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Why international investors have such an appetite for Turkey

Interview - August 16, 2013
Turkey has been able to attract more than $120 in foreign direct investment (FDI) over the past decade, despite the global financial slowdown, demonstrating a high degree of international confidence in the republic’s future. Ilker Ayci, President of the investment agency ISPAT, discusses Turkey’s appeal, its new incentives scheme and how ISPAT’s free services combine a private-sector approach with governmental backing to support investors before, during and after their entry into Turkey.
Turkey has been the fastest growing economy in Europe for two of the last three years and is even forecasted to boast a respectable growth rate in GDP of 4% in 2013. What do you think should be the primary goals of the government though to continue with this economic prosperity?

The primary goal of the government, in the short term, has been to mitigate the negative impacts of the global financial and economic crises on the Turkish economy by diversifying its export markets and sources of foreign direct investment (FDI). On the other hand, the government’s long-term goal is to focus on its vision for 2023, the centennial celebration of the Republic of Turkey. The vision envisages making Turkey one of the top 10 economies in the world, with a GDP of $2 trillion and exports of $500 million.    

Given current events in Turkey do you feel that investor confidence has been damaged? If so, what will it take to regain the trust of the international business community?

Foreign direct investors are long-term investors; hence they are not easily affected by short-term events. Turkey has been a bastion of confidence for investors both in retrospect and prospect, that is the main reason why we managed to attract more than $120 billion of FDI over the last 10 years.   
As the President of ISPAT, can you briefly highlight how you achieve your mandate of promoting Turkey’s investment opportunities to the global business community and providing assistance to investors?

ISPAT provides investors with assistance before, during and after their entry into Turkey. It serves as a reference point for international investors. Working on a fully confidential basis, as well as combining the private-sector approach with the backing of all governmental bodies, our free-of-charge services include, but are not limited to: market information and analyses, industry overviews and comprehensive sector reports, site selection, coordination with the relevant governmental institutions, facilitating legal procedures and legislation issues (such as establishing a company, incentive applications, obtaining licenses and work/residence permits).
A number of leading multinationals such as Microsoft and Coca-Cola have chosen Istanbul as their regional headquarters, but what attracts these companies to Turkey?

Turkey’s strategic location is one of the key factors attracting these companies. Turkey’s geographic position enables these companies to access a market of about 1.5 billion people in the surrounding countries whose combined GDP is around $25 trillion with a trade volume of  $8 trillion. In addition to geographical advantages, human capital and the investor-friendly business environment in Turkey are other factors attracting these companies to Turkey.  
In which sectors are you seeing the most investor interest and conversely, which sectors do you feel have to most untapped potential?

Turkey offers abundant investment opportunities in many sectors, such as energy, renewable energy, chemicals and petro-chemicals, mining, finance, real estate, automotive and ICT, as well as iron and steel. More opportunities will emerge with the realisation of Turkey’s ambitious targets for 2023. Turkey set specific targets to achieve by the year 2023 from health to economy, from defence to education, from energy to transportation.
Where would you say is the source of most of the FDI that comes to Turkey?

The bulk of FDI inflows to Turkey originate from Europe. However, we are seeing increasing FDI from the Gulf countries, North America and Asia. Our policy is to diversity the sources of FDI inflows to Turkey as much as we can, thus reducing risks of depending on a single source. 
What investment incentives would you like to highlight for foreign investors?

In addition to promising sector-specific opportunities, global investors can also benefit from lucrative incentives which include favourable tax deductions, special investments zones, exclusive R&D and innovation support, training of workers, and so on.  What I would like to highlight is that Turkey has recently introduced a new incentives scheme that aims to reduce Turkey’s current account deficit. The new incentives system provides investors with a wide range of options to benefit from incentives. The incentives drastically decrease the cost of production by offering, inter alia, tax deductions and exemptions, land provisions as well as paying social security premiums for both employers and employees. 
It is noteworthy to highlight that the strategic investments that will reduce Turkey’s current account deficit are strongly supported in every part of the country.
Do you actively work to highlight one of Turkey’s greatest assets, its surplus of qualified human capital?

Yes, we do and we have to, because it’s a strategic asset to attract foreign investments. Turkey’s young and dynamic population with a decent education has been an important source of skilled labour, which is one of the most influential factors attracting foreign investment. 
Bilateral relations between Turkey and the UK have never been better. Turkey was one of the first countries David Cameron visited upon his election in 2010, pledging to dramatically increase economic trade, which has now jumped to $17 billion. What do you think could be done though to increase this number even further?

Although the UK is the top investor in Turkey, we are not content with the level we are at and working hard to host more investments from the UK, one of the top three FDI-originating countries in the world. We would very much like to see the UK investors investing in Turkey’s infrastructure and energy projects. To this end, we have recently organised an infrastructure conference in London where major infrastructure and energy projects were introduced to potential investors.
As president of the top Turkish association charged with increasing the amount of FDI that comes to Turkey, which is arguably the lifeblood of the Turkish economy, do you feel a responsibility to the Turkish economy, to the Turkish people?

Yes, I do and I believe that it is an honour for me to serve my people. Attracting the investments which will contribute to the economic development of Turkey is a noble responsibility for me and my team.   
If we were to come back here in five years and interview you again, optimally, what improvements or achievements would you like to have completed?

I would like to see Turkey among the top 10 FDI recipients in the world.