REPUBLIC OF TURKEY PRIME MINISTRY Investment Support and Promotion Agency of Turkey ISPAT

1. REPUBLIC OF TURKEY PRIME MINISTRY Investment Support and Promotion Agency of Turkey ISPAT Istanbul Finance Centre 23April 2013

2. Global economy, emerging markets & Turkey • World’s economic centre of gravity is shifting towards emerging markets • Emerging markets share of the world economy • Twenty years ago less than one third, today they constitute almost half of the world economy • Turkey to become one of the top 10 economies in the world (and 2nd in Europe) during 2030-2050. • Emerging markets contribution to world economic growth • In 2012, they’ve constituted around 80% of the world economic growth • Contribution of US was around 10%, down from 21% in 1980s • Turkey’s growth rates were 9% & 8.5% in 2010 & 2011, respectively and 2.2% in 2012 (year of soft landing). • FDI into emerging markets • More than half of the global FDI now goes to emerging markets. • In Turkey, more than $122 BlnFDI during 2003-2012 vs. $14.8 Blnduring 1980-2002

3. Istanbul – A very attractive global city • Istanbul is the financial heart of Turkey and Turkey is the economic heart of the region (60 countries within 4 hours of flight from Istanbul) • The “coolest” city by Newsweek with more than 10 million tourists per year. • An attractive location due to local economy, skilled labour force, advanced IT infrastructure and strategic location. • Istanbul would rank among the top 50 economies had it been an independent state. In 2025, its GDP will reach around $367 billion at purchasing power parity (source: PWC) • Population of more than 13 million people, half of which is under age 30. • Largest concentration of higher education in Turkey with 40 universities. • Advanced business and technological infrastructure. • At the centre of financial and commercial crossroads; 7 hour time difference both to Tokyo and New York. • Direct access to more than 150 international destinations with Turkish Airlines.

4. Istanbul – Already home to global companies GE Healthcare – relocated regional headquarters to Istanbul from London . Coca Cola – regional headquarters in Istanbul covering Russia, Central Asia, the Middle East and Africa. Microsoft – regional headquarters in Istanbul managing operations in 76 countries. International Finance Corporation – Istanbul hosts their first Operations Center outside of Washington DC. They manage their operations in Central and Eastern Europe, Southern Europe, Central Asia, the Middle East and North Africa from their Istanbul base. GlaxoSmithKline – regional headquarters recently moving to Istanbul from Dubai managing 30 countries. UN Agencies – opening regional offices in Istanbul.

5. Istanbul as Financial Centre Project • Announced in 2009 by the Government. • Vision: Istanbul shall first become a regional financial centre and ultimately a global financial centre. • 300 representatives from more than 80 organizations participated in the project. • 8 working committees were formed; supervised by Deputy Prime Minister Ali Babacan: • Legal Infrastructure • Markets & Instruments • Taxation • Regulatory & Supervisory Framework • Technology • Infrastructure • Marketing & Promotion (ISPAT) • Human Resources

6. Istanbul as Financial Centre Project • An action plan consisting of 71 items to turn Istanbul into an international finance centre is being implemented. • For a copy of The Strategy and Action Plan for Istanbul International Finance Centre, please go to www.ifm.gov.tr

7. Istanbul – Fit for an international financial centre • Increasing FDI inflows to Turkey, particularly to Istanbul, provides lucrative opportunities for financial investors; $15 Bln during 1980-2002 compared to $122.7 Blnsince 2003. More than 33,000 foreign companies. • Favourable tax system; corporate tax rate is 20% and strong financial regulatory and supervisory system. • Strong banking sector, not a single bank was bailed out during the recent financial crisis. Capital adequacy ratio close to 18% and banking sector asset size to GDP is below 100% (Bank loans to GDP 55%); a substantial growth opportunity. ROE @ 17.9% and NPL @ 2.9% (from 17.6% in 2002). • New Turkish Commercial Law has taken effect on 1 July 2012, bringing more transparency how companies operate in Turkey, not limited to listed ones. • Accession country to the EU and harmonization of Turkish legislation with that of EU acquis. • Bilateral treaties promoting cross border investments and preventing double taxation. • One of the well functioning market economies in its region and probably the largest and most liquid financial markets in the region.

8. Istanbul – Fit for an international financial centre • Recent developments: • Asset management industry (Law no:6322). Exemption for foreign funds (based on IM exemption model) as well as venture capital investment trusts. Total AUM in mutual funds @ around 3% compared to more than 20% for Brazil, South Korea and South Africa. • New Capital Markets Law and Borsa Istanbul (BIST) • Private Pension System: Public contribution to private pension savings up to 25% and capped at 25% of annual gross minimum wage. • Insurance System: Regulations to enhance risk management systems to improve the financial position of the insurance system. • Revenue sharing certificates (Sukuks): Diversify into financial instruments with substantial growth rates. • Tax advantages for Angel Investors: Tax deductions up to 75% of their investments. • Withholding tax: To be reduced for longer maturities and no withholding tax on equity transactions for mutual funds with assets more than 75% in equity investments

9. REPUBLIC OF TURKEY PRIME MINISTRY INVESTMENT SUPPORT AND PROMOTION AGENCY Attached to the Prime Ministry and Reports directly to the Prime Minister 2 offices (Ankara – Istanbul) and global coverage in closeto 20 countries Established in 2007 Private sector approach Multi-lingual, professional and dedicated project directors, International representatives network worldwide Guidance on; Laws, Regulations, Site Selection, Sectoral Reports, Local Market Players, Potential Partners Confidential, Free of Charge ISTANBUL ANKARA

10. THANK YOU! Ahmet Iplikci Senior Advisor, ISPAT UK E: iplikci.ahmet@invest.gov.tr T: +44 7540 359 215