Could you please provide a brief history of ISPAT and its role in the Turkish economy?

The Investment Support and Promotion Agency of Turkey (ISPAT) was established in 2006 under the Prime Ministry. Its role is to unify all foreign investment-related services into a single institution. ISPAT operates under a one-stop-shop formula and caters to the needs of foreign investors who are interested in doing business in Turkey. From first contact to after-care services, ISPAT is present at every stage of an investment project by an international company in Turkey. To date, the agency has realized many investment projects that created employment, transferred technology, know-how, and raised exports, all of which contribute to the overall development of the country in parallel with government policies. ISPAT has recently assumed an even more influential role in attracting foreign direct investment as part of a new deputy prime ministry that is directly responsible for improving Turkey’s business and investment environment and coordinating the reform agenda.

What is ISPAT’s mission in providing industry overviews and sector reports? Could you provide an overview of the aerospace and defense sector in Turkey?

ISPAT’s mission is to promote Turkey’s business opportunities, and a network of country advisors work around the world to bring the best of the country to the attention of international business circles. The aerospace and defense sector in Turkey has achieved great success in recent years and is one of the fastest developing aerospace and defense sectors globally. Turkish companies in this sector are developing one project after another, creating products that are competing worldwide and assuming important roles in international projects. With their qualified human resources and high technology infrastructure, Turkish companies bring global solutions to satisfy the requirements of many countries. They conduct activities in many critical areas of the aerospace and defense sector such as original design and development, domestic production, modernization and modification, R&D, and international projects.

What incentives does ISPAT provide to the aerospace and defense sector in Turkey?

Turkey’s investment incentive schemes are mainly based on a regional approach. According to the incentives legislation, Turkey is divided into six different regions where the most developed cities, defined as the first region, benefit from the least amount of incentives, while the least developed cities, defined as the sixth region, benefit from the highest amount of incentives. The sectors to be supported in each region are determined in accordance with regional potential and the scale of the local economy, while the intensity of support varies depending on the level of development in the region. However, some areas that are considered priority investment areas, listed in the legislation, can benefit from fifth region incentives regardless of the region where the investment is made. Among these investment areas are: investments in the defense industry to be made with respect to the project approval received from the Undersecretariat for Defense Industries (SSM), and investments for the production of items in the high-tech industry segment stipulated in the OECD’s definition for technology intensity (production of aviation and space vehicles are also included). Therefore, most production-based investments in the defense, aviation, and aerospace sectors are considered priority investment areas and can benefit from fifth region incentives. These incentives include VAT exemption, custom duty exemption, corporate tax reduction, social security premium support (employer’s share), and interest rate support. In addition, if the total fixed investment amount of production of aircraft and spacecraft and/or related parts exceeds 50 million Turkish lira, it can also benefit from the large-scale investment incentives scheme.