INVESTMENT ADVISORY COUNCIL FOR TURKEY PROGRESS REPORT 2008

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INVESTMENT ADVISORY COUNCIL FOR TURKEY PROGRESS REPORT 2007

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REPUBLIC OF TURKEY
PRIME MINISTRY
UNDERSECRETARIAT OF TREASURY

Investment Advisory Council for Turkey
PROGRESS REPORT

GENERAL DIRECTORATE OF FOREIGN INVESTMENT
APRIL 2006

Foreword

I am pleased to present this year’s “Investment Advisory Council for Turkey Progress Report” portraying the developments on the implementation of the recommendations made by the Council towards enhancing Turkey’s attractiveness for investment.

I remember well the discussions during the Second Investment Advisory Council Meeting held in Istanbul one year ago. The participants have confirmed their confidence in the Government’s commitment for improving the investment climate and resolving the structural problems of the economy and enhancing its competitiveness. They have also noted that Turkey has a significant potential for becoming an important center attracting foreign direct investments.

Today, we are happy to see that the developments of the last year had reconfirmed the Council’s views. Growth spurred to above 7 percent, while inflation came down to below 8 percent in 2005. Turkey is steadily moving towards a new equilibrium which is evident by many factors including investor interest in the country. Most important sign of this interest can be traced down in the continuing momentum in investments in the economy. Private investments had increased by 23.6 percent in real terms in 2005 compared to the previous year. Similarly, foreign direct investment to Turkey had reached its historical peaks. At the time of the Second Investment Advisory Council

Meeting we had an FDI figure of US$ 2.8 billion for 2004. This figure was much above the historical average. Yet we were able to beat the performance of 2004 with an all time high FDI level of US$ 9.7 billion in 2005. Doubtlessly, commitment of the Government to the economic reform program supported by prudent macroeconomic and structural policies has played a significant role in strengthening investors’ confidence in the Turkish economy.

These encouraging developments in the macroeconomic figures have also been accompanied by the tangible advances in our efforts to create a better investment environment. During the Second Investment Advisory Council Meeting, a list of issues was identified on structural areas which could be further pushed ahead in order to boost ii the attractiveness of Turkey for investors and a set of recommendations on these issues were provided for the consideration of the government.

In retrospect, we are pleased to note that good progress was made on the set of issues raised by the Investment Advisory Council over the last year. Concrete steps were taken regarding the recommendations of the Council such as: simplifying the tax regime; strengthening corporate governance; reducing administrative and bureaucratic barriers; accelerating the privatization program and; reforming the social security system.

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PROGRESS REPORT
GENERAL DIRECTORATE OF FOREIGN INVESTMENT
JANUARY 2005

IAC Progress Report

INVESTMENT ADVISORY COUNCIL FOR TURKEY PROGRESS REPORT UPON THE FIRST MEETING

EXECUTIVE SUMMARY

This report has been prepared by Turkey’s Undersecretariat of the Treasury, for submission to the Prime Minister and members of Turkey’s Investment Advisory Council (IAC), as part of the follow up to recommendations made during the inaugural meeting of the Council on March 15th, 2004.

The inaugural IAC meeting, chaired by the Prime Minister Recep Tayyip Erdogan, brought together the heads of 19 international companies, the country’s four leading business associations, the World Bank Group and the International Monetary Fund to share perspectives with the Prime Minister, Minister of State Ali Babacan and Minister of Finance Kemal Unakıtan on how Turkey could enhance its competitive position in the world economy.

Council members identified 13 priority areas to focus attention, advising that strengthened implementation of measures in these areas would lead to the improvement of the investment climate and scaling up of private investment in Turkey.

Council members also agreed on a link between the IAC and the Coordination Council for the Improvement of Investment Environment (YOIKK), with the YOIKK technical committees to serve as working groups where IAC recommendations would be follow up and put into action.

A YOIKK meeting was held in August, 2004, the sole agenda of which was to assess progress on the recommendations of the IAC members. Private sector representatives on YOIKK are also members of the IAC (Union of Chambers of Commerce and Industry-TOBB, Association of Turkish Industrialists and Businessmen-TUSIAD, Association of Foreign Investment-YASED and Assembly of Turkish Exporters-TIM). They expressed views that ongoing efforts to improve the investment environment should quickly lead to new legislative measures. Additionally, new approaches needed to be developed to assess the effectiveness of these measures so that the micro-level factors hampering investors, which stem in large part from faulty implemetation, could be idendified and corrective solutions formulated.

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