International companies that suspended their operations in Russia due to the Russia-Ukraine war, or sought a safe and stable destination in the region after withdrawing from the Russian market put the spotlight on Türkiye's investment climate.
Following the Covid-19 pandemic, international companies affected by the Russia-Ukraine war shifted their routes to Türkiye, which is viewed as the "region's safe harbour" and "trade base." Particularly US companies, which rank second in international capital investments to Türkiye, focused on mutual visits to cooperate by seeing the country's investment potential firsthand.
The Covid-19 pandemic resulted in a shift in the investment policies of countries and companies. Many companies have begun to shift their investments in the Far East to countries such as Türkiye, considering investment opportunities, energy prices, transportation costs, and the labour force environment. The outbreak of the Russia-Ukraine war when the pandemic's effects were beginning to fade prompted a shift in investment plans. The world's leading companies, which support the sanctions imposed on Russia by many countries and organisations, have either suspended their operations or sought alternatives by withdrawing from the Russian market.
Despite leaving the Russian market, international companies seeking a safe and stable destination to coordinate their operations and investments in the region started to shift their routes to Türkiye, considering the business environment.
Seeking cooperation and investment through visits
The Americans stand out among the investors who have grown their interest in Türkiye. Following reports that US Ambassador to Ankara Jeff Flake suggested Türkiye as a destination for 5,000 US companies ready to leave Russia, all eyes turned to the country's next scheduled visits. As of today, Executive Vice President of the US Chamber of Commerce Myron Brilliant and the accompanying delegation will hold meetings in Türkiye delegation on behalf of US companies. Investment opportunities in Türkiye will be explained to Brilliant and the business people who will attend the event, which will be hosted by AmCham Türkiye, representing 110 US-based companies with an estimated $50billion investment in Türkiye. It was discovered that the delegation planning to meet with several ministers and representatives of the business community will examine investments in specific regions in considerable detail.
Various activities were arranged and mutual investments were highlighted as part of the goal of achieving $100 billion trade volume between Türkiye and the United States. Under the coordination of the Presidency's Directorate of Communications and the Turkish Exporters Assembly (TIM), "Commercial Diplomacy Events" were organised in the United States. Türkiye sent a delegation to the United States that included high-level officials, members of parliament, and businesspeople. As part of the visit, which will last until March 18, the delegation will begin its business and diplomatic contacts in Washington and New York, as well as hold talks on bilateral economic relations. These initiatives are expected to further strengthen and expand economic relations between the two countries, such as exports and investments.
Foreign direct investments in Türkiye have surpassed $240 billion
Until 2002, Türkiye's foreign net direct investment inflow was only $15 billion. By the end of 2021, this figure surpassed $240 billion.
While foreign capital investment inflow into the country totalled $174 billion 212 million at the end of last year, capital investments by US companies accounted for $14 billion 97 million, which is 8.1 per cent of that total. As a result, after the Netherlands, the United States ranked second in capital investments in Türkiye. As of 2021, Dutch companies' capital investment in Türkiye totalled $27.4 billion.
By the end of 2021, the number of international companies operating in Türkiye rose to 76,737. Two thousand and thirty of these companies were from the United States.
Following Russia's attack on Ukraine, many US-based international companies, including Ford, Boeing, General Motors, ExxonMobil, FedEx, Ford, Nike, Adidas, McDonald's, KFC, Starbucks, Coca-Cola, PepsiCo, Airbnb, Netflix, Visa, Mastercard, American Express, Apple, Levi's and Walt Disney, announced that they suspended their operations in Russia; Goldman Sachs also stated its intention to withdraw from Russia. These companies are also seeking investment opportunities in Türkiye, as well as other countries in the region.
Considering the effects of the Covid-19 pandemic on trade, there have been reports that international companies such as Swedish furniture company IKEA, Polish ready-made clothing company LLP, German pharmaceutical company Boehringer Ingelheim, and Belgian packaging company DW Reusables are planning to relocate their investments to Türkiye.
With its location and population, Türkiye is an appealing manufacturing centre
With its excellent growth record and structural reforms implemented in the last decade, Türkiye has managed to attract the interest of a growing number foreign investors. In 2020, the country ranked as Europe's ninth most favoured foreign direct investment (FDI) destination. Türkiye was also the third most preferred FDI destination among developing European countries in 2019 and ranked second after Poland in 2020, with a 16 per cent share.
Turkish financial institutions, particularly banks, are among the best-equipped in the world in terms of information technology. Blue and white-collar labour with exceptional capabilities at all levels, capable of manufacturing the most sophisticated industrial products, including spacecraft and aviation, is one of Türkiye's strongest areas, where almost all transactions can be done safely online.
Türkiye's strategic location stands out as one of the most important advantages it offers to international investors, providing significant incentives to both national and international investors.
Furthermore, Türkiye is only a four-hour flight away from a 26 trillion-dollar economy and 1.3 billion people across significant hubs of Europe, North Africa, the Gulf Region, and Central Asia, making it an important manufacturing and management base.