Foreign Direct Investment in Turkey

Overview by

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.


Country Comparison For the Protection of Investors

  Turkey Eastern Europe & Central Asia United States Germany
Index of Transaction Transparency* 9.0 6.3 7.0 5.0
Index of Manager’s Responsibility** 4.0 4.0 9.0 5.0
Index of Shareholders’ Power*** 4.0 6.2 9.0 5.0
Index of Investor Protection**** 5.7 5.5 8.3 5.0

Source: Doing Business

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

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.

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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.
Bilateral Investment Conventions Signed By Turkey
Turkey has signed bilateral conventions with nearly 80 countries. In the Mediterranean basin, Turkey has signed bilateral conventions with Algeria, Egypt, Israel, Spain, Greece, Lebanon, Morocco, Portugal and Tunisia. 44 conventions can be downloaded on the UNCTAD website: click here to download these conventions. They define the framework of protection for foreign investment in Turkey for each of the signatory countries.

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Procedures Relative to Foreign Investment

Freedom of Establishment
Acquisition of Holdings
Obligation to Declare
Foreign investors only have to inform the General Directorate of Foreign Investment (GDFI) through the under-secretariat of State to the Treasury.
Competent Organization For the Declaration
Turkish Treasury
Requests For Specific Authorizations
In some sectors considered to be strategic such as petroleum, the media (radio and TV) and tourism, acquisitions are limited to a certain amount (law n° 6326 of 1954).
Find Investment Service Providers in Turkey on

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Investment Opportunities

Investment Aid Agency
Invest in Turkey
Tenders, Projects and Public Procurement
IHALE, Public Procurements
Tenders Info, Tenders in Turkey
Globaltenders, Tenders & Projects from Turkey
DgMarket, Tenders Worldwide
Other Useful Resources

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Experts Views (2)
  • Doing business in Turkey

    JPA International

    Economical, social, political and legal environment of your investment in Turkey !

    JPA International Turkey on 22 Dec 2010 related to Foreign Direct Investment in Turkey

  • Turkey

    The Turkish economy has shown remarkable performance with its steady growth over las 10 years!

    Panax BC on 30 Mar 2012 related to Foreign Direct Investment in Turkey

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  • Investment Climate in Turkey

    The Government of Turkey (GOT) views foreign direct investment as vital to the country's economic development and prosperity. Accordingly, Turkey has one of the most liberal legal regimes for FDI in the OECD.

    U.S.Commercial Service Turkey on 22 Dec 2009 related to Foreign Direct Investment in Turkey

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