There are different kinds of investments of foreigners in Turkey.
Investments of Foreigners in Turkey
There are two ways for adequate economic development to be achieved in developing countries. These are “foreign borrowing-foreign aid” and “”foreign capital investments”. Although foreign borrowing and foreign aid are aimed at developing states economically, when considered on a long-term basis, these debts must be repaid and placed under obligation in exchange for such assistance.
For this reason, the most effective way to achieve economic development is foreign capital investments. It is possible to define foreign capital as a direct investment in foreign capital and a portfolio investment in two ways according to the way it comes to a country.
Investments of Foreigners in Turkey – Direct Foreign Investment
This form of investment can also be expressed in the form of private-direct foreign capital investment, direct foreign investment or direct foreign capital investment.
Foreign direct investment is an investment in the form of a firm buying a firm in another country, creating a new firm, creating a partnership by increasing the capital of a firm in that country, or adding elements such as “license, know-how, technology and management knowledge” to existing firms.
Investments of Foreigners in Turkey – Portfolio Investment
This form of investment, also called private financial capital, is a financial transaction that occurs in the form of a foreign investor buying shares traded on a country’s stock exchange, bonds that carry a government guarantee.
Turkey has been benefiting from foreign capital inflows in the form of portfolio investments since the opening of IMKB in 1986. Turkey has taken its place in the status of developing countries, carries out various activities in order to protect existing foreign investments and become a center of new foreign investments.
Various laws and regulations have also been established to secure and regulate these investments. The law on Foreign Direct Investment No. 4875 and the regulation on the application of the law on Foreign Direct Investment are among the most important legal regulations made on this issue.
Foreign Investors and The Rate of Investment
Turkey has managed to attract foreign investors, especially in the last 15 years and increasing the number of foreign investors and the rate of investment made. This interest has been generated by foreign investors mainly in the finance, manufacturing and energy sectors, while there has been an increase in interest in many different sectors.
The most of this increase in interest occurs in Europe, North America and the Gulf States, Asia’s share also appears to be significant. The number of companies with international capital in Turkey has also increased over the years.
Although Turkey has improved proportionally in terms of foreign investment and investors compared to the past years and today, this development has occurred in almost every country due to the increase of globalization.
This situation has not made Turkey’s growth in foreign investment and investors very valuable to other countries. At the same time, to be involved in the process of the civil war in Syria, diplomatic tensions with USA and Russia, the negatively constant mention of Turkey’s name in the Foreign Press, the negative reasons prevented the foreign investor from bringing his capital to Turkey and caused the existing foreign investor to distrust Turkey.
At the same time, foreigners who made portfolio investments on exchange-traded stocks sold their shares and withdrew their investments to secure their money.
Also cooronavirus has caused the entire world market to shake recently and investors do not prefer to invest because they cannot predict the process. These situations have slowed Turkey’s development on foreign investment.