Joint Annual Conference: "Invest for Access"

Thursday, April 8, 2004

Joint Annual Conference: "Invest for Access"

Thursday, April 8, 2004Sponsor organizations:Sponsor organizations:

TURKEY-EU RELATIONS

Davut ÖkütçüChairman of the Board

Economic Development Foundation8 April 2004, TORONTO

IMPLICATIONS OF ACCESSION NEGOTIATIONS

on theINVESTMENT ENVIRONMENT IN TURKEY

33

TURKEY-EU RELATIONSTURKEY-EU RELATIONS--

MILESTONES MILESTONES

1963 Accession Partnership Agreement1963 Accession Partnership Agreement Jan.1, 1996 Completion of Customs Union Jan.1, 1996 Completion of Customs Union

with EU with EU 1997 Luxemburg Summit1997 Luxemburg Summit 1999 Helsinki Summit1999 Helsinki Summit 2002 Copenhagen Summit2002 Copenhagen Summit

44

Copenhagen CriteriaCopenhagen Criteria

Guaranteeing democracy, Guaranteeing democracy, The rule of Law, The rule of Law, Respect for human rights, Respect for human rights, Protection of minoritiesProtection of minorities Existence of a functioning market economy Existence of a functioning market economy Capacity to cope with the competitive Capacity to cope with the competitive

pressure from the EUpressure from the EU Full compliance with the European Union Full compliance with the European Union

acquis acquis

Political Criteria

55

Compliance with the political Compliance with the political criteriacriteria

The precondition for the The precondition for the launching of the accession launching of the accession

negotiationsnegotiations Since 1999, Since 1999, Turkey has undertaken various reforms in the Turkey has undertaken various reforms in the

political, economic and legislative spheres of the political, economic and legislative spheres of the integration process.integration process.

1/3 of Constitution amended, 1/3 of Constitution amended, 77 reform packages reform packages adoptedadopted

““Implementation” is now the key word.Implementation” is now the key word. Structural ReformsStructural Reforms Reform Monitoring GroupReform Monitoring Group Human Rights BoardHuman Rights Board Extensive training of security and judiciary staffExtensive training of security and judiciary staff

66

Precondition of Accession Negotiations Precondition of Accession Negotiations are the Copenhagen Political Criteria. are the Copenhagen Political Criteria.

YETYET

Economic criteria and harmonization Economic criteria and harmonization with the Acquis are the key to full with the Acquis are the key to full integration with the EUintegration with the EU. .

Turkey has covered Turkey has covered considerablconsiderable ground e ground in these areas to shorten the period of in these areas to shorten the period of negotiations on the path to full negotiations on the path to full membershipmembership

77

Ec. Growth Ec. Growth & Inflation& Inflation7,8

5,9

5

0

1

2

3

4

5

6

7

8

2002 2003 2004*

Growth

0

10

20

30

40

50

60

70

80

2001 2002 2003 2004*

Inflation

88

Golden Rules of CompetitionGolden Rules of Competition

Stable and predictable legislative environmentStable and predictable legislative environment Flexible and resilient economic structureFlexible and resilient economic structure Traditional and technological infrastructureTraditional and technological infrastructure Private savings and domestic investmentPrivate savings and domestic investment Quality, speed and transparency in governmentQuality, speed and transparency in government ProductivityProductivity Investment in education and life-long trainingInvestment in education and life-long training Preservation of the value systems of the Preservation of the value systems of the

citizenscitizens

Source: IMD

99

After Customs Union.....After Customs Union..... Concepts likeConcepts like

Productivity Total quality management, Customer satisfaction, Standardisation, Continuous improvement, Strategic thinking, Institutionalisation, Value-added, Human resources management Innovation

took their place on the agendatook their place on the agenda

1010

Award Winning Turkish Award Winning Turkish CompaniesCompanies

EFQM European Quality Awards 1996 BRISA (Award Winner), NETAS - Northern

Electric Telekomunikasyon 1997 Beksa (Award Winner)

1998 NETAS - Northern Electric Telekomunikasyon 1998 Beko Ticaret (Award Winner)

2000 Arçelik, Eczacibasi Vitra 2002 Bosch Sanayi ve Ticaret (Bursa / Turkey ) 2003 Kocaeli Chamber of Industry (Prize winner)

European Energy+ Award 2004 Arcelik

1111

Turkish Foreign Trade Turkish Foreign Trade

0

20000

40000

60000

80000

100000

120000

1400001980

1985

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

million U

SD

Exports Imports Total trade volume

Source: UFT, SIS

Customs Union

1212

““The real difficulty lies not The real difficulty lies not

in developing new ideas in developing new ideas

but in escaping from the old but in escaping from the old ones”ones”

J.M. KeynesJ.M. Keynes

Turkey is now full of determination on a Turkey is now full of determination on a clear path to EU. clear path to EU.

We invite you to share and benefit from We invite you to share and benefit from our aspiration our aspiration

THANK YOU ALL…THANK YOU ALL…

April 8, 2004April 8, 2004

Presented by: Brenda Hawryluk, Trade Specialist, Asia PacificPresented by: Brenda Hawryluk, Trade Specialist, Asia Pacific

A UNIQUE PARTNERSHIP FOR TRADE AND BUSINESS DEVELOPMENT

1717

OUR SERVICES:OUR SERVICES: Trade developmentTrade development Market intelligenceMarket intelligence Export financing advice and guidanceExport financing advice and guidance

WHAT IS STEP?WHAT IS STEP?A non-profit, membership-based A non-profit, membership-based

organization designed to promote the organization designed to promote the growth of Saskatchewan’s export growth of Saskatchewan’s export industry.industry.

1818

Saskatchewan Exports as % of GDPSaskatchewan Exports as % of GDPSaskatchewan Bureau of Statistics (May 2003)Saskatchewan Bureau of Statistics (May 2003)

Millions of dollarsMillions of dollars 20012001 20022002

Export of goods & servicesExport of goods & services 22,96022,960 23,09323,093 Exports to other countriesExports to other countries 14,33214,332 14,67714,677 Exports to other provincesExports to other provinces 8,628 8,628 8,4168,416

Gross Domestic Product (GDP)Gross Domestic Product (GDP) 33,59333,593 34,70334,703

Total Exports as % of GDPTotal Exports as % of GDP 68.3%68.3% 66.5%66.5%

Exports to other countriesExports to other countries 42.7%42.7% 42.3%42.3%

Exports to other provincesExports to other provinces 25.7%25.7% 24.3%24.3%

1919

Top 10 Saskatchewan Exports *Top 10 Saskatchewan Exports * Crude Petroleum OilsCrude Petroleum Oils 25.62%25.62% Potassium ChloridePotassium Chloride 19.16%19.16% Meslin and WheatMeslin and Wheat 7.44% 7.44% Durum WheatDurum Wheat 6.93% 6.93% Rape or Colza SeedsRape or Colza Seeds 3.26% 3.26% Natural Uranium Natural Uranium 1.90% 1.90% Peas – Dried and ShelledPeas – Dried and Shelled 1.65% 1.65% LinseedLinseed 1.58% 1.58% Barley Barley 0.92% 0.92% Particle Boards of WoodParticle Boards of Wood 0.68% 0.68% OtherOther 30.86%30.86%

Source of data: Statistics Canada Report Date: 20-Jan-2004* In the last 24 months

2020

Saskcan Pulse Trading Inc. head office and processing Saskcan Pulse Trading Inc. head office and processing facility is located in Regina, Saskatchewanfacility is located in Regina, Saskatchewan

Through an extensive network of cleaning plants and Through an extensive network of cleaning plants and producers and its state of the art lentil splitting factory, producers and its state of the art lentil splitting factory, Saskcan will supply its global client base with premium Saskcan will supply its global client base with premium quality Canadian pulses.quality Canadian pulses.

Saskcan Pulse Trading:

A Saskatchewan Success Story

2121

The company has constructed a lentil splitting The company has constructed a lentil splitting plant with a 75,000 MT annual capacityplant with a 75,000 MT annual capacity

Products include a full line of:Products include a full line of: Red Split LentilsRed Split Lentils Futball Red LentilsFutball Red Lentils Whole LentilsWhole Lentils Chickpeas, andChickpeas, and PeasPeas

Saskcan Pulse Trading

2222

THE PARTNERSTHE PARTNERS Saskcan has strong financial partners. The Saskcan has strong financial partners. The

total project, including operating financing, total project, including operating financing, was about $12 million.was about $12 million.

Lenders include Farm Credit Canada and the Lenders include Farm Credit Canada and the Business Development Bank of Canada, CIBC, Business Development Bank of Canada, CIBC, Scotiabank, Crown Ventures Fund (a labour-Scotiabank, Crown Ventures Fund (a labour-sponsored venture capital corporation) and sponsored venture capital corporation) and SGGF (the Saskachewan Government’s SGGF (the Saskachewan Government’s immigrant investment fund). immigrant investment fund).

SGGF and Crown Ventures are minority equity SGGF and Crown Ventures are minority equity partners. partners.

2323

CHALLENGESCHALLENGES Processing of this type with commodities has never been done in Processing of this type with commodities has never been done in

this climate. this climate. The furthest North this type of processing has been done is in The furthest North this type of processing has been done is in

Turkey. Turkey. Weather is a huge issue when you are splitting each individual Weather is a huge issue when you are splitting each individual

kernel for an average of 300,000 kg per day in –40 degree Celsius.kernel for an average of 300,000 kg per day in –40 degree Celsius. The technical expertise and knowledge of the processing and The technical expertise and knowledge of the processing and

systems was only resident in Turkey and they had difficulties with systems was only resident in Turkey and they had difficulties with immigration which took years to resolve.immigration which took years to resolve.

This company is in a landlocked jurisdiction and the world This company is in a landlocked jurisdiction and the world markets for these products are used to buying from a port-markets for these products are used to buying from a port-serviced source of supply. serviced source of supply.

2424

FOR MORE INFORMATION ON TRADE AND INVESTMENT IN FOR MORE INFORMATION ON TRADE AND INVESTMENT IN SASKATCHEWAN, PLEASE CONTACT:SASKATCHEWAN, PLEASE CONTACT:

Ms. Brenda Hawryluk, Trade Specialist, Asia PacificMs. Brenda Hawryluk, Trade Specialist, Asia PacificSaskatchewan Trade & Export PartnershipSaskatchewan Trade & Export PartnershipP.O. Box 1787P.O. Box 1787Regina, SaskatchewanRegina, SaskatchewanS4P 2C6 CanadaS4P 2C6 CanadaPhone: 306-787-9335; Fax: 306-787-6666Phone: 306-787-9335; Fax: 306-787-6666e-mail: bhawryluk@sasktrade.sk.cae-mail: bhawryluk@sasktrade.sk.cawebsite: www.sasktrade.sk.cawebsite: www.sasktrade.sk.ca

FOREIGN FINANCING OFFOREIGN FINANCING OF PUBLIC SECTOR PROJECTS PUBLIC SECTOR PROJECTS

by by

Serdar GüzeySerdar Güzey

Undersecretariat of TreasuryUndersecretariat of Treasury

Republic of TurkeyRepublic of Turkey

April 8, 2004April 8, 2004

2626

Declining inflation rateDeclining inflation rate

5

15

25

35

45

55

65

75

85

95

J 0

2 F M A M J J A S O N DJ 0

3 F M A M J J A S O N DJ 0

4 F M

(%)

CPI

WPI

2727

A powerful growth A powerful growth performanceperformance

6.3%

-9.4%

7.9%5.9% 5.0%

-15%

-10%

-5%

0%

5%

10%

2000 2001 2002 2003 2004P

GNP Change

2828

A strong fiscal balanceA strong fiscal balance

-2.0

2.3

5.5

3.9

6.5 6.5

-3.0

-1.0

1.0

3.0

5.0

7.0

1999 2000 2001 2002 2003E 2004P

Public Sector Primary Surplus (% of GNP)

2929

New investment climateNew investment climate

A Coordination Committe for the Improvement of the Investment Environment (CCIIE)

No Approval Requirement

No Minimum Capital Requirement

National Treatment

Guarantee to Transfer Proceeds

Key Expatriate Personnel

Protection Against Expropriation

Access to Real Estate

International Dispute Settlement

After the new Foreign Direct Investment LawAfter the new Foreign Direct Investment Law

3030

Key players in foreign Key players in foreign financingfinancing

State Planning Organisation (SPO)State Planning Organisation (SPO) Five Year Development PlanFive Year Development Plan Annual Investment ProgramAnnual Investment Program

prepared by SPOprepared by SPO covers all public sector institutionscovers all public sector institutions In line with Five Year Development PlanIn line with Five Year Development Plan total project costtotal project cost duration of the project duration of the project

3131

Key players in foreign Key players in foreign financing (continued)financing (continued)

appropriations for each projectappropriations for each project foreign componentforeign component local componentlocal component sufficient appropriation to start a projectsufficient appropriation to start a project

currently 10% of the total project costcurrently 10% of the total project cost

Implementing AgenciesImplementing Agencies Consolidated Budget InstitutionsConsolidated Budget Institutions

Ministries, KGM, DSI, Public UniversitiesMinistries, KGM, DSI, Public Universities OthersOthers

MunicipalitiesMunicipalities State Economic Enterprises (SEE)State Economic Enterprises (SEE)

3232

Key players in foreign Key players in foreign financing (continued)financing (continued)

TreasuryTreasury General Directorate of Foreign Economic General Directorate of Foreign Economic

RelationsRelations Foreign borrowing authorisation Foreign borrowing authorisation

for all public institutionsfor all public institutions Treasury borrowingTreasury borrowing

for all consolidated budget institutionsfor all consolidated budget institutions Treasury guaranteeTreasury guarantee

for non-consolidated budget institutionsfor non-consolidated budget institutions Treasury on-lendingTreasury on-lending

for non-consolidated budget institutionsfor non-consolidated budget institutions

3333

Key players in foreign Key players in foreign financing (continued)financing (continued)

LendersLenders International Financial Institutions International Financial Institutions

(World Bank, EIB etc.(World Bank, EIB etc. Exceptionally their rules applyExceptionally their rules apply

Other GovernmentsOther Governments Export Guarantee Agencies (ECA)Export Guarantee Agencies (ECA) Commercial BanksCommercial Banks

3434

Cycle of a Typical Public Cycle of a Typical Public ProjectProject

Implementing Agency (IA)’s application to Implementing Agency (IA)’s application to the Treasurythe Treasury

international competitive bidding (ICB) international competitive bidding (ICB) authorisationauthorisation

Treasury is the borrowerTreasury is the borrower IA is the borrower under Treasury’s guaranteeIA is the borrower under Treasury’s guarantee IA is the borrower but no Treasury guaranteeIA is the borrower but no Treasury guarantee

Treasury asks for the SPO’s opinion, Treasury asks for the SPO’s opinion, whetherwhether

the project is in the Annual Investment Programthe project is in the Annual Investment Program there is sufficient appropriationthere is sufficient appropriation

3535

Cycle of a Typical Public Cycle of a Typical Public Project (continued)Project (continued)

Favourable opinion from SPOFavourable opinion from SPO Treasury makes its own decision Treasury makes its own decision Treasury issues its ICB authorisationTreasury issues its ICB authorisation Implementing Agency declares the bidding Implementing Agency declares the bidding Implementing Agency sends the Treasury Implementing Agency sends the Treasury

commercial contract and the financial commercial contract and the financial offeroffer

3636

Cycle of a Typical Public Cycle of a Typical Public Project (continued)Project (continued)

Treasury negotiates the terms and Treasury negotiates the terms and conditions of the offer and the loan conditions of the offer and the loan agreementagreement

Treasury signs the loan agreementTreasury signs the loan agreement Council of Ministers ratifies the loan Council of Ministers ratifies the loan

agreementagreement Loan agreement comes into forceLoan agreement comes into force Disbursement startsDisbursement starts

3737

Phases in the Foreign Phases in the Foreign Financing of Public ProjectsFinancing of Public ProjectsInternationalInternationalCompetitiveCompetitive

Bidding RequestBidding RequestDue DiligenceDue Diligence

FinancialFinancialAnalysisAnalysis

TechnicalTechnicalAnalysisAnalysis

(SPO)(SPO)

InternationalInternationalCompetitiveCompetitive

Bidding AuthorisationBidding Authorisation

Bidding ProcessBidding Processcompletedcompleted

Financial OffersFinancial OffersSubmitted to Submitted to

TreasuryTreasury

NegotiationNegotiationProcessProcess

EstablishmentEstablishmentof Debt Serviceof Debt Service

AccountAccount

Signing ofSigning ofAgreementsAgreements

(for Muni’s and SEEs)(for Muni’s and SEEs)

(for Muni’s)(for Muni’s)Signing ofSigning ofGuarantee Protocol/Guarantee Protocol/

Onlending AgreementOnlending Agreement(for Muni’s and SEEs)(for Muni’s and SEEs)

1122 33

44 5566

66 77 88

99 1010

3838

Sources of Foreign FinancingSources of Foreign Financing

Types of FinancingTypes of Financing

Financingprovided by the

InternationalCompetitive

Bidding

MultinationalFinancial

InstitutionsIntergovernmental

Protocols

EIBWorldBank

GermanyKfW

JapanJBICCommercial

BanksECAs

Treasury is eitherTreasury is eitherguarantor or guarantor or

borrowerborrower

Treasury is eitherguarantor or

borrower

Treasury is the sole

borrower

Others Others

3939

Public Investments in 2004Public Investments in 2004

SectorSector

Number Number ofof

ProjectsProjects

2004 2004 InvestmentInvestment

Foreign Foreign SpendiSpendinngg(000 US$) (000 US$)

2004 2004 InvestmentInvestment

Total Total SpendingSpending(000 US$)(000 US$)

AgricultureAgriculture 350350 179.987179.987 727.837727.837

MiningMining 6969 31.79631.796 238.170238.170

ManufacturingManufacturing 135135 23.69323.693 237.277237.277

EnergyEnergy 9191 432.681432.681 1.267.1291.267.129

TransportationTransportation 345345 810.266810.266 1.924.2811.924.281

TelecommunicationTelecommunication 2020 00 29.30229.302

TourismTourism 6161 00 53.54853.548

HousingHousing 1919 00 12.21912.219

EducationEducation 12821282 76.14776.147 1.212.1601.212.160

HealthHealth 394394 39.04539.045 610.156610.156

Other Public Other Public ServicesServices 789789 121.809121.809 1.155.2171.155.217

TOTALTOTAL 3.5553.555 1.715.4241.715.424 7.467.2967.467.296

CIDA’s Private Sector CIDA’s Private Sector DivisionDivision

INDUSTRIAL INDUSTRIAL COOPERATION PROGRAM COOPERATION PROGRAM

(“CIDA-INC”)(“CIDA-INC”)Presentation to the Canadian-Presentation to the Canadian-Turkish Business Council’s Turkish Business Council’s

Annual Conference, Toronto Annual Conference, Toronto

April 8, 2004April 8, 2004

4141

CHANGES in CIDACHANGES in CIDA

April 2003 – New Private Sector April 2003 – New Private Sector Development Policy - New Private Sector Development Policy - New Private Sector Division (PSD) Division (PSD)

Fall 2003 – Transfer of REE Program to Fall 2003 – Transfer of REE Program to PSD-New Eastern Europe and Central Asia PSD-New Eastern Europe and Central Asia (EECA) Bureau in the PSD(EECA) Bureau in the PSD

April 2004 – Turkey Program has a New April 2004 – Turkey Program has a New Home with the EECA Bureau- Merged with Home with the EECA Bureau- Merged with the Asia Bureau the Asia Bureau

4242

CHANGES in CIDACHANGES in CIDA

March 2004 – Launch of the Report March 2004 – Launch of the Report by the UN Commission on the Private by the UN Commission on the Private Sector – co-lead by PM MartinSector – co-lead by PM Martin

April 2004 – Announcement of new April 2004 – Announcement of new PSD Mechanism - PSD Mechanism - The Local The Local Enterprise Investment Centre PEnterprise Investment Centre Pilot in ilot in Bangladesh Bangladesh

4343

CIDA-INC: MISSIONCIDA-INC: MISSION

Supports the Canadian Private SectorSupports the Canadian Private Sectorin International Ventures in International Ventures

Promotes Economically sound Private Promotes Economically sound Private Sector-led Projects Sector-led Projects

Ensures Developmental Benefits for Ensures Developmental Benefits for the Host-Countrythe Host-Country

4444

THE SUPPORT THE SUPPORT MECHANISMSMECHANISMS

Investment

Professional Services

Viability Study

Start-up Support

Feasibility Study

ImplementationSupport

4545

CIDA-INC: THE INVESTMENT CIDA-INC: THE INVESTMENT PROJECTPROJECT

Typical support Typical support

Study$150,000

Support$250,000

enables improves

CIDA-INC

Your project

$1M +

4646

INC: Financial Contribution INC: Financial Contribution to lay the to lay the

GroundworkGroundwork

Environmental Impact Assessment Study

Corporate Social Responsibility (Gender)

Mngt and tech Training Assessment

Agreement NegotiationsCost

Analysis

Regulatory Framework

Market Study/ Project Engineering

Technical Feasibility

Start-up/ Implementation

4747

CIDA-INC: UNSUITABLE PROJETSCIDA-INC: UNSUITABLE PROJETSNo straight salesNo straight sales, and no…, and no…

Product/service demo

General Mgmt plans

Straight sales/exports

Business Agency ServicesPreliminary Market Analysis

Speculative ActivitiesMilitary Activities

Nuclear Projects

4848

CIDA-INC: Eligible companies CIDA-INC: Eligible companies have…have…

3 yrs of experience

Proven track record

$700,000 in sales for 2 yrs

Financially sound

Own technology to transfer

Human & Technical resources

Access downstream financing

4949

HOW TO REACH USHOW TO REACH US

DiAnne Masson-Yensen DiAnne Masson-Yensen Phone:Phone:

1-800-230-63491-800-230-6349 1-819-994-05381-819-994-0538

Email :dianne_massonyensen@acdi-Email :dianne_massonyensen@acdi-cida.gc.ca cida.gc.ca

Web: Web: wwwwww..acdiacdi--cidacida..gcgc..caca//incinc FAX : 819-953-5024FAX : 819-953-5024