The export volume of Turkey’s free zones has remained fairly stable over the past half decade. What steps can Antalya Free Zone take to increase its annual export volume going forward?
Our primary goal in the free zone is to increase the number of firms in high value-added sectors such as the electronics and medical sectors. We also have a substantial yacht sector cluster. We are planning to increase yacht maintenance and repair activities together with yacht production, since there is enough demand to create a high trade volume, which also brings employment opportunities in this sector. The main obstacle in achieving our goals is in terms of land structure: we have reached %100 land occupancy in the free zone. We can allocate a certain amount of buildings which are transferred to us from the Treasury, but this is not enough for further growth. We need to expand. The alternatives for expansion in the free zone are presently limited, as there are limited border expansion opportunities. There are 200 acres of land including a dock on the western side of the free zone. This area belongs to the regional grain board, which is under the supervision of Treasury. If we can add these idle lands to our free zone, our trade volume will be much higher. Currently, Antalya Free Zone has a yearly trade volume between $750 to 900 million USD. If we can incorporate these idle lands with the dock to the free zone, we can add more yacht production and maintenance/repair facilities, as well as higher trade volumes thanks to the utility of the dock. This possibility would increase our trade volume to around $1.5 billion and generate employment for an additional four of five thousand, bringing us to over 6,000 employees total. We have already provided a full report on this opportunity to the Free Zone Directorate under the Ministry of Economy.
Antalya Free Zone is home to more than fifty companies involved in yacht production, and has produced more than 300 yachts in the last 13 ysears. How has Antalya Free Zone become a hub of yacht production?
Well, there are more than one reason for this. One of the reasons is that Antalya Free Zone has its own dock. Yachts needs to be put to the sea as quickly as possible after they are constructed in the production centers. Having a functioning dock is a center of attraction for investors. Secondly, the idle land in the free zone belongs to the treasury and it is very nearby to the sea. Investors can obtain a building in the Free Zone and start production without requiring a very high investment cost and because they do not have a very high investment cost, they can start the production in a very short period of time. This is a very crucial element. Thirdly, Antalya has some natural advantages. Antalya has a warm climate of 10 to 11 months of a year, which is convenient for yacht production. On top of that, Antalya Free Zone has tax advantages to the producers. There is a 20% corporate tax deduction for companies that are producing in the free zone. There is also an income tax exemption provided to the staff when they make eighty five percent of their exports abroad. There are logistic advantages as well. If you consider all these points, it is clear that yacht production centers are very attractive. Our first investor came to the yacht industry in the Antalya Free Zone in the early 2000s. An investor in Tuzla Free Zone was not satisfied with the working conditions and relocated to Antalya Free Zone. Our low-cost position and competitive advantages have been seen by many investors as a lucrative opportunity, and thus we have attracted more than 55 investors. It can be said that natural advantages, tax incentives, and a functioning dock has created an inflow for manufactures to the region. International investors are also appealed because of the quality of the workforce and low cost employment on top of above advantages.
What kinds of technology transfer would Antalya Free Zone like to attract from foreign companies?
First of all, because there is a substantial yacht sector cluster here, 35% to 40% of the inputs of yacht production are supplied in Turkey, whereas the remaining 60% is sourced internationally. International procurement largely consists of the electronical components of Yachts. These components, such as the engine, cannot be produced in Turkey and are therefore directly imported to the free zone and installed here. Electronic components create a monetary burden for yacht manufacturing, as these are very expensive parts. In this sense, we would like to have all of the electronic components used in the yacht industry present in our free zone, via technology transfer. This is our primary objective. Our second target is the medical sector. We want to further diversify the medical sector. Currently our firms are operating in the heart and kidney dialysis markets. This sector heavily consists of manufacturing technology-based products, and we want to bring more medical companies to the region. We have a similar outlook on the electronics sector. These are sectors with high added-value products, and Antalya Free Zone will prosper by expanding into these sectors.
Do any barriers to entry exist for foreign companies looking to invest in Antalya Free Zone?
Companies planning to invest in Antalya Free Zone should not face any major issues. The most important issue at present is related to our lack of space. International investors, especially the companies with foreign capital, come to Antalya Free Zone after observing the conditions in Antalya province and the logistical advantages present here. The capacities of hotels in Antalya are quite developed, the climate is very suitable, there exists a high quality workforce, and logistical facilities are exceptional. Investors can see this, but at present we have space allocation issues. If we are able to incorporate those large idle areas that I have mentioned previously into the free zone, we will have overcome a significant obstacle in this sense.
Can you define the kind of business community that investors can expect to find in Antalya Free Zone, and the organization and services provided to them?
Licensing and investment procedures for a company can be completed within a time frame between two weeks and one month. As long as the required documents are supplied on time, there are generally no difficulties in the bureaucratic process, either as an actuator or as a regional directorate. Meanwhile, when the investor company starts their investment and production, all free zone services are provided by our company, which exists for that express purpose. In other words, our company tackles and resolves all problems, such as electricity, water, wastewater, loading, unloading, disposal of waste, disposal of waste in the region, etc. We meet frequently with our investors, having sectoral or general meetings on a monthly basis, and do mutual consultation about current operational issues. We resolve issues quickly by sharing expertise with respect to laws, procedures, and regulations. Of course, we communicate and coordinate with the Free Zone Directorate and other related officials, to create an open and efficient environment for problem-solving.
In terms of its geographic location, what are the strategic advantages of Antalya Free Zone in terms of accessing important international markets? Can you provide some information or examples of prominent trade routes?
Antalya Free Zone’s biggest advantage is having a port of its own. There is also a privately owned port immediately adjacent to the free zone. If necessary, from mentioned private port, our investors can import goods to our free zone as well as export goods from our free zone with a single customs clearance process. They are also able to export their goods from the Free zone by docking their ships in the Free Zone’s own dock. This is a very important logistical advantage. Apart from this, the free zone is 25km away from the airport. The fact that the airport is nearby and that we have the 2nd largest airport of Turkey, gives investors added advantage. We are very close to the city center which is only 12 km away. Transportation, accommodation and commuting also has significant advantages. Most of the trade at the docks is happening to the countries of the Middle East, especially Libya, Syria, and Israel. Barite and cement exports are particularly the largest export commodities. Apart from this, exports are also made to EU countries such as Italy. In addition, we use land and air routes in terms of transporting mainly electronics and medical products. Land routes are mostly preferred to EU countries. Our total trade volume with the EU is 50% and it is 12% with the Middle East, which is also high.
What sectors do you see as growth areas that are prime for investment in Antalya Free Zone? What kinds of companies do you envision taking advantage of new investment opportunities?
The yacht industry is very important to us and currently clustered in the free zone, and one of our highest goals is to expand it. At present we have the capacity to produce yachts of up to 60-70 meters. This provides a very important advantage, a significant labour force, and also provides important added value. We also want to increase our quality in maintenance and repair areas. Yachts can easily access the free zone, but we need places where we can take these yachts and repair them. We are now trying to create these areas. When we solve the problem of space, more companies will have the opportunity to bring more yachts to the free zone, which will provide further growth in the yacht sector; this will create more income and jobs. This is one of our primary targets. Secondly, we see electronics as a very important sector with technology transfer potential, as I mentioned earlier. This sector makes a significant contribution to our growth. The medical sector is a sector mainly based on labour. In this context, it also creates substantial technology transfer. Increasing the medical sector will bring more employment opportunities. In addition, we want to grow in the machinery & chemistry sector, although by far they are the smallest number of firms in the free zone. If we can include the new idle areas into our free zone, there are also plans to work on international fairs to bring more companies in these sectors because we think that they will create significant added value and it will be more profitable for our region and also for our country. We are constantly working to expand our region to bring more companies. I would say that companies with foreign capital in these markets will benefit more from investment opportunities that I have mentioned. However, we always want to have different variety of companies with domestic and foreign partners to operate in our free zone. The advantage of mix partnership is that foreign investors will have an easier time to understand the regulations with the help of their local partners. Mutual understandings are also easier to build with mix partnerships and also technology transfers to our local firms are easier to perform. Because of these benefits, we prefer these kind of investments in our free zone.
What are the soft incentives, such as access to skilled local labour, language training facilities, and a positive social and family environment, that Antalya Free Zone provides, or could provide, to new investors?
The firms in the free zone of Antalya are not heavy industrial companies, therefore they do not create environmental pollution. I have not stressed that issue before, and I would like to emphasise it now. In our free zone, we pay significant attention to this issue, as we prefer companies that do not create environmental pollution. The city of Antalya has great incentives for investors besides tax compensation, and this creates a big advantage for the free zone. Investor firms can comfortably take advantage of a high quality workforce. There are three universities in the region, with one having recently opened in the Belek area. This is a great opportunity for investors to have a qualified labor force. Our city has many top-level, world-class hotels and they serve a wide range of concepts. Some of these hotels have golf tourism concept whereas others have a sun, beach, and relaxation concept. Skiing can also be done in the nearby cities of Isparta and Saklıkent. The historical beauty of the region also provides additional advantages. We also think that international companies are more institutional since their work hours, plans, and programmes are more structured and they care about these social benefits too. When we talk about the Antalya Free Zone, we are not only indicating the opportunities in the free zone but also sharing the positive characteristics of our Antalya city and its surroundings as well. We have the perfect mix of free zone advantages and surrounding environment.