The Republic of Turkey Prime Ministry Investment Support and Promotion Agency (ISPAT) is the official organization for promoting Turkey's investment opportunities to the global business community and for providing assistance to investors before, during, and after their entry into Turkey. Directly reporting to the Prime Minister, ISPAT is in charge of encouraging investments that are needed for the further economic development of Turkey. To this end, ISPAT supports high-technology, value-added, and employment-generating investments with its facilitation and follow-up services during whole processes of relevant investments.
At the upcoming Turkish-German Innovation Summit in Istanbul, the Global Success Club is proud to welcome Arda Ermut, President of ISPAT, as a participator of the summit. There he will gladly give some insight into the attractiveness of Turkey for investments and the future of the country in light of Industrie 4.0. To give all Summit participants a little taste of what is to come at the event, Mr. Ermut was kind enough to answer a few questions about ISPAT and the industry of Tukey for us. Please enjoy the interview and be sure to find out more at the Summit on the 15th-16th of March.
GSC: According to your website, in 2015 there were 46,756 companies with foreign capital in Turkey. Could you please tell us how important it is for Turkey, and the world as a whole, that companies continue to invest in Turkey?
Mr. Ermut: Turkey has implemented a comprehensive reform agenda to improve its investment environment in the leadership of H.E. President Recep Tayyip Erdoğan. As the first directly elected President of Turkey, H.E. Erdoğan is giving the upmost importance to the investors to foster the role of private sector and international investors in the economy. He is the person, actually, who established the Investment Support and Promotion Agency of Turkey in 2006 and directly attached this Agency to Prime Minister, as a sign of the importance given for Foreign Direct Investments (FDI). H.E President even make us to use the term "international investors" rather than "foreign investors" underlining the fact that these investors will never be treated as foreigners in Turkey.
Concrete results of this reform agenda can be seen through the following figures. Number of companies with international capital has increased from 5.000 to more than 50.000. Turkey attracted 170 billion US Dollars of FDI over the period of 2003 and 2016. It is obvious that there is an increasing confidence of global investors in the Turkish economy.
GSC: Having dealt with many companies that have decided to invest in Turkey, what is the one piece of advice, something that many companies struggle with when setting up in Turkey, which you would offer to future investors?
Mr. Ermut: Of course, we welcome all opportunities and all investors in Turkey. Besides, we would rather propose a set of priorities. The main objective of Turkey is to provide a sustainable growth path and make it more inclusive while saving the macroeconomic stability and maintaining the decline in current account deficit. Increasing domestic savings, encouraging the transformation in industrial sector and private investment reliant growth structure, enhancing the competitiveness and efficiency of the economy are the main priorities.
In this context, increasing high value-added goods and services, reducing dependence on imports of domestic production, improving R&D environment, technology transfer, diversification of financial market products, increasing the workforce skills and productivity, improving energy efficiency, and the completion of structural transformations and reforms initiated in the area of local government and regional development are important priorities for us. So, we welcome all investors who make contribution to these goals.
GSC: With a new revolution for industry on the horizon, Industry 4.0, what sort of measures is ISPAT taking to attract manufacturers to set up their new "connected" factories in Turkey?
Mr. Ermut: Fifty years after the start of the information age, we are once again in the midst of a sharp tranformation, the likely effects of which will be a period of more automation, higher productivity and higher return. The fourth industrial revolution, referring to the advent of economy-changing technologies, will also affect Turkey and we will more than likely attract new investments that will improve R&D activities and provide transfer of technology. Therefore, we put great emphasis on sectors that will help us to implement Industry 4.0 in Turkey. In this sense, Germany, a country that ushers in Industry 4.0, and Turkey have lots of bilateral opportunities to offer eachother.
GSC: In a recent article by the Frankfurter Allgemeine Zeitung, the article argues that the current business partnerships and collaborations between Turkey and Germany companies must be fostered and continue on into the future, no matter what. What would ISPAT say to this statement, and how does it feel about such partnerships?
Mr. Ermut: Turkey and Germany have perfect bilateral trade relations in all terms. In 2015, Germany took top honors as Turkey's main partner country for exports with a volume of USD 13.4 billion. In the same year, our exports to Germany had 9.3 percent share in our total exports. Not only in 2015, Germany is our top export market, but also in the last decade. With regard to FDI, in the first eight months of 2016, Germany was the highest fourth country to invest in Turkey with an FDI amount of USD 284 million. The most recent example of German origin FDI is the second factory investment of the automotive supply industry giant ElringKlinger, which will commence production on November 18, in our Bursa province. Moreover, Germany is a prominent country for our top priority sectors such as automotive, chemicals and energy. For all the above reasons, Germany is an important trade partner of Turkey.
GSC: At the upcoming Turkish-German Innovation Summit in Istanbul, ISPAT is set to be one of the main sponsors. Could you please tell us how important it is for ISPAT that summits, like the upcoming one in March, are held between the countries of Turkey and Germany?
Mr. Ermut: Turkey have some unique characteristics which are expected to make any country an attractive investment destination. First of all, robust economy of the country, which is the 17th largest in the world, has been growing with an average rate of 4.7% since 2002. It is also expected to be the fastest growing economy among OECD members.
Turkey's location provides access to European, Middle Eastern, North African, Central Asian and Gulf markets covering 1.6 billion people with 28 trillion USD total GDP. Besides, businesses in Turkey have seamless access to European Union and other 20+ countries, where approximately 1 billion people live, through customs union and free trade agreements.
In terms of human capital, Turkey has a dynamic population structure with an average age of 30 and low dependency ratio. In the last 10 years, working age population and number of employed people increased by 10 million which kept unemployment rate almost the same. There are more than 600,000 university graduates each year. Skilled and cost competitive labour force is easily available in Turkey.
Furthermore, Turkey's one of the most important assets to attract FDI is its liberal investment climate. As a result of structural reforms put into practice in the last 13 years, Turkey has improved its position in OECD FDI Regulatory Restrictiveness Index and World Bank's Ease of Doing Business index. On top of it, Turkey offers a lucrative incentive scheme for manufacturing and R&D projects.
In the light of this information, Turkey lays more emphasis on such summits and events after the July 15 failed coup attempt. We appreciate all kinds of support to the democratic institutions and business environment in Turkey. As of today, we have more than 6,600 companies with German capital and in the last few years some of the top foreign direct investments came from Germany. Thus, we really care about their interests and we would be happy to collaborate with them to enhance investments from Germany and worldwide, to prove that the business life continues as usual and Turkey recovered soon and came out to be ever stronger.
GSC: We thank you for your taking time out of your busy day to speak with us and look forward to seeing you soon in Istanbul.