Turkish companies continue to invest primarily in Western countries
Anew report from the Foreign Economic Relations Board (DEIK) said on May 17 the West remains the most attractive destination for Turkish companies’ investments, despite political tensions with the government.
The “Foreign Investment Index,” prepared by DEIK and Bain & Company, ranked the United States, Germany and Britain as the top three investment destinations in 2017, based on 32 criteria taken from 23 sources. Qatar was the only non-Western country to make the index’s Top 15.
Turkish companies’ total overseas mergers and acquisitions rose 10 percent to $6.5 billion in 2016 after declining to $5.9 billion in 2015. It is expected to remain stable this year, the report said.
Both Russia and Britain saw more investment by Turkish companies in 2016. Britain, which was ranked third place in 2017, is seen as an easier country to invest in as it will no longer have to comply with the European Union regulatory framework after Brexit, DEIK said.
Russia, site of Turkey’s largest investment stock and with whom the Turkish government repaired diplomatic relations in mid-2016, rose to third place among middle income countries in 2017 in the index. Eastern European countries are also attracting more Turkish investment. Companies from Turkey and elsewhere are opting to base their manufacturing operations in middle-income EU countries like Poland, Hungary and Romania be- cause of their suitable business climates and ideal geographic locations.
Investment in Asia doubles
The amount of Turkish investment in the Asia-Pacific region nearly doubled to $260 million from last year , the report said.
“This attractive global investment destination, which has remained on the backburner for our economy for reasons that are not rational, still contains significant opportunities,” a presentation of the report said. “Both political and economic relations with these countries, which have large Muslim populations, have seen marked improvement in the last year.”
Turkey is chairing the Shanghai Cooperation Organization Energy Club in 2017, and recent visits to both China and India by President Recep Tayyip Erdogan have helped awaken Turkish interest, the report said. “Greenfield investments and mergers and acquisitions by large Turkish corporations, as well as aggressive interest from Turkish construction companies are seen as important steps. China, India, Indonesia and Malaysia have entered the index, showing they are now on Turkish investors’ radar,” the presentation said.
Declining oil prices or political instability have reduced Turkish investment in the Middle East and Central Asia, the report found. The Turkish investments to this area declined from $60 million to $20 million last year.
Despite the Turkish government’s efforts to boost economic ties with Africa, which have included visits by senior officials and summits, only one sub-Saharan country – Ethiopia – was included in the DEIK index.
Weak corporate structures, a scarcity of agreements with Turkey and difficulty securing financing have all made the region less attractive to Turkish investors, the report found.
“There is trouble (investing) in Africa. We believe there is important potential there, and will continue to our efforts,” said DEIK President Omer Cihad Vardan.
The first Foreign Investment Index was published last year by DEIK and Deloitte.