Turkey attracting foreign investment; Balkans struggle

26/12/2012

Turkey remains a top destination for investments in the region.

By Muhamet Brajshori for Southeast European Times in Pristina -- 17/12/2012

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Turkey is the world’s 13th-most attractive destination for foreign investment, according to a confidence index. [AFP]

The economic crisis in the Eurozone has influenced foreign direct investments in the economies of Southeastern Europe. While Turkey is still having a growing economy, countries such as Kosovo, Bosnia and Herzegovina or Serbia are seeing less investment than in previous years.

According to the A.T. Kearney FDI Confidence Index, Turkey ranks as the world's 13th most attractive destination for foreign direct investment in 2012. In just nine months of 2012, the foreign direct investments coming into Turkey reached $10.1 billion (7.6 billion euros).

Having climbed to the rank of the world's 16th largest economy despite the negative global financial environment, Turkey has shown an increased profile in attracting foreign direct investment in recent years.

"We are expecting to an increase of foreign direct investments in Turkey in 2013 too, with special emphasis on e-trade. At least one global risk capital company can start investing in Turkey next year," Alev Ertem, of the Turkey branch of EndeavorTurkey, told SETimes.

Internet and technology has been an important area for foreign investors in Turkey. General Atlantic, a global growth investment firm, made an investment of $44 million (33 million euros) to Yemeksepeti.com, Turkey's leading online food provider website.

In Serbia, the government said that foreign direct investment in the country are not falling and that no investor had left Serbia after deciding to invest in the country. Secretary of State at the Serbian Ministry of Finance and Economy Aleksandar Ljubic said the amount of foreign investment remains steady, with projections pointing to a slight increase in the future.

Slobodan Čerovicic, a professor at the University of Singidunum in Belgrade, told SETimes that corruption, rule of law are important issues for investors and will directly impact the amount of foreign investment the country can expect in the future.

"Especially bearing in mind that the processes of privatization are at the end, attraction of [foreign investment] is becoming a major challenge. However, even though it comes to economic challenge, the key to this problem still lies in the legal and social sphere," he said.

Kosovo saw a reduction of 100 million euros ($132 million) in foreign investment in the first half of the year compared to the same period in 2011. The Eurozone crisis is to blame, Arta Istrefi, advisor to Kosovo's Minister for Trade and Industry, told SETimes.

Istrefi said Turkish investments has significantly increased investment, surpassing all previous years.

"Italy and Switzerland remain very well where they have invested better than previous years and soon we expect to see a concrete investment in our country. Significant decline we are having from Germany and it can happen for many reasons, including the transfer of dividends abroad," Istrefi said.

In Kosovo, foreign investment is influenced by many factors, and a good part comes from the Kosovan Diaspora abroad. Greece is not seen as an indicator that has caused a decline in foreign investment in Kosovo. Greece remains the last place in the rankings of the countries that invest in Kosovo. However, this year investment from Greece have increased in Kosovo.

For the first six months of this year foreign investment in BiH was 27 million euros ($35.6 million), which is 50 million euros ($66 million) less than in the same period last year.

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Zoran Djeric, president of the Committee for Economy of Assembly of the Republika Srpska, said foreign investment is one of the basic prerequisites for healing the stumble economy of BiH.

"Political instability, poor business environment puts us at the bottom of the list of people who want to invest. What BiH does the best and what makes us the leaders in the region and Europe is corruption. Nobody is going to invest in the country where corruption is ruling. If the authorities do not do something very soon, I think that we are heading to the uncertain economic future", Djeric told SETimes.

According to the Central Bank of BiH, the inflow of foreign investment in 2011 amounted to 280 million euros ($370 million), or 2.2 percent of GDP, which is more than in 2010 when BiH registered an inflow of 215 million euros ($284 million). But BiH recorded constant decline of FDI since 2006, when the income of foreign investment was 1.650 billion euros ($2.18 billion).

Correspondents Menekse Tokyay in Istanbul, Ivana Jovanovic in Belgrade and Drazen Remikovic in Banja Luka contributed to this report.

This content was commissioned for SETimes.com.
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