Investing in Turkey

Opportunities and Challenges

Turkey has emerged as a significant economic player in both Europe and Asia, making it an attractive destination for foreign investors due to its favorable geographical location and modern infrastructure. However, there are also challenges that need to be considered when investing in Turkey in order to achieve success.

As someone who has had a multifaceted experience in Turkey, starting as a professional working for major corporations and later transitioning into an investor, I have had the opportunity to gain insights into the country from various perspectives. Since 1994, I have witnessed the growth and transformation of Turkey's business landscape, having invested in both the manufacturing and service sectors.

Turkey has a long-standing relationship with the European Union (EU) through various trade agreements and free trade agreements. The first agreement, known as the Ankara Agreement, was signed in 1963 and aimed to establish a customs union. In 1995, the customs union between the EU and Turkey came into effect, leading to a reduction in tariffs and trade barriers.

In 2005, the EU officially started accession negotiations with Turkey. Since then, several negotiation chapters have been opened to address the political, economic, and legal requirements for a potential EU membership of Turkey.

It is important to note that the accession negotiations were temporarily suspended in 2016. This decision was made in the aftermath of the failed coup attempt in Turkey and the subsequent political developments in the country. Since then, no new chapters have been opened, and the negotiations are currently at a standstill.

Despite the suspension of accession negotiations, the EU and Turkey continue to cooperate and maintain trade relations. The customs union remains in place, allowing for largely free trade of goods between the EU and Turkey.

Companies that invest in Turkey can benefit from its large consumer market, particularly in sectors such as energy, infrastructure, and automotive industries. This is evident from the successful investments made by companies like Siemens, the German technology company, BP, the British energy company, and even global toy manufacturer Mattel, which recently announced its plans to relocate production from China to Turkey.

Siemens has had a presence in Turkey for 160 years and is now one of the largest foreign employers in the country. BP's acquisition of a 20% stake in the Turkish oil and gas exploration company TPAO highlights the significant investments expected in the coming years. The decision by Mattel to shift its production to Turkey further demonstrates the country's growing appeal as a manufacturing hub.

While Turkey continues to attract investments and foster economic growth, it is important to acknowledge the current challenging economic situation and the resulting lack of confidence in Turkey's economic and political policies. These factors have created uncertainties and posed challenges for businesses operating in the country.

However, despite these challenges, Turkey still presents opportunities for growth and expansion. Its young and dynamic population, coupled with its strategic location and skilled workforce, provides a solid foundation for businesses to thrive. Additionally, the government has implemented various reforms to improve the business environment and attract foreign investment.

In conclusion, investing in Turkey offers both opportunities and challenges. While the economic landscape and policy uncertainties may pose obstacles, the country's potential for growth and its strategic advantages cannot be overlooked. By carefully navigating the challenges and leveraging the available opportunities, businesses can establish a successful presence in this dynamic market.

I welcome your thoughts and experiences on investing in Turkey in the comments section.

Andreas Vetr