Energy sector
The barrier for FDI is in people’s minds, not on the ground.
As Turkish politics continues to make headlines in the international media, the Turkish business climate may seem foggy. But the energy sector remains an attractive area to invest in Turkey. We asked Mario Diel, chairman at Energy Council of Foreign Investors, about the sector’s potential and its barriers. “The European media is confusing politics with business when it comes to Turkey,” says Diel. “Turkey is at the heart of the most interesting region of the world, both business and politics-wise.”
Not political, but cultural differences
Diel, who has spent 20 years in Turkey as an entrepreneur, believes international companies don’t really understand how to do business in Turkey. Cultural differences are a bigger problem than politics, he says. “I have never seen either the current government or the previous ones having any negative influence on an investor. It is exactly the opposite,” he says. “Of course there are companies that have problems in Turkey. But this has nothing to do with politics, Mr. Erdogan or the government. It is because (the businesses) are making a lot of mistakes.”
Diel considers the main problem to be a lack of knowledge about the country. In Turkey, personal relationships are often more important than how professional one is, he says. “Expats come to Turkey, and, in their social life, they are mainly only with other expats. You never see them at places where the Turkish business world goes. Turkish people make personal contact before they start to discuss business with you. Most of the foreigners don’t understand this,” he says.
Sector will go international
Diel criticizes an expatriate system that does not permit foreigners to integrate with the local culture. “Expats come to Turkey on a three- to four-year contract. They leave for other countries while they are just about to engage. Some of them even live in a hotel. By doing this, you can’t get closer to the Turkish business environment,” Diel says.
Diel does not agree with the view that business development is negative in Turkey. He also believes that Turkey and its companies will play an important role in the energy sector not only at home, but internationally. He compares this to the construction sector. “Fifteen years ago, the image of Turkish construction companies was very bad. But at the moment, the biggest construction companies in the world assign Turkish companies, because Turkish businessmen learn very quickly from their mistakes,” he says.
Professional companies will survive
Diel thinks the decline in electricity-trading companies is not specific to Turkey. “When the market was liberalized, there were about 170 companies registered to trade electricity. But realistically, it is a market for 30 to 40 companies. Of course this is affecting the market. But this is normal and applies everywhere. Professional companies will survive in the end,” says Diel.
“We have to keep in mind that when this market started, electricity prices were extremely high. Because they did not know this business that well, a lot of companies decided to invest in power plants. They were looking at the current market price and later they had to calculate down. They also financed their plants on a euro and dollar basis, but the market is paid in lira,” he says.