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In this page: FDI in Figures | What to consider if you invest in Turkey | Protection of Foreign Investment | Procedures Relative to Foreign Investment | Office Real Estate and Land Ownership | Investment Aid | Investment Opportunities | Sectors Where Investment Opportunities Are Fewer | Finding Assistance For Further Information

 

FDI in Figures

According to the UNCTAD World Investment Report 2021, FDI inflows to Turkey decreased by 15% to USD 7.9 billion in 2020. The slowdown was mainly due to global economic uncertainty caused by the Covid-19 pandemic. Notably, FDI recovered towards the end of 2020 (USD 2.3 billion in Q4), preventing a stronger decline. European economies continued to account for the majority of inflows (55%), but the US (14%), Middle Eastern (7%) and Asian (6%) economies were also significant investors. Notable transactions included a USD 200 million investment by Metric Capita (France) in a pharmaceutical manufacturing unit and the Qatar Investment Authority's acquisition of a 10% stake in a stockbroker also valued at USD 200 million. At the end of October 2021, the stock of FDI stood at USD 145.8 billion indicating 36.6% decrease in comparison to the end of the previous year. The government's assertive foreign policy and unorthodox economic policies discouraged investors (The Economist Intelligence Unit). Finance, manufacturing and energy are among the sectors that attract the highest amount of FDI in Turkey, accounting for more than 60% of total stocks. In terms of stocks, the Netherlands has the lead, accounting for 16.1% of total foreign investment, followed by the United States at 7.6% and the Gulf countries - mostly Qatar - at 7% (Central Bank of the Republic of Turkey).

Turkey 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. FDI inflows improved in the light of 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 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 have reached double-digit rates and the proximity of conflicts in the Middle East. Nevertheless, Turkey's ranking in the World Bank's Doing Business Report 2020 continued to improve, as Turkey was listed as the 33rd out of 190 economies with regards to the ease of doing business in 2020, up by 10 positions from a year earlier. Improvements regarding tax payments in particular helped Turkey obtain a better ranking this year.

 
Foreign Direct Investment 201920202021
FDI Inward Flow (million USD) 9,5947,82112,530
FDI Stock (million USD) 160,754228,978120,700
Number of Greenfield Investments* 217207205
Value of Greenfield Investments (million USD) 3,9044,6862,458

Source: UNCTAD, Latest available data.

Note: * Greenfield 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.

 

FDI STOCKS BY COUNTRY AND INDUSTRY

Main Investing Countries 2020, in %
Netherlands 17.7
Qatar 9.7
Germany 9.3
United Kingdom 8.6
Luxembourg 5.9
Main Invested Sectors 2020, in %
Manufacturing 33.2
Finance and insurance 30.5
Wholesale and retail trade 23.5
Energy 5.6
Information and communication 2.9

Source: Turkish Central Bank - Latest available data.

 
Form of Company Preferred By Foreign Investors
Public limited company, SA (Anonim Sirketi, AS)
SARL (Limited Sirketi, Ltd)
Form of Establishment Preferred By Foreign Investors
Out of the 3,702 foreign companies which had set up in Turkey:
- 2,991 are subsidiaries (set up);
- 651 acquisitions;
- 60 branch offices and representative offices in Turkey.
Main Foreign Companies
Main foreign companies include Coca-Cola, Hyundai, Fiat, Ford, Bosch and Nestlé as well as BNP Paribas, Microsoft and Motorola.
Sources of Statistics
Turkish Statistical Institute

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What to consider if you invest in Turkey

Strong Points

Advantages for FDI in Turkey:

  • Turkey's repeated attempts to join the European Union have helped to establish European regulations and trade standards, which have substantially liberalised the economy. 
  • The Government is working to attract FDI into technology, textiles, services (health, education, public transport), telecommunications, shipbuilding, electronics and bio-technologies. 
  • Because of its demographic vitality, the country has a developing young middle class population with increased purchasing power and orientation towards consumption. 
  • The relatively low cost of labour
  • Turkey has a strategic geographical location that allows it to be a regional hub between Europe, Asia and the MENA economic zone.  
  • The Turkish market counts 85 million consumers
Weak Points

Some of the disadvantages for FDI in Turkey include:

  • A bureaucracy that may be cumbersome to navigate
  • Frequent changes in the legal and regulatory environment
  • Strong dependence on exports and hydrocarbon imports
  • Exchange rate uncertainty and the consequences of a public debt constantly rising
  • Elevated regional geopolitical risks
  • Currency plunge and high inflation
Government Measures to Motivate or Restrict FDI
The Turkish Government has played a large role in initiatives to make the country a more attractive destination for foreign investment and business operations. The Turkish government offers a comprehensive investment incentives program: general, regional, strategic and project-based investment incentives.

Turkey’s 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.

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. Other primary objectives are to reduce the current account deficit and unemployment, increase the level of support instruments, promote clustering activities, and support investments to promote technology transfer.
Foreign firms are eligible for research and development (R&D) incentives if the R&D is conducted in Turkey.
Turkey is seeking to foster entrepreneurship and small and medium-sized enterprises (SMEs). Through the Small and Medium Enterprises Development Organization (KOSGEB), the Government of Turkey provides various incentives for innovative ideas and cutting-edge technologies.
Turkey’s Scientific and Technological Research Council (TUBITAK) has special programs for entrepreneurs in the technology sector, and the Turkish Technology Development Foundation (TTGV) has programs that provide capital loans for R&D projects and/or cover R&D-related expenses.

More detailed information can be found at the Presidency of the Republic of Turkey Investment Office website.

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Protection of Foreign Investment

Bilateral Investment Conventions Signed By Turkey
Turkey has signed several bilateral investment treaties (BITs). To see a list of participating countries, consult UNCTAD website.
International Controversies Registered By UNCTAD
The ISDS Navigator contains information about known international arbitration cases initiated by investors against States pursuant to international investment agreements. Turkey is involved in 36 cases as Home State of claimant and in 14 cases as Respondent State.
Organizations Offering Their Assistance in Case of Disagreement
ICSID , International Centre for Settlement of Investment Disputes
ICCWBO , International Court of Arbitration, International Chamber of Commerce
Member of the Multilateral Investment Guarantee Agency
Turkey is a signatory to the Convention of the MIGA.
 
Country Comparison For the Protection of Investors Turkey Eastern Europe & Central Asia United States Germany
Index of Transaction Transparency* 9.0 7.5 7.0 5.0
Index of Manager’s Responsibility** 5.0 5.0 9.0 5.0
Index of Shareholders’ Power*** 6.0 6.8 9.0 5.0

Source: Doing Business - Latest available data.

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.

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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).

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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.

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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
 
 

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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

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Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors
Media, transport, postal services.

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Latest Update: June 2022