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 Investment opportunities in Turkey

There are many reasons to approach Turkey with a long-term perspective beyond the current economic meltdown affecting the world. As a candidate for EU membership, Turkey is one of the largest countries in Europe, with a dynamic and young population of 70 million. Turkey is the 17th largest economy in the world with a fully convertible currency and liberal trade and payment regimes. The country's financial sector is fully integrated with the global system with state-of-the-art management, information technology and marketing techniques. The early 2000s saw sweeping reforms coupled with political stability, ushering in a new era for Turkey in which its position has been upgraded to that of a first-class emerging market.

Turkey is strategically located where East and West, Asia and Europe and Islam and Christianity meet. On the one hand, Turkey has adopted the universal values of democracy with a well-functioning parliamentary system, and on the other, it has deep-rooted and well-established relations and bonds with Islamic and Asian societies. This unique geopolitical position presents both challenges and opportunities for Turkey.

Turkey's economy is believed to have grown around 3 percent in 2008, a year of global catastrophe. However, due to the global financial crisis and weaker domestic demand, the expected growth rate for 2009 ranges from 4 percent according to the government to 2 percent according to the International Monetary Fund (IMF).

Turkey has strong relations with Western powers and has seats at leading global organizations, including the UN Security Council, NATO, the Council of Europe, the Islamic Development Bank (IDB) and the Organization of the Islamic Conference (OIC). Turkey has peaceful relations with all regional powers despite the fact that the region has a delicate balance of power.

As one of the fastest growing markets, Turkey offers vast opportunities. Typically as an emerging market, Turkey had a high average growth rate -- 7 percent -- between 2002 and 2007, before the emergence of the current crisis. Unlike the pre-2001 crises, when Turkey had boom and bust cycles every three to five years with high interest rates, double-digit inflation up to 70 percent annually, a cumbersome debt burden and weak public finances, Turkey’s growth records since 2002 have been stable and sustainable.

After its recent aggressive growth records, Turkey’s GDP doubled to more than $650 billion and per capita GDP tripled to more than $8,000.

Turkey is one of the most successful “globalizers” in terms of its trade and financial integration due to the “trade creation effect” of the country’s openness. Turkey’s exports rose from $30 billion in 2001 to $130 billion by the end of 2008. The same process also triggered Turkey’s import volume. After this phenomenal rise, the share of exports and imports rose to almost 20 percent and above 25 percent of GDP, respectively.

Turkey’s recent efforts in attracting foreign capital resulted in a phenomenal increase in the volume of both foreign direct investment (FDI) and long-term capital. FDI amounted to $19 billion, $21 billion and $15 billion in 2006, 2007 and 2008, respectively.

One of the remarkable effects of these outstanding advantages is visible in automotive industry investments. From the main industry (Ford, Fiat, Daimler, MAN, Hyundai, Renault and Toyota) to the supply industry, hundreds of global automakers have rushed to establish production facilities in Turkey. In addition to strong domestic demand, automotives have been the largest export sector for the past three years.

Other major sectors that have attracted foreign capital were services such as those in the finance, telecommunication and retail industries in Turkey. Among these, until recently, the share of foreign banks in total banking assets in Turkey was less than 5 percent. Within a couple of years, the share of foreign ownership has increased to 40 percent.

Energy and agriculture will dominate the FDI agenda in the coming era. This is because of expanding economic activities and the industry’s structural transformation. In fact, among others, energy investments and Turkey’s fast developing industrial structure will continue to create vast opportunities for project financing and development banking. For this reason, several development banks continue to offer extensive facilities and loans to investors in Turkey. It is no coincidence that Turkey is one of the largest debtors of international financial institutions.

Parallel to the global warming and rising demand, agriculture has already become a strategic sector all over the world. Obviously, Turkey’s geographic position brings incomparable opportunities to create an agricultural boom by the next decade. With its large lands appropriate for cultivation, well developed irrigation systems, sound infrastructure, and proximity to the most demanding markets in the Gulf region, Russia and Europe, Turkey will become one of best agricultural locations to invest in all over the world.

Tourism will continue to become the most strategic service sector exporter. Turkey gained around $5 billion from the tourism sector just a few years earlier. As Turkey’s brand name is rising rapidly, tourism income was estimated to reach $25 billion in 2008. The rate of increase in the number of visitors as well as the rate of increase in per capita tourism revenue is significantly above other countries.

Turkey’s natural potential is to reach at least $50 billion within 10 years with its rich historical, cultural, religious and health-oriented richness and climate conditions.