Low expectations in foreign capital in Turkey
Güncelleme Tarihi:
Hürriyet Daily News
Oluşturulma Tarihi: Şubat 12, 2009 00:00
ISTANBUL - Following record-breaking years in foreign direct investment, averaging $20 billion annually, Turkey’s bright performance will probably be shattered by the current global turmoil. With expectations for 2009 withering day by day, policymakers are pinning their hopes on 2010
Turkey has been a safe haven and performed successfully in terms of attracting global capital over the past six years, a top minister said yesterday, adding that international interest would continue in the upcoming period.
"Despite the effects of the global financial crisis, Turkey managed to get $17.7 billion in foreign direct investment (FDI) last year. It is still considered as an investment magnet," said State Minister Nazım Ekren, speaking in Istanbul at a conference titled "Turkey, the Land of Opportunities Ğ A Safe Haven for Investment."
"There are currently 22,000 international companies operating in Turkey and this is a concrete indicator of Turkey’s increasing attraction in the eyes of foreign investors," he said at the two-day conference organized by the International Investors Association, or YASED.
The "environment of confidence" provided by the economic and political stability under the Justice and Development Party, or AKP, government has led global capital to prefer to invest in Turkey, said Ekren.
"The presence of a free market economy, increasing endurance in terms of global competition, a young population and ease of transport in reaching neighbors and regional countries are among the contributing factors enhancing Turkey’s attraction to foreign investors," he said.
Turkey climbed into the upper levels in global FDI rankings thanks to an annual average of $20 billion in foreign direct investments, Ekren said, adding that the government’s priority now was "taking the share of FDI that Turkey gets to a higher level."
2009 a lost year
Despite the rosy picture that Ekren drew, YASED Chairman Tahir Uysal said he considers 2009 a "lost year" in terms of FDI inflow.
"While the global FDI flows dropped 20 percent last year, Turkey could receive $17.7 billion in 2008. For us, this, indeed, is a successful figure," Uysal said. "This year the total global FDI flow may decline from $1.8 trillion to $1 trillion. For Turkey, the FDI figure is expected to drop to $10 billion, maybe even lower."
The current growth rates, capacity utilization, export and unemployment figures are leading toward anxiety in business circles, Uysal said. "While there is turmoil in liquidity and decline in investments, certain incentive measures should be implemented." Speaking at the same conference, Ulrich Zachau, country director of World Bank in Turkey, said there is no safe harbor for investors "anywhere in the world" in the short term but it is possible to say there are some opportunities in Turkey.
"It is the right time for Turkey to enact reforms aiming to raise its long-term economic growth," Zachau said. "Reforms would be the best intervention against the global crisis."
Highlighting the importance of creating new jobs, Zachau said the government did not take a significant step in labor reforms in 2008 and this had a direct impact on the current decline in employment levels, particularly among the youth and women.
Zachau outlined short-term policies that need to be implemented to avoid a recession including protecting employment, granting incentives and protecting "those in sensitive conditions."
Disagreements with IMF
Speaking about a possible standby agreement with the International Monetary Fund, or IMF, Undersecretary of the Treasury İbrahim Çanakçı said there exists a "consensus" on "many issues" with the IMF but there are still "crucial differences" on "particular issues."
"There are certain disagreements between the parties, especially on public finance and structural reforms. Both the related institutions and the IMF staff are currently working to move passed these disagreements," said Çanakçı. "As soon as a full consensus is established, negotiations will be restarted."
The government may revise the budget because revenues were projected according to an economic growth estimate of 4 percent for this year, Çanakçı said, adding that the budget may be altered in the following days.
The IMF team ended a round of talks in Ankara on Jan. 26 and left the capital. The government announced this as a "10-day suspension in talks," but statements by Prime Minister Recep Tayyip Erdoğan against IMF requests have cast a shadow over a possible agreement. Turkey’s last standby accord with the IMF ended in May 2008.
"Despite the effects of the global financial crisis, Turkey managed to get $17.7 billion in foreign direct investment (FDI) last year. It is still considered as an investment magnet," said State Minister Nazım Ekren, speaking in Istanbul at a conference titled "Turkey, the Land of Opportunities Ğ A Safe Haven for Investment."
"There are currently 22,000 international companies operating in Turkey and this is a concrete indicator of Turkey’s increasing attraction in the eyes of foreign investors," he said at the two-day conference organized by the International Investors Association, or YASED.
The "environment of confidence" provided by the economic and political stability under the Justice and Development Party, or AKP, government has led global capital to prefer to invest in Turkey, said Ekren.
"The presence of a free market economy, increasing endurance in terms of global competition, a young population and ease of transport in reaching neighbors and regional countries are among the contributing factors enhancing Turkey’s attraction to foreign investors," he said.
Turkey climbed into the upper levels in global FDI rankings thanks to an annual average of $20 billion in foreign direct investments, Ekren said, adding that the government’s priority now was "taking the share of FDI that Turkey gets to a higher level."
2009 a lost year
Despite the rosy picture that Ekren drew, YASED Chairman Tahir Uysal said he considers 2009 a "lost year" in terms of FDI inflow.
"While the global FDI flows dropped 20 percent last year, Turkey could receive $17.7 billion in 2008. For us, this, indeed, is a successful figure," Uysal said. "This year the total global FDI flow may decline from $1.8 trillion to $1 trillion. For Turkey, the FDI figure is expected to drop to $10 billion, maybe even lower."
The current growth rates, capacity utilization, export and unemployment figures are leading toward anxiety in business circles, Uysal said. "While there is turmoil in liquidity and decline in investments, certain incentive measures should be implemented." Speaking at the same conference, Ulrich Zachau, country director of World Bank in Turkey, said there is no safe harbor for investors "anywhere in the world" in the short term but it is possible to say there are some opportunities in Turkey.
"It is the right time for Turkey to enact reforms aiming to raise its long-term economic growth," Zachau said. "Reforms would be the best intervention against the global crisis."
Highlighting the importance of creating new jobs, Zachau said the government did not take a significant step in labor reforms in 2008 and this had a direct impact on the current decline in employment levels, particularly among the youth and women.
Zachau outlined short-term policies that need to be implemented to avoid a recession including protecting employment, granting incentives and protecting "those in sensitive conditions."
Disagreements with IMF
Speaking about a possible standby agreement with the International Monetary Fund, or IMF, Undersecretary of the Treasury İbrahim Çanakçı said there exists a "consensus" on "many issues" with the IMF but there are still "crucial differences" on "particular issues."
"There are certain disagreements between the parties, especially on public finance and structural reforms. Both the related institutions and the IMF staff are currently working to move passed these disagreements," said Çanakçı. "As soon as a full consensus is established, negotiations will be restarted."
The government may revise the budget because revenues were projected according to an economic growth estimate of 4 percent for this year, Çanakçı said, adding that the budget may be altered in the following days.
The IMF team ended a round of talks in Ankara on Jan. 26 and left the capital. The government announced this as a "10-day suspension in talks," but statements by Prime Minister Recep Tayyip Erdoğan against IMF requests have cast a shadow over a possible agreement. Turkey’s last standby accord with the IMF ended in May 2008.