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.