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French Version

Turkey offers a lucrative market for European investors

But uncertainty and bureaucracy scare off many companies

Turkey has everything it needs to become a major export base for European investors, but they still face immense obstacles when trying to do business here, experts say.

Despite a 1996 customs agreement between Ankara and the EU and a 2003 law encouraging direct foreign investment, very little money has come into the country: $2.9 billion in 2004 and $15 billion spread out from 2005 to 2007, according to official forecasts.

"Direct foreign investment in Turkey represents 0.1 percent to 0.5 percent of GNP," said a financial analyst who asked not to be named. "In East European countries such as Hungary, it is 5.0 percent to 10 percent of the GNP."

The uncertainty that has so far dominated the Turkish market and a daunting bureaucracy are what really scare off European investors, the analyst believes.

"Turkey should expect no favors from European Union countries unless it applies the customs agreement 100 percent," he said, "and we are a far cry from that."

He cited as examples bureaucratic horror stories of a cheese distributor whose products remained blocked at customs for two weeks, or a mustard manufacturer who sells all over Europe having his wares rejected by the Turkish authorities on sanitary grounds.

Raphael Esposito of Istanbul's Franco-Turkish Chamber of Commerce says he has been a regular witness of daily bureaucratic snafus.

"The ponderous bureaucracy, failure to acknowledge credentials, persistent bribery, counterfeiting and organized crime are so many reasons foreign investors stay away," he said.

"The simplest of legal dispute means four or five years in court ... if your certificate hasn't been properly stamped by French customs, it'll never clear Turkish customs," he said.

A pity, says Jean-Antoine Giansily, director of the French economic mission Istanbul, because Turkey could provide major opportunities for European firms and capital.

"The Turks are begging foreigners to invest in their country to make up for the deficiencies of the state," he said.

Chemicals, plastics and sanitation networks are so many other sectors waiting to happen, Giansily said, stressing Turkey's advantage of already being a prime partner of the EU in several fields, most notably in textiles and garments.

"Turkey is already well integrated into the European system," he said, stressing that it is just as easy to produce for French boutiques in Turkey as it is in France.

Turkey is Europe's second provider of textiles and garments after China and also exports to its non-EU neighbors - the volume of informal trade between Turkish workshops and Russia in 2004 was estimated at four billion dollars, according to official sources.

Turkish appliance manufacturers, some of them leaders on the European market - Turkish firms, for example, control 35 percent of the European color television market - are just as active all over the ex-USSR and in the Middle East.

"The Turkish economy," Esposito said, "has expanded all over the Balkans and the Black Sea - it could become an excellent platform to re-export European goods to the Near and Middle East."

Beirut,12 20 2004
Redaction
The Daily Star
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