Abdurrahman Bilgiç 15.04.2016

Dear guests,

Ladies and Gentlemen,

It is a great pleasure for me to address this
distinguished audience on the occasion of
Annual Investing in Turkey Forum”. I hope that today’s
briefings and discussions will deliver comprehensive insight on the investment
climate and opportunities in the different sectors of Turkish economy.

The economic literature points to three factors as
the basic determinants of the growth. These are demographics, quality of institutions
and productivity. These three factors are positively at play in Turkey. % 65 of the population in Turkey is
under the age of 34. Turkey continues to provide a productive, cost-effective
and competent labour force in its region. Beyond that, implementation of comprehensive
reform packages helps improve the quality of institutions and boost

Turkey’s reform programme has three dimensions. These are sectoral
transformation reforms (micro reforms), structural reforms and the reforms
implemented in line with the EU accession process.

Under sectoral transformation, Turkey has defined 25 priority areas with 1,250
micro reforms. Those areas range from improving investment climate, combating
shadow economy, increasing productivity and domestic savings, deepening capital
markets, enhancing energy efficiency,
developing health tourism to structural transformation of healthcare industries.

As to the structural reforms, Turkey prioritized eight areas. These are i) enhancement
of the transparency and combat corruption, ii) reform of the labour market, iii) improvement of the investment climate, iv)
public finance reform, v) reform of the public administration and judicial
system, vi) reform of the education system, vii) enhancement of the liberalization and viii) energy market

The EU accession process constitutes the engine of wholesale transformation
in Turkey. So far, 15 chapters have been opened to negotiations. 20 chapters
remain to be opened. Chapter on Economic and Monetary Policy has been opened to
negotiations last December. The last EU Progress Reports indicates that
Turkey’s alignment with the EU legislation is at a relatively advanced level.

Due to comprehensive reforms, Turkey enjoys the
longest and highest uninterrupted growth rate in Europe. Let me give you a quick update
about the growth of Turkish economy. Turkish economy grew by 5 % on average
between 2003-2014. The rate of growth has been 3% in 2014 and 4% in 2015. Thus,
Turkish economy grew two times higher than the other developing economies
except China and India. This success has
been obtained despite two successive general elections, heighthened tension in
the region and current shifts in the global markets.

Turkey has risen to the upper-middle income group from lower-middle income group during the past decade thanks to
structural reforms and sound policies. Turkey aims at becoming a high income
country in the period ahead. Structural reforms have improved
the investment climate which in turn attracted Foreign Direct Investment (FDI).

Dear guests,

Turkey has been at the
heart of commercial relations between the East and the West throughout the history.
Istanbul's strategic location along historic Silk Road
and its position as the only sea route between the Black Sea and the
have fostered Turkey’s commercial ties.
Now the target for Turkey
is to rank among the top 10 economies by 2023. This is the year when
Turkey will celebrate the centenary of the proclamation of the Republic. By
2023, Turkey plans to achieve a gross domestic product of 2 trillion Dollars.

Turkey aims
to transform its economy into a high value added and knowledge based hi-tech economy. In this vein, Turkey plans to implement mega projects particularly in the fields of
transportation, infrastructure, energy, health, urban transformation and defense. Turkey
plans to invest 1.5 trillion Dollars in the infrastructure. The third airport
in Istanbul will serve more passengers than any other airport in Europe. Moreover,
Turkey is going through unprecendented urban transformation project.

Energy projects have a vital place in Turkey’s
economic development programme.
On the energy market, Turkey will i) ease licensing and permits, ii)
provide tax incentives to promote energy efficiency, iii) reduce red tape in
energy investments and iv) encourage energy efficiency in buildings. TANAP Project will carry the Caspian natural gas to
Europe. There will be huge investments in the field of clean energy and
renewable energy. It is a priority for Turkey to increase the
share of renewable sources in the energy basket to %30 percent by 2023.

Turkey is
one of the fastest growing energy markets in the world as the stable economic
growth increases demand for energy. Beyond that, Turkey is the country uniting
the largest producers with the biggest consumers of energy. Turkey is placed right next to % 65 of the
world’s proven oil reserves and 70% of
the world’s proven natural gas reserves.

Ladies and Gentleman,

As part of 2023 vision, Turkey also
launched a project that aims at transforming Istanbul into an international
financial center. This project offers global companies a chance to run
their financial operations in the region through İstanbul, supported by a
skilled workforce and a vibrant local economy. Turkey continues to carry out the
necessary legal and financial regulations, in line with its bid to reposition
İstanbul as an international financial center.

Today, Turkey is the EU’s 6th largest trading
partner. Customs Union with the EU is in place since 1996. Turkey is Europe’s
leading producer in commercial vehicles, buses, minibuses and midibuses.
Turkish market has a high potential for the automotive, white appliances, ship
building and construction sectors. Turkey is currently ranked 8
th in
the world in terms of steel production. Turkey comes 3th following China and
India in terms of growth performance of the steel industry.

Turkey’s sustainable growth
rates over the last decade mainly originated from the activities of the private
sector. Turkey proved that high growth rates with tight fiscal policies could
be achieved, while opening a huge space for the private sector to operate. Today, Turkey is letting private sector to engage even in mega-sized public
infrastructural projects. Government designs the project and give the upper hand to the private sector to
build and operate. Through this model, the
projects are completed much faster with higher quality.
Indeed, the
Public-Private-Partnership (PPP) model
is widely used across Turkey for infrastructure and energy projects. Turkey is
the second most attractive market globally for PPP projects. Turkey aims at repeating the
success of the PPP model in the healthcare sector through city hospital
projects. It goes without saying that Turkey's
healthcare expenditure is expected to grow in the period ahead, due to various
reasons, including the population dynamics and increasing urban migration.

Ladies and Gentlemen,

We can confidently say that the medium term outlook for Turkish economy remains
positive for a couple of reasons. Firstly, Turkish banking remains strong.
Secondly, Turkish households have low debt levels. The household debt ratio to
GDP is less than one third of the EU average.
Thirdly, Turkish
government has a long term economic vision and committed to the reform agenda.

We believe that Turkey’s
recent economic performance and determination of Turkish authorities to further
uphold the Turkish economy, with well-framed reforms, continue to give strong
assurance to economic and commercial partners of Turkey.

Today, more than 2.800 companies with British capital have
investments in Turkey. We hope to increase this number with your
dedicated efforts in the time ahead.

Thank you.


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