When foreign investments are done at the right place and time, they provides significant benefits for countries and institutions
Investment decisions are made on a corporate basis. Therefore, evaluating these preferences in the country-oriented benefit/loss axis is not a very accurate approach. However, all companies except for a few exceptional sectors should consider global value chains in their operations. Otherwise, they might lose their competitive identities in a very short time. At this point, after reaching a certain size, foreign investment should have an important place on the agenda of institutions. Companies that do not place the necessary importance on foreign investment may lose their current position to companies of other countries with higher competitive advantage even if they retain their competence.
Foreign investments can be risky if the domestic market has not reached a certain maturity and saturation
Owning companies with a global agenda also evolves all the competencies of the company in parallel with this agenda. Apart from this, foreign investment can be an important instrument for meeting the needs that cannot be met with internal resources through a public approach within the scope of supply security. On the other hand, mergers and acquisitions to be carried out abroad may be effective for know-how transfer. While the export goals of the domestic market increase the need for resources and raw materials, the limited access to resources leads to imports of intermediate goods. Current production capabilities limit the domestic product variety and added value in exports. As a result, an increase in export volume cannot always be converted into value increase. At this point, foreign direct investment enables the development of competitiveness and innovation and may present a different perspective on the solution of structural problems. Together with all this, foreign investments can be risky if the domestic market has not reached a certain maturity and saturation.
SECTORS READY FOR FOREIGN INVESTMENT IN TURKEY
In this context, on examination of the current amount of investment stock in Turkey, in addition to contracting work and the garment & food retail, we observe that textiles, steel, automotive industry, machinery and furniture manufacturing rank in first place. We have also observed that the energy sector, which has grown in the domestic market with its sub-sectors in the last decade, has increased its overseas operations. The importance of the maturity level in the domestic market of the examples I have mentioned is evident. Together with all this, Turkey does not own long-term industry dynamics but an investor profile, where the urge to seize monetary opportunities dominates. At this point, investors should determine their goals correctly and examine in depth the dynamics of the country in which they will invest. Even though instant success can be achieved, the policy changes in countries defined as “frontier market” may make all efforts made void in an instant. We can often find examples of this situation especially in African markets.
THE WORLDWIDE TOP ADDRESS OF INVESTMENT FOR TURKISH FIRMS: EUROPE
The European continent is always in first place as an address and source of investment. Eastern Europe, in particular, has come to the forefront in recent years. The region attracts a significant amount of Turkish investment for manufacturing operations. At the same time, the Caspian geography has a deep historical accumula tion with the contracting works undertaken by Turkish companies. In order to stay competitive on a global scale, Turkey must set high targets in foreign investments and realize them. Turkey may reach an annual level of capital exports over $10 billion in case that foreign investment grows in line with macro indicators. Nevertheless, this figure is not nearly enough. Foreign investments must be included among our medium and long-term targets. We as Foreign Economic Relations Board (DEİK) have been focusing on this subject since 2011. However, in realizing these targets it is essential that the support mechanisms of the state be well guided. Our country must own companies and brands that play in the Champion’s League of the global economy in many sectors.
As DEİK We annually share the Foreign Investment Index with the public in the framework of our efforts to increase foreign investments
WE EVALUATE FROM THE PERSPECTIVE OF TURKISH INVESTORS
As DEİK We annually share the Foreign Investment Index with the public in the framework of our efforts to increase foreign investments. In this scope, we have created an algorithm integrating global and regional vision. Taking into account the changing political and economic conditions within the index, we evaluate the country from the perspective of Turkish investors. We have published this year’s index in September. With activities and projects, we inform our members about subjects such as investment guarantees, arbitration, investment financing and sectoral/regional foreign investment strategies. We will hold our annual fourth Foreign Investment Forum in Istanbul on December 19, where we focus on the current issues and agenda items of our investors. In this respect, I would like to invite all our investors to the event.
Outbound Investments Business Council Chairman Volkan Kara