Successfully investing in Turkey

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published on May 16, 2018

  

​​​How do you assess the current economic situation in Turkey?

Having shown constant growth, the Turkish economy has developed successfully in recent years.  The political events and the 2016 coup d'état attempt unquestionably put a strain on the overall sentiment and the economy. Nonetheless, Turkey continues to be one of the fastest growing economies in the OECD. Thus, the Gross Domestic Product rose by 5.5 per cent in 2017. Economists are also optimistic about 2018. Economic growth of more than 6 per cent is expected, again.

 

How would you describe the investment climate in Turkey? Which sectors offer the largest potential?

The tense political situation in Turkey has led to uncertainties among foreign investors. But Turkey has not lost its attractiveness to foreign investors and investment activities have not declined at all.
  
The government continues to invest in particular in the expansion of infrastructure. Currently, giant infrastructure projects are being implemented such as the construction of a new airport in Istanbul and the construction of new high-speed rail, underground railway, bridges and tunnels on the Bosporus and in the Dardanelles. Along with these projects, the need for machinery, diggers, cranes or material handlers is growing.

 

Also the energy sector continues to have potential (geothermal energy, wind power, solar energy, bio energy and hydro power). Also the following areas show great potential:


  • The automotive industry,
  • The textile industry,
  • Mechanical engineering,
  • The chemical sector,
  • The service sector,
  • Logistics,
  • The entire high-tech area,
  • Telecommunications technology and
  • Electronics.

 

What challenges do German companies face during their business ventures into Turkey?

German entrepreneurs have to meet in particular the following challenges:
  • Partnerships,
  • Legal and tax aspects,
  • Political uncertainty, and
  • Bureaucratic hurdles.

 

A high inflation rate and the weak Turkish Lira put a strain in particular on domestic-market-oriented companies. Amid the difficult framework conditions on the domestic market, the industry reported an increase in export revenues, while the weak currency has boosted the industry's local real net output ratio.

 

Should investors currently be cautious about investing in Turkey?

Turkey still has great investment potential. A promising economic situation, a qualified and competitive workforce, centrally located extensive infrastructure, a large domestic market and many other factors continue to catch the interest of many investors.

 

Moreover, special state incentive programmes have been designed to encourage investment. So, for example, investors can benefit from VAT exemption, customs duty free allowances, support for payment of social contributions (employer's portion), subsidies for interest payments and, allocation of land.

 

But prior to a planned investment, investors should consult an expert. So, due to the political sentiment, investors should still be a little cautious.
 

In your opinion, how will Turkey develop?

The latest political events, the encouraging growth figures for the last year and the positive outlook for 2018 show that Turkey will develop positively. As the link between the East and the West, Turkey will remain competitive.

 
 

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Prof. Dr. Metin Sagmanli

Partner

+90 212 3101 400
+90 212 3273 214

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