TBY talks to Recep Tayyip Erdoğan, Prime Minister of Turkey, on Turkey’s investment environment and its increasingly influential political role.
The global economic crisis of recent years has shaken the foundations of the global economy, causing it to enter a period of change and transformation. In this time of crisis and upheaval, interest naturally shifts to emerging economies like Turkey, which has emerged as a safe harbor for international investors.
Turkey has succeeded in becoming one of the countries least affected by the recent crisis. The main reasons behind this economic transformation lies in our government, which has, for the past 10 years, instigated and implemented the necessary measures and structural changes to set Turkey on the right track. From 2002 onward, the Turkish economy has proven to be dynamic, solid, and stable.
In just a short period of time, we have already begun reaping the rewards of the economic, political, and legal reforms that we’ve undertaken. Except for 2009, at the height of the global economic crisis, the Turkish economy has posted steady and consistent growth since 2002. Our GDP, which was $230 billion in 2002, has tripled in the last nine years to reach $772 billion by the end of 2011. Similarly, our exports, which were $36 billion in 2002, have since risen to $135 billion at the end of 2011. As for our Central Bank reserves, they’ve increased from $27 billion to $91 billion within the same time period.
On top of that, we’ve had record drops in inflation, unemployment, and interest rates. The ratio of EU-defined general government gross debt stock to GDP stood at 74% when our government came to power; today, that ratio has dropped to 39%. Furthermore, the ratio of net public sector debt stock to GDP has dropped from 61.5% in 2002 to just 22% today.
In order to gain a complete picture of the extent to which the economy has grown and transformed, investment figures are a key indicator. While in 2002 investments totaled TL59 billion, by the end of 2011 that figure had increased fivefold to TL283 billion. Private sector investment rose from TL43 billion to TL235 billion. This major increase in investments is no doubt a result of the stability and security that has held sway over Turkey for the past 10 years. Today, every investor in Turkey can look to the future with confidence, secure in the solid foundations they stand on.
There is no doubt that the wide-ranging structural reform program undertaken since the end of 2002 has been of great benefit to Turkey’s investment environment, transforming our country into a highly attractive destination for FDI. Today, Turkey continues to evaluate and assess its position vis-à-vis global economic developments and crises, as it continues to adapt successfully to the ever-changing political and economic environment.
That being said, we don’t measure economic development on macroeconomic statistics alone; we also pay great attention to socioeconomic factors, making sure to assess our development with these factors in mind. In this sense, Turkey has been very successful in relieving its population from poverty. Indeed, per capita GDP has risen from $3,500 to over $10,000.
Impressed by Turkey’s healthy economic performance, global investors have been pouring into the country. In the last nine years, Turkey managed to attract over $110 billion worth of FDI. When you consider that total FDI in the 80 years between 1923 and 2002 stood at just $15 billion, you can appreciate just how impressive FDI growth has been in the last decade.
Our government has implemented various incentive programs to attract foreign investment, and we continue to add new incentive programs while keeping an eye on changing conditions in the global economy. We announced our latest incentive program in April 2012. Our new incentive system offers investors different options, enabling them to benefit from these incentives in all kinds of situations. These incentives include tax cuts and exemptions, land allocation, and the payment of insurance premiums on the part of both employers and employees, thereby contributing to a major overall drop in production costs. It’s important to underline something here: with the new incentive system, we will continue to strongly support strategic investments that reduce the current account deficit and contribute to the structural transformation of our industries—no matter where—in Turkey.
As the government, we aim to strengthen the attractive investment environment through reforms and incentives. Our government continues to support global investors before, during, and after every investment. With this in mind, we’ve created the Investment Support and Promotion Agency of Turkey (ISPAT), which reports directly to me. The message we’re giving global investors is crystal clear: Turkey is a safe harbor with a business-friendly government that will support you fully through every step of the investment process.
Further lucrative opportunities are awaiting global investors as Turkey has embarked on realizing ambitious targets by the year 2023, the centennial celebration of the foundation of the Republic. One of the targets is to place Turkey among the top 10 economies in the world, with a GDP of $2 trillion and a per capita income of $25,000. Our past experience and success assures us that Turkey will realize all its objectives in the coming period, moving decisively forward in pursuit of its goals. I believe that, in light of these objectives, global investors will find more and more business and investment opportunities in Turkey. While global investors will contribute to Turkey’s growth and economic development on the one hand, they will reap handsome rewards on the other. That’s why we will always support global investors who seek to make investments in our country.
© The Business Year