Net FDI still in Turkey’s favor despite sharp fall in foreign interest

October 25, 2010, Monday/ 16:26:00
Turkey attracted $3 billion in foreign direct investment (FDI) between January and August 2010, while domestic investors invested about $1.2 billion in foreign countries, resulting in a net FDI of $1.8 billion for the country.

The central bank’s accounts payable data for August show that in the first eight months of this year FDI inflow decreased by 34 percent, amounting to $3 billion, compared to the same period of 2009. Likewise, outward FDI by Turkish investors also decreased in the same period, registering an 8 percent fall to $1.2 billion. The central bank data also indicate that between 2002 and 2010, FDI coming into Turkey neared $72 billion while national investors transferred $12.5 billion of capital to foreign investments.

An in-depth analysis of these data shows that between January and August, almost half of the total FDI to foreign countries, $650 million, went for investments in the service sector, while $400 million of it was transferred to financial institutions. Investment in the foreign agriculture sector increased from $3 million to $50 million in this period.

Moreover, FDI coming into Turkey was concentrated in electricity, gas, steam and hot water production and the financial services sector, with each receiving approximately $1.5 billion. Foreign investment in the agriculture sector was limited to $18 million.

The Netherlands ranked first in terms of FDI in Turkey. In the first eight months of 2010, Dutch investments neared $332 million of $2.4 billion in total European FDI. The Netherlands is followed by Czech investments, worth $294 million, and Germany, which invested $284 million.

The total sum of FDI inflow to Turkey from Europe between 2002 and August 2010 reached $55.5 billion. A breakdown by country shows the Netherlands topped the list with $14.2 billion in investment. It was followed by the US with $6.5 billion in the same period. Greece came in third with $6.4 billion. The total amount of investment from Asian countries was limited to $7.2 billion.

The central bank data showed that approximately $12.4 billion in Turkish capital moved abroad. Between 2002 and 2010, $7.6 billion of this was invested in European countries, $400 million in Africa, $950 million in North and South American countries and $3.4 billion in Asian countries. Azerbaijan and the Netherlands both share first place with approximately $2.5 billion of net FDI from Turkey, followed by Malta with $1.7 billion and Germany with $1.4 billion. Countries in the Middle East were able to attract $3.4 billion in Turkish investment in the same period.

The Turkish service sector was able to attract $52.5 billion in FDI from the total FDI of $72 billion in the eight-and-a-half-year period. FDI in the production sector neared $19.5 billion, while the agriculture sector was not able to attract more than $137 million.

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