Foreign direct investments (FDI) play an important and growing role in Turkey. Last year, the FDI flows showed a decline by 16.5% year-on-year to $7.7 billion, according to Turkey’s Central Bank.
Despite the global economic uncertainty, the country received about $8 billion, as per the head of Turkey’s Investment Office.
The highest amount of FDI comes from the finance, energy, and manufacturing sectors that account for over 60% of the total stocks. The finance sector remained the most preferred by foreign investors in 2020, attracting over $1.39 billion of investments. This was followed by Information and Communication with $1.37 billion last year.
The country’s government has adopted many legislative reforms to enable the incoming foreign investment, such as the creation of the Investment Office of the Presidency of the Republic of Turkey in efforts to attract foreign investors.
Turkey’s target consumer buying power is increasing as well and has a positive impact on the investment decision. The non-residents’ direct capital investments reached $5.7 billion in 2020.
FDI inflows have shown improvement with the development of public-private partnerships in infrastructure projects, structural reforms in the process of EU accession, measures to foster intellectual property decision, among others.
On the other hand, the facets obstructing the FDI development include the closeness of conflicts in the Middle East and the instability of the Turkish Iira followed by record lows.
Notably, the country’s share in the global FDI is up by 1% in 2020 as compared to 0.6% in 2019. In the World Bank’s Doing Business Report 2020, Turkey’s ranking spoke decently as it was listed as 33rd out of 190 economies, a rise by 10 positions from the previous year.