The exodus of Turkish investments to Egypt is causing significant disruptions, particularly in the textile and apparel industries. For the first time in the history of the Republic of Türkiye, overseas investments in the apparel sector have surpassed domestic investments within a single year.
Speaking to DW Türkçe, Türkiye Clothing Manufacturers Association (TGSD) President Ramazan Kaya confirmed the decline in domestic investment. “In the past two years, there has been almost no investment in the sector in Türkiye. People can’t even renovate their existing facilities. There is a significant shift to nearby regions, primarily Egypt. Since investment in Türkiye is practically at zero or even below, it’s not wrong to say that overseas investments are 3-4 times higher,” Kaya stated.
Egypt Emerges as the Top Destination for Turkish Investors
Egypt has become a preferred destination for Turkish companies across multiple sectors, from textiles and apparel to home appliances and chemicals. According to data from the Egypt-Türkiye Business Council shared last November, Turkish investments in Egypt have exceeded $3 billion, with over 1,700 Turkish companies operating in the country. The textile sector, in particular, dominates with 200 factories, while Turkish investments in Egypt have created more than 50,000 jobs.
Leading firms such as Arçelik, Hayat Kimya, Yeşim Group, and Eroğlu have already established operations in Egypt and are planning further expansion. For instance, Yeşim Group’s Egyptian company Jade Tekstil is working on a $100 million investment to establish a new facility, while Eroğlu commenced construction of a $40 million factory last August.
“No Significant Investment in Two Years”
The apparel and textile sectors have been hit hardest by this shift. Türkiye Chambers and Commodity Exchanges (TOBB) Ready-to-Wear and Apparel Sector Assembly Chairman Şeref Fayat told DW Türkçe that companies struggling with production costs in Türkiye are moving their factories to Egypt, where costs are only a quarter of those in Türkiye. He emphasized, “For the first time in the history of the Republic of Türkiye, overseas investments in the apparel sector over the past year have been three times higher than domestic investments.”
Ramazan Kaya echoed this sentiment, stating, “There are no significant new investments in Türkiye in 2023-2024. Existing facilities cannot even be maintained or upgraded. Companies are relocating, renting facilities in Egypt, and moving their machinery there.”
Decline in Exports and Employment
The apparel sector in Türkiye is grappling with declining exports and shrinking employment. Ramazan Kaya highlighted several challenges, including high costs in Türkiye, reduced consumer demand, and economic stagnation in the European Union.
“Türkiye is no longer just expensive in terms of costs; it is very expensive. The European Union’s €180 billion apparel import market is shrinking, and Türkiye’s share remains stagnant at 5.5%. Orders are shifting to Asian countries. Türkiye’s apparel exports, which exceeded $19 billion in 2023, dropped to $17 billion last year. Exports to Germany fell by 5.3%, Spain by 17.4%, France by 11.1%, and Italy by 17.2%,” Kaya explained.
The employment situation has also worsened, with the workforce in the apparel sector shrinking from 800,000 to 580,000 over recent years.
A Crossroads for Türkiye’s Apparel Industry
As Turkish companies continue to expand overseas, the domestic apparel and textile sectors face mounting challenges. The shift to Egypt signals a historic moment of transformation but also raises questions about the sustainability of Türkiye’s industrial competitiveness.
Source: Patronlar Dünyası/ Prepared by: İlayda Gök