Competitiveness of Turkey Investment Climate Indices/Rankings · Turkey’sFull Integration into...
Transcript of Competitiveness of Turkey Investment Climate Indices/Rankings · Turkey’sFull Integration into...
www.ekonomi.gov.tr 1
Competitiveness of
Turkey
&
Investment Climate
Indices/Rankings
Ministry of EconomyGeneral Directorate for Incentives Implementation and Foreign Investment
June 2017
www.ekonomi.gov.tr 2
Competitiveness of
Turkey
www.ekonomi.gov.tr 3
World Economic Forum
WEF defines competitiveness as “the set of institutions, policies and factors
that determine the level of productivity of a country”.
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What does Competitiveness mean?
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National CompetitivenessCouncil of Ireland
• The NCC defines competitiveness as ‘the
ability of firms to compete in markets.
Ireland’s national competitivenessrefers to
the ability of the enterprise base in Ireland
to compete in international markets.
• The NCC uses a a three level pyramid
framework model to understand and
analyse national competitivenessand its
drivers.
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What does Competitiveness mean?
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Geostrategic Location
– Proximity to Major Markets
General Economic Outlook of Turkey
– Robust Economic Growth
– Economic and Financial Stability
Market Size
– Quantity: Large and Growing Population
– Quality: Rising Purchasing Power
Human Capital
– Well Educated Labor Force
– Young and Dynamic Population with high technological adaptation ability
Turkey’s Full Integration into the Global Economy
– FTAs and EU Customs Union
Liberal Foreign Investment Regime
Business-Friendly Investment Environment
– Progressive Investment Climate Reforms
– Innovative and Pro-active Investment Incentive System
Main Pillars of Turkey’s Competitiveness
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GDP: $18,9 trillionPopulation: 601
millionGDP: $2 trillionPopulation: 142
million
GDP: $423 billionPopulation: 78 million
GDP: $3,1 trillionPopulation: 729
million
4 Hours of Flight Distance to :
≈ 1:3 of the World GDP
≈ 1:4 of the World Population
≈ 1:2 of the World Trade Volume
Geostrategic position
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Robust Economic Growth
Mean annual growth rate between 2002 and 2016 was 5.6%.
5,6
9,69,0
7,1
5,0
0,8
-4,7
8,5
11,1
4,8
8,5
5,2
3,5
7,2
5,9
7,4
4,55,3
-1,3
3,5
5
2003 2005 2007 2009 2011 2013 2015-I 2015-III 2016-I 2016-III 2017-I
Source: TURKSTAT
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Large Economy
1.574.018
- 5.000.000 10.000.000 15.000.000 20.000.000 25.000.000
China
United States
India
Japan
Germany
Russian Federation
Brazil
Indonesia
France
United Kingdom
Italy
Mexico
Korea, Rep.
Saudi Arabia
Spain
Canada
Turkey
Iran, Islamic Rep.
Thailand
Australia
Gross Domestic Product 2015, PPP
Source: World Bank
Turkey ranks as the 17th
largest economy in the
World and 6th in Europe.
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GDP based on Purchasing Power Parity, Trillion Dollar, 2015)
Source: IMF, World Economic Outlook, October 2016
Large Economy
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Rising Purchasing Power
4 6985 961
7 304 7 906
9 65610 931
8 980
10 56011 205 11 588
12 480 12 11211 014
10087
8 80710 165
11 394
12 89713 895
15 02114 491
16 012
17 69218 437
19 156 19 61019 917
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
GDP Per Capita GDP Per Capita (PPP)
Since 2002, GDP per capita has nearly tripled from 3,581 USD to 10,807
USD in 2016. In PPP terms GDP per capita exceeded 19,917 USD in 2015.
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Sound Fiscal Performance
Central overnment budget deficit/GDP ratio in 2015 was 1.2% and Turkey
outperformed 19 EU Countries. In 2016, Central government budget
deficit/GDP ratio was 1.1%.
Debt/GDP ratio of Turkey was 32.9% in 2015 and Turkey outperformed 25
EU countries. In 2016, Debt/GDP ratio of Turkey was 28.3.
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Dynamic and Growing Population
Growth Rate of
Population: 13,5 ‰
Million People
Source: TURKSAT
Demographic Profile* (2015)
(*) Projections
Source: UN
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23 781 24 516 25 12226 256
27 26128 713 29 565
30 658 30 855 31 131
Labor Force And Employement
Labor Force Employed
Human Capital
Source: TURKSAT
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Liberal Foreign Direct Investment Regime
Legislation
• Law No. 4875 (June 17, 2003)
Foreign Direct Investor
• Foreign real person
• Foreign legal entity established under the laws of foreign countries
Foreign Direct Investment
• Establishing a new company or branch of a foreign company
• Acquisitions of shares in a company established in Turkey
Main Principles
• National treatment
• No pre-entry screening/minimum capital requirements • Right to acquire real estate
• Guarantee to free transfer of proceeds, dividends and other financial assets
• Right to employ key expatriate staff
• Right to access international dispute settlement
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International Legal Framework of FDI in Turkey
• Signed with 100 countries
• 76 treaties are in force
BilateralInvestment
Treaties
• 82 treaties are in force
Avoidance of Double Taxation
Treaties
• Signed with Singapore and S. Korea
• Negotiations are in progress with 5 countries
Free Trade Agreements
(Investment Chapter)
Liberal Foreign Direct Investment Regime
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Investment Advisory
Council(IAC)
Taxes and
Incentives
COUNCIL OF MINISTERS
Coordination Council
for the Improvement of Investment Environment(YOIKK)
Steering Committee Working Groups for
Assesment and Evaluation
Monitoring
(YOIKK Secretariat)
Company registration
and Corporate
Governance
TECHNICAL COMMITTEES
EmploymentInput Supply Strategy
(GITES) and Sectoral
Licensing
Land for investment,
environmental and
zoning permits
InfrastructureIntellectual Property
Rights and R&DAccess to
Finance
Legislation of
Investment Climate
Foreign Trade and
Customs
Progressive Investment Climate ReformsEfficient Public Private Dialogue Platforms
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Pro-active Government Policies for
Business-Friendly Investment Environment
Law on Data ProtectionNo. 6698 (April 7, 2016)
Law on Improvement of the Investment Environment No. 6728 (August9, 2016)
International WorkforceLaw No. 6735 (August 13, 2016)
Amendment of the Regulation on the Implementation of the Lawon Turkish Citizenship (January 12, 2017)
Law on Individual PensionSystem No. 6740 (August 25,2016)
Law on Establishment of Turkey Wealth Fund Administration No. 6741(August 26, 2016)
Law on Project Based Support System No: 6745 (September 7, 2016)
Revisions on Investment Incentives System (October 5, 2016)
Law on Movables as Collateral in Commercial Transactions No. 6750(October 28, 2016)
Law on Expert Witness System No. 6754 (November24, 2016)
Law on Industrial PropertyNo. 6769 (January 10, 2017)
Turquoise Card for
Foreigners: TurquoiseCard gives its holdersindefinite right to stay
and Word in Turkey andto reside with their
families.
Turkish Citizenship forForeign Investors:
Access to Turkishcitizenship has been
eased for foreigninvestors with theamendments made to
Turkey’s currentcitizenship law with the
amendment made onJanuary 12, 2017.
Investment Climate Reforms
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Region & IndustryBasedProgram
Regional
Large Scale Investment
Priority Investment
Strategic Investment
General
Project BasedProgram
Projects with a minimum
investment threshold of USD 100 Million
Business AttractionCenters
Start-ups, Business
rehabilitation andInvestment relocation
Incentives for R&D and Design
R&D and design investment
projects with a minimum 15 or 30 R&D personnel employment.
Pro-active Government Policies for
Innovative and Efficient Investment Incentives
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Source: Ministry of Economy, CBRT
Foreign Direct Investment Flows to Turkey
USD Billion
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Foreign Direct Investment Flows to Turkey
Source: MoE
Measuring the Competitiveness by FDI Inflows
January-April
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FDI Inflows by Home Country Groups
Measuring the Competitiveness by FDI Inflows
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Number of Companies with Foreign Capital
Source: Ministry of Economy, CBRT
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Investment Climate
Indices/Rankings
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Benefits
• Comparison among economies
• Comprehensive measurementand evaluation
• Reflection of differentperspectives and data aboutan economy
• Encouraging economies forfurther reforms
Shortcomings
• Limited assumptions
• Deficiency of multidimensionalstructure about investmentenvironment
• Subjective evaluations basedon surveys and interviews
• Metodological problems: imposibility of comparisonamong economies on specificaspects
Benefits and Shortcomings
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The Index of Economic Freedom, Heritage Foundation and The
Wall Street Journal
Annual Global CEO Survey, PriceWaterhouseCoopers
Doing Business, World Bank
FDI Confidence Index, A.T. Kearney Global Management
Consultants
Best Countries for Business, Forbes
Index of Economic Freedom, Fraser Institute
Corruption Perception Index, Transparency International
The World Competitiveness Yearbook, The International Institute
for Management Development
Global Competitiveness Report, World Economic Forum (WEF)
The KOF Index of Globalization, KOF Swiss Economic Institute
OECD’s FDI Restrictiveness Index, OECD
So many indices, why?
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Limitations of Investment Indices
• Perceptions
• Perspectives of CEOsAnnual
Global CEO Survey
• Standardized case scenarios
• One/two major cities- data representation
World Bank’sDoing
Business
• Free movement of capitalOECD’s FDI Restrictiveness
Index
Focusing on limited aspects of investment environment
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Dimension Attribute Key Performance Indicator (KPI)
Attractiveness
Openness
• FDI
• Foreign Trade
• Number of tourists
• Number of foreign students
• Number of migrants
Innovation
• Employment rate of high-tech
sectors
• Exports of high-tech goods
• Usage of internet
• Number of scientific publications
Efficiency
• Unemployment level
• Logistical performance
• Tax rate
• Rule of law
Resources
• Data related to GDP
• Natural resources
• Education level (college graduate)
Dynamism 3 year variation of KPIs
Sustainability
Resilience• Humanitarian development indicators
• Avg. Years of school attendence
Vulnerability
• Debt/GDP
• Inflation rate
• Number of suicide
• People affected by natural disease
The GAI involves 144
countries,
approximately 93% of
the population and 98%
of GDP worldwide
Rankings
1 USA
2 Germany
3 Japan
4 Canada
5 Singapore
14 Italy
45 Turkey
The Global Attractiveness Index
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FURTHER INFORMATION
CONTACT
www. economy.gov.tr
Ministry of Economy
General Directorate for Incentive
Implementation and Foreign Investment
E-mail: [email protected]
Tel: +90 312 204 84 48
Fax: +90 312 204 89 16