Asian interests in Turkey growing continuously
Strengthening political ties between Turkey and Asian countries has helped in an increasing attention paid to Turkey by Asian investors. Already completing mega projects and making large investments, Asian companies eye further investment in various sectors of the country, according to Daily Sabah's article Asian interests in Turkey growing continuously
Asan investors, who regard Turkey as a transit point leading to European and Middle Eastern markets, have heavily invested in many Turkish companies over the recent years.According to EY, an international audit firm, many Asian investors from China to India and from Japan to Malaysia partnered up with or bought as many as 15 Turkish companies in 2016. According to Central Bank of the Republic of Turkey (CRBT) data, the amount of international direct investment in Turkey last year stood at $6.714 billion, with $2.6 billion of it coming from the Asian region. In the same period, many Asian companies were reported to have held negotiations with Turkish companies in order to access the European and Middle Eastern markets. EY data revealed, 15 Asian companies purchased controlling stakes at Turkish companies or partnered up with them at various percentages in 2016. While acquisitions in this period differed in many sectors, from construction to health, and from information to entertainment, the Mars Entertainment Group, which was completely acquired by South Korean CJ CGV in April 2016, was named the one with the largest transaction value of $689.2 million.
Murat Kolbaşı, Coordinating President of the Foreign Economic Relations Board (DEİK) Turkey Asia-Pacific Business Councils, spoke to AA on the interest of Far Eastern investors in Turkish companies. He said both economy and foreign affairs ministries were conducting studies in this area, adding, "There is a positive motivation towards China especially in the context of our Economy Ministry's China Action Plan." Stressing that there was an improvement in relations between China and Turkey at the presidential and prime ministerial level, Kolbaşı pointed out that Turkey is a transit point when viewed in regards with the ancient Silk Road and that it is of huge significance in terms of logistics. Kolbaşı said that Turkey was in the radar of Far Eastern companies, especially Chinese ones, because of its advantages in port operations and logistics. Noting that he was the coordinating president of 19 countries, within DEİK, Kolbaşı said his remarks about China were also true for 19 other countries, which constitute nearly 50 percent of the world trade. According to Kolbaşı, both parties - Turkey and Asian countries - are newly discovering each other - meaning there is a potential for growth in bilateral trade relations.
Meanwhile, EY Turkey Head of Institutional Finance Department Müşfik Cantekinler said Turkey's geographical location has become the main factor in the recent increase in investments coming from Asia. "Turkish companies have customer base in both Middle East and Europe and also have a cheap labor force - which were the most important factors, attracting Asian automotive companies," he said. According to Cantekinler, investments have increase not only in the automotive sector, but also in food, beverage, information and health sectors in recent years. Likewise, South Korean CJ CGV's investment in the Turkish Mars Entertainment Group was the largest transaction recorded last year. Underlining that Asian investors were making longer-term and more strategic investments in Turkey than investors from other regions, Cantekinler said they were quite successful in fitting in Turkey's condition and company culture. "They prefer to use options such as waiting or restructuring themselves to withdrawing from the country, when their investments bring poor performance," he concluded.
According to Deloitte's report on Turkish mergers and acquisitions in 2016, far Eastern and European investors contributed the most to the foreign investors' annual deal volume at 31 percent each. "Far Eastern investors' share was at its highest level historically, mainly due to a couple of sizeable South Korean and Japanese investments like Mars Entertainment, Polisan and Netaş," the report pointed out.
Moreover, as recently reported, General Manager Jason Jaehyun Ahn of the South Korea-based construction company SK E&C, which completed the construction of Eurasian Tunnel and is one of the companies in the consortium that would build the Çanakkale 1915 Bridge, said the company was also aspiring to take part in projects that will make Turkey an energy trade hub. According to Ahn, his company will participate in the Turkish energy market, especially natural gas-based power plants, in the near future. Evidently, SK E&C has partnered up with Unit International Enerji, a Turkish energy company that invests in the Iranian energy market, and purchased a 30 percent stake at the company.