Gov’t pressure hits investments to Turkey

As political pressure on businesses reached alarming levels in Turkey, the bleak atmosphere has frightened foreign and domestic investors alike with entrepreneurs from different parts of the world shelving their investments in the country, official figures show.
Data from the Turkish Ministry of Economy revealed over the weekend that Foreign Direct Investment (FDI) to Turkey fell by nearly $300 million in the first quarter of 2015 compared to the first quarter of last year. Turkey attracted FDI worth $3.08 billion in the first three months of 2014 while this figure fell to $2.8 billion between January and March this year, government data revealed. The political tension at home dealt the major blows to investments from Africa and the Americas in Turkey, with these regions not making a single investment in the country in the first three months this year. Turkish business world representatives have frequently warned that foreign investment will not be made in a country where there is no respect for the rule of law, where legal codes conflict with European Union rules, public procurement laws have been amended dozens of times and companies are pressured through tax fines. Political tensions have already dented confidence, provoking capital outflows and forcing the Central Bank of Turkey to raise interest rates sharply in early 2014. The central bank still remains fragile to political pressure, especially from President Recep Tayyip Erdogan. High unemployment, an ever-rising current account deficit (CAD) and inflation remain three of the Turkish economyand’s biggest headaches, among structural problems like private firmsand’ growing stock of risky debt, the unregistered economy and high taxes on consumers. The country needs to attract more FDI if it is to remedy these problems. According to economy ministry figures, the number of newly established businesses owned by EU member countries fell to 164 in the first quarter of this year from 348 a year ago. Likewise, entrepreneurs from the US established nine fewer companies in Turkey in the same period. One of the worst hit regions among Turkeyand’s trade and investments partners was Africa. Turkey suffered a 13 percent decline in exports to Africa in the first five months of this year. Entrepreneurs from the continent sent $221 million worth of FDI to Turkey in 2013, while this figure fell to $42 million in 2014 and to zero in the first quarter of this year. The number of newly opened African-owned businesses in Turkey shrank to 15 in the first quarter from 71 a year ago, economy ministry data revealed. The FDI inflow to Turkey has been steadily falling since 2011 when it was $16.13 billion. This figure contracted to $10.76 billion in 2012, $9.86 billion in 2013 and $8.7 billion in 2014.

SOURCE: Today’s Zaman