DIPLOMACY ECONOMY SUPPLEMENTS WORLD

Embassy of the Republic of Turkey to Romania: Turkey – Discover the potential

Discover the Potential

The establishment of the Republic of Turkey is not only the rebirth of a noble nation but also a symbol of the rebellion and success of aggrieved nations in the world. By celebrating the 95th anniversary of Republic Day, Turkey gives a strong message including dedication to build a prosperous future which takes power from 2023 goals to global community.

Homeland of History

Turkey has the honor of being homeland of historical achievements which contribute to build today’s modern civilization. The world’s first city settlement (Çatalhöyük) and the first political entity in the world (The Hittite Empire) rose up on the lands of Anatolia. Also, civilizations in Anatolia created commercial instruments such as the first written commercial agreements (in ancient Kanesh), the first mall (Grand Bazaar), and the first peace treaty in the history.

Country of Economic Transformation

With the power of its deep-rooted experiences, Turkish economy was transformed from labor-oriented structure into industry-oriented form since 1923. Its unique geographic position as a bridge between East and West provided a wide ranged opportunity for business environment, and also its long history of relations with the European Union and continually updated reformation process have been contributed to Turkey’s significant economic development.

After economic liberalization process dated 1980’s and Custom Union agreement with the EU in 1995, Turkish economy had a remarkable success story, and in 2017 Turkey ranks as the 17th largest economy in the World and 6th in Europe. Turkey’s GDP reached to 851,5 billion USD in 2017. Turkish economy has been raised on pillars of services (%53,4 of GDP) and industry (%20,6 of GDP). According to the figures of EuroStat Turkey is the 4th country of Europe region in terms of the volume of the production. By the end of 2017 in European region Turkey is the 5th largest automotive manufacturer, the 2nd largest producer of plastics, 5th largest paint producer, and the 10th most popular tourist destination in the world.

Turkish economy expanded by 7.4% in 2017 and this makes Turkey the top country among OECD member countries. Since 2002, GDP per capita has nearly tripled from 3,581 USD to 10,597 USD in 2017, and in PPP terms, GDP per capita exceeded 27,078 USD in 2017.

Turkey follows an export-led policy for its economic growth since 1980’s. Through the structural reforms and industrial capacity of Turkey, its’ share in global merchandise exports reached to %0,89 in 2017 while it was %0,74 in 2011. Turkey’s export increased to 157 billion USD and import reached to 234 billion USD. Considering that %46 of Turkey’s export was agricultural products in 1980’s, Turkey’s success in diversification of its export is obvious. In 2017 the share of agricultural products in Turkey’s export was %3, the share of manufacturing industries reached to %94 and Turkey’s main export sectors were automotive and spare parts, machinery, textile, readymade clothes and metal products. Turkey’s geographic position provides opportunities to reach both European and Asian markets. The main export destinations of Turkey in 2017 were EU countries (%49) and Asian countries (%50).

Turkey has created Free Zones (FZ) which are special sites deemed outside the customs area, although they are physically located within the political borders of the country in order to boost the number of export-focused investments. FZs are strategically located at points that grant easy access to international trade routes via ports on the Mediterranean, Aegean Sea and the Black Sea.

Today Turkey provides several advantages for companies which operate in 18 Free Trade Zones. Main advantages of operating in FZ are tax advantages for manufacturers, exemption from custom duties, market access to domestic and foreign markets and supply chain opportunities. In 2017, total trade volume of the FZ were 20,4 billion USD, increasing %7,1 annually.

Country that Always Welcomes

Addition to Turkey’s economic performance and its liberal investment environment, the opportunities such as skilled workforce with cost advantage, access to wide geography with its Free Trade Agreements and lucrative incentives have made Turkey as a regional manufacture and management hub for foreign investors. Despite global and regional challenges, in the 2003-2017 period Turkey attracted 193,2 billion USD foreign direct investments (FDI).

Turkey has been conducted a comprehensive investment incentive program which includes 5 different schemes namely general investment, regional investment, priority investment, large scale investment and strategic investment incentive scheme since 2012.

Within the framework of those schemes, investors can take advantage of several support measures with differentiated exemptions or deductions. Briefly, value added tax (VAT) exemption, customs duty exemption, tax deduction, social security premium support (employer’s share), income tax withholding exemption, social security premium support (employee’s share), interest rate support, land allocation and VAT refund are provided to investors by the government.

In the period of 2001 and 2018 (Jan-June) 3.621 foreign investment projects with the value of  266 billion TL used the advantages of Turkey’s investment incentive programs.

Turkey’s economic success is a result of the efforts of Turkish private sector which contributes to Turkey’s international competitiveness. In all over the world, Turkish entrepreneurs have legitimate reputation for risk taking and outcome-oriented attitude even in adverse circumstances. Obviously, creating a business-friendly environment and motivating policies for private sector encourage Turkish business circle to expand their worldwide networks. Turkish entrepreneurs’ direct investments abroad reached 39 billion USD from 2003 to 2017.

Turkish overseas contracting services sector is among the most sophisticated service sectors of Turkey with having undertaken 8.772 projects in 110 different countries with the value of 329,1 billion US Dollars since 1972. According to the list showing the 250 largest construction companies of the world announced annually by the international construction sector’s leading magazine, Engineering News Record (ENR), based on the total value of projects undertaken in the previous year on international level, Turkish overseas contracting companies were in the 2nd place upon the number of national companies and in the 9th place upon the national overall revenue in the list.

Due to the increase of risk perception for developing countries in global economy and effects of the FED’s monetary tightening program, international capital flows have been slow downed in the first half of 2018, and FDI decreased by 3.7% in 2018 January-June period with respect to the same period of the previous year and realized as 4.8 billion USD.

On the other hand, Turkish Government declared “New Economy Program” which aims to establish financial stability in short-term period, and sustainable economic growth in long-term period. With unveiling the New Economy Program, Turkey shared a broad guideline to rebalance economic growth with global community.

Country that Changes

Turkey has mobilized its resources to realize the vision of 2023, which is a set of goals to be reached by the Republic of Turkey’s centennial in 2023. According to the vision of 2023, Turkey aims to be one of the top 10 economies in the world by reaching the value of 2 trillion USD in GDP and 500 billion USD in term of exportation. In order to achieve these goals, mega projects such as Istanbul’s Third Airport, Canal Istanbul, Trans-Anatolian Pipeline Project (TANAP) and the Turkish Stream Eurasia Tunnel and Marmaray, North Marmara Highway – Yavuz Sultan Selim Bridge have been carried out as milestones of a well-developed and prosperous Turkey.

Turkey has been transforming its infrastructure by landmarking projects. Europe and Asia have been connected third time by Yavuz Sultan Selim Bridge. The bridge, which was led by mainly Turkish engineers, is the world’s longest, widest and tallest rail and road suspension bridge combined. Also both continents were connected under the sea by the construction of the Eurasia Tunnel in 2016. Turkey maintain its claim to be a civil aviation hub in the region by İstanbul’s Third International Airport. The airport will have a capacity to serve 150 million passengers a year, once all the stages of construction have been completed. When the construction of all components is completed, it will be the world’s biggest airport in terms of passengers served.  Also, the Grand Istanbul Canal, which will be parallel to the Bosporus and will connect the Black Sea to the Sea of Marmara, will be Turkey’s world brand project.

In addition, Turkey conducts new tools to finance infrastructure projects and sets a working system of Public-private partnerships (PPPs) which is a combination of the skills and resources of both the public and private sectors through sharing of risks and responsibilities.  PPP’s system in Turkey include 4 different models: (i) Build-operate-transfer model that allows private sector to  construct on public land, (ii) Build-operate model that allows private company to build a thermal power station on their own property and guarantees the purchasing of electric energy by state, (iii)Transfer of operation rights model that creates an opportunity to transfer the management rights of an existing state property to private company,  (iv) Build-lease-transfer model that private company constructs on its own property with all physical hardware for a limited time that the state paid the rent, and at the end private company transfers the property to state.

According to European PPP Expertise Centre’s (EPEC) report titled “Review of the European PPP Market in 2017”, Turkey is the largest PPP market in Europe in terms of value. By the end of 2017, 225 investment projects with investment value of 61,7 billion USD have been performed in Turkey. The share of build-operate-transfer model was %72 and the build-lease-transfer model’s share was %19 in 2017.

Turkey & Romania : Strategic Partners

Bilateral trade between Turkey and Romania reflects the integral structure of both economies. Trade volume between two countries has been in increasing trend since 2015 and reached the level of 5,62 billion dollars in 2017. Turkey is the 8th partner country of Romania in terms of import and also 7th partner in terms of export in 2017, while Romania is the main trade partner of Turkey in Balkan region.

The potential of Romania has attracted many Turkish entrepreneurs since 1990’s. There are more than 15.000 Turkish companies registered in Romania, and Turkish business community which is organized under the umbrella of several business NGO’s, has been contributed to enhance bilateral trade between two countries.

Legal infrastructure of trade relations between two countries has been established by the Agreement of Mutual Promotion and Protection of Investments in 2008, and the Agreement of Avoiding Double Taxation in 1998.

Investments are the other dimension of economic relations between two countries. Not only in Bucharest but also in different regions of Romania, Turkish investors enjoy the advantages of Romanian encouraging investment climate. Turkey ranks as the 15th country in terms of foreign capital investment in Romania. These investments show the trust of Turkish investors in Romanian future.

The multi-dimensional structure of the trade and the common belief on building a prosperous future will continue to be the cement of bilateral  relations between Turkey and Romania, and it is obvious that both countries still have wide ranged opportunities for each other’s.

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