Turkey has recently published the “Foreign Direct Investment Strategy for 2021-2023” (“FDI Strategy”), which is considered as a target-oriented FDI Strategy that will help providing Turkey with a clear roadmap for attracting value-added, knowledge-intensive investments, and high-quality employment. In general, this FDI Strategy aims to enhance Turkey's FDI performance in terms of both quantity and quality in different sectors, and in compliance with national development policies.

FDI Strategy focuses on certain sectors including but not limited to, electronics, Aerospace & Defense industry, automotive and machinery & equipment. It also elaborates the concept of quality FDIs and the considerations of each sectors in terms of this concept of quality FDI.

What is Quality FDI for Turkey?

It is emphasized that it has been necessary to determine the investments which will significantly contribute to Turkey’s achievements of its macroeconomic targets for 2023, which will be pursued directly by Turkey in the global FDI market in the years of 2021-2023 and prioritized within the scope of its strategy. In this respect, it is stipulated that the ‘quality FDI’ for Turkey is basically designed in line with the following input, in accordance with its key policy documents. Therefore, the definition of quality FDI for Turkey was made with respect to considerations of different following resources:

- Analysis of Turkey’s key macroeconomic policy documents,

- Selected findings regarding Turkey’s FDI performance,

- Investor survey study,

- Interviews with senior public executives,

- Survey study with FDI stakeholders, and

- Interviews with investment office executives, sector leaders and experts.

In line with the considerations, FDI Strategy establishes that (i) investments that support infrastructure, (ii) investments with high expansion and growth potential, (iii) investments in line with the sustainable development goals (SDGs), (iv) high quality financial investments and (v) investments that support technological transformation, employment and current account balance, constitute a quality FDI for Turkey.

Quality FDI in Aerospace &Defense Industry in Turkey

FDI Strategy examines investments made in the Aerospace & Defense industry in two different profiles: (i) technology intensive production investments with high added value which develop supplier bases and have strong backward or forward linkages (Profile 3) and (ii) investments reducing import dependency in sector/product groups with high imports of intermediate goods (Profile 7). In this respect, FDI Strategy stipulates that existing investors’ expansion investments in the amount of more than 5 million USDs and new investors’ investments in the amount of more than 20 million USDs which are made with respect to production activities in the Aerospace & Defense industry, is considered as a quality FDI for Turkey. With regard to this, it is also emphasized that criteria including business climate, infrastructure quality and logistics, cost taxes, incentives investment area availability, are considered for deciding on the investors.

Furthermore, investments reducing import dependency in sector/product groups with high imports of intermediate goods for production activities are also considered as quality FDI for Turkey. In this respect, it is emphasized that criteria including market size and potential business climate (presence of industrial branches/clusters which are customers of the relevant products), cost and regulatory framework, are considered for deciding on the investors.

Şafak Herdem, Ezgi Ceren Aydoğmuş