Foreign-owned companies in Turkey generated 12.8 percent of the country’s total business turnover in 2023, as their number rose to 10,265, exceeding 10,000 for the first time, according to data released by the Turkish Statistical Institute (TurkStat).
TurkStat released the Foreign-controlled Enterprise Statistics, 2023 on Tuesday.
According to TurkStat, the number of foreign-owned companies in Turkey in 2023 was up from 9,287 in 2022, reflecting the growing presence of foreign capital in the Turkish economy.
Foreign-owned companies also increased their share of total employment, rising from 5.0 percent in 2022 to 5.1 percent in 2023.
As to the sectors dominated by foreign-owned companies, TurkStat data show they were strongest in the manufacturing of tobacco products, where they accounted for 92.6 percent of sectoral turnover. Insurance, reinsurance and pension fund activities followed with a 43.2 percent turnover share.
Germany leads foreign ownership
Germany ranked first among countries controlling businesses in Turkey. Of the 10,265 foreign-owned companies operating in 2023, 1,266 were under German control. These companies generated 13.8 percent of the total turnover attributed to all foreign-owned firms, amounting to 1.085 trillion lira ($25.5 billion).
Germany has consistently ranked among the top foreign countries controlling businesses in Turkey in TurkStat’s enterprise statistics, supported by deep commercial ties and the presence of a large Turkish diaspora who make investments in Turkey.
The country hosts the largest Turkish diaspora, with estimates of people with Turkish roots ranging from around 3 million to potentially 4-5 million, making them the largest minority group, originating from 1960s labor migration and subsequent family reunification.
US-controlled companies followed Germany with 965 enterprises and an 11.2 percent turnover share. The United Kingdom ranked third with 706 firms, accounting for 10.3 percent of foreign-owned turnover.
Sharp increase in Russian and Ukrainian companies
The number of companies controlled by Russian shareholders rose sharply after Russia’s invasion of Ukraine, which began in February 2022. Their number increased from 83 in 2021 to 305 in 2022 and 483 in 2023. Their share in total turnover among foreign-owned companies also climbed from 0.6 percent to 3 percent during the same period.
Ukrainian-controlled companies saw a similar trend, rising from 32 in 2021 to 91 in 2023.
Other data and reports show that many Russian and Ukrainian nationals have set up or expanded businesses in Turkey since the start of the war, particularly in cities such as İstanbul and Antalya.
The increase in Russian and Ukrainian companies in recent years also reflects shifting regional dynamics following the war as both groups sought new bases for economic activity.
Russian-linked companies have occasionally attracted criticism over allegations that they facilitate the circumvention of international sanctions imposed on the country due to its war on Ukraine.
Foreign investment has played a significant role in Turkey’s economy for more than two decades, particularly in manufacturing, finance and retail.
Finance Minister Mehmet Şimşek, who has been at the helm of Turkey’s economy since June 2023, has repeatedly emphasized efforts to make the country more attractive to global investors after Turkey experienced a sharp depreciation of the lira, rising inflation and a debt crisis in 2018 that triggered capital outflows and a decline in foreign investment.
Speaking at a forum in İstanbul in November, Şimşek said Turkey “is once again on the path to becoming a regional hub for foreign direct investment.”
He noted that direct investment in Turkey has increased nearly twentyfold over the past 20 to 25 years and said the government remains committed to structural reforms, fiscal discipline and stabilizing inflation to maintain a favorable environment for investors.