Iranian Businessmen, Investors Establish Footing in Turkey

EghtesadOnline: A total of 970 Iranian companies were established in Turkey last year, making Iran the biggest foreign country to form companies in the neighboring country, the head of Iran-Turkey Studies Center said.

News ID: ۷۴۹۷۴۰

19 February 2020

“As the minimum amount of capital required to set up a company in Turkey stands at 12,000 liras ($1,979), we can say that Iranians have invested at least $1.92 million in the neighboring country last year,” Jalal Ebrahimi also told Financial Tribune.

Iran was followed, he said, by Syria with 747 companies, Iraq with 337, Germany and Egypt with 326 each, Saudi Arabia with 318, the UAE with 229 and Libya with 195 companies.

A total of 11,490 foreign companies were established in Turkey in 2019, according to figures released by the Union of Chambers and Commodity Exchanges of Turkey (TOBB).

“A third of the Iranian companies were founded in Istanbul. The next popular cities for Iranians to invest in were Izmir and Ankara. Most of the Iranian companies in Turkey established in 2019 are active in the fields of IT, commerce, transportation, medical equipment, restaurants and chain stores,” Ebrahimi, who is also the secretary-general of Iran-Turkey Commercial Council, told us.

Iranians, he added, have one main goal by establishing companies in Turkey, which is to use the neighboring country as a platform to ease exports from and imports to Iran in the face of US sanctions.

“These companies often import Iranian goods as end products or in CKD form into Turkey where they are processed, assembled, packaged or rebranded and eventually reexported to Europe and Balkan countries. This makes more sense when we take into account the fact that, at present, Turkey has free trade agreements in place with 36 countries, has commercial attachés in 102 countries and is free from any sanctions. This makes trade much easier and less costly for Iranians who, because of the economic sanctions, face a myriad of trade handicaps and the high cost of transactions deprives them of making profits.”

Ebrahimi noted that Iran has only seven commercial attachés abroad and the few preferential trade agreements it has signed have either not been implemented or are mired in difficulties.

Biggest Foreign Buyers of Real Estate

With the purchase of 5,423 homes in Turkey, Iranians ranked the second biggest foreign buyers of real estate in the neighboring country after Iraqis in 2019.

Iraqis with 7,596 were the biggest foreign buyers of homes in Turkey last year.

Iranians were followed by Russians with 2,893 purchases, Afghans with 2,191 and Yemenis with 1,564.

Foreigners bought a total of 45,483 homes in Turkey in 2019, registering a 14.7% rise compared with 2018.

Of the total sum, 20,857 homes were in Istanbul, 8,951 in Antalya, 2,539 in Ankara, 2,213 in Bursa and 1,696 in Yalova.

Iranians continue to take greater interest in investing in Turkey, according to a statement issued by Elit Citizenship and Investment Consultancy, which offers consultancy services to foreigners in Turkey about company founding and investments under the brand of VIPTurkishPass.

Major Source of Tourism for Turkey

While 3 million Iranian tourists visit Turkey annually, a remarkable increase has also been seen in the number of Iranians investing in Turkey, Daily Sabah reported.

In the last few years, Iranians ranked first in applying for Turkish citizenship through investment.

More than 2.1 million Iranian tourists visited Turkey in 2019 to register an increase of 5.05% compared to 2018.

As data released by Turkey’s Ministry of Culture and Tourism show, Iranians accounted for 4.67% of all foreign tourists visiting Turkey last year.

In fact, Iran was Turkey’s fifth biggest source of tourists in 2019 after Russia, Germany, Bulgaria and the UK.

In December alone, 134,768 Iranians visited Turkey, up by 25.31% compared with the similar month of 2018.

Iranians accounted for 6.27% of all foreign tourists visiting Turkey in the month.

Iran was Turkey’s fourth biggest source of tourists in December after Bulgaria, Germany and Georgia.

Having started to implement a series of policies aimed at attracting foreign direct investment in recent years, Turkey has succeeded in drawing a large number of investors from many regional countries, especially from the Middle East.

After the "Turkuaz Kart" (Turquoise Card), a practice similar to the US Green Card application, was launched in 2016, it became possible to get Turkish citizenship by investing in the country as of 2017.

In September 2018, lowering the minimum investment limit in the Citizenship Through Investment Program to $250,000 in real-estate investments led to an increase in foreigners' interest in the country.

40% Decline in Trade

Iran’s trade with Turkey totaled $5.58 billion in 2019 to register a decrease of 40.09% compared to 2018, data released by Turkish Statistical Institute show.

Iran exported $3.27 billion worth of goods to Turkey during the period under review, indicating a 52.81% decline year-on-year.

Imports stood at $2.31 billion, down 3.22% YOY.

Iran was Turkey’s 19th biggest export destination and the 14th biggest exporter of goods to the country during the period under review.

Iran’s exports to Turkey in December alone amounted to $89.85 million, down 76.18% YOY while imports from the neighboring country during the month went up by 14.97% YOY to $210.82 million.

The Turkish Statistical Institute data do not mention the type of commodities exchanged between the two neighboring countries. However, data released by the Islamic Republic of Iran Customs Administration on Iran's non-crude oil trade show liquefied natural gas, non-alloy zinc, aluminum, urea and bitumen were Iran’s main goods exported to Turkey, while Turkey exported mainly cooking bananas, tobacco and fiber during the last Iranian year (March 2018-19).

The embargo imposed by the US on Tehran—a major trading partner of Turkey—has significantly hit Turkey's exports to Iran, Turkish Trade Minister Ruhsar Pekcan told Turkish broadcasters BloombergHT on the sidelines of the 50th World Economic Forum in the Swiss ski resort town of Davos last month.