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Turkey: Market Briefing

Turkey: Market Briefing. John Fay Commercial Attaché U.S. Embassy Ankara. U.S. Department of Commerce | International Trade Administration. Turkey “ In the middle ”. U.S. Department of Commerce | International Trade Administration. “ Three Turkeys ”. Western Turkey

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Turkey: Market Briefing

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  1. Turkey: Market Briefing John Fay Commercial Attaché U.S. Embassy Ankara U.S. Department of Commerce | International Trade Administration

  2. Turkey “In the middle” U.S. Department of Commerce | International Trade Administration

  3. “Three Turkeys” • Western Turkey • Highly Industrialized • Mostly urban • Historical seat of trade & industry • Central Anatolia • Newly emerging industrialists – Anatolian Tigers • Significant growth in production, exports • Eastern • Turkey • Less Industrialized • Mostly rural • Agricultural focus • Less than 1% of Tax Revenue U.S. Department of Commerce | International Trade Administration

  4. Turkey: Snapshot • Turkey: the most eastern country in the West, the most western country in the East. • Turkey: A country in rapid transformation politically, economically, demographically, socially. • Turkey playing increasing regional and international political and economic role – G-20 member; • Strong position of ruling AKP Party (2002), but opposition vocal; • Key constitutional reforms hottest political issue, as well as foreign policy issues such as Syria, Libya, Arab Spring; • Growing economy puts Turkish interests in play in former Soviet Union, Middle East and Africa; U.S. Department of Commerce | International Trade Administration

  5. Turkey: Snapshot • Sixteenth largest economy in world. G-10 goal by 2023. Turkish construction sector accounts for 30% of GDP. Politically influential. • Economy tripled in the last 10 years to over $750 billion; 8% growth in 2011, (first) engineered soft landing in 2012 with 3.5% expected growth for 2012; 2013-2015 average forecast is 3-4%. GDP per head $3k in 2002, $10k today. • Increasingly export-oriented economy also raises demand for imports in capital goods and technology – sweet spot for American exporters; • Recent upgrade to investment grade rating by Fitch, first time since 1994, but clouds remain with current account deficit and regional instability • Continued efforts to accede to European Union although questions remain on how to pay for improved infrastructure U.S. Department of Commerce | International Trade Administration

  6. Turkey: Economic Snapshot • General exchange rate stability at 1.8TL: 1 USD; forecast 1.8-1.85TL into 2014. Inflation (10%) watched closely. • Record $20 billion bilateral trade relationship in 2011, up 38% from previous year and doubling U.S. exports to $15 billion. Small downturn in 2012 due to relative economic slowdown; growth forecast for 2013 with expanding economy. • BB+ Fitch Rating (just below investment grade, watching current account deficit and inflation); • Growing import market and expensive energy imports create large current account deficit; • Lessons learned from 2001 crisis; banking sector strong and well-regulated; U.S. Department of Commerce | International Trade Administration

  7. U.S.-Turkish Relations • Strong political/defense relationships with long-standing NATO ally; • Cooperation across a spectrum of common interests: Iraq, Afghanistan, Arab Spring; • April 2009 President Obama visit called for closer economic/commercial relationship; • G2G an B2B councils created to develop strong bilateral trade links; • 40% plus growth in bilateral trade for first eleven months of 2011 (vs. 2010); 40% plus increase in U.S. sales in Turkey; U.S. Department of Commerce | International Trade Administration

  8. Business Case for Turkey • Increasingly affluent population (per capita GDP from $3k (2002) to over $10k (2011); • Economic growth backed by strong demographics, trained work force; • European Union Customs Union; • Location, Location, Location: Use Turkey as springboard into regional markets; • Weakening lira a short/medium term challenge for U.S. exports; • Strong interest in U.S. technology, management, global relationships, trade/project finance U.S. Department of Commerce | International Trade Administration

  9. Business Case for Turkey • 2010: U.S. Exim announces $1 billion credit line for energy projects in Turkey; • Over 1,200 American firms registered in Turkey. Two active American Chambers of Commerce (ABFT and TABA). • Identified as priority market by U.S. Department of Commerce; growth in staff and resources to help American firms enter market/secure greater market share; U.S. Department of Commerce | International Trade Administration

  10. Turkey SWOT Analysis Strengths/Weaknesses Opportunities/Threats • S:Political stability, growing economy, “thinking big” • Increasing domestic consumption, deeper pockets • Long-term partnership with U.S., desire to deepen trade ties • W:Regional tensions and soft EU market present challenges to export-led growth • Foreign direct investment still relatively low given size of economy • Turkey still largely unknown to U.S. firms and vice versa • O:Import market will continue to expand; technology play • Turkey as platform for regional plays, infrastructure development • Trade finance to seal the deal • 2013-4: project bonds/pension fund activity? • T:Regional instability affects investor perceptions/decisions • EU Accession talks falter/tension over possible transfer to Presidential system in 2014 • Inability to reach financial close on key projects. U.S. Department of Commerce | International Trade Administration

  11. Best Prospects for U.S. Exporters • Energy, including traditional and renewable sources • Defense and aerospace • Infrastructure • Information and telecommunications • Safety and Security • Healthcare • Automotive parts • Plastics • Education and Training services U.S. Department of Commerce | International Trade Administration

  12. Map of U.S. Investment in Turkey Note: Given concentration of industry in northwest Turkey, map not necessarily geographically representational.

  13. Trade and Project Finance: Key to Success in Turkey • Given strong Asian and European competition, U.S. firms need to bring competitive financing options to front end negotiations with Turkish partners; • Some Turkish firms will offer 30/60/90 day terms however export credit insurance and other trade finance options (public and private) can sweeten the deal; • U.S. Export-Import Bank: Turkey as third largest market after Mexico and India; • Overseas Private Investment Corporation: developmental projects • U.S. Trade and Development Agency: front end feasibility study financing; • U.S. Commercial Service network of relationships with local and U.S. banks U.S. Department of Commerce | International Trade Administration

  14. U.S. Commercial Service Our mission: • To promote the export of goods & services from the United States, particularly by small- and medium-sized businesses • To represent U.S. business interests internationally • To help U.S. businesses find qualified international partners Presence in over 100 U.S. cities and 70 countries worldwide U.S. Department of Commerce | International Trade Administration

  15. Helping Your U.S. Firm Succeed in Turkey • Business Development Advisory • Project and Policy Advocacy with the Turkish Government • Due Diligence on Local Partners • Relationships with Local Banks and U.S. Trade and Project Financiers • Project Vetting and Identification • Strategic Partnering • Market Research • Corporate Communications and Company Promotions U.S. Department of Commerce | International Trade Administration

  16. Thank You! John Fay Commercial Attaché U.S. Embassy Commercial Service Ankara, Turkey Direct Tel: + 90 312 457 7188 E-mail: John.Fay@trade.gov Web: http://export.gov/turkey Irvine USEAC Tel: 949-660-1688 Email: Office.Irvine@trade.gov Web: http://export.gov/california/irvine/index.asp U.S. Department of Commerce | International Trade Administration

  17. Annex I • Maps • Service Brief Slides U.S. Department of Commerce | International Trade Administration

  18. US Exports to Turkey by State

  19. Free Zones in Turkey • 21 Free Zones • Advantages: • 100% corporate tax exemption for manufacturing companies • No customs duties for goods, equipment and machinery brought into the Zone • Warehousing for unlimited time in a customs free area and ability to sell in Turkey immediately upon demand • Opportunity to buy Turkish products at export prices without Value Added Tax (VAT) • Minimum bureaucracy U.S. Department of Commerce | International Trade Administration

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