The overriding concern behind the new Turkish incentive scheme
is the resumption of the macro-economic stability of the Turkish
economy. The country has been growing in an unprecedented speed for
the most part of the last decade. The volume of exports has
steadily increased and finally exceeded 100 billion dollars and the
staunch economic programme by the Turkish government have managed
to reduce the inflation rates in to a historical low level during
the course of the last decade. However, despite such strong
economic growth and the implementation of much neglected reforms,
two interconnected problems still continue to hunt the Turkish
economy. As the economy continued to grow, the Turkish consumers
continued to spend creating the historical low in savings. Turkish
saving rate only stands at 12.6% of the GDP now and what is more
important is the fact this is connected with another major problem
of the Turkish economy; the current account deficit. The current
account deficit has already reached 60 billion dollars during the
course of the last 12 months and the crucial point is that Turkey
has no cushion to safely land on in case of an emergency due to the
low level of savings.
The New Incentive Scheme
Given such macro-economic background the entire Incentive Scheme
is designed to gear the Turkish economy to solve the problem of
current account deficit by promoting some specific business sectors
that will reduce Turkish imports and contribute to the delicate
balance between exports and the imports. The new incentive scheme
is going to provide the would be investors with an advantage of
enjoying the benefits of the scheme with a fraction of the total
investment; to be more precise 10% of the total investment needed
for the project will be accepted enough within the framework of
this incentive scheme for the investors to benefit from the tax
cuts and customs duties exemptions that the scheme includes. Within
the framework of this incentive scheme Turkey is categorized under
six different regions and the fifth and the sixth regions provide
significant advantages for the investors. Moreover in some specific
priority sectors, the investors will automatically benefit from the
wide array of advantages provided for region five investments
regardless of where the investment have been made.
The most salient priority areas of investments that will benefit
from region five are the investments for tourism facilities for
accommodation purposes in the areas designated by the Ministry of
Tourism, investments for mine drilling and operating, maritime and
railway transportation investments, pharmaceutical investments with
a minimum of 20 million Turkish Liras investments, educational
investments pertaining to pre-school, primary school, middle school
and high schools. Such priority sectors are, no means by
coincidence, the sectors that Turkey would like to develop both for
infrastructural purposes and for the aforementioned concern for the
growing current account deficit and the absence of high saving
rates that can act as cushion for the Turkish economy to safely
land on in case of an emergency. Given such an incentive scheme the
foreign investors should look for opportunities that would pave the
way for tax exemptions and exemptions from customs duties for their
investments in Turkey. In order to attain such benefits the
investors should carefully assess Turkey's needs and see where
such opportunities might lie in connection with the Turkey's
efforts to clamp down its current account deficit.
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