Infrastructure Industry
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Infrastructure Industry August 2013 Disclaimer OO accepts no liability to any party who is shown or gains access to this document. The opinions expressed in this report are based on OO Consulting judgment and analysis of key factors. However, the actual operation and results of the analyzed sector may differ from those projected herein. OO does not warrant that actual results will be the same as the projected results. Neither OO nor any individuals signing or associated with this report shall be required by reason of this report to give further consultation, to provide testimony or appear in court or other legal proceedings, unless specific arrangements thereof have been made. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice and may become outdated. Investment Support and 2 Promotion Agency of Turkey Table of Contents List of Abbreviations 5-7 Executive Summary 8 I. Macroeconomic Overview of Turkey 9-14 A. Overview of the Turkish Economy and the Macroeconomic Outlook 10-11 B. Foreign Direct Investment Overview 12 C. Turkey’s Advantageous Geographical Position and Ease of Doing Business 13-14 II. The Infrastructure Targets of Turkey 15-24 A. A Brief Introduction to the 2023 Targets in Infrastructure 16 B. The Supporting Industries of the Infrastructure Industry 17-21 C. The Major Players and Labor Force 22-24 III. The Investment Environment in Turkey 25-32 A. The New Investment Incentive Programs , PPS and the Major Stakeholders 26-27 B. The Role of the Public & Private Sectors in Turkey and Opportunities Compared to the EU 28-31 C. The Major Public Infrastructure Institutions in Turkey 32 IV. Transportation: Infrastructure Developments 33-47 A. Air Transportation 34-36 B. Railways 37-42 C. Roads and Bridges 43-45 D. Ports and Marinas 46-47 Investment Support and 3 Promotion Agency of Turkey Table of Contents V. Energy: Infrastructure Developments 48-52 A. A Brief Introduction to Turkey’s Energy Sector 49 B. Turkey: A Bridge Between Consumption and Production 50 C. Natural Gas Infrastructure 51 D. Electricity Transmission Infrastructure 52 VI. Urban Renewal and Development 53-59 A. Urbanization and Population Growth in Turkey 54 B. Major Urbanization Projects in Istanbul 55-58 C. TOKI Projects 59 VII. Special Focus: Healthcare and Communications 60-67 A. Healthcare Infrastructure and Planned Projects 61 B. Health-Related Free Zones 62-63 C. Urban Renewal and Medical Faculties 64 D. Communication Infrastructure and Opportunities 65-67 VIII. Infrastructure Investments in Major Cities 68-77 A. Adana, Ankara, Antalya 69-71 B. Bursa, Erzurum, Gaziantep 72-74 C. Izmir, Konya, Samsun 75-77 Investment Support and 4 Promotion Agency of Turkey List of Abbreviations Acronym Definition Acronym Definition ADSL Asymmetric Digital Subscriber Line EATL Euro-Asian Transport Links AGR European Agreement on Main Traffic EBITDA Earnings Before Interest, Taxes, Arteries Depreciation, and Amortization A.Ş. Incorporated Company EBRD European Bank for Reconstruction and AZR Azerbaijan Development BAKA West Mediterranean Development Agency ECOTA Economic Cooperation Organization Trading Agreement BEBKA Bursa, Eskişehir, Bilecik Development EIB European Investment Bank Agency EIU Economic Intelligence Unit BCM Billion Cubic Meters EMEA Europe, the Middle East and Africa BDDK Banking Regulation and Supervision Agency EMU Electric Multiple Unit BL Build Lease EPİAŞ Energy Market Corporation BMI Business Monitor International EU European Union BO Build Operate EUR Euro BOT Build Operate Transfer Euro Stat Statistics Institute of European Commission BOTAŞ Petroleum Pipeline Corporation Expo Exposition BRIC Brazil, Russia, India, China FDI Foreign Direct Investment ca. Approximately FR France CAGR Compound Annual Growth Rate GAP Southeastern Anatolia Development Project CCGT Combined Cycle Gas Turbine GASKI Gaziantep Water And Sewerage CEO Chief Executive Officer Administration CIF Cost, Insurance, Freight GCF Generale Costruzioni Ferroviarie S.p.A. CNR National Research Council GDP Gross Domestic Product Co. Company GSM Global System for Mobile Communications DE Germany HPP Hydropower Plant DHMI General Directorate of State Airports HSR High Speed Railway Network Authority İBB Istanbul Metropolitan Municipality DLH General Directorate Of Railways Harbors ICAO International Civil Aviation Organization And Airports Construction ICT Information & Communication Technology DWT Deadweight Tonnage IFC International Finance Corporation Investment Support and 5 Promotion Agency of Turkey List of Abbreviations Acronym Definition Acronym Definition IFC Istanbul Finance Center OOG Out of Gauge IGC Inter-Governmental Commission ÖSYM Student Selection and Placement Center IMF International Monetary Fund PPP Public Private Partnership IMO Intermodal Container PVC Polyvinyl Chloride IRN Iran QTR Qatar IRQ Iraq R&D Research and Development IRU International Road Transport Union RHS Right Hand Side ISPAT Investment Support and Promotion Agency RUS Russia of Turkey SAR Saudi Arabia IT Italy SPK Capital Markets Board JICA Japanese International Cooperation Agency SSI Social Security Institution KM Kilometers TANAP Trans Anatolian Natural Gas Pipeline Project KOP Konya Plains Project TCDD Turkish State Railways km/h Kilometers per hour TEM Europe North-South Project KUDAKA Northeast Anatolia Development Agency TEU Twenty Foot Equivalent Unit KUW Kuwait THY Turkish Airlines KWh Kilowatt hour TEİAŞ Turkish Electricity Transmission Corporation LHS Left Hand Side TL Turkish Lira LNG Liquefied Natural Gas TOKI Housing Development Administration of m2 Square Meters Turkey MW Megawatts TOR Transfer of Operational Rights N. Cyprus Northern Cyprus TPAO Turkish Petroleum Corporation N/A Not Available TR Turkey NGO Non-Governmental Organizations TRACECA Transport Corridor Europe-Caucasus-Asia NL Netherlands TRK Turkmenistan TRT NLDC National Livelihood Development Turkish Radio Television Corporation Turkstat Turkish Statistics Institute OECD Organization for Economic Co-operation TWh Terawatt hours and Development UAE United Arab Emirates Investment Support and 6 Promotion Agency of Turkey List of Abbreviations Acronym Definition UBAK Ministry of Transportation, Maritime Affairs and Communication UEM United Engineers Malaysia UITP International Association of Public Transport UK United Kingdom UKAT International Road Transporters and Agents UN United Nations UNECE United Nations Economic Commission for Europe UNIFE The Association of the European Rail Industry Urban Inf. Urban Infrastructure URD Urban Renewal and Development US United States USD United States Dollar VAT Value Added Tax Investment Support and 7 Promotion Agency of Turkey Executive Summary • Turkey is the 17th largest economy in the world • For example, for transportation sector, the and 6th largest economy in Europe with a nominal government plans to increase the length of high GDP of approximately USD 786 billion in 2012. speed railway lines to 10,000 km in 2023 from With its vibrant and growing economy, Turkey aims 888 in 2012 km at a CAGR of 25%. For the same to be one of the top ten global economies by time period, highways are expected to reach 7,500 2023. km from 2,236 km. • Trade in Turkey has been increasing significantly. • Regarding the energy sector, Turkey aims to For instance, in 2012 1.2% of all global trade increase its installed power capacity to 125,000 was conducted through Turkey and this share is MW by 2023 from 57,059 MW in 2012. expected to exceed 1.5% by 2025. Aforementioned targets in the energy sector require significant infrastructure investments in • Regarding the infrastructure sector, the Turkey and offer ample opportunities for investors. government has allocated USD 26 billion in 2013. 30% of this budget is for the transportation • New plans and targets also continue for urban sector, followed by education, energy, renewal projects. Since the enactment of the Urban healthcare, and agriculture. Transformation Law No. 6306, the Turkish government decided to retrofit and renovate • Tremendous government incentives created a buildings that are prone to destruction during pipeline of projects as well as capital for new natural disasters which include 6.5 million investments and opportunities for investors. residences with a budget of USD 400 billion. • Turkey also have ambitious targets in the sub- • This report provides a comprehensive and detailed sectors of the infrastructure industry. review of the infrastructure industry in Turkey and its subsectors. Investment Support and 8 Promotion Agency of Turkey I. A Macroeconomic Overview of Turkey A. Overview of the Turkish Economy and Macroeconomic Outlook B. Foreign Direct Investments Overview C. Turkey’s Advantageous Geographical Position D. Ease of Doing Business in Turkey Compared to Selected Countries Turkey’s fast-growing economy is expected to attract more investment in the future • Turkey has undergone profound economic Figure 1: GDP Growth Rate (constant prices) transformation over the last decade and its economic fundamentals are quite solid. It is the 17th largest economy in the world and the 6th 9% largest economy in Europe with a current GDP of approximately USD 786 billion in 2012. 4% EIU* • Having boomed as fast as 9.3% and 8.8%, in real terms, in 2010 and 2011, OECD projects a real -1% GDP growth of around 4% in 2014 and 2015, while EIU projects on average 5% growth until 2017. -6% • Monetary policy played a vital role in reining in inflation