Turkey unveils $30bn incentives package to bring tech sector to global stage

Country aims to strengthen global competitiveness and economic independence, President Recep Tayyip Erdogan says

Turkey's President Recep Tayyip Erdogan delivering a speech at the unveiling of the High Technology Incentive Programme in Istanbul on Friday. Reuters

Turkey has unveiled a $30 billion economic incentives package aimed at boosting investment in its advanced technology sectors, with President Recep Tayyip Erdogan pledging to bring them to the global stage.

The programme includes a goal of attracting at least $20 billion in private sector investment, Mr Erdogan said at the unveiling of the High Technology Incentive Programme in Istanbul on Friday.

The initiative is being positioned as a key driver to recognise the country as a “global centre of attraction in high technology investments”, as Ankara strengthens its capabilities in key industries such as electric vehicles, battery storage and renewable energy.

“With value-added production, we increase our global competitiveness and strengthen our economic independence. We will continue supporting such critical technologies,” Mr Erdogan said.

The government plans to make about $750 million worth of investments available to small and medium enterprises involved in industrials and green technology, he said.

The new incentives package also comes after the country handed out about 300 billion Turkish liras ($9.1 billion) in low-cost financing over the past three years to encourage businesses, Mr Erdogan said.

“As we apply our economic programme decisively, we continue taking the necessary steps to improve our investment climate,” he said.

Turkey is facing economic challenges, underpinned by chronic inflation. Mr Erdogan installed an economic team to stabilise the economy and control consumer prices last year.

However, confidence in the country is expected to grow after recent positive developments.

Last week, Moody's Investors Service upgraded Turkey's sovereign credit rating, the first such rating action in more than a decade, citing improvements in governance and economic policies.

The country was also removed from the Financial Action Task Force “grey list” of countries that face tighter monitoring for money laundering and terrorism financing last month, as the country has made “significant progress” in its fight against illicit actions in the sector.

Meanwhile, inflation hit 69.8 per cent in April, above initial projections, the Central Bank of Turkey said in its latest report released in May.

The regulator is more optimistic in the longer term, expecting inflation to go down to 38 per cent by the end of 2024 and further to 14 per cent at the end of 2025, it said.

That silver lining is in line with government data released in May that showed Turkey's economy expanded by 5.7 per cent in the first quarter of 2024 as domestic demand strengthened.

Turkey is also planning major tax changes as part of an economic reform proposal that aims to shore up government revenue, reduce inflation and “create a fairer system”.

Recent data on the Turkish economy show that it is on the “right path”, Mr Erdogan said on Friday.

“Our own businesses [and] also market players abroad are positive; they have an increasing confidence in the Turkish economy. Hopefully, it will be even better,” he said.

Mr Erdogan expects that the new programme will be able to attract more businesses and convince them to set up their operations in Turkey.

Chinese EV manufacturer BYD, which famously overtook Tesla as the world's biggest, signed a $1 billion investment deal with Turkey earlier this month.

The deal includes a manufacturing plant capable of producing 150,000 vehicles annually.