FDI in Turkey

Overview by Globlatrade.net:

FDI in Figures

Following the economic and political crisis of 2001, which led to the collapse of its banking system, Turkey concluded a significant macro-economic stabilization plan with the IMF, in 2002. Within this stable political context, also characterized by a gradual improvement of the country’s economic results, FDI influx to the country was enormous. However, due to the global financial crisis and the suffocation of the privatization process, the trend has been reversed: since September 2008, the FDI influx into Turkey has been decreasing.

In 2009, Turkey, with 6 billion of FDI, has been demoted to 32nd place in world’s destinations, i.e. 12 places dowtn from 2008.

The effects of the crisis can still be felt. In the first half of 2010, FDI flux totalled 3.2 billion USD, or a quarter less than on September 1st 2009. The estimate for 2011 is 7.5 billion USD. In this way, the influx should not return to their earlier lever before two years from now. The state has undertaken many legislative reforms in order to attract FDI (tax exemptions and other incentives), such as creating the Prime Ministry “Investment Support and Promotion Agency of Turkey”, showcasing the efforts made to attract foreign operators.

Foreign Direct Investment 2007 2008 2009
FDI Inward Flow (million USD) 22,023 18,148 7,611
FDI Stock (million USD) 153,124 70,118 77,729
Performance Index*, Ranking on 141 Economies 91 95 109
Potential Index**, Ranking on 141 Economies 73 76 -
Number of Greenfield Investments*** 97 170 153
FDI Inwards (in % of GFCF****) 15.9 12.5 13.5
FDI Stock (in % of GDP) 23.7 9.6 12.6

Source: UNCTAD

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.


FDI Inflows By Countries and Industry

Main Investing Countries 2009, in billions USD
The Netherlands 0.9
France 0.6
Germany 0.5
UK 0.3
USA 0.3
Italy 0.3
Gulf countries 0.2
Countries of the Near and Middle East 0.1
Canada 0.1
Australia 0.0
South America 0.0
Total FDI 6.0
Main Invested Sectors 2009, in billions USD
Manufacturing industry 1.7
Distribution of gas, electricity and water 1.7
Real estate 0.6
Financial services 0.5
Wholesale and mass marketing 0.4
Transport, storage and communication 0.4
Construction 0.3
Mining exploration 0.2
Others 0.2
Total 6.0

Source: Turkish Treasury

Form of Company Preferred By Foreign Investors
Public limited company, SA (Anonim Sirketi, AS)
SARL (Limited Sirketi, Ltd)
Form of Establishment Preferred By Foreign Investors
In 2007, out of the 3 702 foreign companies which had set up in Turkey:
- 2 991 were subsidiaries (set up)
- 651 acquisitions
- 60 branch offices and representative offices in Turkey
Main Foreign Companies
The Turkish Treasury Ministry announced in 2007 a total of 18 308 companies at least 10% of whose capital was held by foreign entities.
« Success stories »  : Coca-Cola , Hyundai and Nestlé especially, but also BNP Paribas, Microsoft or Motorola.
Sources of Statistics
Turkish Treasury

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Why You Should Choose to Invest in Turkey

Strong Points
- A geographical strategic location;
- A well developed industrial basin;
- A country whose calling is to join the EU club by 2015-2020;
- A rapidly developing consumer middle class;
- A Flexible labor law, which favors investment and low labor costs;
- A sustained growth influenced by a modern and dynamic private sector;
- A strong increase in productivity in recent years;
- A legal framework close to European standards and favorable to investment.
Weak Points
- The slowing down of economic and political reforms observed since the end of 2005;
- A strong dependenc on hydrocarbon imports and on exports;
- An uncertainty regarding the exchange rate;
- A disturbing deficit of the balance of current payments;
- Insufficient and sometimes obsolete, infrastructures;
- An informal sector difficult to reduce.
Government Measures to Motivate or Restrict FDI
Since 2003, investors are no longer obliged to acquire a minimum interest.
Nevertheless, the government encourages investments in the form of Build Operate Transfer (BOT) (law n° 4283 of 16 July 1997). It favors investments in the High Tech, textiles, services (health, education, transport), telecommunications, shipbuilding, electronics and biotechnologies sectors. Export-oriented projects are also promoted.
Decree n° 24 810 of 9 July 2002 defines public aid for investment.

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