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FOREIGN DIRECT INVESTMENT
The liberalization and the rapid growth of the economy in recent years made Turkey an attractive market for foreign investors. To invest in Turkey means also, to rely on laws protecting foreign capital, working in a totally liberalized environment, being able to recruit qualified labour force and enjoying convertible Turkish currency and free profit and capital repatriation.
10 GOOD REASONS FOR INVESTING IN TURKEY:
- Unique geographical location - Turkey enjoys a very special location at the crossroads between East and West, overlapping Europe and Asia geographically. The proxy to the new emerging markets in Middle East and Central Asia creates unique business opportunities.
- A strong international investment record -The experience of more than 4000 foreign capital establishments, including 104 of the Fortune Top 500 companies, confirms Turkey as a predominant investment location.
- A fast developing economy - The average growth rate of 6,8 % for the last 3 years prior to 1999, which is well above many OECD countries, implies a dynamic and growing economy. WTO outputs also state that Turkey is among the most dynamic 20 countries in the world trade.
- A huge domestic market - With a population of 63 million and an increasing consumer purchasing power, Turkey offers a huge and dynamic domestic market to investors.
- High-skilled, competitive labour - The Turkish labour force is well-known with its skills and learning capacity, and competitive labour rates offer cutting edge for industries.
- High quality standards - The new quality oriented generation in both manufacturing and services sectors ensures high quality levels. Turkish companies have proven their high quality levels by winning the European Quality Award consecutively in 1996 and 1997 as well as winning the European Quality Award for Small and Medium Sized Enterprises.
- The gateway of energy resources - Turkey is located at the gateway of Middle East and Caspian petroleum and Central Asian natural, which are regarded as the future energy reserves of the world.
- A well developed telecommunications network - Turkey has a relatively "young" telecommunications network with the latest technology, which can easily compete with the developed countries.
- Economic and political stability - Turkey is identified with its democratic parliamentary regime and a stable growing economy within its region.
- Strong ties with Caucasia and Central Asia - Turkey is the leading investor in Caucasian and Central Asian Republics. Due to her strong cultural and historic ties, Turkey provides privileged access and a perfect base to develop business with these countries.
| Years | No.of Firms (Cumulative) | Amount of Actual Investment | Amount of Cumulative Investment | Foreign Capital Permits |
| 1988 | 1172 | 488 | 1,583 | 821 |
| 1989 | 1525 | 855 | 2,438 | 1,512 |
| 1990 | 1856 | 1,005 | 3,443 | 1,861 |
| 1991 | 2123 | 1,041 | 4,484 | 1,967 |
| 1992 | 2330 | 1,242 | 5,726 | 1,820 |
| 1993 | 2554 | 1,016 | 6,742 | 2,125 |
| 1994 | 2830 | 830 | 7,572 | 1,485 |
| 1995 | 3161 | 1,127 | 8,699 | 2,938 |
| 1996 | 3582 | 964 | 9,663 | 3,837 |
| 1997 | 4068 | 1,032 | 10,695 | 1,678 |
| 1998 | 4533 | 976 | 11,700 | 1,645 |
| 1999 | 4950 | 817 | 12,488 | 1,691 |
| 2000* | 5129 | **501 | **12,989 | 1,203 |
| Source: General Directorate of Foreign Investment * (as of June), **(as of March) | ||||
By the end of June 2000, the number of foreign companies operating in Turkey has reached to 5129 with the total capital is 12,989 billion USD. In terms of number of companies, EU companies have the largest share with 2420. The leading country is Germany (919), followed by Netherlands (313), UK (330) and France (248). In terms of foreign capital flow to Turkey, the Netherlands is leading followed by France, USA and Germany.
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One of the major reforms in the 1980s was the adoption of liberal and flexible foreign investment policies. These policies have been upgraded with Decrees that took force in 1992 and 1995. The highlights of the legislation on foreign investment are as follows:
- All rights and privileges recognised for domestic capital and enterprises shall be equally applicable to foreign capital and enterprises.
- Enterprises with foreign capital may freely secure foreign credit to use both in their investments and operations.
- A minimum of 50,000 USD is required to establish a company, to become partners in existing companies or to open a branch office.
- The transfer or reinvestment of profits, dividends, proceeds of a sale or liquidation, compensation payments, payments under licence, technical assistance agreements, repayments of foreign credit principal and interest corresponding to the shares in foreign capital is unrestricted.
- There is no limitation for the assigning expatriates as manager or technical staff.
The applications of real persons and legal entities to invest in Turkey, to engage in commercial activities, to open branch offices or liaison offices are to be addressed to the Undersecretariat for Treasury.
It is expected that recent adoption of the international arbitration system will pave the way for the enhancement of foreign investment to Turkey.
There are attempts to further liberalize the investment legislation. In this context, new steps eliminating the minimum investment of 50,000 USD requirement from foreign investors and easing of the procedures are being considered.