Turkey's hard-earned reputation as a stable country on the path to European Union admittance took a hit May 28 after a sit-in at Taksim Gezi Park in Istanbul turned violent and led to weeks of deadly, anti-government demonstrations.
The violence was a sharp turn for this country, which had been applauded for its political and economic stability during the Arab Spring uprisings elsewhere that began at the end of 2010. But can a decade of stellar growth and healthy economic projections outweigh Turkey's bad press? Business people, such as Omer al-Katib, director of corporate affairs and investor relations at Alliance Grain Traders, think so.
Mr. al-Katib considers the internal strife part of Turkey's growing pains and says the country still has an attractive investment climate. His Regina-based lentil and bean export company has maintained business ties in Turkey for more than a decade and Mr. al-Katib says it has no intentions of leaving.
"From our company's standpoint, no impact whatsoever," he says of the turmoil. Pointing to Turkey's access and proximity to markets, its free-trade deals with lots of countries in the region and its customs union agreement with the EU, Mr. al-Katib says: "[There are] certainly a lot of opportunities for Canadian companies and Canadian manufacturers as well."
Additionally, Ernst & Young's 2013 attractiveness survey found that a young, skilled workforce, political stability and its geographic location made Turkey a unique and appealing investment opportunity.
Foreign markets are taking notice, according to the survey, as Turkey received "foreign investment inflows of only $18-million (U.S.) 33 years ago when it started to host foreign investors. Now, the cumulative value of foreign investments has surged to $138.3-billion."
For years, Turkey has been working at luring foreign companies to its cities by promoting its economy as more stable than many still reeling from the 2007-08 economic crises. The country had its own financial meltdown in 2001 and rampant inflation, which scared the country into executing banking reforms that helped shield it from the global meltdown only a few years later.
Turkey also adopted several macroeconomic policies that led the private sector to play a stronger role and encouraged more interest in foreign direct investment – all under the plan of joining the EU.
According to the Organization for Economic Co-operation and Development (OECD), Turkey is expected to be the fastest growing economy among OECD members from 2012 through 2017, with an annual average growth rate of 5.2 per cent. And it continues to set high national targets. By 2023, the centennial anniversary of the country's modern republic, Turkey expects to be among the top 10 economies in the world with a gross domestic product of $2-trillion. It also projects attracting $80-billion in foreign direct investment, up from $15.6-billion in 2011.
But Turkey will have to continue fighting against misconceptions from foreign markets, acknowledges Tuncay Babali, Turkey's ambassador to Canada.
"One specific misconception might be that Turkey does not have a well-diversified, Western-like economy," the ambassador says. "For some, this may be because the country is not part of the European Union, and for some considered more closely connected to the Middle East. So, foreign business may still have the misconception of Turkey as a more Middle East or emerging-developing market economy than the European-Western-style economy that is the reality."
Showing off its resilience, stability and strategic geographic location – more than 50 countries are within a three-hour flight from Istanbul – helps ease the minds of foreign investors, Mr. Babali says.
"Mentioning that the main export item of Turkey in 2012 was vehicles and automotive parts … [and] that the required time to start a business in Turkey is six days or that since 2006 trade volume has been almost doubled to $400-billion might give an idea about the current level of Turkey's economy."
Mike Ward, Canada's former senior trade commissioner for Turkey, has been trying to persuade the Canadian government to put more attention on this country and move its gaze beyond the United States. As of 2011, merchandise trade between Canada and Turkey was approximately $2.4-billion, an increase of 53.9 per cent from 2010, according to the federal government. But there is still a lot of room to grow, Mr. Ward says.
"Certainly, there is tremendous enthusiasm among Canadian firms to go over to Turkey to do business, at the national level and at the provincial level," he says, adding that a Canadian delegation focused on business in the communications and technology sectors is expected to travel to Turkey soon.
Meanwhile, other countries, including the United States, have jumped in. Multinational heavy-hitters such as Coca-Cola and Microsoft are investing directly.
"Whether or not it joins [the EU] in the near term doesn't really matter," Mr. Ward says. "It's got these things in place which make it very comfortable for North American and European firms to do business in Turkey. Turkey is now right into the 21st century."
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