FDI in Figures
According to the UNCTAD 2017 World Investment Report, Turkey was the second largest recipient of FDI in West Asia, behind Israel. The country has adopted a series of legislative reforms to facilitate the reception of foreign investment, such as the creation of Investment Support and Promotion Agency of Turkey (ISPAT), a showcase of the efforts undertaken to attract foreign operators. FDI inflows improved in 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 EU accession process.
After reaching a record high (USD 22 billion) in 2007, FDI flows to Turkey have decreased. FDI reached USD 17.5 billion in 2015 and dropped to USD 12.1 billion in 2016 according to Turkish Ministry of Economy (2017). The factors hindering FDI development include political instability (an attempted coup d’état took place in 2016 claiming many lives), the weak currency, inflation, and the proximity to conflicts in the Middle East.

The countries of the European Union, the Gulf States and the United States are among the main investors in Turkey.

Foreign Direct Investment 2014 2015 2016
FDI Inward Flow (million USD) 12,458 17,259 11,987
FDI Stock (million USD) 182,134 149,803 132,882
Number of Greenfield Investments*** 122 161 154
FDI Inwards (in % of GFCF****) 4.6 6.8 4.7
FDI Stock (in % of GDP) 19.5 17.4 15.5

Source: UNCTAD, Latest available data.
Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country’s Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field 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. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased by Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

FDI Stocks by Country and Industry

Main Investing Countries 2016, in %
The Netherlands 15.8
The United States 8.0
Austria 7.0
United Kingdom 6.9
Luxembourg 6.4
Germany 6.4
Belgium 5.9
Spain 5.5
Greece 4.9


Main Invested Sectors 2016, in %
Manufacturing 25.6
Finance and insurance 23.4
Wholesale and retail trade 9.1
Transport and storage 8.9
Construction 4.9

Source: Turkish Ministry of Economy – Latest available data.

The 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
According to The Turkish Treasury Ministry, a total of 18,000 companies are set up in Turkey, for which at least 10% of the capital is held by foreign entities. Success stories include Coca-Cola, Hyundai and Nestlé as well as BNP Paribas, Microsoft and Motorola.
Sources of Statistics: Turkish Treasury

Why Should You Choose to Invest in Turkey?

– Turkey’s movement towards the European Union has helped establish and further the adoption of European business regulations and standards.
– Government promotion of investments in technology, textiles, services (health, education, transit), telecommunications, shipbuilding, electronics and bio-technologies.
– Commercial hub in the heart of West Asia, which provides access to nearby markets in the Middle East, Africa and Central Asia.
– Home to a rapidly developing, consumption-oriented middle class.
– Comparatively low labour costs.
– A bureaucracy that may be cumbersome to navigate.
– Frequent changes in the legal and regulatory environment.
– Strong dependence on exports and hydrocarbon imports.
– The pace of economic and political reforms has slowed recently.
– Exchange rate uncertainty.
– Proximity to/exposure to conflicts in Syria and Iraq.

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. Turkey’s movement towards the European Union, in particular, has helped establish and further momentum to embrace European business regulations and standards. The new Turkish Commercial Code encompassed significant reforms to create a more transparent, equal and modern environment for investment/business. Moreover, the Government has taken the lead on industrial promotion and investment financing through the BOT model (build, operate, transfer).

Protection of Foreign Investment
1. Bilateral investment conventions signed by Turkey
Turkey has signed bilateral conventions with 81 countries. Sixty-five of these agreements are in force and 16 of them are in the ratification process. In the Mediterranean basin, Turkey has signed bilateral conventions with Algeria, Egypt, Israel, Spain, Greece, Lebanon, Morocco, Portugal and Tunisia.
2. International Controversies Registered By UNCTAD
One in the field of mining and one in that of electricity production.
3. 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.
4. Member of the Multilateral Investment Guarantee Agency
Yes. 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 7.0 7.0 5.0
Index of Manager’s Responsibility** 5.0 5.0 9.0 5.0
Index of Shareholders’ Power*** 8.0 6.0 4.0 8.0
Index of Investor Protection**** 7.0 6.4 6.5 6.0

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. **** The Greater the Index, the Higher the Level of Investor Protection.

Procedures Relative to Foreign Investment

Freedom of Establishment
Acquisition of Holdings
Obligation to Declare
Foreign investors must inform the General Directorate of Foreign Investment (GDFI) through the Undersecretariat of Treasury.
Competent Organisation For the Declaration
Undersecretariat of Treasury.
Requests for Specific Authorisations
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).
Learn more about Foreign Investment in Turkey on Globaltrade.net, the Directory for International Trade Service Providers.

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 centre, lodging in relay-workshops, company “incubators” and renting professional premises.
The Possibility of Buying Land and Industrial and Commercial Buildings
Yes, on one condition, that the buyer’s country applies the principle of reciprocity. A new law has been drafted in January 2012 that aims to be more flexible in allowing international companies to purchase a real property by abandoning the former requirement whereby foreign purchasers of real estate in Turkey had to be in partnership with a Turkish individual or company that owns at least a 50% share in the property. The new draft law also increases the upper limit on real estate purchases by foreign individuals to 30 hectares and allows further increases up to 60 hectares with permission from the Council of Ministers.
Risk of Expropriation
Foreign investors are entitled to compensation if they are victims of expropriation. Expropriation can happen only if it is in accordance with due process of law, for the public purpose and non-discriminatory.

Investment Aid
Forms of Aid
Companies benefit from a tax reduction of 40% for any amount invested. Exporting companies benefit from exemption from Customs duties, VAT and partial exemption from corporate tax. The Treasury is the organization in charge of promoting international investment. It must be contacted for full information about the framework of investment in Turkey.
Within the framework of its rapprochement with the European Union, Turkey has begun a process of harmonization of its financial incentives with the requirements of Brussels. Thus, the main aim of encouraging investment is to reduce regional imbalances. The Government of Turkey announced in the first quarter of 2012 new incentives that gave priority to high-tech, high-value-added globally competitive sectors.
Privileged Domains
There are 23 technoparks in Turkey (Teknoloji Gelistirme Bölgeleri – TGB) managed by the General Directorate of Research and Development, itself attached to the Ministry of Commerce and Industry. R&D activities as well as research activities in the IT field, carried out in these areas of technological development, are exempted from IS until the end of 2013.
Privileged Geographical Zones
There is also aid for regional industrial development. The country has classified its regions into three categories: developed regions, regions called normal, and those whose development is judged to be a priority.
The General Directorate of Incentives and Implementation (GDII), a department of the Undersecretaries to the Treasury based in Ankara, accords notions of special importance to more particular areas.
Free Zones
There are 20 free zones in Turkey, 7 of which are in the region of Marmara. Despite the decrease in the number of incentives granted in these zones over the years, they still conserve numerous advantages (exemptions from customs duties, the IS and VAT; lower social charges; etc.).
Organizations Which Finance
Undersecretariat to the Treasury.
French Development Agency.
Investment Opportunities
The Key Sectors of the National Economy

The exploitation of these resources is still under-developed and presents many opportunities. This could also lead to opportunities in the heavy industry. Engineering works can also offer a good number of opportunities. The agri-food and textile sectors are also looking for equipment. On the other hand, among the key sectors are automobiles, and especially the market for supplying automobile equipment, and health which is facing certain development. Finally, we should remember that the Turkish market is made up of 70 million consumers.
Tourism is one of the country’s key sectors, even if it is already well developed on the Mediterranean coast, in the region of the capital and Cappadocia. In spite of its present development, the tourism sector still has large potential. Finally, Turkey’s geographical position offers good perspectives in the fields of logistics, transport and insurance.
High Potential Sectors
– Chemistry – Plasturgy
– Energy
– Agri-food
– Packaging
– Building and Public Works/Finishings
– Telecommunications
– Ores
– Industrial subcontracting
– Automobile
Privatization Programmes
Consult the website of the Turkish Undersecretariat for Privatization.
Tenders, Projects and Public Procurement
IHALE, Public Procurement Authority
Tenders Info, Tenders in Turkey
Globaltenders, Tenders & Projects from Turkey
DgMarket, Tenders Worldwide: Turkey

Source: https://en.portal.santandertrade.com/