International Investors Association of Turkey

International Investors Association of Turkey International Investors Association of Turkey Barbaros Bulvarı, Mürbasan Sokak Koza İş Merkezi, B Blok, Kat 3 34349 Beşiktaş İstanbul, Turkey Phone: +90 212 272 50 94 Fax: +90 212 274 66 64 www.yased.org.tr August 2008

About us YASED International Investors Association of Turkey is an independent and non-profit business association, where members are international companies operating in Turkey. YASED, with its members sharing a common vision, gives substantial and proactive efforts for promoting a better investment environment.

Our Vision Promoting a better investment environment To lead the efforts for Turkey to be an attractive investment destination and building a stable business environment for international investors.

Common goals and cooperation produce positive impact Our mission is to promote proactively a business environment which matches to best global practices and to encourage free trade of goods and services, free competition, investment and movement of capital. We promote networking and communication between established, new and potential investors, facilitating the exchange of information and specifically foster better communication with YASED members. Our organization acts as a platform for new ideas and provides collective support to our members in their dealings with Turkish governmental and regulatory bodies on business issues of common interest. Our Mission We are committed to develop better channels of communication and coordination with other organizations in the business community and to generate greater awareness among the general public of our issues and to improve the image of FDI in Turkey among all the stakeholders. One of our highest priorities is lobbying in support of initiatives to harmonize Turkish legislation and business practices with international norms and being committed to improving the ethical values and corporate governance principles. In order to achieve our targets, we aim to generate collective synergy. We strongly believe that our issues demand more than can be achieved merely by reaching a consensus and agreeing on definitions or problems. In order to support all structural reforms which help to improve the investment environment we aim to create solution calls for resolute, coordinated and proactive effort. Building on our organization s solid foundations and impressive record of success, we believe YASED will continue to be a driving factor in improving the investment environment in Turkey. YASED members dedication and vision have created an organization that is recognized as the voice of international investors in Turkey which actively promotes Turkey s negotiation process with the EU for the realization of its full membership. The momentum generated by YASED s successes and the vision of our members will keep us a strong and vital force in the Turkish and international business community today and in the future.

The Architecture of Results Our members from international companies are active on YASED s Board and Working Groups. GENERAL ASSEMBLY HIGH ADVISORY BOARD Our Organization INTERNATIONAL ADVISORY BOARD BOARD OF DIRECTORS BOARD OF AUDITORS SECRETARIAT WORKING GROUPS SECTOR GROUPS

Promoting and facilitating international direct investments in Turkey Government Policy and Legislation YASED acts as the representative of the international business community to the Turkish government. In this framework, we Main Types of Activities maintain continuous dialogue between the international investment community and the Turkish government, follow the implementation of laws, rules and regulations between the international investment community and the Turkish government, notify Turkish government authorities of failures to implement existing regulations, track foreign investment related international legislation and practice with a view to provide case studies which the Turkish Government may use to improve its own legislation and practices. Networking and Partnership YASED acts as a facilitator and clearing house for the information and liaison needs of the international investment community. To this end, we provide a database, which enables the international investment community to gain an understanding of Turkish national policy and the Turkish regulatory environment, bring international companies together to develop their individual issues into coordinated general principles on the subject of relations with the Turkish government and its national interests, organize conferences, seminars and lectures to educate the public about the benefits of international investment, act as a reference center for international investors interested in establishing business in Turkey.

Communication YASED s public relations and lobbying activities aim to enlist the support of the Turkish media by providing objective information on issues pertaining to international investment, cultivate goodwill by keeping the Turkish government and media informed about the activities of international joint ventures and investment community, enlighten the general public on matters regarding international investment by issuing reports, brochures and press releases, be a major partner in the improvement of the investment environment efforts. Main Types of Activities

Government Policy and Legislation CCIIE Works YASED is continuously playing an important and active role in the Coordination Council for the Improvement of Investment Environment (CCIIE). Being a natural member together with TOBB, TÜSİAD and TİM in the name of the private sector, works under 12 technical committees continue since 2002. Many micro and macro amendments for the improvement and simplification of the existing legislation and introduction of new legislation are prepared and discussed through this mechanism. Regular Activities YASED is represented in the Coordination Council meetings by the Chairman, in the Steering Committee meetings by the Secretary General and in the technical committee meetings by the Secretary General, in-house experts or members representatives. YASED is also a natural member of the Investment Advisory Council (IAC) meetings hosted by the Prime Minister every year since 2004 and another arm of this scheme. Around 20 CEOs of MNCs who are existing or potential investors of Turkey, Chairmen of the World Bank, the IMF and 4 business associations in Turkey including YASED compose the participants of these meetings. YASED is active in all of the following technical committees working under CCIIE framework: Company Establishment, Employment and Education, Sectoral Licenses, Investment Location, Taxes and Incentives, Customs and Foreign Trade, Intellectual and Industrial Property Rights, Investment Promotion, Investment Legislation, SMEs, Corporate Governance, Research&Development.

Working Groups and Sectoral Groups Initiated upon the Board s or members proposal, working groups are one of the main mechanisms where our members identify their common problems and the corresponding action plans. YASED provides the necessary coordination and support works for the activities of the working groups. Once members common problems have been ascertained, they are closely studied and effective solutions are generated at the working group meetings. The resulting proposals are then conveyed to relevant government officials and regulatory bodies. Current Working Groups and Sectoral Groups of YASED are as follows: R&D Incentives, Intellectual Property Rights (IPR), Free Zones, FMCG, Banking, Energy, Employment and Education, Taxes and Incentives, Law Group, Ankara Group. Regular Activities Networking and Partnership International Investment Conference Organized in November 2005 and February 2007, YASED s Turkey Where the Opportunities Abound Conferences have received notable interest both locally and internationally. YASED hosted the Prime Minister in both conferences and organized a special rountable session with potential international investors. Traditional Ankara Protocol Reception Organized in November of each year in Ankara, YASED s Protocol Reception hosts Ministers and many high level bureaucrats as part of its efforts to create networking platforms for its members. Member Meetings Member meetings create a closed circle of networking platform between YASED members. YASED s agenda and priority isuues are updated in member meetings upon interactive sharing of macro, sectoral and company level problems.

Seminars, Luncheons YASED organizes seminars and luncheons with experts and authorities on new developments and legislation on the agenda in order to inform and prepare its members about the changes awaiting them. Gala Dinner YASED organizes a gala dinner every year in September, celebrating its anniversaries and giving start to a new term of activities after summer. Memberships Regular Activities - YASED is a founding member of Foreign Economic Relations Board of Turkey (DEİK). - YASED is a memeber of Economic Development Foundation (İKV). - YASED is a member of International PPP (Public-Private Partnership) Platform in Turkey. Information and Communication Relations with the Media YASED attaches great importance to the works that would help communicate better and more proper information about international direct investments to the public. Relations with the media are one the main legs of information and communication activities. YASED s views and messages are conveyed through the news agencies, newspapers, magazines and TV channels primarily on high priority subjects and upon new developments. Publications, Academic Reports, Research Support to independent academic studies in the form of publishing them, commissioning special publications and in-house research in the form of quarterly FDI reports and various joint studies are some of the ways YASED contributes to better and more proper understanding of the issues related to international direct investments.

Insight YASED Magazine Published as four issues per year, Insight YASED features a wide variety of subjects ranging from interviews with the executives of the leading international companies to sectoral sections; from its members corporate social responsibility projects to FDI statistics and from articles to cultural events. Barometer Survey and Press Conference Conducted twice a year among YASED members, YASED Barometer Survey results provide important indicators about the perceptions of international investors in Turkey. UNCTAD World Investment Report Press Release Regular Activities UNCTAD World Investment Report is launched every year in Turkey by YASED simultaneously with the world in October. Academic Research Competition YASED organizes an Academic Research Competition open to all university students, with the objective of maintaining continuity of the academic studies focused on FDI and attracting university students interest in the subject. Web Site (www.yased.org.tr) YASED web site - containing information about the investment environment in Turkey, FDI inflows to Turkey and about YASED s activities - is updated regularly to provide the necessary content for the interested audience.

International Advisory Board Formed in 1994, YASED s International Advisory Board (IAB) is made up of the ambassadors of countries which are leading investors in Turkey, the Head of Representation of the European Commission to Turkey, the representatives of the World Bank, the IFC, IMF, UN/UNDP and YASED's Board of Directors. The mission of the IAB is to expand its members joint lobbying base and engage in reciprocal lobbying. Meeting twice a year in Ankara and exchanging views about recent developments and future trends in Turkey and in members' countries, the IAB seeks to increase awareness of the importance of competitiveness not only for companies but for countries. The result is synergy between our members and the transfer of experience gained by other countries to Turkey. Countries represented in the IAB: International Relations Canada, France, Germany, Italy, Japan, Netherlands, Switzerland, UK, USA Organizations represented in the IAB: IFC, IMF, Representation of EU Commission to Turkey, The World Bank, UN

Major Partner International Organizations United Nations, UNCTAD, UNDP YASED has a long-standing relation with UNCTAD (United Nations Conference on Trade and Development) starting with the launching of World Investment Report 1997 in Turkey by YASED upon UNCTAD s proposal. Since then, the World Investment Report, issued annually by UNCTAD, is launched in Turkey by YASED simultaneously with more than 70 other countries in the world every October. The United Nations Development Program (UNDP), another arm of UN, has been an important supporting organization in the international conferences organized by YASED and UN Resident Representative in Turkey is represented in YASED International Advisory Board meetings. World Bank, FIAS, IFC International Relations YASED s cooperation of long years with the World Bank has been intensified with the preparation of the A Diagnostic Study of the FDI Environment, Administrative Barriers to Investment, Investment Promotion Strategy and Organization and FIAS Program on Developing an Appropriate Legal Framework for FDI reports by the World Bank and the Foreign Investment Advisory Service, an affiliate of the IFC, respectively, in the years 2001-2002. These studies were the milestones of the improvement of the investment environment works in Turkey. The World Bank has been a partner in many conferences organized by YASED, and is also represented in YASED International Advisory Board meeting. OECD YASED s relations with OECD is conducted both through the center in Istanbul and through the headquarters in Paris. YASED is invited to the Board Meetings of OECD Center for Private Sector Development in Istanbul and follows up the activities of the center. Contact with the headquarters is also continous through information sharing and participation to annual OECD Investment Forums. OECD experts also contribute to YASED s conferences.

Solid Foundations Founded in 1980 by 14 multinational companies, YASED is the leading representative of international investors in Turkey. As of July 2008, 248 companies established in Turkey with foreign capital are members of YASED. The following are some examples of YASED s achievements: - YASED has been supportive of and an active party in the process of the making of the Law on Incentives for Research & Development (R&D) Investments, which had become effective as of April 2008. History and Achievements - YASED has initiated the establishment of an R&D Committee under the Coordination Council for the Improvement of the Investment Environment (CCIIE). Having an active Working Group on R&D Incentives under its own structure, YASED has also suggested and led to the setting up of an R&D Technical Committee under CCIIE framework, to follow up the related issues in this public-private platform. (2008) - YASED Free Zones Working Group s efforts have created some desired results. As a result of the group s initiatives, a new law amending Free Zones Law meeting the group s concerns is expected to be passed soon. The most important provision being the extension of the exemption on the income tax of the workers' wages for the manufacturer companies, which ends as of 2009 according to the existing legislation, till the full membership to the EU takes place. (2008) - Hosted by the Prime Minister Recep Tayyip Erdoğan, the 5 th meeting of the Investment Advisory Council (IAC) was held on June 18, 2008, with the participation of the CEOs of 20 MNCs, Chairman of TOBB, TÜSİAD, TİM and YASED, the Vice Presidents of the IMF and the World Bank. Being a highlevel private sector driven platform to advise the Prime Minister and his cabinet on measures to improve the flow of investment into the country, IAC meets since 2004 and participants evaluate the success of Turkish Government on attracting FDI to the country.

- YASED has added a prestige publication to its publications, namely The Historical Development of Foreign Capital in Turkey. Prepared by journalist Şafak Altun for YASED, the book covers three periods: the Ottoman Era (1838-1923), the Republican Era (1923-1980), Globalizing Turkey (1980-2007). - Turkey, Where The Opportunities Abound On The Way To Success Conference was organized by YASED on February 21-22, 2007 in Istanbul, with the participation of the Prime Minister Recep Tayyip Erdoğan, State Minister and Chief Negotiator for EU Affairs Ali Babacan, Minister of Industry and Trade Ali Coşkun and CEOs of well-known multinationals. The conference has received great attention from private sector, international organizations, public sector representatives, and the media. During the conference, around 90 speakers addressed nearly 700 participants. History and Achievements - YASED, being the representative of existing investors, has promoted the establishment of an Investment Promotion Agency for many years to serve the mission of attracting new investors to Turkey. Investment Support and Promotion Agency of Turkey has been established in 2006 and YASED was an active supporter and partner in preparatory works. - New Corporate Tax Law which decreased the corporate tax rate to 20 percent has been passed by the Parliament to be effective as of the beginning of 2006. YASED was a major partner during the preparatory works. - Consensus reached between domestic and foreign drug producers in 2005 alongside the efforts of the Government on Patent Data Protection with the contribution of YASED since many years. - Turkey Where The Opportunities Abound: A New Favourite Destination for FDI Conference was held in Istanbul on November 8-9, 2005. Opened by the Prime Minister R.T. Erdoğan, the Conference hosted 700 participants and Turkey as a land of opportunity was promoted and evaluated in both general and sectoral sessions.

- First International Advisory Council Meeting was held with the support of YASED on March 15, 2004. Prime Minister Recep Tayyip Erdoğan, Presidents of WB, IMF and EIB, State Minister Ali Babacan, Finance Minister Kemal Unakıtan, CEO s of 20 Multinational companies, Chairmen of TOBB, TÜSİAD, TİM and YASED participated to the meetings to discuss the problems of the foreign investors. - YASED has took an active role and been a major partner in the initiation and consultation process of 25 new regulations that were legislated within the scope of Improvement of Investment Environment Efforts during 2003-2004. - Company establishment procedures were decreased from 19 steps to 3 steps in 2003. Local treatment of foreign companies is reassured and after the new application, it is possible to establish a company in one day. History and Achievements - New Foreign Direct Investment Law bringing a more modern approach to foreign investments in line with the international standards has been accepted by the Parliament in June 2003. YASED was a major partner during the preparation works of this Law. - Coordination Council for the Improvement of the Investment Environment (CCIIE) started to work in 2002. YASED became one of the natural partners. YASED members participate and contribute to works under different technical committees. - YASED was a major contributor to FIAS (World Bank) Reports "A Diagnostic Study of the Foreign Direct Investment Environment" and "Administrative Barriers to Investment" published in 2001 and paved the way for the improvement of the investment environment works. - Foreign Direct Investments Special Expertise Commission, organized by the State Planning Organization in 1999 during the Eighth Development Plan preparations of the government, has been chaired by YASED. - As a result of the years-long efforts of the YASED Pharma Committee, the decree-law concerning patent protection in the pharmaceutical industry has come into force on January 1, 1999.

- In the World Economic Forum (WEF) meeting held in Turkey on November 9, 1998, YASED organized a panel titled Improvement of the Investment Environment in Turkey. - YASED worked to promote the Customs Union between Turkey and the European Union. - Intensive lobbying efforts paved the way for passage of a decree-law on the protection of patent rights providing international standards in patent protection in 1995. - Anti foreign investment article in the Draft Bill on Intellectual Property and Works of Art was deleted with the contribution of YASED in 1993. History and Achievements - Delays in the repatriation of profits have been eliminated upon YASED s proposal and efforts in 1988. - YASED s proposal on the credit limits of foreign banks to be calculated periodically on the basis current exchange rate was accepted by the Treasury in 1987. - YASED supported the efforts which resulted in the repeal of a Finance Ministry communiqué which called for discriminatory application of investment incentives for foreign partners in 1985. - YASED contributed to regulations broadening the areas in which foreign investors can invest in 1984. - YASED worked for the expansion of incentives for pharmaceutical investments from 30% to 100%. - YASED was a prime mover in efforts to liberalize regulations pertaining to the ratios of domestic versus foreign capital investments.

Unregistered Economy and Transparency: We consider that the measures to be taken urgently and decisively for preventing the unregistered economy, which almost punish the law-abiding companies, and which we consider as the priority problem of Turkey, will significantly contribute to the healthy operation of the Turkish economy. We believe that aiming for a Turkey, where income distribution is more fair, tax basis is wider, and unfair competition is avoided, by fighting with unregistered economy is a priority. On the other hand, we also believe that it is essential to; set the rules in a way so that they are clear and understandable, and do not include any content that would require subjective interpretations, which lead to discriminative implementations, and secure transparency so that the executive units put these rules into practice clearly, without interpretation and as laid down by the law. Current Priority Issues Taxes and Incentives: Steps that will be taken to lower indirect taxes, which constitute a heavy burden on investors, would be an undertaking that would receive support from all investors - foreign and domestic alike for impeding the unregistered economy. Development of incentive mechanisms and streamlining of the tax system are key elements of this undertaking. Employment and Education: Compared to its competitors, employment taxes in Turkey, constitute a significant disadvantage before the evolution of mergers and acquisitions, which make up the majority of FDI inflows to Turkey today, to greenfield investment. Efforts to be given to secure the qualified workforce necessitated by investors, should also be evaluated as an element of the same concern. Foreign language teaching and vocational training should be set as priorities for configuring the workforce in accordance with existing requirements. Intellectual and Industrial Property Rights: International integration is not attainable, unless international standards are adopted. Infringement of intellectual and industrial property rights damage Turkey s prestige considerably, and fuel unfair competition. Adoption of international standards on the subject of laws and regulations, and particularly the implementation of these, should be set as one of the targets. On the field of trademark protection, preventing the misleading of consumers should also be prioritized. It is essential to fix the shortages experienced in the implementation of regulatory amendments made recently on data protection. The accomplishment of a legal reform is extremely important, regarding the protection of these rights.

R&D / Investments and Incentives: One of the most significant and permanent keystones of improved competitive power, is technology and R&D. The increases made in recent years in the funds allocated for R&D incentives from the budget, is pleasing. We wish that the efforts given for sustaining, extending and securing the effective use of these incentives continue; so that Turkey s R&D capacity enlarges and investments oriented on this area, are attracted. Current Priority Issues Making Turkey an attractive destination for FDI particularly for greenfield investments: The continuity of FDI inflows, which have increased substantially in recent years, in the medium- and long term depends on whether or not Turkey will become a base for greenfield investment. Attracting high valueadded, technology-focused and production-oriented investments is of critical importance for Turkey s future. Investment Promotion and Support Agency of Turkey should, in this framework, carry on its works more effectively than ever. Turkey should develop competitive tax and incentive systems to facilitate greenfield investment inflows to Turkey. We ought to create advantages over our competitor countries if we are in request of large and employmentgenerating greenfield investments. European Union: Progress to be achieved in all of the other priority issues will actually be developments that will open way for Turkey s EU membership talks. Achievement of these developments, and Turkey s success in ranking permanently among the top investment locations of the world, depends on the success of the talks to be carried out with the EU for full membership. It is extremely important to guard the priority of the issue on the agenda, by not letting the EU membership issue to drop from the agenda, and not losing pace in the efforts given for the negotiation process and lobbying activities.

Recent Conferences & Seminars Major Recent Activities Turkish Commercial Code Seminar, April 3, 2008, Istanbul Fast Moving Consumer Goods - Food - Tobacco Sectoral Group Panel, November 1, 2007, Istanbul Working Breakfast on the Draft Bill on Work Permits of Foreigners, February 9, 2007, Istanbul Turkey Where the Opportunities Abound on the Way to Success Conference, February 21-22, 2007, Istanbul Competition Law Seminar, January 10, 2007, Istanbul Turkish Commercial Code Draft Bill Seminar, November 13, 2006, Istanbul Draft Law on Corporate Tax Seminars, February 13, 2006 and July 11, 2006, Istanbul Global FDI Movements: Myths and Facts Conference, March 24, 2006 New Land Development Bill Panel, February 24, 2006, Istanbul SMEs Seminar, November 17, 2005, Istanbul International Conference on The New Favorite Destination for Foreign Investments: Turkey Where the Opportunities Abound, November 8-9, 2005, Istanbul Executive Pay Seminar, June 8, 2005 Conference on International Commerce, Financing and Investments, October 12-13, 2004, Istanbul Symposium on Administrative Barriers Facing Foreign Investment in Turkey, October 8, 2004, Istanbul The Workshop on Foreign Investors Council and Their Role in the Economic Reform Process in Transition Economies, January 12-13, 2004, Istanbul Improvement of the Investment Environment and a Promotional Model for Turkey, February 14-15, 2002, Ankara The Changing Face of International Investments, New Opportunities for Turkey, December 7-8, 2001, Istanbul Globalization and the Turkish Economy: Foreign Capital, November 27, 2001, Istanbul New Trends in the Banking and Capital Markets, November 20-21, 2000, Istanbul Industrial Property Summit 2000, June 29-30, 2000, Istanbul

Recent Publications Major Recent Activities The Historical Development of the Foreign Capital in Turkey, 2008, Şafak Altun YASED Academic Research Competition VIII titled The Role of International Investments in Preventing Unregistered Economy, Prize Winner Articles, 2007 Factors Influencing FDI in Turkey: An Implementation Report, September 2006, Assoc. Prof. Aykan Candemir YASED Academic Research Competition VII titled, The Effect of Taxes and Incentives on Attracting Foreign Direct Investments, Prize Winner Articles, 2006 Towards a Foreign Direct Investment Strategy for Turkey Report, June 2006, Assoc. Prof. Kamil Yılmaz YASED Academic Research Competition VI titled, Public - Private Sector Relationship in Foreign Direct Investments, the Role of NGOs, Prize Winner Articles, 2005 New Investment Environment In Turkey Report Doing Business in Turkey - The New Investment Environment in Turkey, 2004, 2005, and 2006 (in English, Russian, Arabic) Turkey - Investment Promotion Strategy and Organization* Turkey - FIAS Program of Assistance on Developing an Appropriate Legal Framework for Foreign Direct Investment - Aide Memoire* Turkey - Administrative Barriers To Investment - June 2001* Turkey - A Diagnostic Study Of The Foreign Direct Investment Environment - February 2001* *Prepared by FIAS in cooperation with YASED, TOBB, TÜSİAD and TİM (FIAS - Foreign Investment Advisory Service a joint service of the World Bank and International Finance Corporation)

Growing larger, growing stronger Membership is open to all companies established in Turkey having a share of foreign capital in their capital structure and thus subject to the Foreign Direct Investment Law No: 4875. Real persons, who represent the branch offices and liaison offices, subject to the same law and legal entities organically associated with international corporations or organizations, serving the establishments on tax, legal, and financial issues, patents, trade mark registry and protection or similar issues can be members as well, all upon the approval of the Board of Directors. About Membership The Board of Directors is elected by the General Assembly every two years and every member has the right to participate in the election of Board Members and to be elected as a Board Member. The primary source of YASED s revenues is annual membership fees and contributions determined in the General Assembly every year. To arrange a meeting or receive more information about YASED, please contact us and we will be pleased to give you detailed information about terms of YASED membership. Contact info YASED International Investors Association of Turkey Barbaros Bulvarı Mürbasan Sok. Koza İş Merkezi B Blok Kat: 3 Balmumcu Beşiktaş İstanbul Turkey Phone +90 212 272 5094 Fax +90 212 274 6664 E-mail office@yased.org.tr Web www.yased.org.tr