The Turkish government has just revealed details of a new incentive package which is aimed at helping the less developed eastern provinces. It’s expected the new package will help reduce the current account deficit and will encourage new investment in the regions. The eastern provinces, particularly the Kurdish south-eastern provinces are quite poor in comparison with the rest of the country, and conflicts over the past three decades have prevented economic development from taking place.
The incentive package will provide incentives designed to increase production capacity and competition in six sectors which are the automotive sector, iron and steel production, machine manufacturing, agriculture and food production, and textile and chemical production. The government feels these sectors are largely responsible for the current account deficit.
The government feels the East needs these incentives which will help support private industries in poorer cities, and it hopes local businessman will invest in their home towns. However the package is expected to promote development throughout the country. When designing the new package, the government divided at the country into different categories according to the level of economic development and investment opportunities offered.
While the first category is for the most developed regions, the sixth category is for the least developed regions, and incentives include making businessman exempt from Social Security employment premiums. These usually have to be paid for new employees for between seven and 10 years depending on the region of investment. This means those investing in poorer regions will receive this tax break for a longer period of time. One of the main aims is to make Organised Industrial Zones attractive to new investors, and it looks as if this new incentive package is being well received.