June 2023

Economic & business news from Türkiye

Increase in foreign direct investment

Foreign direct investment in Türkiye recorded a significant increase in 2022, increasing by 22% year-on-year. The country welcomed 321 projects in total, positioning it 5th among European countries to have received the greatest number of foreign investments behind France, the United Kingdom, Germany, Spain and ahead of Portugal or Poland again.

This is what emerges from the study carried out by EY on FDI in Europe.

Among these 321 projects, 256 were industrial, which placed Türkiye in second position in Europe after France and its 547 new industrial investments. These foreign investments created 13,677 jobs in Türkiye, an average of 49 jobs per project.

The report also highlights the strong growth in FDI projects in several states in Southern, Central and Eastern Europe while investments in Europe stagnated in 2022 (+1% compared to 2021). Many companies have in fact decided to move their operations from Asia to countries in Europe and the Mediterranean rim due to the reorganization of supply chains that has occurred as a result of the pandemic, and Türkiye was able to take advantage of this trend. Türkiye's attractiveness is also based on other key factors such as its solid and diversified industrial fabric, as well as its young, qualified and affordable workforce.

France remained the preferred European destination for foreign investors, welcoming 1,259 projects in 2022 (+3% yoy).

Source: EY, May 11, 2023

Türkiye ranks 9th most tax competitive country among OECD countries

Türkiye is part of Iraq's new transport project aimed at connecting Asia and Europe. This project, which could be completed in 2029, aims to develop aging transport infrastructure, notably highways and railways, in order to facilitate trade between different regions.

Project cost: 17 billion USD.

Due to its strategic geographic positioning which makes it a regional hub in transport and logistics, Türkiye is, de facto, engaged in this colossal project. This will notably involve connecting a major goods port located on the southern Iraqi coast (Port of Grand Faw) by rail and road to the Turkish border and thus shortening travel time between Asia and Europe. These new routes intend to compete with the Suez Canal.

This initiative also aims to strengthen economic and commercial ties between Asia and Europe, by facilitating the transit of goods via Türkiye and reducing transport costs. It should also promote Iraq's economic development by opening new export opportunities.

Source: Daily Sabah, May 28, 2023

Launch of the first electric train

Türkiye has just launched its very first national electric train entirely manufactured locally by TÜRASAŞ (Turkish Railway Vehicles Industries).

The train will run five times a day on the Adapazarı-Gebze line and will serve 11 stops for a total of 500 km of travel per day. The train has an operating speed of 160 km/h. Depending on operational needs, three-, four-, five- and six-car vehicles can be manufactured for use on regional or intercity routes. The train has a capacity of 324 passengers in the five-car configuration.

The electric train is equipped with advanced technologies, providing a comfortable and safe travel experience. It also comes with innovative features such as energy recovery during braking, helping to reduce the overall energy consumption of the train.

This is an important step towards Türkiye's goal of modernizing its railway network and promoting more sustainable means of transport.

This national electric train will reduce Türkiye's dependence on fossil fuels, which will have a positive impact on the environment by reducing greenhouse gas emissions. It will also help improve the efficiency and reliability of Türkiye's railway system.

Source: Daily Sabah, May 29, 2023

Valvoline enters the Turkish market

American company Valvoline, the world's leading motor oil brand, has partnered with M Oil to enter the Turkish market.

Under the terms of the agreement, M Oil will begin by marketing product groups of transmission and industrial engine oils and lubricating oil first.

M Oil specializes in the manufacturing of oils and lubricants and operates within the Turkish OYAK group. The company will bring its local expertise and distribution network to support Valvoline's entry into the market. Being able to produce the Valvoline ranges locally, M Oil will be able to benefit from Valvoline's extensive knowledge and experience.

The country's geographic location, its trained workforce and market potential are the factors that helped attract the interest of the American giant with a turnover of 1.3 billion USD. The Turkish lubricants industry is indeed an attractive market estimated at around 600,000 tonnes. It is one of the 14th largest markets in the world. Until 2030, experts expect growth of around 60%.

This strategic partnership is a significant step forward for both companies. It will not only strengthen M Oil's market position, but also contribute to the growth and development of the Turkish mineral oil industry.

Source: BNN, June 1, 2023

Istanbul becomes the regional hub of Pernod Ricard

The French group Pernod Ricard, an international giant in the alcoholic beverage industry, recently made the decision to modify its management model by entrusting the management of 50 countries from Istanbul, which will now be its center for the region called #AME (Africa Middle East).

Selçuk Tümay, Managing Director and founder of the subsidiary in Türkiye and who already supervised 12 countries from Istanbul, will be responsible for the AME region which will include 50 countries from Africa, the Middle East, the Gulf countries and Türkiye.

The total turnover of the 50 countries amounts to around 800 million EUR and Türkiye occupies an important place, accounting for around 30% of the turnover.

The AME region stands out for its rapid progress, with an annual growth rate of 18%, double the group's overall rate.

In Türkiye, alcohol consumption at home increased sharply during the pandemic, going from 65% to 90% before stabilizing around 75% today. Consumption in bars, cafes and restaurants, which normally represents 15%, fell to 5% during the pandemic, but has now risen to 13%.

Source: Ekonomim, June 21, 2023

Media & audiovisual: Turkish companies in the spotlight

The dynamism and influence of Turkish productions arouse the interest of foreign companies: North Road, a production company headed by Peter Chernin, makes its first international acquisition by buying the Turkish company Karga Seven. Iyuno is also expanding its global presence with the acquisition of the Turkish studio Ak’la Kara which will now be renamed Iyuno Türkiye. Ak'la Kara International is a renowned dubbing studio in Türkiye, providing language services to international clients such as Netflix, Amazon Prime Video, Discovery and Riot Games. This acquisition is part of Iyuno's strategy to expand globally and provide integrated services to its clients. The Karga Seven, based in Istanbul and Los Angeles, is best known for his hit work “Rise of Empires: Ottoman” made for Netflix. The company also produces successful Turkish dramas for television such as Hekimoglu, adapted from the American series House. These acquisitions highlight the growing interest in Turkish content on the international scene. Indeed, “Karga Seven: Rise of the Ottoman” will benefit from the support and resources of North Road for its development and global distribution.

Turkish series and audiovisual production in general arouse considerable enthusiasm. After the USA, Türkiye ranks second in the world in terms of exports of television series. In 2022, exports in this sector will approach 750 million USD. Turkish soap operas are exported to more than 150 countries and viewed mainly in the Middle East, Latin America and Africa.

Source: Deadline & Asia One June 6, 2023

Public buildings are going green

The World Bank recently approved a significant investment of USD 549 million to boost the adoption of renewable energy in public buildings in Türkiye.

Türkiye has abundant renewable energy resources, such as solar, wind and geothermal energy, and the construction sector is one of the largest energy consumers and carbon emitters in the country. This initiative will not only allow Türkiye to reduce its dependence on fossil fuels but also to meet its climate commitments.

Renewable energies already represent around half of total installed capacity and 45% of electricity production. This new measure will further reduce carbon emissions. The project will notably install solar energy systems on the roofs of public establishments such as schools, hospitals and other government facilities.

In addition to promoting renewable energy, the project also aims to improve the energy efficiency of public buildings by introducing energy conservation measures and implementing more efficient technologies.

Source: Daily Sabah, June 14, 2023

Explosion in electric vehicle sales

According to ODMD data, sales of electric vehicles (EVs) more than tripled from the previous year with 7,526 vehicles sold in the January-May 2023 period. Sales in May alone jumped by 457.18% to 2,095 units, compared to 376 in May 2022. The gasoline-electric hybrid category also saw its sales jump by almost 60% year-on-year in the January-May period to reach 37,988 units.

The market shares of electric and hybrid vehicles thus reached 2.21% and 11.17% respectively, compared to 0.82% and 11.09% during the first five months of last year.

The EV trend gained new momentum with the launch of Türkiye's first EV, Togg. Currently 306 Togg T10X have been delivered. The current production capacity of around 100,000 vehicles per year will rise to 175,000 when the Togg factory reaches full capacity. Exports will begin by 2025.

This increase is also due to Türkiye's efforts to promote EV adoption. Indeed, Türkiye has put in place incentive measures such as tax reductions, purchase subsidies and charging infrastructure to encourage consumers to opt for electric cars.

Türkiye plans to further strengthen this sector by developing battery technologies and electric propulsion systems. The launch of the construction of a lithium-ion battery factory last March with a capacity of 20 GWh supports this approach. This initiative aims to reduce the country's dependence on EV #imports and promote innovation in the field of electric mobility.

Source: Daily Sabah, June 4, 2023

The Champions League final will bring in 80 million USD

The UEFA Champions League final, which pitted Manchester City against Inter, took place at the Atatürk Olympic Stadium in Istanbul on June 10, 2023. It is one of the most prestigious and most watched sporting events in the world. world, attracting a strong global audience. By hosting the final, Istanbul will benefit from a significant increase in tourism and demand in various economic sectors.

Indeed, this sporting event will impact not only the hotel industry, but also the catering sector, as well as local businesses and clothing stores which will benefit from the influx of visitors who come to watch the final.

According to specialists, this event is expected to contribute around 80 million USD to the Turkish economy. According to calculations by Mastercard and Garanti BBVA Payment Systems, fans stay on average three nights in host cities and spend around EUR 855 per person on the card.

As a global tourist destination, fans will also have the opportunity to visit the historical, cultural sites and attractions of the city of Istanbul, which alone accounts for 40% of the country's total tourism spending.

Source: Daily Sabah, May 26, 2023