Issue 64 June '19

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Issue 64 June '19 ISSUE 64 JUNE '19 NEWSLETTER REFORM ACTION GROUP MEETS FIRST TIME UNDER CHAIRMANSHIP OF PRESIDENT ERDOĞAN Turkey is pressing forward with a series of positive reforms. Over the th President Recep Tayyip Erdoğan chaired the 6 meeting of the Reform past few weeks, the Reform Action Action Group held on May 9, 2019, under the coordination of Directorate Group and YOIKK meetings were for EU Affairs, Ministry of Justice, Ministry of Foreign Affairs, Ministry of held under the chairmanships of Treasury and Finance, and Ministry of Interior. President Recep Tayyip Erdoğan Turkey will continue working towards its strategic goal of becoming a full and Vice President Fuat Oktay member of the European Union, said President Erdoğan during his address respectively. Steps to be taken at the meeting. On the modernization of the customs union, President in line with Turkey’s 2023 vision Erdoğan highlighted the benefits not only for Turkey but also for Europe, were discussed in these meetings. adding, “we need to escalate the reforms that would liven up our economy.” May 2019 was also a fruitful "WE WILL NOT STOP OR REST UNTIL WE REACH OUR 2023 TARGET” month in terms of foreign direct President Recep Tayyip Erdoğan also spoke at the Innovation Week and investments. A number of global İnovaLIG Awards Ceremony organized by the Turkey Exporters Assembly companies announced investment (TIM). "We will not stop or rest until we reach our 2023 target. The more decisions in Turkey. We foresee we open to the world, the closer we will come to achieving our goals,” said that these decisions will lead to a President Erdoğan during his speech at the ceremony. rise in FDI inflows into Turkey in the coming period. Turkish exports registered a 5.38 percent rise and hit USD 15.3 billion in April. Imports dropped by 14.6 percent and fell to USD 18.1 billion, while the Arda ERMUT foreign trade deficit dropped by 57.8 percent to USD 2.83 billion in April. President, Investment Office The export to import ratio rose to 84.4 percent. REBALANCING AND REBOUNDING PROCESS CONTINUE IN THE TURKISH ECONOMY The Turkish economy is continuing its rebalancing, rebounding on the back of industrial production, which expanded for the third consecutive month through March. Capacity utilization rate in manufacturing reached 75 percent in April, while employment generated 68,000 new jobs in February and retail sales rose for the third consecutive month through March. INDUSTRIAL PRODUCTION YOIKK HOLDS ITS FIRST MEETING INCREASED IN MARCH WITH NEW STRUCTURE In March, industrial production in Turkey was up 2.1 The Coordination Council for the Improvement of the percent compared to the previous month. It is seen Investment Environment (YOIKK) convened on April that the signs of recovery that have been observed 25 under the presidency of Turkish Vice President for a while and more clearly in February, continued Fuat Oktay, to lay out a revisionist road map for reform gaining strength in March. that will further strengthen Turkey's investment In line with the strong positive changes on the environment. Besides Chairman Vice President Fuat monthly basis of the industrial production series Oktay, the council will also include: and the decrease in the contraction momentum on the yearly basis, Turkey is eyeing continuing ◆ Energy and Natural Resources Minister improvement in industrial production for the rest of ◆ Environment and Urban Planning Minister 2019. ◆ Family, Labor and Social Services Minister ◆ Industry and Technology Minister ◆ Justice Minister ◆ Trade Minister CBRT UNVEILS INFLATION ◆ Transport and Infrastructure Minister REPORT 2019-II ◆ Treasury and Finance Minister ◆ President of Strategy and Budget Directorate On April 30, the Central Bank of the Republic of ◆ Investment Office President Arda Ermut Turkey (CBRT) announced the Inflation Report 2019-II. CBRT kept inflation forecast at 14.6 percent (midpoint Speaking at the meeting, Vice President Oktay said 14.6 percent, 12.1 percent - 17.1 percent forecast range) that Turkey showed an improvement of 17 places and and 8.2 percent (5.1 percent - 11.3 percent range, ranked 43rd in the World Bank Doing Business Report with a midpoint of 8.2 percent) for 2019 and 2020 2019. Oktay added that investments have contributed respectively. The CBRT's 2019 average estimate for oil 2.4 points to the 5.5 percent annual average growth rate prices rose from USD 63.1 to USD 67.2 per barrel. over the last 16 years in Turkey. CURRENT ACCOUNT DEFICIT ANNUALIZED FDI INFLOWS (MILLION USD) LOWER THAN EXPECTED IN MARCH Turkey's current account deficit in March amounted to 23% USD 590 million against a market expectation of USD increase 1 billion, while the annualized current account deficit 13,431 decreased to USD 12.83 billion in March. 10,923 2019 (Until March) 2018 (Until March) On the financing side, Turkey saw an FDI inflow of USD 1.14 billion in March 2019. Comparative analysis of FDI figures can be found in the chart below. MAY SEES PLENTY OF INVESTMENT ANNOUNCEMENTS IN TURKEY MADE BY GLOBAL COMPANIES TURKEY ESTABLISHES SOCAR -the largest Turkey’s first intermodal Turkey’s Boyner 6 NEW foreign direct investor cargo terminal, financed Holding and Qatari in Turkey- and BP plan by Turkish logistics investment firm INDUSTRIAL to start construction of a company Arkas Holding, Mayhoola have ZONES new petrochemical plant the European Bank for decided to share and in Turkey at the end of Reconstruction and restructure Boyner 2020. The investment Development (EBRD), Retail’s company cost of the SOCAR-BP and the Industrial and portfolio. Under the joint project is expected Commercial Bank of agreement, Boyner to stand around USD China (ICBC) is expected Holding will be the 1.8 billion and the to launch in 2020. The sole owner of Boyner construction is expected EBRD and ICBC Turkey Grand Retailing to be completed by are each financing Inc. and Altinyildiz 2023. Once up and USD 30 million of Textile, while running, it is projected loans to the USD 80 Mayhoola will hold With the Presidential that the facility could million investment. The a majority share in decree that came into help decrease Turkey's operator of the world’s the Beymen and Ay force in May 2019, six current account deficit largest intermodal cargo Marka brands, with a new investment-friendly by up to USD 5-6 billion terminal, Germany’s 96.89 percent stake. industrial zones were annually. Duisport, has around a This agreement will established. one-third stake in the be the largest foreign project. investment in the The Minister of Turkish luxury retail Industry and Technology The European Bank and fashion sector to Mustafa Varank Tofas, a joint venture of for Reconstruction date. announced that the Turkey’s Koc Holding and Development six specially designed and Fiat’s Chrysler, also acquired a USD industrial zones with has decided to pursue 100 million stake in a an investment of USD a facelift investment subsidiary of Turkish 3.7 billion would have of the Egea car family firm IC Ictas Energy. produced in its facility. Japanese ink giant a positive impact on The financing is TOYO Ink, which had lowering Turkey’s current The investment is expected to be used expected to reach entered the Turkish account deficit. “The in investments for approximately USD 225 market two years ago investment amounts million by the end of wind farms and solar by acquiring Dyo’s in the announced 2020. projects. manufacturing plant industrial zones and for printing ink, will sectoral diversification be opening its second serve Turkey's goal to factory in the Manisa ensure a transformation Organized Industry led by high-value added Turkish paint Zone. The investment production,” said Varank. manufacturer Betek US multinational power for the new factory Boya, known for its brand management company is estimated to The first special Filli Boya, was acquired Eaton Corporation be around TRY industrial zone was by Japan-based Nippon purchased 82 percent 300 million. The established as the STAR Paint Holdings Co. The of Turkey's Ulusoy Investment Office refinery of the State Oil Investment Office was Electric. The transaction supported the Company of Azerbaijan, involved throughout this amounted to USD 285 realization of this which was inaugurated process. million. investment. in late 2018. EVENTS MAY 24 | SINGAPORE Investment Office held the "Investment Opportunities in an Emerging Market – Venture Capital Development in Turkey" seminar in Singapore in collaboration with TÜBİTAK and Ministry of Treasury and Finance. Dentons Rodyk Academy welcomed Murat Lütem, Ambassador of the Republic of Turkey to Singapore; A. Emre Büyükkılıç, Country Advisor of Investment Office; Barış Özistek, Director of Boğaziçi Ventures to address an exclusive group of guests on venture capital development and investment opportunities in Turkey. MAY 13-15 | WASHINGTON D.C. - USA APRIL 24 | ISTANBUL On April 24, the Investment Office kicked off its new automotive and communications project, The Future of the Automotive Industry. The project includes a series of workshops in Turkey and in the US, and will work on the disruptive technologies in an effort to respond how these emerging technologies The Investment Office was a sponsor at the 21st will affect the automotive industry in the Annual Global Private Equity Conference held in upcoming years. The first workshop was held Washington D.C. on May 13-15. The conference on April 24, and attended by over 30 high-level included an exclusive panel session entitled executives from automotive companies, tech “Turkey Luncheon: Addressing Successful Exits, start-ups, academy, and non-governmental Political Risk, and Investment Opportunity” that organizations. featured speakers from the Turkish Finance Office and the Sovereign Wealth Fund. APRIL 25 | LONDON - UK APRIL 16-19 | GAZİANTEP - TURKEY On April 16-19, the Middle East and North Africa Business and Investment Forum On April 25, Necmettin Kaymaz of the organized by the Investment Office and the Investment Office presented on the recent Silkroad Development Agency took place in economic developments in Turkey at the 7th Gaziantep.
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