DO NOT INVEST WITHOUT CALCULATING THE RISK

INTERNATIONAL INVESTMENT OPPORTUNITIES FOR TURKISH COMPANIES

These are economically tough times for Turkish companies. Although there are incentives and governmental support in certain areas, these are often below expectations when we compare them to other countries. Turkey's economic data for a long time is not encouraging. The time has come for Turkish companies to evaluate overseas investment opportunities, and it is already passing. Turkish companies should strive to internationalize to manage their risks. Since it is difficult to determine the direction in Turkey, the companies are already aware of what to do.

Nevertheless, in international markets, before making an investment decision in other countries, it is necessary to determine the risks correctly and invest accordingly. Before investing in other countries, the risk areas are under five main topics:

1. Market Risk: The investment prospect country has political, economic, and exchange rate risks. Political risk can pose a danger that will affect your investment due to political instability in a country. The two most dangerous areas for foreign investors are the presence of unfavourable legislation and the transfer of political power regardless of an election or a coup. In an environment of developing political instability, it may not be wise to take investment risks, as global economic impacts will also exist.
2. Project Risk: It is fundamental to consider factors such as the business model, vision, state of the market, experience of the development team, exit strategy, and project progress; to obtain a reliable indicator of the risk involved in the investment. When examining the business and financial models of an investment, the general idea is to understand how the investment will generate income or returns. For this reason, it is necessary to prepare and work with experts. It is also essential to work in different scenarios on the performance of the investments' pay-back time and be prepared even for the worst scenario. Usually, if there are no other inputs and guarantees, the longer the return period of the investment, the higher the risk can be. It will also be necessary to evaluate the market targeted by the investment. For example, if you consider investing in a turnkey agricultural plantation that grows a particular crop, it should be investigated whether there is an increasing demand for that crop. Also, when you want to liquidate the exit from your investment, you have to be sure that there is already a resale market. On the other hand, Project Developers' experience level affects the risk to the same extent. Working with a project developer who has no experience involves high risk.
3. Transaction Risk: When deciding on investment at the international level, the areas to focus on investment suitability in terms of the transaction are; banking operations, contract management, the currency, and the investor, as well as the country's transactional credibility and reputation. Legal contracts have to be managed by professional experts and lawyers. Because of the delineation and protection of rights' and fast investment exits' importance, it is easier to consider countries with established banking and currency transfer systems. Transferring money to developing countries where banking and foreign exchange transfer systems are not fully established is more complicated, expensive, and risky. Clarity of procedure is critical not only when investing but also when exiting the country after investment.
4. Investment Categories Risk: The appetite of the company to invest will be decisive in this regard. For example, renewable energy project investments can be a more risky project at the pre-construction stage. The investment here will be lower, but the possible profit will be high along with the risk. On the other hand, a renewable energy project investment that is ready for construction can be considered low risk. Here, too, the investment cost will be high.
5. Environmental and Climatic Risk: When calculating the risks of projects climatic conditions of the country and the place have to be invested should be evaluated. It is necessary to know what types of natural disasters are common in the country or region where the investment is made. For example, when investing in agriculture, one should be concerned with whether there are droughts or forest fires in the farm area. If the winter conditions of the country are severe in construction works, it is essential to plan and project accordingly. In the renewable energy sector, the efficiency of natural resources information should be net for the calculations.

Being aware of the risks and being able to manage them with expert staff is like Art - timeless and precious.