Turkey's Model of Excellence “The Aegean Free Zone”

TURKEY’S MODEL OF EXCELLENCE «AEGEAN FREE ZONE» What is a Free Zone

• A Free Zone is an area inside a country’s borders but considered to be outside the customs area. • The purpose of the area is to encourage exports by offering special incentives for commercial and industrial activities.

2 Basic Objectives of the Free Zones in Turkey

Developing international Accelerating foreign direct Technology access and trade investment employment

Promoting export oriented Directing enterprises investment and production towards export

3 Free Zones in Turkey

İstanbul Trakya İstanbul Ind. Istanbul Ataturk Airport Samsun Kocaeli Trabzon Rize Tubitak - MAM Bursa

Doğu Anadolu

Izmir Kayseri AEGEAN FREE ZONE Denizli Gaziantep

Antalya Adana Yumurtalık Mersin

4 Types of Operating License

Assembly- Manufacturing Trading Disassembly

Others (Banking, Maintenance Consulting)

5 Free Zone Advantages | Tax Advantages

100% Corporate Tax Exemption for manufacturing companies

100% Income Tax Exemption on employee’s salaries for manufacturing companies which export 85% or more of their products

No Customs Duties for goods, equipment and machinery brought into the Zone.

Opportunity to buy Turkish products at export prices without the Sales and Value Added Tax

Special Consumption Tax Exemption

Stamp Taxes, Tariffs and Duties Levied Exemption

Resource Utilization Support Fund (RUSF) Exemption

Witholding Tax Exemption

6 Free Zone Advantages | Tax Advantages According to Type of Operating License

Assembly-Disassembly, Manufacturing Maintenance Trading

Corporate Tax Corporate Tax ** Value Added Tax %22 %22

Income Tax* Value Added Tax Customs Duties %15-35

Special Consumption Value Added Tax Customs Duties Tax

Special Consumption Stamp Taxes, Tariffs and Customs Duties Tax Duties Levied

Special Consumption Stamp Taxes, Tariffs and Resource Utilization Tax Duties Levied Support Fund (RUSF)

Stamp Taxes, Tariffs and Resource Utilization Witholding Tax Duties Levied Support Fund (RUSF)

Resource Utilization Witholding Tax Support Fund (RUSF)

Witholding Tax ** %100 export

* Minimum %85 export

7 Comparison of the Tax Rates with Other Countries

# of Different Countries Total Tax Rate Profit Tax Labor Tax Other Tax Taxes Turkey 41,1 11 1 18,2 1 19,9 9 3

USA (NY) 45,8 11 2 27,1 4 10 5 8,7

Hungary 46,5 11 2 9,9 2 34,3 7 2,3

Italy 48 14 2 19,5 1 43,4 11 1,9

Germany 48,9 9 2 23,2 1 21,4 6 4,3

Japan (Tokyo) 47,4 14 3 24,6 2 18,5 9 4,3

Morocco 49,8 6 1 25,1 1 23,3 4 1,4

Czech Republic 50 8 1 9,1 2 38,4 5 2,5

India (Delhi) 55,3 13 1 23,5 4 20,4 8 11,4

China (Shanghai) 67,1 9 3 11,1 1 47,6 5 8,4

France 62,2 9 1 0,7 2 51,1 6 10,4

Source : Paying Taxes 2018 Report - Pwc

8 Free Zone Advantages | Other Advantages

Unlimited Time Stocking

Minimum Minimum Bureaucracy Port Costs

Logistical Guarantee Advantages of transfers

Ready to One Stop Use Shop Buildings

9 About Aegean Free Zone

 

Founded Built First in 2.200.000 m2 in1990 Operate Private Transfer Sector System     176 21.158 600.000 m2 23.000 Investor Employment Expansion Goal for Area Employment About ESBAŞ

• Developed and Operated by ESBAS (US Company) • 530 Employees On-Site • Shareholders • EAC International (USA) • Aegean Region Chamber of Industry • İzmir Chamber of Commerce • İzmir Metropolitan Municipality • Ministry of Finance • Certificates • ISO 9001 Quality Management System Certificate • ISO 14001 Environmental Management System Certificate • OHSAS 18001 Occupational Health and Safety Management System Certificate • ISO 22000 Food Safety Management System Certificate • EFQM Management Systems 11 Main Services

 Leasing Services: Land, Open Area, General-Modular Warehouses

 Electricity, Natural Gas, Water, Telecommunication

 Food Service, Catering Service

Loading/Unloading & Handling Services

Project Examination and Construction Control Service, Construction/Repair Service

Industrial Waste Collection Service, Environmental Clean-up and Garbage Collection Service

12 Optional Services

 Occupational Health and Safety Department Service

Child Care Center Service

Landscape Service

Foreign Trade Service

 Personnel Transportation Service

 Cleaning Service

Conference and Training Hall Rental Service

13 Aegean Free Zone Trade Volume [1000$]

6000000 5.000.095 5.000.095

5000000

4.710.012 4.710.012

4.680.244 4.680.244

4.327.519 4.327.519

4.293.418 4.293.418

4.092.781 4.092.781

4.075.581 4.075.581

4.001.498 4.001.498

3.985.295 3.985.295

3.878.766 3.878.766 3.766.021 3.766.021

4000000 3.763.964 3.241.026 3.241.026

3000000

2.658.772 2.658.772 2.642.599 2.642.599

2000000 1.828.870

1.684.972 1.684.972

1.662.598 1.662.598

1.446.381 1.446.381

1.429.659 1.429.659

1.291.910 1.291.910 1.188.186 1.188.186

1000000 912.886

704.059 704.059

487.110 487.110

193.573 193.573

56.325 56.325

34.586 34.586 0

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

YEAR 2014 2015 2016 2017 2018/5 TOTAL

TOTAL

34.586 34.586 56.325

487.110 487.110 704.059 912.886

193.573 193.573 4.293.418 3.878.766 4.075.581 4.327.519 1.684.972 72.038.706

1.429.659 1.429.659 1.446.381 1.188.186 1.662.598 1.291.910 1.828.870 2.642.599 3.241.026 3.766.021 4.001.498 4.092.781 3.763.964 2.658.772 3.985.295 5.000.095 4.710.012 4.680.244

14 Annual Trade Volume of the Free Zones in Turkey [1000$]

25.000.000

22.541.209 22.589.564 21.898.769 21.748.016

3.334.483 3.771.593 19.830.877 20.006.920 20.000.000 3.196.087 18.572.205 3.767.837 18.675.410 1.532.317 1.571.579 1.797.351 3.375.893 3.822.761 2.731.215 1.518.423 3.306.716 2.364.905 2.059.462 1.723.960 1.633.495 1.271.013 1.135.613 15.000.000 1.352.280 1.096.455 2.103.566 1.907.396 1.320.816 1.264.041 1.288.563 2.241.525 1.934.418 1.121.673 1.746.707 1.766.082 1.443.596 1.533.749 2.439.926 1.835.433 2.718.109 2.447.756 2.338.769 2.030.141 1.972.379 10.000.000 1.480.979 2.693.049 3.832.246 3.367.449 3.328.734 2.939.453 3.096.676 2.227.309 2.768.490 3.603.223 3.220.084 2.901.539 2.823.959 2.564.087 5.000.000 2.959.513 2.498.723 4.270.831

5.000.095 4.710.012 4.680.350 4.293.394 3.878.713 4.075.541 4.327.519 2.502.919 - 2010 2011 2012 2013 2014 2015 2016 2017

Aegean Free Zone Mersin Free Zone Istanbul Industrial European Free Zone Bursa Free Zone Istanbul Trakya FZ Istanbul Atatürk Airport FZ Other Free Zones TOTAL

Source: Ministery of Economy 15 Aegean Free Zone Employment

25.000

21.158

19.640 19.370

20.000 19.200

18.270

18.200 18.200

17.500 14.500

15.000 14.500

14.000 14.000

12.900

12.500 11.200

10.000

9.000

7.150

6.100 5.200

5.000

3.367

3.200

2.300

1.542

853

600 600

400 0 0

16 Employment of the Free Zones in Turkey

Adana-Yumurtalık Gaziantep Free Zone Denizli Free Zone 2% Samsun 0% 0% Free Trabzon Free Zone İstanbul Trakya İstanbul Zone 0% 4% Atatürk 1% Rize Free Zone Airport İzmir Free Zone 0% 2% 3% Kayseri Free Zone 6%

European Free Zone Aegean Free Zone 6% 29% TÜBİTAK-MAM 2% Kocaeli Free Zone 2% İstanbul Industrial 9% Bursa Free Zone 15% Antalya Free Zone 6% Mersin Free Zone 12%

Total employment is 66.984 persons

Source: Ministery of Economy 17 Prominent Sectors at the AFZ

Electric & Electronics Food Processing Textile & Packaging

Machinery

Aviation, Automotive Avionics, Aerospace Medical Devices IT

18 Aegean Free Zone Total Investment Volume [1.000$]

200.000

180.000 174.860

163.804 163.804

162.182 162.182 156.683 156.683

160.000 152.582

DOMESTIC: $ 493 Million 138.696 140.000 FOREIGN: $ 1.275 Billion

TOTAL: $ 1.769 Billion 127.950 119.111 119.111 120.000

USD(.000) 100.000 77.335 77.335

80.000

61.149 61.149

57.165 57.165 56.989 56.989

60.000 51.651

47.355 47.355 45.084 45.084

40.000 34.822

26.919 26.919

21.720 21.720

20.585 20.585

20.210 20.210 17.978 17.978

20.000 13.078

6.732 6.732

4.962 4.962

4.285 4.285

3.225 3.225

3.192 3.192 1.054 1.054 - 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 FOREIGN 604 3.49 2.53 4.20 1.91 1.91 7.02 10.6 13.8 25.4 18.2 18.8 27.4 36.2 43.6 32.0 32.0 36.3 59.6 51.6 108. 86.8 107. 126. 90.8 113. 112. 101. DOMESTIC 450 793 2.42 2.53 1.30 1.27 6.04 7.37 7.86 1.50 2.38 1.33 7.32 20.9 17.5 19.6 15.3 8.76 17.6 5.30 10.9 76.9 54.9 47.9 61.6 25.1 41.8 26.1 TOTAL 1.05 4.28 4.96 6.73 3.22 3.19 13.0 17.9 21.7 26.9 20.5 20.2 34.8 57.1 61.1 51.6 47.3 45.0 77.3 56.9 119. 163. 162. 174. 152. 138. 156. 127.

19 Dispersion of User Companies

Others 12%

Trading 18%

Manufacturing 70%

20 Breakdown of Job Creation

19%

81%

FOREIGN INVESTORS DOMESTIC INVESTORS

FOREIGN INVESTORS : 74 DOMESTIC INVESTORS : 102 TOTAL : 176

21 Some of the Leading Multinational Companies

Hugo Boss Delphi Diesel FTB Lisi Aerospace Germany USA France (Manufacturing injector nozzles, (Manufacturing air craft fasteners) (Manufacturing men’s apparel) valves and pump parts for diesel motors)

Gates Safe Spice Aero USA England Germany/Netherlands (Manufacturing tensioners and oil (Spice sterilization and packaging) (Manufacturing wind turbine blades for pump parts) wind energy power plants)

22 Some of the Leading Multinational Companies

Eldor Electronics PFW Mahle Italy Germany Germany (Producing ignition coils and (Manufacturing aviation fuel (Manufacturing pistons and bobbin of ABS braking systems) tanks and tubes) cylinder liners)

Fokker Elmo Kale – Pratt & Whitney DEZEGA Netherlands Turkish/U.S.A. Ukraine (Manufacturing wire harnesses (Manufacruring Aircraft engine (Manufacturing respiratory for aircrafts ) parts) protective equipment )

23 Pigeon – Lansinoh in AFZ

PIGEON - LANSINOH IN THE AFZ Pigeon – Lansinoh in AFZ Sector Specific Projects

• ESBAŞ has organized nearly 50 national and international conferences since 2001. • We have hosted approximately 9.000 guests through its organizations to date. • Turkey’s first Aerospace Clustering Association-ACA established as a result of ESBAŞ’s initiative. • Izmir’s first aerospace sector specific technical school “Aircraft Technologies Technical School” established in cooperation with the Ege University.

26 Space Camp Turkey

• Space Camp Turkey is one of three space camps in the world which have brought together more than 200,000 young people from 60 countries. • As a space and science education center, Space Camp Turkey is primarily focused on motivating young people from around the world to pursue careers in science, math, and technology. • Through interactive, space-related simulations, both youth and adults learn about communication, teamwork, and leadership in a dynamic, fun-filled environment.

27 Some of the Corporate Social Responsibility Projects

KİT-VAK Guest House Gaziemir Women Gaziemir Sports Hall Building Construction Counseling Center

Gaziemir Health Village TEC Project DLD Sparking Project Project

28 Aegean Free Zone Occupancy Rate

THE AEGEAN FREE ZONE (AFZ)

550 Acres (220 Hectares) 99% FULL Aegean Free Zone Expansion Area

A New Opportunity

30 AFZ From Past to Present | Entrance in 1990

32 AFZ From Past to Present | Entrance in 1991

33 AFZ From Past to Present | Land Subdivision 1991

34 AFZ From Past to Present | Land Subdivision 1991

35 AFZ From Past to Present | Sport Center Construction in 1991

36 AFZ From Past to Present | Entrance in 2003

37 AFZ From Past to Present | General Overview in 2003

38 AFZ From Past to Present | General Overview in 2010

39 AFZ From Past to Present | General Overview in 2014

40 AFZ From Past to Present | General Overview in 2018

41 ありがとうございました。

ESBAŞ Marketing & Leasing Department [email protected]