Tyrkiet - Vækstmotor for danske virksomheder? 1. v/ generalkonsul Jesper Kamp, Generalkonsulat i Istanbul

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1 Tyrkiet - Vækstmotor for danske virksomheder? 1 v/ generalkonsul Jesper Kamp, Generalkonsulat i Istanbul

2 AGENDA The Consulate General in Istanbul Turkey facts and figures Turkey growth engine Export related facts and figures FDI related facts and figures, opportunities and challenges Cultural differences Gezi Protests politics in Turkey 2

3 CONSULATE GENERAL ISTANBUL Trade Council Export promotion Investment Invest in Denmark Financial EKF Citizens Services visa, passport etc. Culture Administration 3

4 TRADE COUNCIL SERVICES Market research Market monitoring Partner & supplier identification Sourcing Establishment of businesses Company visits and preparation of meeting programs Growth House" Your partner in Turkey Lobby support & PR advisory Joint Export Promotion events Participation in trade fairs Information on customs, export, and import Personnel recruitment 4

5 TURKEY FACTS AND FIGURES 5

6 6

7 TURKEY WITH NUMBERS 7

8 COUNTRY FACTS Population: 76 million (14.2 million in Istanbul) Young population avg. 29 years youngest average age compared to EU28 Biggest TV producer in Europe 36 million tourists in entrepreneurs within top 225 in the world Top 10 automobile producer in the world 8

9 TURKEY GROWTH ENGINE 9

10 2023 VISION Become one of the top ten world economies Gross domestic product of $1 trillion by 2014 Gross domestic product of $2 trillion by 2023 Increase annual Turkish exports to $500 billion Per capita income of $25,000 Foreign trade volume of $1 trillion Increase the employment rate by 10 points to a working population of 30 million Reduce the unemployment rate to 5 percent 10

11 ECONOMIC INDICATORS 17th biggest economy in the world (2012) the goal is to be 10th biggest in From $820 billion today to $2.000 billion in 2023 Growth-market: 8.9% in 2010 and 8.5% in 2011 (2.2% in 2012 and 3-5% in ) A threefold increase in GDP during the last 10 years: approx. $ 15,000 (2012) target: $ 25,000 Expected increase in purchasing power: +40% ( ) Healthy public finances (budget deficits approx. 8% of GDP in 2013 and public debt approx. 35% of GDP + increase state revenue) Dismantling of unemployment (approx. 9% in 2013) 11 Dismantling of inflation (approx. 6% in 2012) At present 8%

12 ESTABLISHMENT AND SOURCING Easy to establish a company (Ltd., JV, rep. office) Electronic register of company/digitised Free Trade + Industrial Zones Corporation tax: 20% Possible to buy land (expropriation protection) Investment incentive (vat, customs, tax, social welfare, rates, land) Highly educated workforce (21 million students) Modern production facilities (quality) Low minimum wage approx. DKK for unskilled Hard working people avg. 53 hours pr. week / 4 days of illness pr. year Availability near market (fly directly to Aalborg, Billund, and Copenhagen) 12

13 EASE OF DOING BUSINESS IN TURKEY 13

14 OPPORTUNITIES Increased standard of living (big spending, demands for services, infrastructure, and environment) EU-admission (approximation to EU standards on environment) Increased energy needs (doubling next 10 years) Increased privatization and PPP (energy, infrastructure, services) Huge investments in infrastructure Ambitious targets for renewable energy (20 GW of wind, 3 GW of solar + biomass) RE = 30% in 2023 ($130 billion investment) Expecting 70 million tourists in

15 OPPORTUNITIES Istanbul as a market Biggest city in Turkey (approx % of the Turkish economy) Financial centre The municipality is in the top 50 of the world's largest "businesses" More than100 shopping malls Office space doubled in 3 years to 5 million Sold more Ferrari's than in Italy per year 5th place of cities with USD billionaires Metropolis the elite 15

16 CASE HUMMEL TURKEY Deniz Erda had extensive experiences from Mavi Jeans Opened first store in march 2010 in Istanbul Today 175 mono stores and shop in shop Sold around 1 million items by the end of 2012 Expecting a turnover of DKK million in 2014 Most sold shoes in Turkey 3 key elements: High quality Strong marketing Detail-experience 16

17 MACRO EVALUATIONS OF OPPORTUNITIES IN TURKEY Political Government getting similar results in this election compared to previous results (52%). Eastern affairs Economic Despite a lack of progress in the EU accession process, Turkey is still a major convergence play for investors. The government programme is likely to increase the opportunities for investment in privatised state firms. Business environment The government has pushed forward new pension and labour code reforms that aim to lower labour costs for businesses. Government has demonstrated a renewed commitment to the privatisation of state-owned firms. e.g. road tenders, thermal power plants. 17

18 DANISH-TURKISH RELATIONSHIP More than 5% of the Danish population (> 350,000 people) come to Turkey on holiday every year. In 2013 Turkey became the biggest Danish tourist destination. There is an important Turkish community in Denmark, which strengthens our ties. Trade, commerce, and investments are growing in Turkey. 514 Danish companies in all areas are established in Turkey incl. wellknown global companies such as Novo Nordisk, Maersk, Lego, and Vestas. Growing interest to Turkey among Danish SME s. 18

19 EXPORT RELATED FACTS & FIGURES 19

20 TRADE Total trading volume USD 389 billion in 2012 (60% import / 40% export) Danish goods export to Turkey: DKK 4.1 billion Danish goods import from Turkey: DKK 5.6 billion (2012) Member of G-20, OECD, OIC, WTO, NATO Customs union in EU (1995) and a number of free trade agreements with Third World Countries Huge commerce with EU (approx. 40% of export and 35% of import) Strategic centre East/West Turkish people are used to work with Europeans 20

21 COMPARISON OF DANISH AND EU15 EXPORT TO TURKEY Denmark above the average Mostly pharmaceutical products (high-tech) 21

22 EXPORT & IMPORT- DENMARK TO TURKEY ( ) Source: Denmark s Statistic Bank 22

23 BREAKDOWN OF GOODS EXPORT FROM DK TO TURKEY 18% Machines total (1,00 bill. DKK) 54% 17% Ore- and metal waste (0,97 bill. DKK) Medical and pharmaceutical products (0,61 bill. DKK) 11% Others (incl. Organic chemicals and clothing) (3,10 bill. DKK) 23

24 FDI RELATED FACTS, FIGURES, OPPORTUNITIES, AND CHALLENGES 24

25 FDI FDI in 2012 was $12.4 billion (9.3 = net capital inflow / 2.6 = real estate) companies with foreign capital Within finance and insurance, production, service, and detail industry 78% from Europe over the last 5 years 25

26 STARTING A BUSINESS IN TURKEY 26

27 TOTAL FDI INFLOWS TO TURKEY 27

28 LEGAL SERVICES COMPANIES IN TURKEY DLA Piper, Clifford Chance, White& Case, Allen& Overy penetrated the Turkish market in the recent years. Strict bar regulations on foreign law companies for practising law in Turkey. Foreign legal services companies market entry strategies. 28

29 Danish Companies in Turkey - Sectorial Distribution Approx. 37,300 foreign companies in Turkey (2013 data) 29

30 Largest sectors in Turkey Building & Construction Energy Automotive Food & Agriculture IT & Electronics, Machinery Textile Agriculture Tourism 30

31 EXAMPLES OF WELL-KNOWN DANISH COMPANIES IN TURKEY Water-supply and waste Ambulance services, healthcare Logistics and shipping Clothing Healthcare Construction Wind-power Solar technologies Engineering consultancy Retail 31

32 MACRO EVALUATION OF CHALLENGES IN TURKEY Political Economic Divisions between the moderate Islamist government and secular institutions including the judiciary and military pose serious threats to the policy agenda, e.g. Gezi Protests. Turkey is becoming increasingly involved in regional conflicts, such as the Syrian civil war, straining its diplomatic relations in the region. Reliance on short-term foreign capital inflows and borrowing from abroad presents a danger to economic stability. Monetary policy credibility and independence from government influence has recently been called into question. Instability in Syria or domestic (or regional) terrorism could lower investor confidence and cap much needed fixed investment levels. Business environment High reliance on short-term debt financing increases the economy s vulnerability to investment flows. Tax avoidance is widespread. Procedures for hiring and firing staff are more highly regulated than in developed European states. 32

33 TURKEY - CULTURAL DIFFERENCES Relationship vs. network Formal vs. informal X Factor-law vs. Law of Jante Status vs. quality Hierarchical vs. flat structure Anarchy counter orderly Short vs. long time horizon Hofstede's four dimensions (DK / TR): Power distance (18 vs. 66) Individualism (74 vs. 46) Masculinity (16 vs. 45) 33

34 GEZI PROTESTS POLITICS IN TURKEY 34

35 Gezi events-31 May 2013-? Started in Istanbul, Gezi Park, as an environmentalist protest and spread to whole Turkey as a search for more democracy. 35/25

36 Highly criticized in the world/within Turkey because of its disproportional use of police force and main media channels ignorance of the events. The woman in red becomes the symbol of the events.

37 Business as usual. Not an Arab Spring, but part of a democratization movement in a democratic country that will lead to further democracy.

38 Contact: Royal Danish Consulate General, Istanbul Consul General - Jesper Kamp Phone: jekamp@um.dk Trump Towers Büyükdere Cad. No: 1 Kule 2, Kat 14, D. 463 TR Sisli / Istanbul Tel: +(90) isthkt@um.dk 38

39 THANK YOU FOR LISTENING! Q&A 39