FOREIGN DIRECT INVESTMENTS 2010 YEAR-END EVALUATION REPORT

Transcription

1 FOREIGN DIRECT INVESTMENTS 2010 YEAR-END EVALUATION REPORT (February 2011) IN 2010, FDI FLOWS TO TURKEY REACHED TO 8.9 BILLION $ By the end of 2010, foreign direct investment (FDI) inflows to Turkey have reached to 8.9 billion US$. In 2010, FDI inflows rose by 6% compared to In 2010, FDI inflows could not surpass 10 billion US$ level and it is not probable to surpass this level in 2011 as well, unless some high volume deals take place. No signals can be received for returning back to 20 billion US$ level that was achieved in 2006, 2007, and 2008 since uncertainties in the recovery process from the global crisis persists. FDI Inflows to Turkey (Billion US$) (average) (including real estate purchases by foreigners) The preliminary FDI stock value * in Turkey, as of the end of 2010, is billion US$. By the end of 2010, total number of companies with international capital in Turkey has aggregated to 24,490. FDI inflows to industrial sector accounted for 49% of the total inflows in 2010, while the services sector had 50% share. In 2010, energy and finance sectors got the primary share in FDI inflows with 33% and 25% share in total inflows respectively. * Monthly inward FDI stocks disseminated as an indicator are calculated by adding inward FDI flow figures to the preceeding year-end stocks and by revaluating the preceeding year-end FDI stocks based on FX rate and market value changes of foreign direct investment enterprises. 1

2 Sectoral Breakdown of FDI Inflows to Turkey ( ) Sectors (Million US$) 2010 Agriculture, Forestry, Fishing Industry 2,100 5,116 5,174 3,778 3,082 19,250 Mining Manufacturing 1,866 4,211 3,955 1, ,444 Electricity, Gas, Water ,068 2,124 2,040 5,912 Services* 15,533 14,012 9,532 2,423 3,100 44,600 Finance 6,957 11,662 6, ,575 26,929 Construction ,442 Wholesale and Retail Trade 1, , ,115 Real Estate Brokerage Services ,142 Transportation, Warehousing and Communication 6,696 1, ,573 Other Services ,399 Total Inflows (Equity) 17,639 19,137 14,747 6,250 6,260 64,033 Outflows ,552 Other Capital (net)** , ,502 Real Estate Purchases (by real persons) 2,922 2,926 2,937 1,782 2,494 13,061 Net Inflows 20,185 22,047 19,504 8,409 8,899 79,044 *Sub-sectors are sorted according to FDI inflows in **Other capital refers to investments associated with the borrowing and lending of funds between direct investors and their subsidiaries, branches and associates. FDI inflows to the industrial sectors have decreased from 5.1 billion US$ in 2007 and 2008, to 3.8 billion US$ in 2009 and to 3.1 billion US$ in electrical and optical instruments was the leading sector in the manufacturing industry receiving 20% of total inflows to manufacturing sectors and manufacturing of basic metals and fabricated metal products followed with 19% share. Breakdown of FDI Inflows to the Manufacturing Non-metallic Sector in 2010 other minerals 6% Machinery and Equipment 8% Textiles and Products 10% Other 10% Chemicals 10% Food, beverages, tobacco 17% Electrical and Optical Instruments 20% Basic Metals and Fabricated Metal Products 19% 2

3 In 2010, the major source countries for FDI inflows to Turkey were Austria, France, Netherlands, Germany and Greece. FDI Inflows to Turkey and Shares by Source Countries in 2010 Top 10 Countries FDI Inflows (million US$) 1 Austria France Netherlands Germany Greece Japan USA Luxembourg UK Spain 190 Other 1,112 Total 6,260 Shares of Top 5 Countries (2010) Other 39.4% Greece 6.8% Germany 8.0% Austria 28.4% France 9.4% Netherland s 8.0% Looking at the FDI inflows by regions, it can be observed that the European countries, having the major share in FDI inflows to Turkey, had 85% share in 2009 rising again compared to a relative fall in previous two years. Breakdown of FDI Inflows to Turkey by Regions ( ) (Million US$) 2010 Europe 14,574 12,974 11,367 5,232 5,005 49,152 Share (%) North America 969 4, ,769 Share (%) Asia/Near & Middle East 1, , ,500 Share (%) Asia / Other ,722 Share (%) Other regions Share (%) TOTAL 17,639 19,137 14,747 6,250 6,260 64,033 M&A transactions in Turkey were vibrant in The second highest M&A volume totaling 29 billion US$ after the record 31 billion US$ in 2005 was reached thanks mainly to privatizations in energy sector. Published by Deloitte Turkey, according to Annual Turkish M&A Review 2010, 203 transactions with a total value of 29 billion US$ were realized and international investors were a party in 73 of them. The share of international investors in total deal value was 36% with a deal volume of 10.5 billion US$. This ratio was 38% in 2009 and 75% in 2008 and The fall in this ratio can be attributed to the effects of the global crisis on the one hand while more intense interest from local 3

4 investors towards privatization tenders is another factor. The fact that the ratio increases to 70% signals an increase in international investors interest. In 2010, privatization deals accounted for half of total deal value (14.6 billion US$). Out of 35 privatization deals, 33 were in the energy area. The highest-volume deal of the year was the acquisition of GE shares in Garanti Bank by Spanish BBVA for 5.8 billion US$. Besides energy and finance sectors dominance; food&beverages, manufacturing, tourism and other services sectors were among the sectors deals took place. Financial investors like private equity funds were observed to be interested in healthcare, entertainment, food&beverages, finance, retail and IT sectors is expected to be a vibrant year as well in terms of M&A transactions. Galataport, National Lottery, electricity generation assets, Istanbul Fast Ferries (IDO), Istanbul Natural Gas Company (İGDAŞ), bridges and highways will be among the privatization tenders to be on the agenda. Energy, healthcare, pharmaceuticals, retail, media, education and automotive parts are expected to be among the sectors where deals will take place. GLOBAL TRENDS According to preliminary data released by UNCTAD, global FDI inflows in 2010 remained at the same level as in 2009, at 1.1 trillion US$. Global FDI Inflows ,401 1,459 2,100 1,771 (Billion US$) ,114 1, s s 1990s * Source: UNCTAD * preliminary data Preliminary data show that for the first time, in 2010, developing countries received more FDI inflows than developed countries. There was an increase in inflows in the form of M&A while the FDI in the form of greenfield investment was on the fall. Reinvested earnings increased, while intracompany credits and equity investment decreased. 4

5 While FDI inflows to USA recovered, Europe was the region experiencing the sharpest decrease in inflows. South Asia and Latin America once again came to the forefront among developing regions. There are positive expectations for 2011 mainly due to an upward expectation for M&A deals and the existence of a positive environment for investments. However, the factors of low expectations for growth, exchange rate fluctuations, sovereign debt and the danger of protectionism should not be forgotten on the risks side. Sustainable recovery and stability are gaining more importance. Recovery in global FDI still does not seem to be robust and stable. TURKEY IN INTERNATIONAL INDICES INDEX RANKINGS OF TURKEY BY YEARS World Bank Ease of Doing Business Index UNCTAD FDI Inflow Ranking * AT Kearney FDI Confidence Index WEF Global Competitiveness Index IMD Global Competitiveness Index Transparency International Corruption Perceptions Index * We will be able to see the 2010 ranking in the UNCTAD WIR 2010 Report which is expected to be published in July

6 Sources - Central Bank of Turkey, Balance of Payments Statistics - Undersecretariat of Treasury Statistics - UNCTAD Global Investment Trends Monitor No.5 (January 2011) - Deloitte Annual Turkish M&A Review International Indices o World Bank Doing Business o UNCTAD o AT Kearney o World Economic Forum o Institution for Management Development o Transparency International 6