Unique incentives, investment regulations make Turkey attractive for foreign investment

Published 26.02.2019 00:07

Thanks to the incentives offered for foreign investors over the few last years, Turkey attracted large amounts of investment and continues to be on the radar of many foreign companies.

The State Oil Company of the Azerbaijan Republic (SOCAR) is one of the major examples that has greatly benefited from the incentives introduced by the government and has become the largest foreign direct investor in Turkey. Addressing a meeting with the press in Istanbul yesterday, SOCAR Turkey CEO Zaur Gahramanov said Turkey has opened its doors for investments.

"As SOCAR, we have been doing business in the country for 15-16 years. Yet, the laws and incentives in Turkey cannot be found in any other country," he said.

SOCAR Turkey CEO remarked that SOCAR postponed some of its investments in Azerbaijan, but noted that it continued its investments in Turkey.

The company has invested around $15 billion in the 11 years since it began investing in Turkey after it acquired the country's leading petrochemical company Petkim in 2008 for $2 billion, Gahramanov remarked.

On Oct. 19, Turkey and Azerbaijan witnessed the inauguration of the largest single-location real sector investment in Turkey, the SOCAR Turkey Aegean Refinery (STAR), in İzmir's Aliağa district. The grand opening ceremony was held with President Recep Tayyip Erdoğan and his Azeri counterpart İlham Aliyev in attendance.

The $6.3-billion refinery will be one of the biggest petroleum and gas operations in Europe, the Middle East and Africa.

The facility will produce around 4.8 million tons of diesel, 1.6 million tons of jet fuel, 1.6 million tons of naphtha, 500,000 tons of reformate, 700,000 tons of petroleum coke, 400,000 tons of mixed xylene, 300,000 tons of liquefied petroleum gas (LPG) and 160,000 tons of sulfur at its full capacity.

Pointing to the important projects the company carried out in Turkey, the SOCAR Turkey CEO said they are making a contribution to the development of the country's economy.

Turkey is the country with the largest potential in the region, he noted. "Our activities in Turkey continue as petrochemical based. In 2018, we inaugurated our STAR Refinery and TANAP [Trans Anatolian Natural Gas Pipeline Project] projects, which are of high importance for Turkey and Azerbaijan economies. The $6.3-billion refinery will process 10 million tons of crude oil and will contribute to the decrease of the current account deficit by $1.5 billion per year. The strategic investment of Turkey and Azerbaijan, TANAP, with an investment value of $8 billion, started providing commercial gas flow as of June," Gahramanov explained.

Dubbed the "Silk Road of Energy," the 1,850-kilometer-long TANAP is the largest section of the 3,500-kilometer-long Southern Gas Corridor (SGC) that was officially launched on June 12 at a grand ceremony in the central Turkish city of Eskişehir. President Recep Tayyip Erdoğan, Azerbaijani President Aliyev and a number of other presidents and officials were present at the event along with energy ministers and the project's partner representatives.

The first gas deliveries to Turkey occurred on June 30 last year. Since its launch, TANAP has transferred more than 1 billion cubic meters of natural gas to Turkey, Azerbaijan's President Aliyev announced last week.

TANAP will deliver 6 billion cubic meters from the giant Shah Deniz II field in Azerbaijan to Turkey and 10 billion cubic meters to Europe per year. The European part of the project is expected to become operational in 2020, upon the completion of the Trans Adriatic Pipeline (TAP), which will connect with TANAP at the Turkish-Greek border.

Apart from these two giant projects, SOCAR Turkey CEO Gahramanov said, the company has investments such as a container terminal and wind power plant.

"We will continue our investments with our new petrochemical plant, for which we plan to break ground this year. We have full confidence in Turkey's economic strength and political stability. We want to strengthen our links by adding the economic cooperation to the eternal friendship of Turkey and Azerbaijan," Gahramanov concluded.


$13.2 BILLION IN FDI IN 2018

Also addressing the meeting yesterday, Arda Ermut, the head of the presidency's investment office, said Turkey attracted nearly $13.2 billion in foreign direct investment (FDI) in 2018, an increase of 21 percent compared to the previous year.

The Netherlands and Azerbaijan were the top two sources of direct investments last year, he said.

"We want to receive 1.5 percent of the total global direct investments. At first, we want to reach $18 billion [in FDI] then $20-25 billion," Ermut said.

The country aims to increase its share to 2 percent in the long term, Ermut stressed. "Turkey has outperformed the emerging countries in terms of attracting investment," he said.

In 2017, Turkey attracted $10.83 billion in net international direct investment, whereas this number was $13.34 billion in 2016.

Ermut stated that foreign direct investment on the global scale have decreased by 19 percent due to growing risks and protectionist policies. The increase in Turkey's FDI shows the potential of the country's economy and the trust of foreign investors, he added.

He also noted that the share of Asian countries in FDI has increased from 12 percent to 27 percent, describing it important to diversify investment sources.

Regarding reports on some automotive companies planning to leave Turkey, Ermut said new players might enter the Turkish market in the upcoming period instead.

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