Turkey’s investment potential still alluring
Posted by meb at April 16th, 2008
In order to boost its attractiveness for foreign investors, Turkey needs to ensure political stability, meet European Union standards and improve its image, a survey by Ernst & Young has found.
The “Southeast Europe Attractiveness Survey,” announced in Istanbul yesterday, also revealed that Turkey is challenging Romania in terms of attractiveness for potential investors. Turkey ranks second with 50 percent approval, whilst Romania scores 52 percent in this year’s survey. “Last year Romania scored 58 percent, but this year it came down to 52. Turkey, on the other hand, improved its attractiveness by one percent. This is a good trend for Turkey,” Fabrice Reynaud, senior manager at Ernst & Young, told reporters.
Bulgaria ranks third in the survey with 40 percent, Greece fourth with 31 percent, followed by Croatia (28 percent), Serbia (19 percent) and Bosnia and Herzegovina (10 percent). The least attractive place in terms of investment in the region is Greek Cyprus with only 9 percent of international executives rating it.
The survey aims to measure international investors’ perceptions regarding the attractiveness of the Southeast European (SEE) region for foreign direct investment (FDI), to compare investors’ perceptions with the real investment in the region and reflect on opportunities for countries in the region.
Maintaining stability:
In order to boost its attractiveness, Turkey needs to ensure political stability, 26 percent of respondents said. Around 19 percent said Turkey needs to meet EU economic standards to improve its attractiveness, whilst 14 percent of the respondents noted the need for Turkey to improve its image abroad. Respondents also said Turkey should introduce more flexible and simpler administrative procedures, improve its education system and the quality of life.
In terms of the number of FDI projects in 2006-2007, Turkey comes fourth in the survey with 40 projects. It is outscored by Romania (149 projects), Serbia (63 projects), and Bulgaria (60 projects). “This shows we are in a competitive region. Turkey’s score is very good as such, but it can do better to reach the level of 60-70 FDI projects a year. There is still room for improvement,” Raynaud said. Over the year the number of FDI projects in Romania increased by 6 percent, where as in Serbia they increased by 174 percent. “Serbia is a big surprise,” Raynaud added.
Image versus reality:
In terms of perception versus reality, the survey reveals a discrepancy. “Greece and Turkey are underperforming. They have a better perceived image than their real attractiveness in terms of the number of inward FDI projects is,” Raynaud said. Whilst Turkey’s FDI inflow stands at approximately 15 billion euros (approximately $22 billion), FDI inflows to Greece totaled approximately 1.4 billion euros in 2007. The number of FDI projects in Greece were reduced by 8 percent and totaled 11 last year.
Turkish domestic market is the most attractive area for foreign investors, with 34 percent choosing the country in the survey. “This is largely because of the fabvourable demographics of Turkey,” said Osman Dinçbaş, country managing partner at Ernst & Young’s Istanbul office. Special treatment for expatriate executives and corporate headquarters and incentives were also mentioned as Turkey’s strength to attract FDI inflows. “This is a direct reflection of the significant steps the government has taken in previous years to support FDI,” Dinçbaş said. “But unfortunately our corporate tax system remains the main weakness.”
Source: Turkish Daily News
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