TurkishPress.com - Turkish Prime Minister Tayyip Erdogan unveiled Thursday a long-awaited incentives package aimed at boosting employment and attracting greenfield investments.
The incentives include cutting corporate taxes to as low as 2 percent for companies investing in Turkey's poorer eastern and southeastern provinces, lowering labor costs and providing guarantees for loans.
"The new incentives system study was prepared to support new investments. The investments that will increase the competitiveness and minimize regional development differences will be supported," Erdogan told at a televised press conference held in Ankara.
He said the new system was divided into three categories, Large Project Investments, Regional Investments and Sectoral Investments, in addition to other incentives that are aimed at promoting employment.
The tax breaks under the Large Project Investments category will be applied to those greater than 250 million lira ($160 million) in twelve sectors including transit pipeline, air vehicles, metals, mining, transportation, oil refining, Erdogan added.
Investors will be supported with cuts in social security premiums for workers, free land and cheap credit, he noted.
For Regional Investments, Turkey was divided into four regions and more incentives will be applied for investments made to poorer regions, he added. Corporate tax rates will be reduced to 10 percent from the existing twenty percent for investments in the first region, 8 percent for the second region, four percent for the third region and two percent for the fourth region, the Prime Minister stated.
Under a revised system of incentives, Turkey will encourage investment in agriculture and textiles in its poorest southeastern provinces while backing electronics and automotive investment in the country’s wealthier west, Erdogan said in Ankara.
He did not give any figure on the financial aspect of the package, but earlier media reports suggested the new economic stimulus package could be worth 60 billion lira ($39 billion).
“We are going to implement this package in order to turn the crisis into an opportunity and to increase our competitiveness. Therefore our aim is to start the implementation as soon as possible. Our target is 2010. So it should have started by this time,” he added.
Support for employment
Erdogan also unveiled a package to increase employment, stating that the cost of the employment package is around TRY 1 billion (USD 648.1 million).
The package includes renovating schools and hospitals, support for vocational schools and apprenticeship schemes and environmental reforms in a bid to increase employment, Erdogan added.
Companies will be exempt from paying social security premiums for workers hired after April 30, he said, noting that this will create jobs for 120,000 people. Around 500,000 people are planned to be employed through the package.