Turkey's new 5-year investment promotion strategy is an ambitious and vocal attempt to position the country as a leading hub for high-value investments. As you delve into this strategy, several important questions arise:
1. Are There Enough High-Value Projects to Go Around?
With numerous countries vying for high-value investments, the pool of these projects and sectors is super competitive. High-value investments often include those in technology, green initiatives, and advanced manufacturing, which are all in high demand and are replicated across the strategies of most IPAs. Given the global economic uncertainties and shifting supply chains, there is a finite number of these opportunities available.
However, the increasing emphasis on sustainable and technology-driven projects means new and innovative investment opportunities are continually emerging. The challenge for Turkey will be to secure a substantial share of these projects amidst growing global competition.
2. How Can Turkey Differentiate and Target High-Value Investors?
To stand out and attract high-value investors, governments need to focus on several strategies. This is essential as we see so many countries and regions chasing the same pool of investors with sometimes minimal differentiation:
Tailored Incentives: Offering specific incentives for strategic high-value sectors, can make a country more attractive.
Infrastructure Development: Investing in state-of-the-art infrastructure, including digital and green infrastructure, provides a competitive edge and attracts the development of essential industry ecosystems.
Skill Development: Focusing on developing a skilled workforce tailored to high-value sectors ensures that there is a local talent pool ready to meet investor needs.
Value Proposition: The time for copying is over - governments need to create absolute clarity on their value propositions to investors and can create compelling stories for the right (targeted) investors.
Investor-Ready Projects: Identifying and presenting the key high-value investments to investor communities is a game-changing proactive approach that will allow Turkey to approach targeted investors in alignment with the country's strategy.
3. Given the Low FDI in Previous Years, Is This Achievable?
Turkey's historical FDI levels have been modest compared to its potential. Achieving the ambitious targets set by the new strategy will require substantial efforts to build confidence which must be consistent with the strategy's effective implementation. Turkey needs to demonstrate stability and create a more predictable investment environment. Concentrating efforts on sectors where Turkey has a competitive advantage or emerging opportunities can help in achieving the FDI targets.
Over the five-year period to 2028, Turkey will target a total of 120 projects in climate FDI, 240 projects in digital FDI, 360 projects in global value chain-related FDI, 270 projects in high-end services FDI, 360 projects generating high-quality jobs, and 300 projects in knowledge-intensive FDI. (Source FDI Intelligence)
While Turkey’s goal to significantly grow its share of global FDI by 2028 through high-value investments is ambitious, it is not out of reach. The effectiveness of the strategy will hinge on the country's ability to differentiate itself, leverage strengths, and address past shortcomings.
I view the publication and promotion of this strategy as a significant positive signal of a shift in mindset and a commitment to better collaboration with investor communities. This proactive approach is noteworthy, especially compared to many FDI strategies that often change with minimal announcement or stakeholder consultation. Such transparency and engagement are crucial for maintaining long-term trust and fostering strong relationships with potential investors.
Managing Partner, KW Group APAC FDI Advisory
Consultant FDI, Trade, Investment & Innovation Division, United Nations ESCAP
Comments