Mideast inflows fail to compensate FDI drop

ISTANBUL

Foreign direct investment and capital inflows to Turkey fell 8.8 percent and 11.7 percent respectively in the first eight months of the year, according to a report issued by the Economy Ministry.

Substantial foreign direct investment increases from Asia, particularly Near and Middle Eastern countries and a rise in real estate sales to foreigners failed to offset the sharp fall of investment volume from European Union (EU) countries, according to official data.

Despite a plunge in investment inflows, EU countries made up 77.4 percent of all investments in the January-August period.

Foreign direct investments from EU countries dropped to $5.9 billion in the first eight months of the year from $9.8 billion in the same period last year.

Asian countries ascent

Turkey witnessed a striking increase of investment flow from Asia, which totaled more than $1 billion in the January-August period, up from $405 million in the first eight months of 2011.

Near and Middle Eastern countries made up the biggest chunk of Asian investments with $705 billion. The figure was only $182 million in the same period last year.

However, Gulf countries seemed to shy away from investing in Turkey as direct investment inflow dropped to $111 million from $127 million in the same compared period.

Net foreign investment inflows in the first eight months of the year amounted to nearly $9.6 billion, while foreign direct capital inflow was recorded as about $8 billion.

Net foreign direct capital inflow hit $7.7 billion in the same period, nearly $3.5 billion of which was toward the manufacturing sector. Some $677 million of net foreign direct investment inflow was recorded last August.



10.2 pct rise in real estate investments

Real estate sales to foreigners increased 10.2 percent year-on-year in the first eight months to $1.5 billion. The Turkish government enacted a law to ease property sales to foreigners in a bid to lure large volumes of foreign investment into Turkey particularly to stem current account deficit.

A total of 1,075 foreign-capital firms were established in the first eight months, 410 of which are from Near and Middle Eastern countries, followed by 392 firms from the EU. Some 123 firms are from other European countries.