Financial Risks of Doing Business in Türkiye: Key Insights for 2024-2025
Türkiye offers numerous opportunities for international entrepreneurs, but working with Turkish business partners also entails financial risks. To help businesses navigate these challenges, we have compiled the latest financial insights for 2024-2025, highlighting key risks and opportunities in financial reporting, international financing, banking, and the entrepreneurial ecosystem.
Financial Reporting and Risks
Understanding financial reports is crucial to mitigating risks in Türkiye. Here are some key figures from the latest DO & CO Financial Report for the 2024-2025 fiscal year:
- net profit margin: 4.1% (previous year: 3.9%)
- cost of goods sold: increased by 29.1% to 27,658.45 million TL
- personnel expenses: rose by 37.1% to 21,692.67 million TL
- finance costs: decreased from 809.75 million TL to 417.91 million TL
The improvement in financial results is attributed to increased financial income, making it essential for investors to analyze financial stability before entering partnerships.
International Financing
The International Finance Corporation (IFC) plays a significant role in Türkiye’s private sector investment. The latest data shows:
- IFC approved and deployed $3.6 billion in financing for Türkiye in 2024
- Türkiye is the third-largest country where IFC operates with the private sector
- IFC plans to provide $35 billion in financing to Türkiye between 2024-2028
These investments highlight Türkiye’s potential for international business collaborations, particularly in sectors benefiting from IFC funding.
Banking Sector Risks
Türkiye’s banking sector presents both opportunities and risks. According to the TEB Financial Report from December 2024:
- banks have allocated 1,500,000 bin TL in free provisions to counter possible economic and market downturns
- accounting practices follow TMS 37 standards
- the complexity of TFRS 9 compliance presents challenges in credit risk assessment
Investors should consider these factors when evaluating the financial stability of Turkish banks before making business decisions.
Entrepreneurial Ecosystem
Recent regulatory changes have improved conditions for startup investments in Türkiye. Key developments include:
- venture capital investment funds (GSYF): a new regulation enacted on September 21, 2024, facilitates investments in foreign companies
- SAFE agreements: legally recognized, allowing startup investments to convert into equity shares in the future
These changes contribute to a more dynamic investment environment, making it easier and faster for international entrepreneurs to invest in Turkish startups.
Conclusion
When working with Turkish business partners, financial risks must be carefully analyzed. Key areas to monitor include financial reporting, international financing opportunities, the banking sector’s stability, and the evolving entrepreneurial ecosystem. Understanding these factors can help international entrepreneurs make informed business decisions and successfully navigate Türkiye’s market.