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Republic of TurkeyPrime Ministry
Investment Support and Promotion Agency of Turkey
(ISPAT)
Turkish ICT Sector
Umut KÖSEOĞLU
Project Director
AGENDA
Turkish ICT Market
Drivers of Turkish ICT Sector
Incentives for ICT Sector
Turkish ICT Market
Summary of Turkish ICT Market..
Sizeable Domestic Market of $32bn
Double-Digit Growth Performance
Young & Dynamic Population
Skilled-Labor Force
e-government
Incentives
Ambitious Targets
Export Opportunities
11
32
160
0
20
40
60
80
100
120
140
160
2003 2013 2015 2017 2019 2021 2023
Turkish ICT Market ($ Billion)
Source: TUBİSAD, Vision 2023, Interpromedya, Team Analysis
Turkish ICT sector has performed robust growth in recent years exceeding $30bn by 2013 and is expected to reach $160bn by 2023..
+17%CAGR
Source: Deloitte
Growth performance of Turkish IT companies has been also observed in international rankings..
86
67
45
43
42
36
32
24
22
18
15
93
86
54
48
53
27
23
23
18
7
15
0 20 40 60 80 100
France
UK
Sweden
Norway
Netherlands
Turkey
Germany
Finland
Israel
Belgium
Poland
2014
2011
Number of Companies in EMEA’s 500 Fastest Growing Companies
Source: TUBISAD
Turkish ICT sector is mainly dominated by communication technologies…
IT $9,4bn
Breakdown of Turkish ICT Market 2014
Communication Technologies$23bn
$32,4bn
Hardware $6bn
Communication Technologies Market
Electronic Communication$17bn
$23bn
Hardware $5,3bn
Software $2,6bn
Service $1,6bn
IT Market
$9,4bn
Potential growth areas: • Software • Services • Hardware
Source: TUBISAD
Turkish ICT sector is getting more and more diversified…
Turkish ICT Sector
Source: Information and Communication Technologies Authority *As of Sep 2014
Broadband internet and mobile phone penetration in Turkey have been rapidly increasing..
19.40
31.40
41.80
49.30
56.80
64.30
42.40
33.90
25.90
20.40
15.10
9.40
61.8065.30
67.7069.70
71.9073.60
0.00
25.00
50.00
75.00
20
10
20
11
20
12
20
13
20
14
20
15
3G 2G
16.20
15.21
13.86 13.55
12.74
11.49
1
5
9
13
17
20
10
20
11
20
12
20
13
20
14
20
15
*
Number of Landline Subscribers (million)
Increasing mobile internet usage driving the growth
-
10
20
30
40
50
60
2010 2011 2012 2013 2014 2015*
Number of Broadband Internet Subscribers (million)
Source: TURKSTAT *16-74 age group
ICT statistics show rapidly increasing usage among both Turkish households and enterprises…
Online Transactions
Source: Interbank Card Center (BKM), domestic and international transactions with domestic cards as well as domestic transactions with international cards
8414
48
5
10
15
20
25
30
35
40
45
50
55
50
70
90
110
130
150
170
190
210
230
2010 2011 2012 2013 2014 2015
Number (Million, LHS) Value (Billion TL, RHS)
36,5% CAGR
30% CAGR
8880
48
9489
56
40
50
60
70
80
90
Computerusage
Internetaccess
Firms withinternet
2005
2014
Enterprise ICT Usage (%)
20
3330
60
54 54
10
20
30
40
50
60
Householdswith Internet
ComputerUsage*
InternetUsage*
2007 2014
Household & Individual ICT Usage (%)
58 million credit cards
(2014)
Key Players
Top 10 ICT Companies in Turkey, 2013
Company Revenue ($ Bn)
1 Turk Telekom 6,9
2 Turkcell 6,0
3 Vodafone 3,4
4 Avea 2,0
5 TTNET 1,8
6 GEN-PA 1,5
7 Teknosa 1,3
8 KVK 1,0
9 Indeks 0,8
10 Brighstar 0,7
Source: Interpromedya
Turkey-based Sector Leaders, 2013
Company Sector Revenue ($ Mn)
Airties Hardware Manufacture 95
Innova Software Manufacture 86
GEN-PA Hardware Distribution 1.150
Indeks Software Distribution 587
Both local and foreign companies are active players in the Turkish ICT market…
Source: OECD
Turkish ICT sector is more open to FDI than many countries…0
.75
0.5
75
0.4
0.3
25
0.1
75
0.2
65
0.2
0.1
0.1
1
0.0
89
0.0
75
0.0
25
0.0
23
0
0.7
5
0.5
75
0.4
0.3
25
0.1
75
0.5
05
0.2
0.1
5
0.0
2
0.0
95
0.0
75
0.0
25
0.0
23
0
0.7
5
0.5
75
0.4
0.3
25
0.1
75
0.0
25
0.2
0.0
5
0.2
0.0
82
0.0
75
0.0
25
0.0
23
00
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
Ch
ina
Can
ada
Au
stra
lia
Ko
rea
Ind
ia
Jap
an
Swed
en
Ru
ssia US
OEC
D -
Ave
rage
Po
lan
d
Bra
zil
UK
Turk
ey
Communications Fixed telecoms Mobile telecoms
Index Score:
• 1 = Closed to FDI
• 0 = Open to FDI
FDI Regulatory Restrictiveness Index 2013
The FDI Index gauges the restrictiveness of a country’s FDI rules by looking at the four main types of restrictions on FDI: 1. Foreign equity limitations, 2. Screening or approval mechanisms , 3. Restrictions on the employment of foreigners as key personnel, 4.Operational restrictions, e.g. restrictions on branching and on capital repatriation or on land ownership
Source: CBRT, Ministry of Economy
Turkish ICT sector has been one of the most attractive sectors for foreign direct investment (FDI)..
$11,6bn
$2,9bn
FDI in Turkish ICT Sector, 2004-2014
Information and Communication Services
Manufacture of Computers, Electronic-Electricaland Optical Equipment
Total FDI in ICT
$14,5 Billion
1,239
516
19415
Number of Foreign Companies in Turkish ICT, 2014
Computer and related activities
Post & telecommunications
Manufacture of radio, TV & communication equipment
Manufacture of office, accounting & computing machinery
1.964 companies
Source: TURKSTAT; ITC, UNCTAD, WTO joint dataset.
Foreign Trade
Turkey’s Foreign Trade of Manufactured ICT products, ($ million)
2011 2012 2013 2014
Manufacture of… Export Import Export Import Export Import Export Import
Electronic Components and Boards 72 1.021 98 1.057 116 1.108 108 1.246Computers and Peripheral Equipment 117 3.133 122 3.147 148 3.483 157 3.548Communication Equipment 151 3.403 233 4.030 204 5.450 193 6.005
Consumer Electronics 1.880 1.563 2.178 1.629 1.723 1.458 1.931 1.489Magnetic and Optical Media 2 40 2 27 2 24 3 17TOTAL 2.223 9.160 2.634 9.890 2.193 11.523 2.391 12.305
c.$15 billion foreign trade of manufactured ICT products
Turkey’s Foreign Trade of ICT Services, ($ million)
2011 2012 2013
Export Import Export Import Export Import
Telecommunication services 451 268 417 282 345 239 Information services 18 38 17 13 19 22 TOTAL 469 306 434 295 364 261
Over $600 million foreign trade of ICT services
In addition to domestic market, there are also export opportunities…
Source: International Trade Center, latest data available as of 17.02.2015
EUROPE
ICT Service Import: • Computer & Information Services: $79bn• Telecommunication Services: $43bn
RUSSIA
ICT Service Import: • Computer & Information Services: $3,3bn• Telecommunication Services: $2,8bn
MENA
ICT Service Import: • Computer & Information Services: $2bn• Telecommunication Services: $4,7bn
CENTRAL ASIA & CAUCASUS
ICT Service Import: • Computer & Information Services: $0,2bn• Telecommunication Services: $0,4bn
Over $135 billion
foreign trade of
ICT Services at a
4-hour flight
distance from
Turkey
Turkey has the potential to emerge as an ICT service center in the region as Turkey incentivizes export of services by exempting 50% of the export revenues from tax..
Import of ICT Services, 2013 Access to Multiple Markets
• Managing 79 countries in Middle East & Africa..
• Managing 67 countries in Middle East & Africa..
• Managing 20 countries from Caucasus & Central Asia and Eastern Europe
• Managing 30 countries from Turkey..
• Managing 11 countries in Central Asia and Caucasus..
• Managing 90 countries from Turkey..
•Managing 22 countries in Middle East..
• Managing Middle East & North Africa from Turkey..
Turkey is already being used as a management hub by multinational companies..
Drivers of ICT Sector
Population Pyramid (%)
5 4 3 2 1 0 1 2 3 4 5
0-4
5-9
10-14
15-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65-69
70-74
75-79
80-84
85-89
90+
Female Male
%
Age Group TURKEY
5 4 3 2 1 0 1 2 3 4 5
0-4
5-9
10-14
15-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65-69
70-74
75-79
80-84
85-89
90+
Female Male
%
Age Group EUROPE
Source: Turkstat, Eurostat, UN, 2014
78 million young & dynamic people
5 4 3 2 1 0 1 2 3 4 5
0-4
5-9
10-14
15-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65-69
70-74
75-79
80-84
85-89
90+
Female Male
%
Age Group ASIA
Turkey has a young and dynamic population, with half under the age of 30, making Turkey the country with the largest youth population in Europe…
Favorable demographic trend is here to stay for the next two decades with increasing working age population and low dependency ratio..
Source: UN
80
100
120
2014 2017 2020 2023 2026 2029 2032 2035
Working Age Population (15-64)(Index: 2014=100)
Europe
Turkey
40
45
50
55
60
65
70
75
2014 2017 2020 2023 2026 2029 2032 2035
Total Dependency Ratio (%)(Age 0-14 & Age 65+) / Age 15-64
Europe
Turkey
95
100
105
110
115
120
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Turkey
Europe
Population Projections (Index: 2014=100)
Source: IMD World Competitiveness Yearbook 2014,
7.4
7.2
7.0
6.9
6.7
5.3
0 2 4 6 8
Turkey
Bulgaria
Hungary
China
Romania
Brazil
Availability of IT Skills
7.1
6.8
6.7
6.0
4.5
3.9
0 2 4 6 8
Turkey
Hungary
Romania
China
Brazil
Bulgaria
Availability of Qualified Engineers
Turkey offers investors with necessary ICT skills and talents..
Executive Opinion Survey based on an index from 0 to 10 0 = Not available 10 = Readily available
Availability of ICT Skills, 2014
Source: OSYM
3621
3987
4403
3000
3300
3600
3900
4200
4500
2010 2011 2012
Number of Annual Graduates in Electrical-Electronics Engineering
3028
2906
3187
2700
2800
2900
3000
3100
3200
2010 2011 2012
Number of Annual Graduates in Computer Engineering
4881
5161
5605
4500
4700
4900
5100
5300
5500
5700
2010 2011 2012
Number of Annual Graduates in Mathematics
13203
13607
15175
12000
13000
14000
15000
16000
2010 2011 2012
Number of Annual Graduates in Computer Tech & Programming
Turkish higher education does support the ICT industry through training world-class engineers and technicians…
Turkish primary & secondary education also supports the ICT industry through enhanced usage of ICT products…
Hardware & Software infrastructure
Educational e-content and Management of e-content
Effective Usage of the ICT in Teaching Programs
In-service Training of the Teachers
Conscious, Reliable, Manageable and Measurable ICT Usage
To integrate state-of-the-art computer technology into Turkey’s public education system and provide tablets and internet access.
Education policies have been yielding results…
7470
4751
38
46
0
10
20
30
40
50
60
70
80
Science Math
20062006 2009 20092012 2012
Source: OECD
PISA ResultsGap between Turkey and OECD Scores
PISA: Programme for International Student Assessment of the competencies of 15-year-olds in reading, mathematics and science
Math Scores
2006 2009 2012
OECD 494 496 494
Turkey 424 445 448
Science Scores
2006 2009 2012
OECD 498 501 501
Turkey 424 454 463
Source: EUROSTAT, 2012
42.4
37.5 37.3
25.0
10.08.3 8.0
6.8
0
10
20
30
40
Labor cost per hour (€) in manufacture of computer, electronic and optical products
42.6
39.136.8
19.3
10.07.4 7.0 6.7
0
10
20
30
40
Labor cost per hour (€) in manufacture of electrical equipment
Labor cost ICT Manufacturing, 2012
Turkey offers a cost-competitive labor force in ICT manufacturing..
Source: EUROSTAT, 2012
44.842.7
38.4
31.6
19.214.3 13.8 13.4
0
10
20
30
40
50
Labor cost per hour (€) in computer programming, consultancy and
related activities
46.641.8 40.2
29.023.3
19.415.9 14.0
0
10
20
30
40
50
Labor cost per hour (€) in Telecommunications
42.640.6
35.733.2
18.5
12.1 11.6 10.8
0
10
20
30
40
50
Labor cost per hour (€) in Information service activities
Labor cost ICT Services, 2012
Turkey has also a competitive edge in labor cost for ICT services..
Source: Turkey Vision 2023
Industrial Strategy of the Ministry of Science, Industry & Technology
• Increasing the number of companies that continuously improve their skills within the economy.
• Increasing the number of medium- and high-technology sectors in production & export.
• Transition to products with high added value in low-tech sectors.
• To increase the sector's share in the GDP from 2.9% to 8% in 2023.
Communication Strategy of The Ministry of Transport, Maritime Affairs &
Communications
• Having 120 million mobile subscribers.
• Increasing number of broadband subscribers to 30 million.
• Providing internet connections for 14 million houses at a speed of 1000 Mbps
• Reaching an ICT sector size of $160 billion.
R&D Strategy of the Supreme Council of Science and Technology
• Increasing the number of researchers from 135,000 to 300,000.
• Reaching a number of 180,000 private sector researchers from 39,000.
• Increasing the R&D expenditure to GDP ratio to 3% from 0.85%.
• Increasing private sector R&D expenditure of the GDP ratio to 2%.
2023 ICT
Targets
The government has also set ambitious goals in ICT sector to ensure Turkey becomes an informationsociety with a fully developed ICT sector by 2023
Information Society
Objectives
Citizens Businesses Government
A globally competitive IT sector
Competitive, widespread and affordable telecommunications infrastructure and services
Improvement in R&D and Innovation
Social
transformation
ICT Adoption
by businesses
Citizen focused
service
transformation
Modernization in
public
administration
Information Society
• Government's holistic e-transformation efforts started in 2003
– Department of Information Society has been established under M. of Development for coordination of activities
• Since its inception, Turkey has made progress in improving its Networked Readiness Index (NRI) from 3.96 to 4.30 (on a scale from 1=worst to 7= best) between 2007 and 2014; moving the country ranking from 55 to 511
• For the coming years, government focus is on transforming Turkey into an ICT hub
Major growth in Turkish ICT market is expected to be driven by public expenditure which has been increasing steadily as a result of information society strategy…
1. Source: WEF, NRI measures the propensity for countries to exploit the opportunities offered by ICT. The NRI has 3 components: the environment for ICT offered by a given country or community(Market, political, regulatory, infrastructure),the readiness of the community’s key stakeholders (individuals, businesses, and governments) to use ICT, and finally the usage of ICT.
Source: Ministry of Development *Adjusted to 2014 prices
Government has been a key driver of ICT development for Turkey’s e-transformation…
0.70.8 0.9
1.21.3 1.3
1.2 1.2
1.6
2.5
2.8
3.83.7
0
1
2
3
4
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
Government Investment in ICT (Billion TL*)
12%CAGR
Education, 43.7%
Other public services, 41.7%
Agriculture, 5.5%
Health, 2.5%
Breakdown of Government Investment in ICT (2014)
Source: Ministry of Development
Government has launched ICT projects to transform Turkey into an information society throughe-government…
1415
257
209
167
157
114
114
108
106
104
0 300 600 900 1200 1500
Ministry of National Education
Ministry of Interior
Ministry of Transport
Universities
Ministry of Justice
Turkish National Police
Ministry of Agriculture
Social Security Institutions
Land Registry
Revenue Administration
1400
87
77
63
58
58
55
55
55
54
0 300 600 900 1200 1500
Fatih Project
Various Projects (MoJ)
Modernization of Land Registry
GSM Infrastructure
Improving Communication Infrastructurein Disasters (MoH)
Agricultural Monitoring & Info System
City Security Management System(MOBESE)
IT Project (Turkish National Police)
Emergency Call System (112)
National Identity Card
Top 10 Public Institutions Investing ICT (Million TL, 2014)
Top 10 Public Project in ICT (Million TL, 2014)
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