Foreign Investments in Turkey Not Helping Industry Improve

Article Summary
Gungor Uras reports that foreign equity in Turkey’s industrial and service sectors reached 15.5% in 2009. While foreign investment was encouraged for the purpose of bringing new technology and raising marketing skills, this has not been the result. Instead, foreign companies are simply buying established Turkish companies and operating them as-is.

Foreign shares in Turkish industrial and service companies reached 15.5% in 2009. That year, of 46,459 total industrial and service enterprises, 1,315 were controlled by foreign capital. In the banking sector, foreign equity is roughly 22%. Combined with the bank shares that foreigners purchase from the stock market, that figure climbs up to 42%. In the insurance sector, foreign equity is 65%. For years we have been eagerly inviting foreign capital so that:

  1. Foreign companies will bring technology that we do not have into Turkey.
  2. They will set up factories that can compete in world markets, which is something we cannot do with our own resources.
  3. They can teach us management and marketing skills that we do not possess.
  4. Additional employment opportunities can be created by foreign capital.

However, we have since found out that foreign capital enters Turkey to buy the companies that we have set up and managed ourselves, and which were doing well in domestic and foreign markets. They are not coming to bring new technology, they are coming to buy a share of the markets that we have created. Of course, nobody has the right to question a Turkish entrepreneur selling a business — that he established with his own means and expanded — to a foreign investor.

I am not writing this because I am against foreign capital. I just want to interpret official statistics to explain where we are. Sadly, foreign capital is not bringing advanced technology. Foreign companies just buy our established companies and use our own technology to run them. In the foreign-controlled segment of the manufacturing industry, advanced technology is only used for roughly 10.9% of total production.

According to the statistics, the total share of foreign-controlled enterprises is 30.7% in wholesale trade, 14% in the retail business, 90.4% in tobacco and cigarette production and 51% in basic pharmaceuticals.

German capital constitutes 17.1% of the capital in foreign-controlled businesses. The US is next with 14.9%, followed by the French with 13.1%.

According to figures from the Ministry of Economy, 23,963 companies are completely owned by foreign capital in all of the sectors as of April 2012. As for partially owned companies, 5,401 are owned by foreign capital. 

Found in: turkish economy, ministry of economy, foreign capital in turkey, foreign investment

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