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backEUROtalk April, 2012

Asian investments up, EU investments down in Turkey

Asian capital holders were more eager to enter Turkish markets than their European counterparts as the size of foreign direct investment inflow from the former surged in the first two months of 2012, economy ministry data show.

Capital inflow from Asian countries was up $413 million in the first two months of 2012 over the same period of 2011 and reached $434 million according to direct foreign investment figures from the ministry of economy. Investments from EU countries in Turkey declined by $200 million in the same period. The share of Asian FDI in total FDI inflow to Turkey increased dramatically to 34 percent in first two months from 1.8 percent in the same months of the preceding year. Share of the EU declined to 56 percent from 79 percent in the same period, seeing the lowest level since the January-February of 2008 when it was 52.4 percent.Capital inflow in Turkey was up 15 percent to $1.2 billion year-on-year in the first two months of the year.

Capital inflow from EU countries decreased 22 percent to $716 million. This figure was $913 million in January and February 2011. France was the country from which direct investments to Turkey declined the most among EU member states in the mentioned period. France, which made $193 million of investments in Turkey in January and February 2011, only made $8 million of investments in the first two months of this year. FDI in Turkey has increased by 25 percent and reached $1.7 billion in the months of January and February. FDI flow to country was $1.3 billion in the same period in 2011.

China and India come first when considering current investment appetite from Asia for Turkey. Large companies from these two fast emerging markets -- popularly referred to as Asian Tigers -- are interested in large investments such as infrastructure, energy, machinery manufacturing and mining. A recently announced government incentive package is expected to entice more Asian firms to part with their capital in new investments inside Turkey. Turkey managed to maintain its “safe haven” status amidst global economic slowdown. Observers argued increased FDI flow to the country was proof of the continuation of interest in Turkey in 2012. When looking at the distribution of FDI among sectors in the first two months of 2012, the manufacturing industry received investments of $352 million. Within the manufacturing sector, the production of refined petroleum goods and cocking coal totaled $150 million and food and beverage production totaled $56 million. In the services sector, healthcare and social services ranked at the top with $273 million. Meanwhile, in February 2012, 80 international firms began operations in Turkey in addition to 16 domestic firms that converged with foreign companies, totaling 96 new firms that started operations.

Turkey has now become one of the most attractive destinations for foreign investors interested in doing business outside the BRICS countries (Brazil, Russia, India, China and South Africa).

Source: Today's Zaman - GAI

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