Türkiye: Investing

FDI in Figures

According to UNCTAD's World Investment Report 2022, FDI inflows to Turkey increased by 60.2% to USD 12.5 billion in 2021. European countries accounted for 60% of the inflows in Turkey, followed by Asia and the Americas with 23% and 16%, respectively (UNCTAD). In the same year, the total stock stood at USD 120.7 billion (around 15% of GDP). Data by the Turkish Investment Office show that the majority of foreign investments are directed towards the finance (31.6%), manufacturing (24.2%) and energy sectors (10.6%), followed by ICT services (8.8%), wholesale and retail trade (8.4%), and transport and storage (4.7%). In terms of stocks, the Netherlands has the lead, accounting for 15.7% of total foreign investment, ahead of the United States (8.1%), the UK (7.5%), and Gulf countries (7.1%, mostly from Qatar). According to EY, Turkey became the 5th most popular FDI destination in Europe in 2021 with 264 projects (4.5% of total projects). The latest data from OECD shows that in the first half of 2022, FDI inflows to Turkey totalled USD 5.4 billion, marking a 24.4% increase compared to the same period one year earlier.

Turkey’s investment climate is positively influenced by its favourable demographics and its strategic geographical position, providing access to multiple regional markets, and has one of the most liberal legal regimes for FDI among OECD members. The country has adopted a series of legislative reforms to facilitate the reception of foreign investment, such as the creation of the Investment Office of the Presidency of the Republic of Turkey, a showcase of the efforts undertaken to attract foreign operators, and the publication of the government’s Foreign Direct Investment Strategy 2021-23. FDI inflows improved in the light of the development of public-private partnerships for major infrastructure projects, the measures to streamline administrative procedures and strengthen intellectual property protection, the end of FDI screening and the structural reforms carried out as part of the EU accession process. The factors hindering FDI development include the instability of the Turkish lira, as evidenced by the currency crises that regularly break out and bring its value to record lows, inflation that has reached double-digit rates and the proximity of conflicts in the Middle East. Overall, Turkey has a favourable business climate, ranking 45th out of 82 countries in the Economist Business Environment ranking and 52nd in the 2022 Global Competitiveness Ranking. It is also at the 128th spot out of 177 countries in the 2023 Index of Economic Freedom.

What to consider if you invest in Türkiye

Protection of Foreign Investment

Procedures Relative to Foreign Investment

Freedom of Establishment

There are no general limits on foreign ownership or control.  However, there is increasing pressure in some sectors for foreign investors to partner with local companies and transfer technology, and some discriminatory barriers to foreign entrants, on the basis of “anti-competitive practices,” especially in the information and communication technology (ICT) sector or pharmaceuticals.

Acquisition of Holdings

Foreign investments are not restricted and a notification is made to the General Directorate of Foreign Investments after completion of the transaction.

Obligation to Declare

The Capital Markets Law is the primary legislation governing public companies. This law also applies to public M&As, together with the Turkish Commercial Code. Takeover and merger rules are regulated and supervised by the Capital Markets Board, which is authorised to conduct investigations, request information and apply sanctions for non-compliance.

Competent Organisation For the Declaration

Capital Markets Board

Requests For Specific Authorisations

If the target is active in a regulated sector (such as telecommunications, energy, banking and financial services), approval from that sector's regulator may be required.
In sectors considered to be strategic - such as petroleum, media (radio and TV) and tourism - acquisitions are limited to a certain amount (law n° 6326 of 1954).

Office Real Estate and Land Ownership

Possible Temporary Solutions

There are several temporary solutions: domiciliation of the company at the private address of the director, domiciliation and/or lodging in a business center, lodging in relay-workshops, company "incubators" and renting professional premises.

The Possibility of Buying Land and Industrial and Commercial Buildings

Buying a property in Turkey falls under Law No. 2644 of 2012, also known as the Land Register Law which provides for the conditions for purchasing any type of real estate: residential property, commercial property, agricultural land, or any other type of field. Foreign investors seeking to purchase real estate in Turkey are subject to certain restrictions. In order to acquire the title of a property, an application has to be submitted to the local Land Registry Office in which the property is situated.

Risk of Expropriation

Under Turkish law, state and public legal entities can, where the public interest requires, terminate private ownership without the consent of the owner. Foreign investors are entitled to compensation if they are victims of expropriation. The legislation principally requires immediate compensation for the actual value of the expropriated investment.

Investment Aid

Forms of Aid

Turkey’s regional incentives program provides the following benefits to investors: corporate tax reduction; customs duty exemption; value added tax (VAT) exemption and VAT refund; employer’s share social security premium support; income tax withholding allowance; land allocation; and interest rate support for investment loans.

Privileged Domains

The incentives program gives priority to high-tech, high-value-added, globally competitive sectors and includes regional incentive programs to reduce regional economic disparities and increase competitiveness.

Privileged Geographical Zones

There are a number of technology development zones (TDZs) in Turkey where entrepreneurs are given assistance in commercializing business ideas.  The Turkish Government provides support to TDZs, including infrastructure and facilities, exemption from income and corporate taxes for profits derived from software and R&D activities, exemption from all taxes for the wages of researchers, software, and R&D personnel employed within the TDZVAT, corporate tax exemptions for IT-specific sectors, and customs and duties exemptions.
In total, there are 71 technoparks in Turkey (Teknoloji Gelistirme Bölgeleri - TGB) managed by the General Directorate of Research and Development, itself attached to the Turkish Science, Industry and Technology Minister.

Free-trade zones

There are 21 free zones in Turkey, 7 of which are in the region of Marmara. The zones are open to a wide range of activities, including manufacturing, storage, packaging, trading, banking, and insurance.  Foreign products enter and leave the free zones without imposition of customs or duties if products are exported to third country markets.  Income generated in the zones is exempt from corporate and individual income taxation and from the value-added tax, but firms are required to make social security contributions for their employees.

Public aid and funding organisations

Turkey Ministry of Trade
General Directorate of Incentive Practices and Foreign Capital
Turkey Prime Ministry Investment Support and Promotion Agency

Investment Opportunities

The Key Sectors of the National Economy

Industry
Turkey has a wealth of natural resources: boron, coal, iron, zinc, chromium, copper, silver. The exploitation of these resources is still under-developed and presents many opportunities. This could also lead to opportunities in heavy industry.  There are also a good number of opportunities in engineering works. The agri-food and textile sectors are looking for equipment. Other key sectors are the automotive industry (especially the market for automobile equipment) and health, which is in increased demand.

Services
Tourism is one of the country's key sectors. It is already well developed in Istanbul, on the Mediterranean coast, in the region of the capital and Cappadocia. In spite of this, the tourist sector still has large potential. Also, Turkey's geographical position offers good opportunities in logistics, transport and insurance.

High Potential Sectors

• Chemistry - Plasturgy
• Energy
• Agri-food
• Packaging
• Building and Public Works/Finishings
• Telecommunications
• Ores
• Industrial subcontracting
• Automotive

Privatization Programmes

Consult the website of the Turkish Directorate of Privatisation Administration

Tenders, Projects and Public Procurement

Tenders Info, Tenders in Turkey
Globaltenders, Tenders & Projects from Turkey
DgMarket, Tenders Worldwide: Turkey

Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors

Media, transport, postal services.

Finding Assistance For Further Information

Investment Aid Agency

Presidency of The Republic of Turkey Investment Office

Other Useful Resources

Istanbul Chamber of Commerce

Doing Business Guides

Doing business in Turkey (Thomson Reuters Practical Law)
Turkey Country Commercial Guide - The U.S. Department of Commerce
Exporting to Turkey - The UK Department for International Trade
Investment in Turkey - KPMG Guide
Doing Business in Turkey - UHY

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