Strategic Location

Robust Economy

Domestic market + EU

Liberal Investment Climate

Benign R&D Ecosystem

Opportunities

Favorable Demographics

Skilled workforce with cost advantage

Lucrative Incentives

Continuous reform process..

REFORMS

OPENfor BUSINESS

Why investin Turkey?

10 reasons to invest in Turkey..

WHY INVEST IN TURKEY?

Real GDP Growth (Index: 2002=100)Ranking of Economies by GDP at PPP

100

125

150

175

200

225

250

275

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Source: TurkStat, OECD, World Bank, IMF, PPP: Purchasing Power Parity

13TH LARGEST ECONOMY 5.7 3.9 3.8 2.8 1.8

Robust Economy

Track record growth and bright future with proven resilience..

Average Annual GDP Growth (%), 2003-2017

Turkey Poland Romania Czechia Hungary

2003 2017 2021

2017 Real GDP Growth in G20

7.4%

6.8%

6.4%

5.1%

3.8%

3.1%

3.0%

2.9%

2.4%

2.3%

2.3%

2.2%

2.0%

1.8%

1.8%

1.7%

1.5%

1.5%

1.3%

1.0%-0.8%

TurkeyChinaIndia

IndonesiaG20

KoreaCanada

ArgentinaEU

AustraliaUS

GermanyMexicoFrance

UKJapanRussia

ItalyS. Africa

BrazilS. Arabia

Fastest growing economy in G20

Budget Balance as % of GDP

Annual Inflation (%)

Gross Public Debt Stock as % of GDP

Source: Eurostat, Ministry of Finance, TURSTAT

20

30

40

50

60

70

80

90

-15

-12

-9

-6

-3

0

0102030405060708090

100110120130

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

10.23% as of Mar 2018

Turkey

EU 28Turkey

EU 28

Robust Economy

Strong macroeconomic fundamentals, reining in public finance and keeping inflation relatively low at single digit rates…

Contribution to GDP Growth 2002-2017 (%)

74

31

22

-2

-25

Turkish Economy (GDP at current prices, $Billion)

Turkish economy has more than tripled over the past 15 years andis promising more growth in future

Source: TurkStat

DomesticConsumption

Investment Expenditures

Stocks

Imports

Exports

236

851

2002 2017

Driven by a robust domestic market and entrepreneurial

private sector which has spurred investments and exports

Robust Economy

Driven by a diversified structure, Turkish economy has more than tripled over the past 15 years

Stock of Automobiles(millions of passenger cars)

The Rise of Turkish Middle Class(# of individuals by annual disposable income per capita)

Tripling Income per capita (GDP per capita, current prices)

GDP per capita in countries with population over 50 million, 2017

$3,581

$10,597

2002 2017

$59,501

$44,550

$39,869

$39,735

$38,440

$31,984

$29,891

$10,597

$10,608

$9,895

US (1)

Germany (2)

France (3)

UK (4)

Japan (5)

Italy (6)

Korea (7)

Turkey (8)

Russia (9)

Brazil (10)

Source: IMF, Turkstat, Euromonitor, ICTA

High income (>$55K)

Upper-middle ($25K – $55K)

Middle ($10K – $25K)

Low ($5K – $10K)

Poor (<$5K)

2016

million

million

2002

21.3 million

23 million

17.8 million

3.3

1

3

10.8 million

40 million

21.2 million

5

million

DomesticMarket

Turkey’s economic growth has paved the way for emergence of a sizeable middle-classwith an increasing purchasing power…

Annual House Sales (million of houses)

4.6

12.0

2002 2017

0.4

1.4

2008 2017

Source: TurkStat, 2017

DomesticMarket

The domestic market is further supported by emerging urban centers across Turkey…

More than 20 urban centers with populations over 1 million

Source: Eurostat, Population as of 2017, Ministry of Economy* In ratification process

Access to

in 27 countries with Free Trade

Agreements

Customs Union with the EU allows direct access to the

EU Market

+

+

Free Access

to

945million consumers

DomesticMarket + EU

Domestic market + EU market + Free Trade Area

355million in FTA Area

81million in Turkey

510million in EU

Strategic Location

to manufacture, export and manage…

Source: *IMF and World Bank

PROXIMITY TO MAJOR MARKETS1.5 billion people and $24T GDP

in Europe, MENA and Central Asia at 4 hour flight-distance

CONNECTIVITYTurkish Airlines connects you to 246 destinations in 120 countries

Production base for MENA

Largest production facility worldwide

Exporting 85% of its production

Exporting 77% of its production

67 countries

80 countries

60 countries

30 countries

89 countries

72 countries

MANUFACTURING & EXPORT HUB

FOR MULTINATIONALS

AS WELL AS MANAGEMENT

HUB FOR MULTINATIONALS

Working Age Population (15-64) (Index: 2014=100) Total Dependency Ratio (%, Age 0-14 & 64)/Age 15-64)

45

50

55

60

65

70

75

2014 2017 2020 2023 2026 2029 2032 2035

Europe

Turkey

90

100

110

120

2014 2017 2020 2023 2026 2029 2032 2035

Europe

Turkey

TURKEY EUROPE

5 3 1 1 3 5

0-4

10-14

20-24

30-34

40-44

50-54

60-64

70-74

80-84

90+

Female Male5 3 1 1 3 5

0-4

10-14

20-24

30-34

40-44

50-54

60-64

70-74

80-84

90+

Female Male

Source: Turkstat, Eurostat, UN, 2016

Ag

e

Gr

ou

ps

(%

)

Ag

e

Gr

ou

ps

(%

)

FavorableDemographics

half of population under age 31..

Availability of Competent Senior Managers (10=Available; 0=Unavailable)

Availability of Qualified Engineers(10=Available; 0=Unavailable)

7.51 7.216.72 6.40

5.83 5.50

Turk

ey

Rom

ania

Pola

nd

Slov

akia

Czec

hia

Hun

gary

Annual Number of Graduates (thousands)

Labor Force by Education Level

76.8%

23.2%

90%

10%

Source: Ministry of National Education, Council of Higher Education, Turkstat, IMD World Competitiveness Yearbook Executive Opinion Survey based on an index from 0 to 10; Eurostat, US BLS

Skilled workorcewith cost advantage

Turkey’s education system has been upgraded to support a skilled labor pool that meets business requirements..

287

177

801

515

University Vocational & Technical HighSchool

2002 2016

University High School & below

Labor Cost per hour in Manufacturing

5.725.44

4.834.39 4.36

3.09

Turk

ey

Pola

nd

Czec

hia

Slov

akia

Rom

ania

Hun

gary

45.443.0 41.5

27.8

12.9 12.810.2 9.5

6.3 6.1G

erm

any

Fran

ce

USA UK

Slov

akia

Czec

hia

Hun

gary

Pola

nd

Turk

ey

Rom

ania

2017 2017

Remuneration of Management/Engineer Total base salary plus bonuses and long-term incentives

145

118 104

87

61 60 44 39 38 33

Ger

man

y

USA

Fran

ce UK

Slov

akia

Pola

nd

Hun

gary

Turk

ey

Czec

hia

Rom

ania

$K, 2016$, 2017

Number of Days to set up a Company, 2017FDI Regulatory Restrictiveness Index, 2016

Personal Data Protection Law

MAJOR REFORMS

Internationally-mindedpeople

0.327

0.2120.187

0.166

0.1010.089 0.083 0.072 0.067 0.059

Chin

a

Indi

a

Russ

ia

Cana

da

Braz

il

USA

Swit

zerl

and

Pola

nd

OEC

D

Turk

ey

1 = Closed to FDI 0 = Open to FDI

37.0

29.8

22.921.0

12.010.5 10.1 10.0 9.0

7.0 6.5

Pola

nd

Indi

a

Chin

a

Aust

ria

Rom

ania

Ger

man

y

Russ

ia

Swit

zerl

and

Czec

h R.

Hun

gary

Turk

ey

Source: OECD, World Bank

2006

Tax Reform (Corporate Tax %20 down from 33%)

2003

New FDI Law

……

ISPAT

2005

New Banking Law

2008

Overhaul of Social Security System

2011

New Commercial Code

New Code of Obligations

2012

New Capital Market Law

New Labor Law

2014

Istanbul Arbitration Center

Ease of company establishment (Law No: 4884)

Investment Incentives

R&D and Innovation Incentives

2009

Upgrading Investment Incentives

Upgrading Investment Incentives

2016

Upgrading Investment Incentives

2007

New Insurance Law

Establishment and Operating Licenses

2004

Removing Restrictions on Foreigners’ Purchases of Real Estate

2013

Unifying All Exchanges (Stock,Derivative, Gold, etc.) under BIST

2001

Coordination Council for the Improvement of the Investment Environment

2017

Industrial Property Law (IPR)

Production Reform Package

Down from 0,283 in

2003

Down from 38 days in

2002

Reforms Turkey has implemented sweeping reforms in many areas and continues to introduce new reforms..

New Labor CourtsCode

2018

Amendments to improve doing business (Law 7099)

International Tax Competitiveness, 2017(Index=100 as most competitive)

Bilateral Investment Protection Treaties with 75 countries

Source: Ministry of Economy, Ministry of Finance, WB Doing Business Report, Total Tax Rate: Profit or corporate income tax, social contributions and labor taxes paid by the employer, property taxes, turnover taxes and other taxes (such as municipal fees and vehicle taxes). Tax Foundation (Tax competitiveness measures countries’ tax policies five categories: corporate income tax, consumption taxes, property taxes, individual taxes, and international tax rules.)

74.3

74.1

73.7

71.8

71.3

70.8

70.4

67

66.8

66.6

62.2

59.8

55.1

54.4

47.7

43.4

Foreign Direct Investment Law

Total Tax and Contribution Rate, 2017(% of Profit)

40.5

41.1 43.8 46.5

46.9

47.4

47.5 48

48.9 50

51.6

51.8

52.1 55.3 62

.2 67.3

68.4

Liberal InvestmentClimate

offers protection and ease of doing business..

Treaties to avoid Double Taxation with 80 countries

Technology Development Zones

✓ To support R&D

✓ Tax deduction & exemption+

Exclusive Zones

Free Zones

✓ Tax deduction & exemption +

Organized Industrial Zones

✓ Developed infrastructure

Academia

Industry

Manufacturing Incentives

✓ Tax deduction & exemption +

Employment Incentives

✓ Payroll & Training support +

Incentives for Service Exporters

✓ Tax deduction for exporting services in;

E n g i n e e r i n gA r c h i t e c t u r e

D e s i g nS o f t w a r e

Medical ReportingAccounting

Call CenterD a t a c e n t e r

EDUCATIONH e a l t h c a r e

R&D and Innovation Incentives

✓ Tax deduction & exemption +

LucrativeIncentives

Investors are offered lucrative incentives in many ways..

Selected Foreign Companies conducting R&D in Turkey

Increasing R&D Spending ($ Billion, PPP)Number of Researchers (thousands)

Source: OECD, Eurostat, Turkstat, PPP: Purchasing Power Parity

9.4

1.9

16.2

0

3

6

9

12

15

18

Turkey

Romania

Poland

0

40

80

120

160

200 Turkey

Romania

Poland

Benign R&D Ecosystem

R&D incentives are further supported by a favorable ecosystem..

Over 100 R&D centers by foreign companies

Source: Turkstat, Ministry of Science, Technology and Industry, market values as of 2016, exports as of 2017

Opportunities Turkey offers abundant opportunities in a variety of sectors..

AUTOMOTIVEMACHINERY &

ELECTRICAL EQP.AEROSPACE &

DEFENCE ENERGYAGROFOOD &

BEVERAGE INFRASTRUCTURE FINANCE–Largest TV & white goods producer in Europe

–Market: $38 billion–Export: $22 billion

–$15 billion defense spending–Maket: $6 billion (industry) –Export: $2 billion–Air passengers: 193 million

–Market: $70 billion–Growing demand–Energy corridor–Untapped renewables

–Market: $74 billionExport: $17 billion

–Exports 1,781 products to 190 countries

–14th largest manufacturer–1 million vehicle production–Market: $24 billion–Export: $24 billion

–$123 billion PPP investment (2003-2016)

–More opportunities in transport, energy, health

–Robust growth with double digits

– Islamic finance to grow– Istanbul Financial Center

OPPORTUNITIES

Number of Foreign Companies in Turkey (‘000)FDI Inflows ($ Billion)

Source: CBRT, Ministry of Economy, ISPAT Team Analysis *Geographic (adjusted) and sectoral breakdown of cumulative gross inflows of equity FDI from 2003 to 2017

15

193

1973-2002 (30 years) 2003-2017 (15 years)

5.6

58.4

2002 2017

UK 11.9%

Netherlands 11.6%

Gulf 9.4%

USA9.3%

Spain6.6%

Germany6.5%

Austria6.1%

Russia6.1%

Azerbaijan 4.0%

Japan 2%

Switzerland 1.7% China 1.3%

Top Investors*

Finance34%

Manufacturing24%

Energy12%

Information & Communication Services 8.4%

Wholesale & Retail Trade

5.5%

Transport & Storage

4.4%

Construction 3.1%

Others 8.1%

Top Sectors*

Foreign Direct Investment (FDI)

Turkey’s value has been appreciated by foreign investors with increasing FDI inflow to Turkey…

FDI Despite global and regional challenges, foreign investors have continued to invest in Turkey in 2017..

€300 million greenfield investment in

paper mill (Kütahya)

Inauguration of a €350 million greenfield investment in home &

personal care (Konya)

Part of consortium for $1 billion investment in wind power plant

(1GW)

Part of consortium for $1 billion investment in

solar PV (1GW)

The trail-maker officially opened its new production plant in

Adapazarı

BBVA raised its stake in Garanti to 49.85% by acquiring further 9.95%

of shares for €859 million

BRF and QIA acquired 79.5% ofBanvit for $270 million

IFM Investors acquired 40% of MIP for $869 million

Notable investments in 2017

Sep’17 May

’17Aug’17

Mar’17

Oct’17

Oct’17

Feb’17

Jan’17