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Sector briefing

A young growing population and EU funding mean there are opportunities for UK companies in a variety of sectors including, airports, environment and water, education and training, financial services, ICT, medical including hospital development and running, rail and ports. However, Turkey presents opportunities for UK companies in almost all sectors, and high-quality British products and services are particularly well received in the sectors presented here.

1) Healthcare, Pharmaceutical, Medical Devices, Medical Tourism & Life Sciences sector

Health is one of the leading sectors in Turkey with the highest development acceleration. A key driver behind Turkey's continued healthcare budget growth is the country's enhanced health insurance coverage and the demand for new healthcare facilities across the country. There are plans to develop 30-40, 3-5000 bed healthcare campuses and related facilities across the country. With its growth trend in the last five years, the sector is one of the top three sectors attracting business and investment opportunities, together with renewable energy and telecommunications.

Sector overview:
In fiscal year 2012/2013, TL14.4 billion (approx. US $7.5 billion) was allocated to MOH by the Government. A key driver behind Turkey's continued healthcare budget growth is the country's enhanced health insurance coverage and the demand for new healthcare facilities across the country. Besides state investments, the private sector is closely involved in building private healthcare facilities, contributing to demand for state of the art medical equipment and devices.

Turkish Medical Devices and Supplies Exports by Year (US $ approx)
(Turkish Ministry of Economy)

2007

2009

2011

2013

10,700,000

117,000,000

182,000,000

259,000,000

Key opportunities

  • The total bed capacity in Turkish hospitals is above 200,000, an increase of more than 10% over the past five years. The privatisation and transformation of the healthcare system, establishment of new healthcare facilities under the PPP model and on-going hospital projects of the Ministry of Health, offer significant opportunities for foreign exports and investment.

  • EU harmonisation of standards, part of the overall sector modernisation, will reduce the specific barriers to entry to the Turkish market. This will make those operating in other EU and international markets much more easily able to sell to Turkey.

  • Demographic factors, including an increasing population and longer life expectancy, will boost demand for healthcare in Turkey.

  • Introduction of universal health insurance coverage.

  • Potential for generic sector growth, with market demand patterns structured by a cost conscious government and population.

Export trade may benefit from closer links with the EU, an improvement in local industry standards and an increase in international investment.

Getting into the Turkish healthcare market
In order for a UK company to market its medical equipment in Turkey, we advise the company to find an exclusive distributor or representative in the Turkish market. They should have a strong reseller base to market and service the products across the country, follow public and private medical equipment tenders and be knowledgeable about shipping products into Turkey. Medical equipment exported to Turkey has to comply with Turkish customs regulations. A foreign company’s representative in Turkey has to register the product in the National Data Bank that keeps track of all medical equipment marketed in Turkey. This will then place the product on the all-important approved list of the Social Security Agency.

Contacts
Market intelligence is critical when doing business overseas, and UKTI can provide bespoke market research and support during overseas visits though our chargeable Overseas Market Introduction Service (OMIS).

British Embassy Turkey 
Tel: +90 (312) 455 3246 

 

2) Energy and Renewables sector

Wind Turbine/Solar PanelThe Turkish Energy sector needs total investment of more than $130 billion by 2023. Demand for energy is increasing by 6-8% annually, and Turkey plans to reform energy production to meet increasing demand and become a transit hub for energy transportation in the region.

Sector overview:
Energy consumption in Turkey is low compared with Western European countries, but is steadily increasing. The Turkish Electricity Transmission Company estimates that Turkey’s demand for electricity will increase at an annual rate of 6% between 2009 and 2023. For Turkey to meet its energy demand, significant investments are necessary in the energy sector, estimated around US $130 billion by 2023.

The transition of the Turkish electricity market to a liberalised market has already attracted both domestic and foreign investors, and privatisation together with plans to construct new power plants, present further opportunities for foreign businesses. In 2010 the Turkish and Russian governments signed an agreement for Turkey's first nuclear power plant at Akkuyu. It is expected that construction will begin in 2015 with the first reactor reaching completion by the end of 2020. In 2013 Turkey signed an agreement with a French/Japanese consortium for a second nuclear plant at Sinop with construction expected to start in 2018 and a site for a third nuclear plant is under consideration in the Trakya region with construction expected to start in 2023. The total programme at the moment is valued at $45 billion.

Turkey also has significant interest in renewable energy. By 2023, the government wants 30% of Turkey’s energy to be generated from renewable sources. In early 2011, Turkey enacted a new law aimed to encourage renewable energy investment through offering better incentives, in particular in solar energy. This has attracted interest from Germany, Spain and the US. Yet to date biomass/waste, geothermal, solar and wind currently comprise less than 1% of electricity consumed. The government has announced plans to develop the country’s hydro potential and connect 20GW of wind to the grid by 2023.

Privatisation of energy production and distribution is underway, but progress so far has been mixed. Turkey will now run tenders for electricity generation assets over the next year. There are opportunities for UK companies, particularly for service sector companies as new private sector owners look to make efficiency savings.

The UK is well-placed to offer technical expertise in areas such as low carbon energy generation, carbon markets, consultancy and grid connection, as well as energy efficiency in existing technologies. Promoting efficiency in energy use has previously not been a priority for Turkey, but Turkish policy-makers have sought to address the issue with legislation designed to reduce Turkey’s energy bill by $5-6 billion.

 

3) ICT sector

The Turkish Software sector was worth over £650 million in 2013, and is expected to grow 13% annually until 2016, reaching £900 million.

Sector overview:
The success of the ICT sector in Turkey will depend on the success in bringing down illegal software use, which at 65% is nearly twice the global average. The global economic crisis may have provided a boost to hosted software and outsourcing solutions, which have grown in popularity.

There is considerable potential for software market growth but lack of access to credit limits Turkish SMEs’ willingness to spend on applications and solutions that often must be financed from operational budgets.

Cabot communications won several awards from 2001 onwards:

  • 2004 Cable & Satellite International Product of the Year award for Best Interactive Technology

  • ‘Best Interactive TV Technology or Application’ award at the Cable and Satellite 2008 Awards

  • Cabot won the ‘Best HDTV Technology’ award at the Cable and Satellite 2010 Awards.

 

4) Financial and Business Services sector

The Financial and Business Services sector was worth more than £300 billion by 2012. The total net income is expected to grow 80% in the next five years (Credit Suisse).

Sector overview:
The financial & legal services sector in Turkey offers a wide range of opportunities. Under close regulatory supervision, Turkish financial institutions boast healthy financial ratios and bright growth prospects. The Turkish financial services industry has gone through a radical structural transformation since the financial crisis in 2001. A new industry watchdog has been created and mandated with enforcing strict reserve requirements partly as a result, the Turkish banking industry is considerably healthier than its European counterparts and survived the recent financial crisis relatively unscathed. Currently the loan to GDP ratio (around 50%) is low and coupled with a healthy expected GDP growth rate, the loan portfolio of the Turkish banking sector is expected to grow 18% per annum for the next ten years. Deposits are also expected to grow on average 15% per annum for the next ten years.

Turkish financial institutions have little exposure to potential European debt issues and have an improving earnings growth outlook compared to regional peers. Non-bank financial institutions are still small compared to banks but due to Turkey’s rooted stock exchange, the brokerage and fund business remain viable and healthy. The insurance sector is also vibrant and top foreign players such as Aviva and AXA are all present in Turkey.

The Turkish financial service sector is heavily regulated and requirements are very strict. As a result, Turkish banks are regarded as some of the safest in the world. Technology is widely used and Turkish internet and telephone banking systems are some of the most advanced in the world. Due to the young demographics of the country, consumer banking is important and developed. Turkish financial services professionals are well educated and most of them speak at least one foreign language, English in most instances. Turkish banks and other financial professional services institutions are open and used to collaborating with foreign firms. Banking licences are distributed by the Banking Regulation and Supervision Agency and the selection process is rigorous.

 

5) Infrastructure, Construction & Design sector

Pointing ManThe Turkish Construction sector grew between 4 and 5% in 2013, following new VAT regulations. (Source: Reuters)

Sector overview:
Need to mention 2023 vision and planned expenditures (check with Zeyno) Service-related aspects, such as sustainable construction related consultancy, urban regeneration, engineering and design, in particular, UK firms with expertise in creative and technical services with good networking skills will get a chance to take part in this high-growth area. Public Private Partnership (PPP) projects will be more wide-spread and the upgrading of the existing infrastructure motorways, railways and airports) as well as building new infrastructure will be on the agenda. The annual need for new housing is approximately 400,000 units domestically. The sector is considered to be the “Locomotive” of the economy and creates 7% of all employment. Turkish contractors are active in 96 countries and are known for being successful especially in volatile environments.

 

Source - UKTI


 

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