What Makes Türkiye a Good Investment
Foreign capital is vital today, particularly in emerging countries such as Türkiye, which frequently enact new legislation that streamlines and reduces investment procedures to attract foreign investors to key investment areas and to guarantee a smooth process.
Türkiye offers high return potential with the following advantages: a key geopolitical location linking Asia and Europe; a developing economy featuring a variety of industries and an average annual GDP growth rate of 5.4 percent; a sizable domestic market; free trade agreements; and local markets with 1.3 billion consumers. Recognizing the importance of foreign capital, Türkiye prioritizes industry, development, and employment and offers benefits to investors, such as valuable practices outlined in domestic legislation, procedural exceptions, arrangements to protect investments and investors, and project-based incentives.
In Türkiye, foreign investors can benefit from lower investment costs due to currency differences and quickly obtain cash, loans, and investment incentives. High labor potential owing to a young working-age population, low labor costs, and efficient work hours make the country an ideal place for foreign investment. Investors are also drawn to the nation’s support for international R&D activities and technological innovations, its advanced sea, air, and land transportation systems, and vital tourism and healthcare sectors.
1. Investment Options
Investors can collaborate with any organization or launch any enterprise in Türkiye. The key to investment planning is to maximize income at the lowest possible cost and quickly satisfy investor expectations and goals. As such, investors should obtain expert advice from specialists familiar with the relevant country’s culture, legislation, official procedures, inter-institutional interactions, international partnerships & agreements, and investment incentives & zones. These specialists can analyze the crucial aspects of relevant concerns while prioritizing the investor’s best interests to guarantee the investment’s profitability.
Türkiye welcomes investments from natural persons and legal entities as follows:
a) Natural Persons:
If the investor is a Natural Person, they may invest in Turkish businesses as natural persons, become shareholders in Turkish companies, acquire securities, invest in fixed capital, and buy real estate.
b) Legal Entities:
If the investor is a legal entity, they can establish an enterprise, a branch, or an office in Türkiye or become a shareholder in Turkish firms through their own company abroad.
Natural Persons or Legal Entities should consider the following before taking any concrete action regarding their investment: the investment’s location, sector, subject, capacity, and cost; the instruments, loans, and incentives to exploit during the investment; the risks involved; their expectations in the short and long terms; and any other financial considerations. Undoubtedly, in addition to investment-related factors, investors should also take into account factors relevant to the region of investment, including its current environment, legislation, cost due to the foreign exchange difference, economic growth and development, local market diversity, competitiveness, consumer index, inflation balance, political conditions, and international relations, to develop a road map based on the necessary actions.
Other factors that do not immediately influence investment plans but can emerge over time include the following: industrial competition, target consumers, culture, and transport capabilities in the chosen region; whether the part is suitable for exportation; the structure and operation of the manufacturing plant and the relevant long-term financial risks; whether there is an authorized trade union; how to draft collective bargaining agreements; and the employer-employee relations. Indeed, it is not uncommon to see companies facing financial difficulties due to the operation of plants, as well as strikes and lockouts, despite their capital, brand value, market recognition, competitiveness, and strong production capacity, thus being on the verge of permanently ceasing operations. Therefore, investors should consider both theoretical and practical factors. For instance, a company established in Region A may obtain excellent results with rapid growth, while another company operating in Region B with identical qualities may not get the same favorable results. Thus, each factor should be strategically considered while choosing the location of investment. To that end, investors should consider instances for each element and their advantages and disadvantages while planning the process.
2. Different Enterprise Zones and the Advantages of Each
Türkiye offers three types of enterprise zones:
a) Technology Development Zones (TDZs) – Technoparks: These sites feature cutting-edge capabilities to facilitate R&D efforts for the participants to produce or develop technologies or software and to turn their inventions into commercial products, methods, or services.
Thus, universities, research institutions & organizations, and manufacturing industries collaborate to create a globally competitive, innovative, and export-oriented industrial structure. The goal is to raise production quality and standards, increase efficiency, decrease production costs, commercialize knowledge, support technology-focused production efforts and startups, and create new investment opportunities by meeting investors and entrepreneurs.
b) Organized Industrial Zones (OIZs): These sites refer to legal entities that are built based on specific zoning plans as per OIZ regulations and conduct operations defined in the legislation to ensure efficient industrial activities and standardized premises by grouping manufacturing plants and meeting their infrastructural and other needs for land, transportation, energy, fuel, water, industrial wastewater treatment plants, raw materials, etc. while preventing unplanned urbanization and mitigating the adverse environmental effects of industrial operations.
The main advantage of OIZs is that they give producers access to affordable, long-term lands with the required physical and social infrastructure. These sites help companies create standard environmental policies, communication materials & plans, and service points. Here, businesses operate independently in a regular, planned area with practical infrastructure and physical needs solutions. Thus, they can build networks, expand their operations, collaborate with other businesses to improve energy and material efficiency, and have a direct say in the running of the zone. Now that OIZs are managed by a general assembly rather than a committee of entrepreneurs, each member has the right to vote on OIZ decisions and the authority to affect the systems and functions of the zone.
c) Free Zones
Free Zones are included in a country’s political limits but excluded from its customs zones. Therefore, they refer to areas where legal and administrative regulations on commercial, financial, and economic matters are not implemented or partially implemented; comprehensive incentives for industrial and commercial activities and projects promote export-oriented investments. In Türkiye, free zones are often found around ports on the Mediterranean, Aegean, and Black Seas and in locations with easy access to global trade routes.
Investors that aim to export might prefer these zones to take advantage of incentives, tax relief, profit transfers, and convenient trade regimes.
3) Investment Incentives
Türkiye offers many incentives to investors based on their investment plans, categorized under general incentives, regional incentives, priority investments (e.g., renewable energy, test control systems), and strategic acquisitions.
These investment incentives include VAT exemption, customs duty exemption, tax relief, employer support for insurance premium payments, employee support for insurance premium payments, support for income tax withholding, interest or dividend support, allocation of investment locations, VAT refund, stamp duty exemption, fee exemption, the exemption for resource utilization support fund, property tax exemption, and discounting of depreciation.
4) Conclusion:
The abovementioned issues offer a helpful overview of the subject from a legal standpoint. However, because investment procedures are incredibly complicated and entail both profits and losses, investors need certain information for their investment with specific concerns, sectors, scope, and geography. Therefore, a profitable investment requires seeking advice from experts who share their expertise and experience in investing along with their innovative and visionary views to help their clients achieve long-term success.
