(AA) – Structural reforms are by far the most cost-effective way to attract investments, Turkish Deputy Prime Minister Ali Babacan has said.
Speaking at the G20 World Association of Investment Promotion Agencies Conference on Foreign Direct Investments in Istanbul on Monday, Babacan said: “There is no more-effective way for a government to act.”
“It has only to change a few articles in a law, or update a regulation, and the environment for investment can be vastly improved.”
“Turkey decided to make life easier for business and investment, and we succeeded,” he added.
The changes introduced in Turkey are regarded by experts as having been critical to the country’s rapid growth in the Gross Domestic Product over the past 10 years.
Turkey attracted $12 billion in Foreign Direct Investment in 2014, including investment in real estate, according to statistics from the Turkish Economy Ministry. Moreover, Turkey ranked third in the world for inward Foreign Direct Investment stock (or total accumulated Foreign Direct Investment) at $146 billion, according to the Dubai Annual Investment Report published in April 2015.
Babacan pointed out that Foreign Direct Investment is playing a significant role in the development of emerging markets. “Globalization has extended the limits and horizons for this kind of investment,” he explained. “Companies today see the world as one single market.”
It was up to host countries to provide a friendly-economic environment for such investment, Babacan said. “The establishment of long-term investor confidence is critical to attract such investment,” he said.
Turkey is 24th in the world in terms of investor confidence for Foreign Direct Investment, according to the A.T. Kearney Foreign Direct Investor Confidence report published in June 2014.
To achieve investor confidence, as Turkey has, a government must provide an evolved regulatory system, including transparency, good governance, property rights, and an active investment promotion agency.
“Openness for trade and finance are also among the essential elements for any country to attract Foreign Direct Investment,” Babacan added.
The deputy premier explained that, in the framework of the G20, a template was being established to evaluate if a country had the necessary elements to attract Foreign Direct Investment.
“Use of this template will mean that countries will no longer be responsible only to their internal stakeholders for investment condition — they will also become responsible to each other,” he said.