Çağlayan was quoted as putting the January-March figure at $4.6 billion in an Economy Ministry statement on Saturday. Some $2.8 billion of that amount came just in the month of March, he said in the statement. “As a result of our new investment incentive package, the volume of international direct investment flowing into Turkey will further increase,” he added.
The long-awaited incentive package was unveiled by Prime Minister Recep Tayyip Erdoğan in early April. Related policies are expected to attract new investments to 15 of Turkey's relatively less-developed eastern provinces. Also expected to substantially help reduce the country's current account deficit (CAD) as a result of what is called “strategic investments” while minimizing differences in regional development, the new incentive package is the most comprehensive announced so far.
The new program -- following the previous one that was introduced in 2009 -- features incentives including social security employment premium subsidies for seven to 10 years, land allocation and tax exemptions for new investments from the beginning of this year through the end of 2013.
The government revised Turkey's regional development map and divided the regions into six categories based on their current level of economic development and also the investment opportunities they offer. The first category, mainly western provinces, is the most developed, while the sixth category includes the least developed regions, particularly in the eastern and southeastern parts of the country. According to the new package, those who invest in relatively less developed regions will benefit from this tax opportunity for a long time.
The sectors foreign investors preferred to invest in the most were food and beverage production with $1.9 billion and production of refined petroleum products with $163 million. As of the end of March, there were almost 29,877 firms owned wholly or partly by foreign investors in the country.
Flight from Europe
Of the $4.6 billion foreign investors brought Turkey in long-term investments, 75.2 percent originated in Europe, the minister also said in the statement. The flight of capital out of Europe from Turkey coincided with the country's achievements in reducing public debt and budget deficits as well as the real economy -- economic growth and employment -- side at a time when most of Europe is teetering under severe austerity measures aimed at restoring some financial order that deepened economic recession there. “Turkey is a safe harbor for international investors, offering them opportunities. But that some 75.2 percent of all the FDI we received came from Europe shows not only that there were certain opportunities, but also that Turkey is progressing to becoming Europe's supply and goods production center,” Çağlayan said.
The three European countries that sent the largest amount of FDI to Turkey were the UK with $1.9 billion, the Netherlands with $430 million and Luxembourg with $189 million in the January-March period, according to the information provided in the statement.
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