‘Türkiye has potential to lure up to $30 billion in FDI annually’

ISTANBUL

Türkiye has strengthened its “friendshoring” position and has a potential to lure between $25 billion to $30 billion in foreign direct investment (FDI) annually, according to Engin Aksoy, the president of the International Investors’ Association (YASED).

Based on its FDI Competitiveness Index, YASED made a projection as to how much FDI Türkiye could attract if its risk indicators and its regulatory framework performance were similar to that of its competitors, Aksoy said.

The projection showed that Türkiye could find a place among the top 10 countries in the index, he added.

“We estimate that if that happens annual FDI inflows into Türkiye could rise from the current $13 billion to up to $25 billion to $30 billion,” Aksoy said.

Türkiye is now not only competing with developing nations but also with developed economies, such as Germany, to attract foreign investments, according to Aksoy.

Türkiye has a stronger position in “friendshoring,” which means investing in friendly nations, and has a stronger potential, he said.

“Per capita GDP is above $10,000, it has a young population, it has a big working population, its geographical location is very convenient…These are Türkiye’s selling points,” Aksoy said.

Citing results of the YASED’s Pulse CEO survey, Aksoy noted that international companies that participated in the study expressed intention to expand their operations in Türkiye.

“In the last two surveys, exchange rates and inflation emerged as the two main issues affecting our members. Though limited, today there are some improvements in those concerns,” he added.

In the December 2023 survey, 88 of the CEOs cited the exchange rate volatility as the main external risk to their operations in the next 12 months, this dropped to 82 percent in the study carried out between May 17 and July 9, according to Aksoy.

“A similar trend is also observed for inflation. The portion of CEOs who perceive inflation as a risk declined from 86 percent to 81 percent.”

“Based on the survey results, we can say that there is a cautious optimism toward Türkiye… Even though risks still exist, steps taken led to an improvement in expectations,” he said.

The FDI inflows into Türkiye for the first five months of 2024 amounted to $3.8 billion, marking a 15 percent decrease compared to the same period last year, said YASED in a report this month, citing the Central Bank’s balance of payments data.

Türkiye has received more than $267 billion in FDI inflows since 2002, according to the YASED report.