Don’t miss out on the latest round up of investment news from Türkiye!

MESSAGE FROM THE INVESTMENT OFFICE

On the August 30 Victory Day, Türkiye marked the 100th anniversary of its victory at the Battle of Dumlup?nar in 1922. On this historic day, we respectfully commemorated Mustafa Kemal Atatürk, the founder of the Republic of Türkiye, and gallant soldiers of our military.

As the year has already passed halfway through, unprecedented success stories continue to usher in, with Türkiye remaining committed to building on its new vision in various domains such as the investment climate, economy, industry trends, and energy policy.

In the past month, Türkiye deployed its newest seventh-generation drillship, Abdulhamid Han, to the Mediterranean Sea to conduct oil and natural gas exploration as part of its endeavors to reduce import dependency on energy. President Recep Tayyip Erdo?an heralded that Abdulhamid Han is the embodiment of indigenous manpower, data infrastructure, and technological tools.

On the regional arena, President Erdo?an continued his diplomatic efforts and launched a number of fresh initiatives including holding consecutive talks with his Russian and Ukrainian counterparts on bilateral relations in economy, trade, and the defense industry, as well as the full implementation of the Grain Shipment Agreement to address regional concerns.

Looking into GDP, latest statistics showed that Türkiye has become the second-fastest growing economy among the G20 members and OECD countries, with an annual growth of 7.6 percent, and a quarterly growth of 2.1 percent in the second quarter of 2022, outpacing most peers.

With regard to FDI, Abu Dhabi-based International Holding Company acquired a 50 percent stake in Turkish Kalyon Enerji at a USD 490 million-deal, which came amidst recent pledges of the two countries to step up cooperation in a variety of areas.

Türkiye continues to be on the radar of global companies in various industries owing to its solid and resilient investment environment in the post-pandemic period. Total FDI inflows into Türkiye during the first half of 2022 soared to USD 5.5 billion, up 21 percent year-on-year, bringing the total FDI inflows for the last 12 months to USD 14.77 billion, up from USD 14 billion in 2021.

Moving on to startups, after having the strongest first quarter ever in 2022, the ecosystem maintained its impressive streak with an equally remarkable second quarter, spearheaded by VCs engaged in financial technology and gaming, resulting in USD 1.4 billion in investments in the first half of 2022.

In this September edition, you will access a compilation of news stories from Türkiye’s investor-first market and latest statistics from its thriving startup ecosystem.

A. Burak Da?l?o?lu

President, Investment Office of the Presidency of the Republic of Türkiye

TüRK?YE’S NEWEST DRILLSHIP ABDULHAM?D HAN SETS SAIL FOR FIRST MEDITERRANEAN MISSION

Türkiye sent its newest seventh-generation drillship, Abdulhamid Han, to the Mediterranean Sea to search for oil and natural gas in a ceremony honored by President Recep Tayyip Erdo?an on August 9.

"The Abdulhamid Han will sail to the Y?rükler-1 well, 55 kilometers off coast of Antalya's Gazipa?a," President Erdo?an said in the ceremony held to mark the vessel’s maiden mission.

President Erdo?an stated that as the most advanced drillship in the country’s fleet, Abdulhamid Han is the symbol of Türkiye’s new vision in the field of energy, and added, “We identified our dependence on foreign energy as one of the issues we needed to address immediately while setting our country’s goals for 2023 and decided to carry out this process with our own manpower, data infrastructure, and technological tools.”

Türkiye has a rare drilling fleet in the world with its ships Fatih, Kanuni, Yavuz, and Abdulhamid Han, President Erdo?an emphasized.

Abdulhamid Han has a maximum operating depth of 3,600 meters, a tower height of 104 meters, and a crew capacity of 200.?

PRESIDENT ERDO?AN ATTENDS MASS OPENING CEREMONY IN KOCAEL?

President Recep Tayyip Erdo?an attended a mass opening ceremony in Kocaeli on August 6. Sharing his insights on the infrastructure of democracy and development built in Türkiye over the past two decades, President Erdo?an said, “Since we are companions of our nation, we have never deviated from the path of righteousness and the path of services and projects.”

President Erdo?an also attended the Award Ceremony for Those Who Add Value to Kocaeli, the Heart of Industry and Technology held by the Ministry of Industry and Technology in Gebze Bili?im Vadisi.

“Freedom in terms of the economy or politics is unattainable without achieving technological independence or building a national industry. Just as foreign dependency in defense gives rise to grave problems, foreign dependency in technology and production poses similar risks as well,” President Erdo?an said in his speech.

Highlighting the 11 percent growth rate achieved in 2021, which placed Türkiye top among the G20 countries, President Erdo?an noted, “We achieved a 7.3 percent growth in the first quarter of this year. We break records in exports every month. Our July exports totaled USD 18.5 billion, up 13.5 percent year-on-year. While employment rates are declining across the world, we have reached nearly 31 million, the highest such figure in our history.”

Following the ceremony, President Erdo?an conducted the test drive of Togg, Türkiye's indigenous car, and posted a video of Türkiye’s future vehicle on his social media account captioned "A memory with Togg”.

PRESIDENT ERDO?AN INTENSIFIES PEACE EFFORTS IN THE REGION

Over the past month, President Recep Tayyip Erdo?an continued his diplomatic efforts and took several initiatives to address regional concerns, ranging from the Syrian conflict to the Russia-Ukraine war.

Following the Tripartite Summit in Astana Format with the Russian President Vladimir Putin and Iranian President Seyyed Ebrahim Raisi in Tehran and the Grain Shipment Agreement signed by Türkiye, the UN, Russia, and Ukraine on the reopening of Ukrainian ports for grain exports in July, President Recep Tayyip Erdo?an headed to the Russian city of Sochi on August 5 and Ukrainian city of Lviv on August 18 to meet with his Russian and Ukrainian counterparts.

The talks in Sochi focused on the recent developments in Syria, Ukraine, bilateral ties and international concerns, and concluded with President Erdo?an and President Putin agreeing to boost cooperation in the energy, transport, agriculture, finance, and construction industries.

In a joint statement released after the four-hour meeting, the two leaders underlined the need for the full implementation of the “Grain Shipment Agreement” signed in Istanbul.

Russian President Putin thanked President Erdo?an for his involvement in signing the deal, and added, “Success has been achieved in launching the shipment of Ukrainian grain from the Black Sea ports through the UN and Türkiye.”

Regarding the ongoing Turkish-Russian Akkuyu Nuclear Power Plant Project, President Erdo?an stressed the importance of building the plant under the recommended timeframe.

"It is crucial that the agreed-on calendar work and that Akkuyu be completed on time as it will handle 10 percent of Türkiye's energy potential in energy supply," Erdo?an added.

As part of Türkiye’s endeavors for lasting peace in the region, President Erdo?an also met with his Ukrainian counterpart Volodymyr Zelenskyy and UN Secretary-General António Guterres at the Potocki Palace on August 18. The two leaders were accompanied by a large delegation of ministers and senior officials, including Turkish Foreign Minister Mevlüt ?avu?o?lu and his Ukrainian counterpart Dmytro Kuleba.

President Erdo?an and President Zelenskyy discussed the bilateral relations focusing on the economy, trade, and defense industry in the context of the ongoing war and held a trilateral summit with UN Secretary-General Antonio Guterres to discuss the continuation of the mechanism established for the export of Ukrainian grain to global markets.

5th ISLAMIC SOLIDARITY GAMES KICK OFF IN TüRK?YE

President Recep Tayyip Erdo?an presided over the inaugural ceremonies of the 5th Islamic Solidarity Games on August 9 at the Sel?uklu Cultural Center in Konya, which were held under the aegis of the Islamic Solidarity Sports Federation (ISSF) and attended by world leaders.

The program started with a dinner in honor of President Ilham Aliyev of Azerbaijan, President Ersin Tatar of the Turkish Republic of Northern Cyprus (TRNC), Prime Minister Mohammad Shtayyeh of Palestine, Prime Minister Edi Rama of Albania, Prime Minister Aymen Benabderrahmane of Algeria, Minister of Sports of Saudi Arabia, President of the Islamic Solidarity Sports Federation Prince Abdulaziz bin Turki Al-Faisal, and President of the Qatar Olympic Committee Sheikh Joaan Bin Hamad Al-Thani.

President Erdo?an held one-on-one meetings with President Ilham Aliyev, Prince Abdulaziz bin Turki Al-Faisal, Prime Minister Aymen Benabderrahmane, and Prime Minister Mohammad Shtayyeh.

Under the umbrella of the games, over 4,000 athletes from 56 countries compete in a variety of sports branches, including football, volleyball, basketball, handball, taekwondo, judo, wrestling, fencing, shooting, archery, table tennis, swimming, and traditional Turkish archery.

TURKISH ECONOMY GROWS 7.6 PERCENT IN Q2

Türkiye’s economy expanded 7.6 percent annually in the second quarter of 2022, growing at a faster rate than expected and outpacing most peers, according to the figures released by the Turkish Statistical Institute (TurkStat).

With an annual GDP growth of 7.6 percent, and a quarterly GDP growth of 2.1 percent in the second quarter of 2022, Türkiye has become the second-fastest growing economy among the G20 members and OECD countries.

A close analysis of GDP's activities demonstrated that all of the components, particularly finance and services contributed positively to economic growth, with the exception of agriculture, forestry and fishing, and construction.

The value-added in the financial and insurance sector increased by 26.6 percent, 18.1 percent in the services sector, 11.0 percent in professional, administrative and support service activities, and 7.8 percent in manufacturing.

Commenting on the remarkable figures, the Minister of Treasury and Finance Nureddin Nebati said the Turkish economy has maintained balanced-growth for five consecutive quarters.

"In this period, an additional 900,000 people were employed compared to the end of last year, and the unemployment rate fell to 10.3 percent," Minister Nebati noted, adding that these gains were made possible by the Türkiye Economy Model, which prioritizes growth and employment while supporting production and exports.

MINISTRY OF INDUSTRY AND TECHNOLOGY BOOSTS SUPPORT FOR PRIVATE SECTOR INVESTMENTS

The Ministry of Industry and Technology issued 1,335 investment incentives certificates in June 2022, according to a written statement released on August 8.

The Minister of Industry and Technology Mustafa Varank stated that the private sector is investing at full steam, adding, “With the latest certificates we issued in June 2022, we will support investments amounting to TRY 52.3 billion, and create additional employment for 37,000 people.”

Accordingly, 60.3 percent of those investments will be made in the manufacturing sector, 18.8 percent in services, 8.2 percent in mining, 9.9 percent in energy, and 2.8 percent in agriculture sectors.

A breakdown of investments by region shows that Region 1 attracted the highest investments with 37.4 percent, followed by Region 2 with 31.9 percent.

Türkiye’s investment certification program is based on a descending pattern, where regions vary in a range of 1 to 6 based on their level of development, with a rating of 6 being granted to the least developed region. With this system, the most advantageous incentives are offered to the lesser-developed regions.

TURKISH EXPORTS ON TRACK TO HIT ANNUAL TARGET WITH USD 18.55 BILLION IN JULY

Minister of Trade Mehmet Mu? unveiled Türkiye's July 2022 foreign trade statistics on August 3. Accordingly, Turkish exports rose 13.5 percent year-on-year in July 2022, reaching USD 18.5 billion, while foreign trade volume increased 28.7 percent to hit USD 47.68 billion.

Noting that Türkiye’s exports during the past 12 months reached USD 248.4 billion in July, Minister Mu? said, “We are steadily advancing step by step towards our export target of USD 250 billion, as set forth by our President for the end of 2022.”

July 2022 exports were mainly driven by motor vehicles with USD 1.77 billion, mineral fuels and oils with USD 1.69 billion, and machinery with USD 1.53 billion.

Germany was Türkiye’s top export destination with USD 1.48 billion, followed by the US with USD 1.31 billion, and the UK with USD 1.17 billion.

Türkiye’s TRY-denominated exports increased 84.4 percent, spanning 159 countries and 5,529 companies.

FDI INTO TüRK?YE SOARS 21 PERCENT YEAR-ON-YEAR IN H1 2022

According to the latest data released by the Central Bank of the Republic of Türkiye, the total FDI inflows into Türkiye during the first half of 2022 amounted to USD 5.5 billion, up 21 percent year-on-year. Meanwhile, total FDI inflows in the last 12 months soared to USD 14.77 billion, up from USD 14 billion in 2021.

In the first half of 2022, the Netherlands was the top source of FDI in Türkiye with USD 590 million, followed by Switzerland with USD 513 million, and Germany with USD 211 million.

Regarding industrial breakdown, the manufacturing and wholesale/retail trade sectors attracted the highest amount of FDI with a share of 31 percent, followed by ICT with 11 percent during the same period.

Commenting on the recent FDI figures, Investment Office President A. Burak Da?l?o?lu said, “Türkiye continues to be on the radar of global companies in various industries owing to its solid and resilient investment environment in the post-pandemic period. Our investors are able to offer products and services that can compete on a global scale, thanks to our rapid adaptation to changes in the supply chain. Under the leadership of our President, Türkiye has become a regional R&D, manufacturing, logistics, and management hub in the past two decades, and continues to consolidate this position with ongoing investments. Investments attracted by our technology startups is another important topic. In the first half of 2022, seed, early and later VC stage technology startups in Türkiye received USD 1.4 billion in investments in a total of 140 deals.”

Da?l?o?lu further stated that Türkiye, as a resilient and fast-growing economy, offers business-friendly policies, deep talent pool, and global market access at the nexus of Europe, Asia, and Africa to attract sustainable FDI, and added, “We expect a continued uptrend in investments in bolstering the supply chain and financing startups throughout the rest of the year.”

TURKISH STARTUP ECOSYSTEM ATTRACTS AROUND USD 1.4 BILLION OF INVESTMENT IN H1 2022

Starting 2022 off with the best first quarter ever, the Turkish startup ecosystem maintained its impressive streak with an equally remarkable second quarter, spearheaded by VCs engaged in financial technology and gaming.

According to data from the Turkish Startup Ecosystem H1 2022 Report, USD 1,393 million were invested across 140 deals in the seed, early, and later VC stages. International investors took part in one out of every four deals, accounting for the lion’s share of 96 percent of angel and VC deals with USD 1,338 million.

Looking into angel and VC deals, grocery delivery, gaming, AI, SaaS, and MarTech topped the list in terms of deal volume, whereas FinTech, SaaS, AI, gaming, and eCommerce fared best in terms of deal count.

Türkiye was also ranked above the Netherlands, Estonia, and Austria in the European Super League, whereas it was ranked just above the UAE in the MENA Super League of angel and VC deals. The report also reveals that Istanbul ranked 4th among European cities for angel and VC deals in the first half of 2022, following the likes of London, Paris and Berlin.

On the gaming side, Türkiye not only beat its own record for deals, it also overtook the rest of Europe as the country with the highest amount of gaming deals in the continent with USD 333 million, supported in part by gaming startups that generated record investments such as Dream Games and Spyke Games. The UK came in second behind Türkiye with USD 138 million, trailed by Norway in third place with USD 60 million.

Commenting on the outstanding results, Investment Office President A. Burak Da?l?o?lu said, “Technology investments have recently emerged as an important source of FDI inflows. In addition, Turkish technology entrepreneurs are increasingly attracting major investments from international investors thanks to the country’s entrepreneurial business culture, competent talent pool, and perfect location at the nexus of Europe, Asia and Africa. The Investment Office promotes the ecosystem’s achievements and prospects at the world's top-tier events, and invites international funds to take part in the next success stories and earn yield high returns.”

Meanwhile, startups.watch Founder Serkan ünsal said, “Istanbul ranked top in Europe in gaming investments, leaving behind London, Oslo, Helsinki, and Stockholm. For the remaining half of the year, mega-investments are in the pipeline for startups that have attained certain levels,” in his statement on the Turkish startup ecosystem’s recent performance.

Since the beginning of the pandemic, 65 funds worth USD 866 million have been established in Türkiye.

In addition, investments in blockchain and metaverse initiatives in Türkiye have reached USD 20 million and additional investments are already on the agenda.?

TURKISH AUTOMOTIVE PRODUCTION UP 37.4 PERCENT IN JULY

Türkiye's automotive production increased 37.4 percent year-on-year in July to 93,659 vehicles, announced the Automotive Manufacturers Association (OSD).

The data also show that Türkiye’s automotive production rose 5 percent year-on-year in the first seven months of 2022 to 742,969 vehicles.

The capacity utilization rate of the automotive sector was 66 percent in July.

According to the breakdown of vehicle segments, the capacity utilization rate was 66 percent for light vehicles, 84 percent for the truck group, 33 percent for the bus-midibus group, and 62 percent for tractors.

UAE-BASED IHC ACQUIRES 50 PERCENT OF KALYON ENERJI

Abu Dhabi-based International Holding Company (IHC) acquired a 50 percent stake in Turkish Kalyon Enerji, a subsidiary of Kalyon Holding that mainly operates in the construction, energy, and aviation industries.

The USD 490 million-transaction includes the photovoltaic power plant project with an installed capacity of 1,347,734 MWp / 1,000 MWe in Konya’s Karapinar district, 1 GW capacity-RES wind power plants, 100 MW solar project in Ni?de, 50 MW solar project in Gaziantep, among other renewable projects in various cities across Türkiye.

Commenting on the acquisition, IHC CEO Syed Basar Shueb stated, "With this transaction that makes up IHC's second-largest acquisition in the renewables sector to date, IHC is further accelerating its growth in the renewable energy sector by partnering with Kalyon Enerji. This will complement our renewable energy portfolio, which we will continue to grow across different markets".

The power plant project in Konya was established on approximately 20 million square meters of land. The installation and commissioning of 3.5 million panels started in August 2020, and are expected for completion in 2023.

Once completed, the energy equivalent to the one-week need of 50,000 inhabitants will be generated in just an hour, and meet the annual energy needs of approximately two million people. The plant will also eliminate two million tons of fossil waste and carbon emissions.

The deal arrives at a time after the two countries committed to step up cooperation in various fields during their official visits.

ITALIAN SEA GROUP ACQUIRES A 100 PERCENT STAKE AT TISG TüRK?YE

Italian Sea Group S.p.A. (TISG), a global player in the luxury nautical industry with the brands Picchiotti, Admiral, Perini Navi, Tecnomar, and NCA Refit, announced the acquisition of a 100 percent stake at TISG Türkiye Yat Tersanecilik A.?. (TISG Türkiye) from GC Holding S.p.A. at a cost of EUR 150,000.

This operation will allow the TISG to consolidate its entire production process, granting an even more integrated and quality-oriented management of the operations. Moreover, it will enable the company to favor the investment strategy directly from TISG to TISG Türkiye in terms of business growth.

TISG disclosed that its total revenues for the first half of 2022 posted a 64 percent year-on-year increase to hit EUR 133 million, mostly due to the company’s progress in its recent projects.?

JAPANESE HOSHIZAKI PLANS TO ACQUIRE MAJORITY STAKE IN TURKISH ?ZT?RYAK?LER

Japanese Hoshizaki Corporation announced that ?ztiryakiler, its industrial kitchenware manufacturer group company in Türkiye, completed the construction of its new factory in ?orlu on a 93,000 square meters of site next to its existing factory and that production began in May 2022.

Hoshizaki made its initial investment in ?ztiryakiler in 2019 and currently possesses a 39 percent share, with plans to acquire an additional 51 percent stake by 2023 in a bid to make the Turkish company its consolidated subsidiary.

“We are planning to improve our competitiveness in Türkiye and abroad by securing the production capacity necessary to realize our future growth strategy and by starting production at the new plant in addition to the existing plants in Istanbul, ?orlu and Antalya,” stated the Japanese group in a press release about the new factory.?

AUSTRIA-BASED TYROLIT ACQUIRES 75 PERCENT STAKE IN TURKISH EGELI EGESAN GROUP

Austria-based Tyrolit Group acquired more than 75 percent of the Turkish coated abrasive producer Egeli Egesan Group.

Emphasizing that this acquisition will strengthen their competitiveness, Tyrolit CEO Thomas Friess said, “We are glad that we could acquire the majority of a strategically important abrasives manufacturer. The location has excellent infrastructure and gives Tyrolit market access to new geographical regions. I am convinced that combined with Tyrolit’s technology, know-how and innovative strength, we will soon create a win-win situation for our customers in the Middle East.”

Tyrolit is one of the world’s leading manufacturers of grinding and dressing tools as well as machinery for the construction industry. The family-owned business focuses on the strengths of a global vision with more than a century’s worth of corporate and technological experience.

INVESTMENT OFFICE HOLDS ROADSHOW IN SAUDI ARABIA

As part of a roadshow program in Saudi Arabia, a delegation from the Investment Office headed by Vice President Furkan Karayaka met with executives from the Ministry of Investment, the Jeddah Chamber of Commerce, the Riyadh Chamber of Commerce, and the Makkah Chamber of Commerce, and Saudi companies.

INVESTMENT OFFICE ATTENDS GAMESCOM 2022

Investment Office attended gamescom 2022, the world's largest event for computer and video games and Europe's largest business platform for the games industry, in Cologne, Germany. With the support of Ministry of Trade, 20 Turkish game companies participated in the fair along with METU ATOM, Y?ld?z Technopark, and Bah?e?ehir University BUG Lab.