Companies seeking new supply chain hubs eye Turkey in post-COVID-19 era

The shift in global supply chains as a result of the trade wars between the U.S. and China in the aftermath of the COVID-19 pandemic has become clear, according to the Turkish Presidency's Investment Office Chairman Burak Dağlıoğlu, who says Turkey is one of the most advantageous countries in this regard, as more firms seek to invest in the country due to its strategic location and opportunities.

“We expect a new, strong flow of investment in Turkey once the global investment climate recovers,” Dağlıoğlu told Daily Sabah, adding that Turkey is ready for investors and provides a safe atmosphere for investment, as companies that have never invested in Turkey have started requesting information on producing products that have not been produced in the country before.

Noting that the world has been undergoing a difficult period in which almost all economic activity came to a halt or slowed down, Dağlıoğlu said the economy never stopped in Turkey.

“Since the beginning of the pandemic, we have been consistently in touch with all individuals and institutions who previously invested, were planning to invest or had a potential to invest in Turkey and personally took care of problems faced by companies which invested here,” Dağlıoğlu said, adding that the Investment Office has provided all types of support to ensure foreign companies’ production was not affected during the lockdown.

The top investment official added that some companies are even planning to hold groundbreaking ceremonies in September and October, though he refrained from naming them.

Referring to the acquisition of Turkish gaming company Peak by the U.S.-based mobile gaming giant Zynga for $1.8 billion (TL 12.20 billion), and the announcement of other partnerships during the pandemic period, Dağlıoğlu said these boosted the morale.

But more importantly, Turkey has succeeded in creating new investment documents through a proactive approach and strong sense of communication in this period, according to Dağlıoğlu, who notes that there has been a remarkable surge in the number of requests for information (RFI) documents. For instance, a large, prominent company submitted a new request the other day, and the investment office forwarded the company information on Turkey’s investment environment, incentives and sectoral information, as well as recent activities. Dağlıoğlu noted that such requests indicate that global companies are still interested in making investments in Turkey.

“Most of these companies are ones that did not prioritize investment in Turkey before, even though we previously contacted them about it. But now, this interest is extremely significant amid drastic changes in the global supply chain,” Dağlıoğlu said, adding that it also indicates that their investment is likely to soar in the upcoming period.

Noting that permanent investments are made after long-lasting decision-making processes, Dağlıoğlu said some even take up to two or three years.

Multinational companies are now in search of new regions to make investments,” Dağlıoğlu said, adding that Turkey positively differentiates itself from others with its remarkably sophisticated production infrastructure and its proximity to Europe.

Dağlıoğlu continued by highlighting that the Presidency Investment Office has been proactively making preparations toward potential changes in the supply chain as companies have recently started taking concrete steps to shift their supply chains.

“We have determined which companies have which needs in which sectors. We have been working on a product and company-based framework as we highlight Turkey’s performance in the health care sector and ability to carry out economic activities thanks to its sophisticated production structure during the pandemic,” Dağlıoğlu said, adding that they aim to give the message that Turkey provides the steadiest and readiest environment for new investments.

According to the latest research about global supply chains, 83% of firms expressed they were planning to diversify their supply chain regions and are trying to figure out what these new regions would be, Dağlıoğlu said, adding that a look at the increase in Turkey’s textile exports clearly shows this.

Regarding the outlook for 2020 and investment expectations for the next year, Dağlıoğlu said 10 Turkish startups have received investments in the first half of 2020. Although there has been a slowdown since the lockdown in April, they expect things to pick up steam after September. He noted that they expect good news in the automotive, engineering, infrastructure investments and chemical sectors in September.

“We have positive expectations in line with the global recovery in 2021,” he said.

Dağlıoğlu touched upon the new venture capital funds that will be established in Turkey, saying that the funds generated will be above TL 1 billion and that these will provide funding for entry-level entrepreneurs, particularly technology firms.

“There is a deep interest in making investments in mobility, e-mobility, energy, chemistry and information technologies,” Dağlıoğlu said.

Hailing the discovery of gas reserves in the Black Sea as an important turning point for Turkey, Dağlıoğlu said it will not only take the country’s energy security to the next level but will also contribute to competitive and sustainable growth. He noted that the reserves will provide a critical foundation for future investments in Turkey and will draw more foreign investors.

There has been an increase in demand for investment from not just the West, but also Asia, with many firms contacting Turkey for the first time, Dağlıoğlu said, adding that they expect investments to especially increase after a vaccine for COVID-19 is found.

“Finding a vaccine is the key point for investments to liven up,” he said, adding that U.S.-China relations were another factor in this regard.

Dağlıoğlu also noted that the change in supply chains cannot be seen overnight and he expects the impacts of this period to be reflected in the global economy in the next three years.

“For instance, we visited a multinational firm and invited them to produce an ingredient used in their Turkish productions in Turkey, and they had not included the issue on their agenda back then. However, they quickly started producing that ingredient in Turkey due to the difficulties they experienced in the supply chain during the pandemic,” Dağlıoğlu said, adding that companies that exclusively depended on China have started thinking that they need to move closer to Europe.

“Turkey is the only country between China and Europe that has sophisticated production skills,” Dağlıoğlu said.

Based on Daily Sabah

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