Turkey's prospects and its relevance for Austrian companies

In view of the abating "thermal" from Eastern Europe, domestic enterprises must open up new growth markets. Especially Turkey, as a great interior market in a strategically advantageous location, seems to offer itself as a complement to the prevailing concentration on Russia and the CIS states. The areas that are interesting for Austria in this connection are those of financial services, energy, building and building supplies, automotive supplies and mechanical engineering and plant engineering and construction. A far as Austria is concerned, Turkey has hardly been included in any long-term strategic plans at all. However, the country should not be seen only from the point of view of risk diversification in relation to Russia. On the one hand, it offers a market with 75 million people and above-average economic growth, expected to amount to more than five percent annually over the coming years. On the other hand, Turkey is ideally positioned to open the door to the Middle East and Africa, and even to Southern Russia.

Driven by privatizations and government reforms, there has been a great increase in investments over the past three years; however, these are still significantly below those in the CEE states. Like the Russian economy, the Turkish system is dominated by family-owned local business conglomerates. This means that, for foreign investors, strategic partnerships are the best options for an entrance into the market. Problems for Western enterprises will be due mainly to lack of transparency, excessive bureaucracy and lack of accessible equity capital – both the Istanbul stock exchange and Private Equity constitute "bottlenecks" in this respect.

In the last two years, only four Austrian enterprises have invested relevant amounts in Turkey: OMV, Verbund, Meinl European Land and Meinl Airports. This reluctance is mainly due to the prevailing concentration on Eastern Europe. Awareness of exotic destinations such as China, India or Turkey (see above) is only just awakening.