisticsIndicators of Success - FDI Statistics

Undersecretariat of Treasury

World Investment Report 2008, UNCTAD

Indicators of the Success- Investment Indices

20052005 20062006 20072007

FDI Stock in TurkeyFDI Stock in Turkey(USD Billion)(USD Billion)

64.464.4 7979 146146

Turkey has been selected as 15th attractive country to Turkey has been selected as 15th attractive country to invest in 2008-2010 term. invest in 2008-2010 term.

Turkey has been 21st in terms of FDI stock; while it Turkey has been 21st in terms of FDI stock; while it

was 25th in 2006.was 25th in 2006.

Undersecretariat of Treasury

# of countries# of countries Turkey’s RankingTurkey’s Ranking

DOING BUSINESS 2009DOING BUSINESS 2009 181181 5959

DOING BUSINESS 2008DOING BUSINESS 2008 178178 6060

DOING BUSINESS 2007DOING BUSINESS 2007 175175 6565

DOING BUSINESS 2006DOING BUSINESS 2006 155155 8484

World Bank - Doing Business 2009 Report

Doing Business 2009 Report Turkey has displayed progress in;• employing workers, • protecting investors and• enforcing contracts.

Indicators of the Success- Investment Indices

Undersecretariat of Treasury

Improvement in International Competitiveness

Heritage Foundation Economic Freedom Heritage Foundation Economic Freedom IndexIndex

20052005 20062006 20072007 20082008

No of No of countriescountries 161161 157157 157157 162162

Ranking Ranking of Turkeyof Turkey 112112 8585 8383 7474

Forbes / Best Countries for Forbes / Best Countries for BusinessBusiness

20062006 20072007 20082008

No of No of countriescountries 135135 144144 121121

Ranking of Ranking of TurkeyTurkey 6161 4848 4141

Tranparency International/Corruption Tranparency International/Corruption Perception IndexPerception Index

20062006 20072007 20082008

No of No of countriescountries 163163 180180 180180

Ranking of Ranking of TurkeyTurkey 6060 6464 5858

Indicators of the Success- Investment Indices

Undersecretariat of Treasury

FUTURE AGENDA

Undersecretariat of Treasury

Future AgendaFuture Agenda

Investment climate reform program will focus on:Investment climate reform program will focus on:

Decreasing time and cost of business start-up Decreasing time and cost of business start-up

Improving flexibility of the labor marketImproving flexibility of the labor market

Simplifying and decreasing cost of sectoral licensingSimplifying and decreasing cost of sectoral licensing

Simplifying and decreasing cost of customsSimplifying and decreasing cost of customs

Easing access to finance for SMEs Easing access to finance for SMEs

Enhancing corporate governanceEnhancing corporate governance

Strengthening R&D activitiesStrengthening R&D activities

IMPROVEMENT OF INVESTMENT IMPROVEMENT OF INVESTMENT ENVIRONMENT ENVIRONMENT

&& IMPACT on FDI IMPACT on FDI

February 2009February 2009

Cavit DAĞDAŞCavit DAĞDAŞ

Deputy UndersecretaryDeputy Undersecretary

Undersecretariat of Treasury Undersecretariat of Treasury

Prime MinistryPrime Ministry

Undersecretariat for TreasuryUndersecretariat for Treasury