London, 16.10.2007

KAAN TOKATTÜRKİYE İŞ BANKASI LONDON

London, 16 October 2007

London, 16.10.2007

FACTS ABOUT TURKEYStable economic growth (and hence, growing imports

and exports)

Growing population, nearly 73 millionImproving quality of lifeMore stable political environmentSecular stateConvergence with the EU

London, 16.10.2007

London, 16.10.2007

LARGEST EU COUNTRIES vs.TURKEY

London, 16.10.2007

Population (≈mio)

Trade Balance (≈bn.$) (n.b. goods only, last 12

months)

GDP per capita ppp ($)

Germany

82 +228 31,095

France 64 -40 30,693

UK 60 -159 35,051

Italy 59 -16 30,732

Spain 45 -124 27,522

Poland 38 - 9 14,880

Total EU

493 +29 28,213

Turkey 73 -56 9,107

London, 16.10.2007

TURKEY’S RELATIONSHIP WITH THE EU AND THE IMPACT OF CUSTOMS UNIONAssociate member of the EEC since 1963Full membership application 1987Customs Union between EU and Turkey

effective as of 1996 (no customs restriction on industrial goods)

Became a candidate country officially in December 1999 at Helsinki Summit

Accession talks began in November 2005

London, 16.10.2007

London, 16.10.2007

THE IMPACT of THE CUSTOMS UNION

London, 16.10.2007

Weight of EU (%) – exports from Turkey

Weight of EU (%) – imports to Turkey

1980 44.7 29.8

1985 40.3 34.3

1993 47.5 37.2

1995 51.2 47.2

1996 49.7 53.0

1997 46.6 51.2

1998 50.0 52.4

2000 52.2 48.7

2003 51.8 45.7

London, 16.10.2007

BILATERAL TRADE BETWEEN TURKEY AND THE UK (mio.USD)

London, 16.10.2007

London, 16.10.2007

MAIN TRADE PARTNERS OF THE UKEXPORTS 1 H 07

(bn.£)SHARE

(%)

1.USA 15,495 14.6

2.GERMANY 11,839 11.2

3. FRANCE 9,000 8.5

4. IRELAND 8,378 7.9

5.NETHERLANDS

6,980 6.6

.

19.TURKEY 1,165 1.1

IMPORTS 1 H 07 (bn. £)

SHARE (%)

1.GERMANY 22,038 14.7

2.USA 13,330 8.9

3.NETHERLANDS

10,706 7.2

4.FRANCE 10,678 7.1

5. CHINA 8,525 5.7

.

17. TURKEY 2,290 1.5

London, 16.10.2007

London, 16.10.2007

UK EXPORTS TO TURKEY- FIRST 10 ITEMS1H 2007 Value(mio.

£)Share in total UK exports%

1. Medicaments of mxd/unmixed prods for therap/prophltc uses, in dosage

152 2.5

2.Ferrous waste and scrap; remelting scrap ingots or iron or steel

127 18.2

3.Parts & access of the motor vehicles 109 5.6

4.Motor vehicles designed for transportation incl car

53 0.8

5.Compression-ignition int combu piston eng (diesel or semi-diesel engine

46 8.3

6.Self-propelld bulldozer/angledozer/ grader/excavator/shovel loader

40 4.3

7.Turbo-jets, turbo-propellers and other gas turbines

23 0.6

8. Undenat ethyl alcohol;spirits liqueurs&o spir bev

14 1.1

9. Yachts & other vessels for pleasure or sports; rowing boats and cano

14 4.6

10.Polymers of propylene or of other olefins, in primary forms

11 9.7London, 16.10.2007

London, 16.10.2007

PAYMENT METHODS FOR IMPORTS FROM THE UK (mio. $)

London, 16.10.2007

Y 2004 % Y 2005 % Y 2006 %

Letters of credit 286 6.6 313 6.7 638 12.4

Cash against documents

532 12.3 633 13.5 550 10.7

Cash against goods

784 18.2 808 17.2 738 14.4

Advance Payment 2,366 54.8 2,692 57.4 2,992 58.3

Other (unknown etc.)

349 8.1 244 5.2 216 4.2

Total 4,317 4,690 5,134

London, 16.10.2007

WEIGHT OF GBP IN TURKISH FOREIGN TRADE (figures in $)

Y 2005 Y 2006 Y 2007 (8 MONTHS)

TOTAL EXPORTS FROM TURKEY

73,476,408

85,534,676 67,122,965

Funds received in GBP 4,105,918

4,367,914 3,370,271

Exports to the UK 5,892,330

6,811,868 5,308,450

GBP receipts from UK importers

69.7% 64.1% 63.5%

TOTAL IMPORTS TO TURKEY

116,774,151

139,576,174

107,589,019

Funds paid in GBP 1,460,709

1,426,947 967,871

Imports from the UK 4,663,058

5,081,887 3,491,097

GBP payments to UK exporters

31.3% 28.1% 27.7%

London, 16.10.2007

London, 16.10.2007

BRITISH EXPORTERS’ CURRENT SITUATION Get paid in GBP only in less than a third of

sales Exchange rate risk (mainly against EUR and

USD)Strong GBP making British products less

competitiveRelatively stronger TRY Reliance on “advance payments”

London, 16.10.2007

London, 16.10.2007

THE PREFERENTIAL TREATMENT OF TRADE BETWEEN TURKEY AND THE EU(AND THE UK)Industrial products qualify for preferential

treatment as a result of the Customs Unionwhen originated in EU/Turkeywhen in free circulation in EU/TurkeyATR (a status certificate)- used in industrialised

products Agricultural products : traditional preferential

arrangementsEUR1 document

Coal/steel: traditional preferential arrangementsEUR1 document

London, 16.10.2007

London, 16.10.2007

GENERAL ENVIRONMENT in TURKEY

Fairly liberal regulationsCustoms Union with the EU since 1997Payments can be made in any currency as

agreedTRY a convertible currency on its own rightAutomated customs offices Used motor vehicles incl. cars , yachts are

disallowed

London, 16.10.2007

London, 16.10.2007

OBJECTIVES OF IMPORT POLICY OF TURKEYIn general, to expedite the economic development,To foster manufacturing structures that are

export-oriented, technology-intensive, high added valued that comply with international standards,

To help in improving the competitiveness of the local producers in agricultural and industrial sectors which will in turn increase their production by achieving cost advantages in import of raw materials,

To protect both the end-consumer and the producer who may otherwise be adversely affected by unfair competition practices that can take place during importing

London, 16.10.2007

London, 16.10.2007

HOW TO BECOME AN IMPORTER IN TURKEY Any real or legal person with a tax ID can be

an importer with the below exceptions where no tax ID is requiredBook importersImporters of merchandise to be displayed at

fairs and exhibitions

London, 16.10.2007

London, 16.10.2007

IMPORT REGIMEFor definitive imports to Turkey

Two pro-forma invoices (one to be original)Customs Statement from the relevant Customs

OfficeReceipt of the duties payable

For temporary imports stemming from leasingthe lease agreement

For used goodsEvaluation report prepared by the relevant

Chamber of Commerce or University verifying the economic life of the underlying

London, 16.10.2007

London, 16.10.2007

PROS OF DOING BUSINESS WITH TURKEYProfessional business partnersRelatively good transportation opportunitiesIncreasing purchasing powerGrowing and vibrant economyDynamism of the populationStrong export potential boosting importsLiberal foreign exchange regime since 1980sAutomated customs officesCustoms Union with the EU

London, 16.10.2007

London, 16.10.2007

POSSIBLE AREAS of INTERESTRetail: supermarkets, off-licences, upmarket

brandsLeisure: Golf courses, restaurants, dep’t

stores, zoos, amusement & theme parks, leisure boats-equipment)

FMCG: soft drinks, snacks,Other: electrical equipment British re-locating to Turkey will play a role

London, 16.10.2007

London, 16.10.2007

WHAT CAN HAVE A POSITIVE IMPACTCompetitive pricing

Good quality

Better payment terms

London, 16.10.2007

London, 16.10.2007

FDIs to TURKEYMio USD 2002 2003 2004 2005 2006 ∑ 02-06

Netherlands

72 50 568 381 5,171 6,242

Belgium 5 54 25 1,088 3,456 4,628

UAE 1 0 0 1,625 1,548 3,174

Greece 0 24 38 11 2,787 2,860

France 22 120 34 2,107 444 2,727

Russia 0 0 0 1,605 7 1,612

UK 8 141 126 165 883 1,323

Total 622 745 1,291 8,534 17,817 29,009

London, 16.10.2007

London, 16.10.2007

YACHT IMPORTSHigh duties and taxes (8% special

consumption tax, 18% vat , high annual motor vehicle tax)

To avoid these costs, people prefer to fly foreign flags

Used yachts disallowed (like cars)

London, 16.10.2007