April 2023

Economic & business news from Türkiye

Türkiye inaugurated the gigantic Istanbul Financial Center

Türkiye has inaugurated the long-awaited opening of the Istanbul Finance Center (IFC), a vast business district that will accommodate most of the country's international and financial institutions.

A project started in 2009, it takes place on the Anatolian side of the city of Istanbul (Ümraniye district). The center aims to make the Turkish metropolis a global financial center by being a competitive destination for international financial institutions and investors and to support the growth of the Turkish economy.

The financial center will bring together most of the most important financial institutions and authorities (public and private sector banks, asset management companies, brokerage companies, #insurance companies, Turkish and international financial institutions, etc.). The country's Central Bank, the Istanbul Stock Exchange, the Banking Regulatory and Supervision Agency and the Capital Markets Board of Türkiye have already taken place there.

The construction of the financial center represented an investment of 65 billion TL (3.3 billion USD) and should ultimately become the heart of crowdfunding and Fintech. The IFC in a few figures is:

• 1.3 million m2 of offices,
• A 100,000 m2 shopping center extending over 3.3 km of streets,
• A conference and performance center that can accommodate 2,100 people,
• A 5* hotel of 30,000 m2,
• A car park with a capacity of 26,000 vehicles.
• All built as part of a cutting-edge smart city model.
• It is expected to welcome around 100,000 visitors per day, including up to 50,000 employees.

Source: Daily Sabah, April 14, 2023

Türkiye ranks 9th most tax competitive country among OECD countries

The International Tax Competitiveness Index prepared by the Tax Foundation assesses the competitiveness and neutrality of the tax systems of the 38 OECD countries. The report attempts to show which countries offer the best tax environment for investment, but also for workers and businesses.

This index takes into account more than 40 variables divided into five categories: corporate taxes, personal taxes, consumption taxes, property taxes and international tax rules.

Thus, with an overall score of 76.6, Türkiye ranks 9th as the most competitive country in terms of taxes among OECD countries. She gained 8 places compared to the 2021 ranking where she was 17th. The strong points of Türkiye:

The country has a territorial tax system exempting foreign dividends and capital gains income without any limitations by country.

The income tax on dividends is 20%, lower than the OECD average (23.9%).

Türkiye provides an Equity Provision (#ACE), which addresses the leverage bias inherent in the standard corporate tax.

Source: Tax Foundation, 2023

The American MCC buys the Turkish Korsini, specialist in IML

The American MCC Label, one of the largest label suppliers in the world, has acquired the Turkish Korsini, specialized in the manufacture of in-mold labels.

In-mould labeling or also called In-mould-labeling IML is a molding system which merges the label with the product allowing the information to appear directly on the product. The IML solution is a recyclable technology and replaces the adhesive label which carries a greater risk of deterioration.

This acquisition will enable MCC to develop new innovations to offer even better service and products to its customers and will strengthen its position in the markets of Europe, the Middle East, Africa and Asia. The partnership will allow Korsini to establish new local and international growth opportunities, while allowing it to maintain control of its day-to-day operations. The Turkish group will continue its activities under the name MCC Korsini.

Korsini is a historical company in Izmir with 120 years of existence founded initially as a printing house by the Corsini family, of Italian origin. After several partnerships with various companies, Korsini formed a JV with Korozo in 2004, the largest flexible packaging manufacturer in Türkiye, and specialized in IML solutions, a still niche segment at that time. Today, the Turkish company exports overmolded labels to more than 40 countries and serves global brand manufacturers such as Mondelez, Kraft, Nestlé and Unilever.

Founded in 1916, MCC is today one of the largest label printing companies in the world, having generated 3.5 billion USD in turnover last year. An international company, it has more than 100 production sites in more than 30 countries and employs more than 14,000 people.

Source: Dünya, April 6, 2023

Turkish agricultural exports reach record high

Türkiye's agricultural exports stood at USD 8.62 billion in Q1 2023, up 4.5% YoY. Türkiye thus breaks a new record for exports of agricultural products during the first quarter period. The share of exports of agricultural products in total exports amounted to 14% in Q1 2023. This growth benefits from the strong export of the following product groups:

• Cereals, legumes and oilseeds recorded 2.94 billion USD in exports (+7.9%).
• The furniture, paper and other forest products category recorded 1.96 billion USD in exports (+1.6%).
• Fresh fruits and vegetables recorded 941.52 million USD in exports (+23.4%).
• Ornamental plants and products recorded 48.45 million USD in exports (+7.4%).

Olives and olive oil is the category that recorded the highest growth rate: 156.7% in Q1 2023 y.y. In value, their exports reached 294.75 million USD, a figure driven by exports of olive oil in particular which jumped by 283% during this period including 590% for the month of March. This explosion in sales is explained by the drop in production in Spain and Italy, the world's largest producers of olive oil, whose harvests have halved this year.

The first customers for Turkish agricultural exports were Iraq, Russia, Spain and the Netherlands.

Competitive prices, proximity, product quality... all factors that contribute to the increase in demand for Turkish agricultural products not only from consumers, but also from companies that use it as an ingredient in their food production chains.

Source: Ekonomim, April 9, 2023

PSA International acquires a majority stake in Turkish company Alisan Logistics

PSA International (PSA) has signed an agreement to buy 75% of the shares of Turkish company Alisan Logistics through its subsidiary PSA-BDP Türkiye Supply Chain Solutions. Following the transaction, Alisan will be grouped under the umbrella of PSA BDP's “cargo solutions” activity.

PSA is a global port operator and supply chain partner for freight players. Its solutions portfolio includes more than 60 offshore, rail and inland terminals, spread across 160 locations in 42 countries. Alisan is a logistics company specializing in the fast-moving consumer goods (FMCG), chemicals, automotive and food industries. With more than 1,600 employees and 39 warehousing sites located mostly near chemical producers, the company carries out more than 250,000 shipments.

With this acquisition PSA intends to benefit from Alisan's strong presence in Türkiye and its local expertise in contract logistics and national distribution while ALISAN intends to benefit from PSA's global network of offshore, rail and inland terminals, companies affiliates in distribution fleets, warehouses, logistics and maritime services, and global expertise in end-to-end supply chain services. Groupe PSA actively collaborates with its partners to offer complete logistics and supply chain solutions. Türkiye's strong long-term growth potential is one of the factors that motivated this investment decision, which further reaffirms PSA's strategic direction in expanding its network in Türkiye and its capabilities to serve cargo owners.

Source: PSA / Alisan News Release, April 18, 2023

Türkiye launches first deliveries of Turkish gas

Türkiye has started its first deliveries of natural gas as part of its flagship project aimed at reducing its energy dependence. The gas, shipped from the Sakarya offshore field at a depth of 2,200 meters via a 170 km long underwater pipeline and various compression sites, was delivered to a newly built terminal at Filyos in Zonguldak province.

This is a historic step towards energy independence for Türkiye, which is heavily dependent on imports from Russia, Azerbaijan and Iran. Once full capacity is reached, this field discovered in the Black Sea three years ago will meet 30% of the country's gas needs.

For this first, households will benefit from a free supply of natural gas for their domestic consumption of 25 m3 per month for one year. They will also be offered a month of free natural gas.

The Sakarya field will initially produce 10 million m3 of natural gas per day, before reaching 40 million by 2028. Türkiye's offshore gas reserves in the Black Sea are estimated at 710 billion m3, which is enough to meet national demand for 35 years.

Thanks to its geographical advantage, Türkiye already serves as a transit route for large gas pipelines. Infrastructures present in the Black Sea, such as TurkStream, facilitate the re-export of part of the gas imported to European countries.

Source: Daily Sabah, April 20, 2023

2022 sales of electric and hybrid vehicles in Türkiye

Türkiye is experiencing a very serious acceleration in sales of electric and hybrid cars and these technologies are starting to significantly establish themselves in the Turkish automotive landscape.

8,210 electric cars and 19,126 hybrid vehicles were sold last year. Sales of electric cars have almost tripled (+188% compared to 2021) while sales of hybrid vehicles fell slightly by 8.6%.

The BMW brand continues to be the leader in electric vehicles with a market share of 27%, followed by the Mercedes Benz brand (19%) and the French manufacturer Renault (14%).

On the hybrid side, the Toyota brand largely dominates with a 63% market share. In other words, 6 out of 10 hybrid vehicles marketed in 2022 were Toyotas compared to 9 out of 10 vehicles in 2021. The entry into the hybrid market of the Fiat and Honda brands has increased the diversity of models.

These figures are extremely encouraging given that the Turkish automobile market has experienced some turbulence recently with the increase in the special tax (ÖTV) and the health crisis which has led to supply problems with semiconductor components.

Source: TEHAD, January 10, 2023

Türkiye begins construction of its first lithium-ion battery factory

Türkiye has just laid the foundation stone for its future lithium-ion battery development and production campus, the Siro Energy factory, a JV established between the Turkish automobile manufacturer TOGG and the Chinese manufacturer of batteries for electric vehicles, Farasis Energy.

The first phase of the site is expected to be completed at the end of 2024. Once finalized, the center will offer battery solutions for the automotive industry but also storage solutions for renewable energies, electricity networks, charging stations and residential buildings. By the end of 2023, the battery cell laboratory is expected to be commissioned, allowing the battery cells to be developed and manufactured locally. This laboratory will boast of being the most modern in Europe.

The production site will be installed on an area of ​​607,000 m2 next to the TOGG factory in Bursa. It will have an annual production capacity of 20 GWh, a capacity which should be increased to 50 GWh by 2035.

The batteries will initially be intended for the SUV models of the Turkish car manufacturer, whose first model, the T10X, was officially launched last March.

Source: Dünya, April 23, 2023

Turkish Kardemir plans to invest 1 billion USD in 5 years

Kardemir, a Turkish company specializing in the steel industry, announced an investment of 1 billion USD between 2023 – 2028 with the aim of increasing its high value-added products and its exports.

In addition to the investments in the environmental field that Kardemir intends to make, the company is planning important achievements, particularly for this year, such as investing in a ladle oven, a vacuum installation as well as an additional continuous casting machine in order to increase production. of high value-added steel and to ensure product diversity.

Last year, Kardemir produced 2.22 million tons of crude steel and 2.14 million tons of finished products. Sales of profiles, which are among the company's high value-added products, increased by 9%, sales of thick coils by 41% and sales of railway wheels by 456%. The European Union EU, the Balkans, North Africa, Central Asia and the Middle East were among its main export markets which generated an income of 45.5 million USD.

Türkiye is a major player in the steel industry which is the 8th largest producer of crude steel in the world. However, it was hit by the global recession, with the country's exports of steel products falling by 23.5% in 2022 while imports fell at a more limited rate (3.6%).

While global crude steel production was 1.879 billion tonnes in 2022, down 4.2% from the previous year, Türkiye's crude steel production declined more sharply, by 12.9 % and fell to 35.1 million tonnes last year.

Source: Ekonomim, April 3, 2023

EBRD grants USD 152 million loan to Antalya Airport

EBRD has granted an investment bridge loan of USD 152 million to Fraport TAV Antalya Airport (FTA) for the construction of new infrastructure at Antalya Airport, located in southern Türkiye. The loan is part of a financing package that includes funds from the International Finance Corporation (IFC) and the Asian Infrastructure Investment Bank (AIIB). As well as enabling the completion of the new infrastructure, the investment will ensure improvements in energy efficiency.

The project will include green investments such as LEED (Leadership in Energy and Environmental Design) certified terminals and a solar power plant. The airport has also committed to obtaining Level 4 accreditation under the Airport Carbon Accreditation program, which will place it at the forefront of global airports in terms of carbon management and energy commitment.

The FTA is a Joint Venture between global airport operators Fraport AG Frankfurt Airport Services Worldwide (Germany) and TAV Airports Holding (Türkiye). The entity has obtained the operation of Antalya airport until 2026 which will be renewed in 2027 for a period of 25 years.

The Antalya region is a tourist hotspot on Türkiye's southern Mediterranean coast. In 2022, more than 30 million passengers will use Antalya airport, reinforcing the city's seaside tourist appeal.

Source: Daily Sabah, March 31, 2023

Turkish aquaculture ranks 1st ahead of EU countries

Türkiye has risen to the top in aquaculture production over the past four years, surpassing all EU member states. Production amounted to almost 800,000 tonnes, including 471,000 tonnes for aquaculture and 328,000 tonnes for fishing.

Along with the increase in production, the industry's exports have also increased over the years. They increased from 145,000 tonnes to 252,000 tonnes last year. Export revenues amounted to USD 1.37 billion in 2022. Nearly 2400 facilities operate in the aquaculture sector. Some 1,800 of these are inland while 533 are maritime installations. These facilities are mainly dedicated to the production of trout, sea bass, sea bream and Turkish salmon.

Since 2003, the government has provided a total of 1.64 billion TL in financial support to the industry. In 2022 alone, the amount was 119 million TL.

Source: Hürriyet Daily News, April 17, 2023