Global Investing

Turkey: investment grade, peace and FDI?

Turkey’s elevation to investment grade last week may or may not be a game changer for its stock and bond markets, but the country is really hoping for a boost to FDI – bricks-and-mortar foreign direct investment  into manufacturing or power generation. Its peace process with Kurdish separatists should help.

Speaking last week at Mitsubishi-UFJ’s annual Turkey conference, Finance Minister Mehmet Simsek cited data showing an average 2 percentage-point pick-up in FDI in the two years immediately after a country moves into investment grade.

Sticky, job-creating and not prone to sudden flight, FDI is the kind of investment that Turkey, with a massive balance of payments deficit, desperately needs. Turkey does worse than most other countries on the FDI front.  Its combined deficit of the current account and net FDI is around 5 percent, Commerzbank analysts note –  wider than most emerging market peers.

By itself, an investment grade rating may not lead to a surge in FDI.  But Turkey has an ace up its sleeve. Having fought a deadly three-decade war against Kurdish separatists, Ankara has managed to negotiate a withdrawal of PKK militants from Turkey to bases in Iraqi Kurdistan. That peace gambit, if successful, has the potential to transform the impoverished Turkish provinces that border the Kurdish areas.

Simsek told the conference:

The reconciliation process has boosted morale and interest in investment in southern and eastern Turkey has gone up five- and 10-fold. The regional development gap is going to be one of the main engines of growth in the next decade of two. Convergence between the regions of Turkey will be key.

from Global News Journal:

Back to the future in Malaysia with Anwar sodomy trial II

By Barani Krishnan

A decade ago, Malaysia's former deputy prime minister Anwar Ibrahim was on trial for sodomy and corruption in a trial that exposed the seamy side of Malaysian justice and the anxieties of a young country grappling with a crushing financial crisis and civil unrest.

Anwar is Malaysia's best known political figure, courted in the U.S. and Europe and probably the only man who can topple the government that has led this Southeast Asian country for the past 51 years. Photo: Anwar Ibrahim, with a bruised eye, at court on Sept 30, 1998 during his his first trial. REUTERS/David Loh Now the leader of the opposition, will go on trial next week again charged with sodomising a 23-year old male aide. The trial once again looks likely to provide gory evidence and bringing some unwanted attention from the world's media on this Southeast Asian country of 27 million people. It could also embarrass the government and draw international criticism.

Anwar vowed in a recent interview to fight what he says are trumped up charges.