Turkey welcomes investors
Turkey has managed to become one of the countries that has piqued the interest of global investors, thanks to its impressive growth rates and structural reforms over the past decade. Still, there is enormous untapped potential for international companies that are looking to invest in the country.
Turkey's diversified economy has a record growth rate; a young population in which half of all Turks are aged under 30; an entrepreneurial business ecosystem supported by reforms; and a strategic location with lucrative export opportunities. These factors stand out as attractive advantages for investors that want to step up their direct commitments abroad, and grow their business operations in Turkey and surrounding regions.
Today, Turkey is ranked as the 13th-largest economy in the world, up from the 18th in 2003, having experienced an annual growth rate of nearly 6.0% over the past 14 years. This has earned Turkey the distinction of being the fastest-growing economy in Europe and one of the fastest globally. This remarkable performance has continued into 2017, with 5.1% growth during the first half of the year, and Turkey is expected to maintain this momentum with projected growth rates of 5.5% every year through to 2020.
This economic activity has been driven by a vibrant domestic market, lucrative export opportunities, diversified sectors with promising growth and an entrepreneurial spirit of a private sector that has substantially invested in the Turkish economy. The country's favourable demographic structure has also been a key driver of economic growth. With 50.0% of its population under the age of 30, Turkey stands out as the country with the largest youth population in Europe. This translates into the availability of a skilled labour force with an industrious working culture and cost -competitive edge, which is yet another reason to invest in Turkey.
Economic growth has paved the way for the emergence of a sizeable middle class with increasing purchasing power. The domestic market is further supported by emerging urban centres across Turkey. There are now more than 20 such centres with populations of more than one million.
Logistically and culturally speaking, Turkey is a prime location to place headquarters for multinational companies, thanks to its excellent connectivity, unique setting and strong bonds with its neighbours. Companies such as Siemens, Nestlé and Deutsche Bank have been operating in Turkey for more than 100 years. An increasing number of companies that are looking for expansion into new markets are finding a second home in Turkey, where they can manufacture, design and engineer, for a combined market of 1.6 billion people within a four-hour flight radius.
Investments in Turkey are strongly protected by domestic and international laws. On top of the foreign direct investment law, foreign investments in Turkey are also safeguarded by more than 75 bilateral investment promotion and protection treaties. In addition, the country has also signed bilateral tax treaties with 81 countries to prevent double taxation.
These structural reforms have also made Turkey one of the most attractive destinations for private equity firms. Over the past five years, private equity deals amounted to more than $11 billion. Following top-quartile returns from the first funds that were raised in the early 2000s, Turkey's private equity scene has been transformed dramatically, with small to large capital investors, as well as local, regional and international players, actively pursuing new deals in the country. On the supply side, the appetite for investment is growing, with a positive perception of the industry as Turkish enterprises recognise the ultimate value that a private equity investor could potentially add to their company.
The Investment Support and Promotion Agency of Turkey also provides a variety of services for investors who are looking to enter the country's vibrant market. These include:
- site selection support
- arrangements of meetings with government bodies and other stakeholders
- facilitation of investment at all stages
- establishing business links with local partners
- project launch services.
Turkey is proving itself to be an attractive investment opportunity for companies around the world.