Foreign investment recedes amid weakening rule of law

With the ruling Justice and Development Party (AK Party) having upped its efforts to consolidate power, eschewing the rule of law, foreign investors have grown increasingly ambivalent toward Turkey, and investment levels have steadily declined, according to recent figures from the Ministry of Economy and the Central Bank of Turkey.
While foreign investment from the European Union totaled $11.5 million in 2011, that figure was sliced in half last year, dropping to $5.5 million. The decline has continued into 2015, with EU investment during the months of January and February amounting to only $759 million, less than half of the $1.7 billion in investment that arrived during the same period in 2014. Meanwhile, the number of companies established in Turkey by EU citizens fell from 224 during the first two months of last year to 89 in 2015.
Similar drops were recorded in foreign investment coming from the United States, as $1.4 billion in US investments arrived in Turkey in 2011, while only $325 million was invested in Turkey from the US last year. Only $14 million in American foreign investment arrived during the first two months of this year, down from $89 million during the same period of 2014.
New businesses did not fare much better, with only 325 firms established with international capital in Turkey this year, compared to 755 during the same period last year. African investments have dried up entirely, this after $6 million came to Turkey during the first two months of last year.
Foreign investors have shied away from what is perceived as an unfriendly investment atmosphere in Turkey, where pressure on the media and business sectors has grown amid President Recep Tayyip Erdoganand’s harsh condemnation of groups critical of the government. He has repeatedly lambasted the prominent Turkish Industrialists and Businessmenand’s Association (TanduSiAD), boycotting the influential groupand’s meetings, and even calling its former head a and”traitorand” last year after TanduSiAD warned that foreign investment would not come to a country suffering from increasing authoritarianism.
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Meanwhile, the local technology retail industry has gone through a less than favorable period over the past seven months, with 43 stores from the countryand’s most ubiquitous chains closing their doors, according to a report in the Handurriyet daily on Thursday.
The report cites the banned practice of cellular phone sales purchased with a credit card on an installment plan. Last year the purchase of various products and goods with credit cards on installment plans was outlawed in an effort to reduce consumer credit card debt.
While 658 technology retail chain stores were operating in November of last year, that number fell to 615 as of May 2015. Twenty-two stores in the TeknoSA chain, the largest technology retailer in Turkey, closed their doors during this period, while the second-largest chain, Bimeks, lost four stores and number-four Gold Computers saw 13 stores close down.

SOURCE: Today’s Zaman