Wal-Mart, H & M, Boots, Aldi... Turkey has been waiting for these retail giants for years. It looks as though we shall wait a little longer. In fact, these companies had included Turkey among their investment plans. But the global crisis resulted in them suspending these plans. It is not just these companies, there are tens of others in this situation. Our research shows that 23 important foreign companies, including Radio Shack, Maplin, Euronics and Germanos, had included Turkey in their plans but then shelved their investments. Information from the market suggests that 10 foreigners, including Fnac, Boots and Magna, have suspended their investment plans.
There is no doubt that the main reason for foreign investors removing Turkey from their calendars has been the global financial crisis. The crisis has resulted in companies changing their strategies. They have focused more on protecting what they already have rather than launching investments in new areas. For this reason, in the world as a whole, there has been a significant decline in the appetite for investments and taking risks.
According to forecasts by the World Association of Investment Promotion Agencies, direct foreign investments will fall by 15 percent in the world as a whole in 2009. Moreover, this fall will be more keenly felt in the Emerging Seven (E7) countries, which include Turkey and which have attracted a high volume of foreign capital in recent years.
Investment banks and funds lead the way in terms of project postponements. The sectors which have been really hard hit are headed by real estate. Sectoral sources report that many companies which had taken the decision to launch significant investments in this area are now trying to sell their projects to larger concerns. Those who are unable to sell are closing their offices in Turkey and breaking up their teams.
Shopping mall projects are also being frozen. Around 30 shopping malls projects were expected to be opened in 2009, but this has now fallen to 4-5.
The First To Give Up
A lot of foreign brands which were going to enter the new shopping malls that were going to be opened are shelving their investments because of both the projects being halted and revisions to growth plans It is striking that there is a disproportionate number of retail electronic chains amongst those who have shelved their investments. For example, the Home Retail Group and Maplin, which are among the largest electronics retailers in Britain, the Netherlands-based Euronics, which is one of the largest electronics retailers in Europe, and the US electronics retailer Radio Shack are just a few of the chains which have shelved their investment plans as a result of the economic crisis. Companies are also pulling out of investments in banking, insurance, energy and cement, which have recently been amongst the most popular sectors. It is thought that foreign investment activity in finance, automotives, housing and information technology sectors will be very limited in 2009. In fact, in the financial, automotive and housing sector in particular, the recession is forecast to last at least three years.