Foreign investments fell by incentive certificates: Ministry


The decrease in the foreign direct investment (FDI) in recent years became more evident in 2020. The share of foreign capital companies in total amount of investment incentive certificates, which stood at 22% in the last 10 years, fell to 8% in 2020, according to a study conducted by the Ministry of Industry and Technology.

Foreign direct investments mostly consisted of foreign capital firms operating in the country declined in the pandemic year. The fixed investment amount of incentive certificates obtained by foreign capital companies, which generated 22% of total fixed investment amounts over the past 10 years, saw 8% in 2020. The decline stemmed from the fact that international companies have critically postponed their investments during the pandemic.

The number of inventive certificates obtained by domestic companies was 10,144 in 2020. The figure stood at 361 with 3.6% share for foreign companies. The fixed investment amount of incentive certificates prepared for domestic companies totaled TRY 219.2bn while this amount was TRY 19.2bn for foreign companies, generating 8% of total fixed investment amount.

Considering certificate-basis averages, foreign investors obtained 5% of total investment incentive certificates over the past 10 years. On fixed investment basis, foreign investors’ certificates generated 22% share in total amount.

“The fixed investment share of foreign companies per project is higher than the share of investment incentive certificates due to their links with multinational corporations that are part of the worldwide value-added chains,” the study said.

“The projects of foreign capital companies took a smaller share in 2020, compared to averages of the previous year. This suggests that the unpredictable conditions created by the pandemic have carried overseas investment preferences to a more sensitive point,” the study reported. 

The investment incentive certificates received towards the services sector decreased more than the manufacturing industry compared to the long-term averages in terms of amount. Accordingly, the share of incentive certificates received for the manufacturing industry, which generated 45% in total in the long-term averages, rose to 61% in 2020.

Rising sectors with the COVID-19

The high demand in hygienic products such as sanitizers, medical protecting masks, clothing etc. due to the pandemic raised investments in textile and chemical industries, according to the study.

Medical instruments production, including manufacturing of medical and surgical products as well as delicate and optical instruments manufacturing increased by 350% in terms of certificates, by 346% in terms of projected total fixed investment amount and by 446% in terms of projected employment in 2020, compared to the previous year.

Meanwhile, manufacturing of chemicals and chemical products rose by 82% in terms of certificates, by 80% in terms of in terms of projected total fixed investment amount and by 163% in terms of projected employment in this period.

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