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Project name: Industrial Restructuring of Şanlıurfa Project (Technical Assistance Component)
Budget: € 2.620.000
Timeline: August 2008 - November 2010
What is the situation?
The industrial policy (published by SPO in 2003) states that “the main objective of industrial policy in Turkey is to increase competitiveness and productivity of the industry, and to promote and maintain sustainable growth within an outward oriented structure, in the face of increased global competition”.
Organized Industrial Zones (OIZs) are well-established practices of the Turkish industrialization policy, and are one of the important means through which the aforementioned objective of the industrial policy can be achieved. The OIZs are important for a number of reasons: first, they are a means to plan and shape the interactions between urbanization and industrialization; second, they offer considerable opportunities for controlling the negative effects of the industry on environment by providing the incumbent companies with the opportunity to benefit from shared infrastructural facilities, allowing also for easier and less costly production.
General Directorate for Crafts, Industrial Zones and Estates of the Ministry of Industry and Trade (MoIT) is authorized to establish, audit and accredit OIZs and to establish co-ordination with other institutions. Establishment and functioning of Organized Industrial Zones are governed by the “Law on Organized Industrial Zones” dated 15.04.2000 no 4562. The objectives of establishing OIZs can be summarised as follows:
- To allow for profit maximisation and to facilitate interactions between companies that are engaged in complementary economic activities (i.e. manufacturing),
- To contribute to better urban planning,
- To promote industry in less developed regions,
- To prevent utilisation of agricultural areas for industrial manufacturing purposes,
- To establish a sound and reliable infrastructure, and common social facilities, from which OIZ incumbents can benefit in a cost efficient manner,
- To prevent environmental pollution via common treatment facilities.
87 OIZs have been completed by 2005 across Turkey and around 30.000 firms have started production in these zones.
Sanliurfa (TRC21) is one of the least developed regions of Turkey as evidenced by many indicators, including but not limited to the socio-economic development index (2003) that has been published by the State Planning Organisation (SPO). With an index value of “minus 0.83”, Sanliurfa ranks 68th among the 81 provinces in Turkey.
Sanliurfa’s present economic performance is far from reflecting its actual potential, which owes much to the Southeast Anatolia Project (GAP, after its Turkish language acronym). The GAP facilitated establishment of dams, hydraulic power plants and irrigation networks. Upon the completion of the GAP, 1.7 million hectares of land will be irrigated, and energy production in the region will reach 27 billion kWh. Sanliurfa is located at the heart of the GAP Region. The financial difficulties have prevented timely completion of the infrastructural investments of the GAP, however the investments that have been completed thus far is beneficial mostly to Sanliurfa (i.e. irrigation networks). The establishment of irrigation networks have increased the agricultural output of the Province; however increased agricultural output has not yet contributed to socio-economic development that benefits larger population groups Most of the agricultural output is either sold domestically or exported as raw materials. Thus the agro-based industry in the Province is presently at the lower levels of the value chain, which impedes socio-economic growth. Non-existence of a second OIZ and the failed attempt to establish a free trade zone in the Province are the two main factors that prevented accelerated economic development in the region. The works component of the present Programme will therefore eliminate an important bottleneck by providing the local economy with the infrastructure that can be used as a springboard to socio-economic development. Although agro-based industry is pre-dominant, other industries (i.e. chemicals, metal, machinery etc.) are also present, although weakly, in the Province.
Sanliurfa has a strategic location in terms of access to Middle East markets, especially to Iraq and Syria. The international cargo airport, which is the largest of its kind in Turkey, is yet another facility that provides logistical advantages to the companies operating in the Province. In terms of conventional factor endowments (i.e. land and labour), the Province is quite rich, however the contemporary factors endowments, such as qualified labour force, is rather poor.
A major advantage of the Province is its location with respect to access to renewable energy resources (i.e. hydraulic and solar). If utilised strategically, these resources might serve as a sound socio-economic development trajectory for the Province. The recently-launched “Competitiveness Agenda for the GAP Region”, which was developed within the scope of the EC-funded GAP-GIDEM Project, underlines the vital importance of this “hidden” competitive advantage. The said study also highlights the distinctive potential of the Region (and specifically Sanliurfa) to combine renewable energy with organic production, which will help create immense benefits not only for Sanliurfa and GAP Region but also for Turkey as a whole.
Although establishment of the 2nd OIZ will eliminate the “spatial” bottleneck for new investments in the Province, it cannot, by itself, mobilise economic and industrial potential of Sanliurfa. The very reason for establishing OIZs is to strategise and shape a sustainable industrial development path. As such, the Technical Assistance component of the IRS Programme will be instrumental for Sanliurfa’s socio-economic development. This calls for development of integrated industrial development plan, which will form the basis for identification and selection of the incumbent companies of the OIZ and promoting the investment opportunities in a strategic manner so as to attract the types of investments that will contribute most to the economic and industrial development of the Province. Additionally, improvement of national and local capacity is utterly important. The latter will ensure sustaining the positive impact of the intervention (i.e. the Project); where as the earlier will contribute replication of the intervention in other regions of Turkey.
UNDP (United Nations Development Programme) has been actively involved in local socio-economic development projects in Southeast Anatolia. Among the many projects and programmes, which UNDP managed or co-executed with governmental or international funds (including the EU funds), GAP-GIDEM Project is quite relevant to the present Project both in terms of scope and nature. The Entrepreneurship Support Centres (GIDEMs) was originally established in 1997 within the scope of an umbrella programme co-funded by the GAP Regional Development Administration and UNDP. GIDEMs enjoyed EC’s financial support between 2002 and 2007 and delivered business development services and executed local economic development initiatives. UNDP’s long-lasting presence in Sanliurfa also provided the organisation with the opportunity to establish strong working relations with the local actors and develop a strong understanding of socio-economic dynamics of the region.
What is our mission?
The overall objective of the Technical Assistance for Industrial Restructuring of Sanliurfa Project is to reduce regional disparities in Turkey, by contributing to social stability and economic development in the Southeast Anatolia Region. More specifically the Project will identify strategic sectors for Sanliurfa OIZ and will establish an operating environment for the enterprises in the OIZ, in which such enterprises can operate competitively.
UNDP’s mission can be summarized as providing the Government of Turkey with high quality technical assistance, which will help achievement of the ambitious objective of the Industrial Restructuring of Sanliurfa Project.
How are we doing this?
Technical Assistance for the Industrial Restructuring of Sanliurfa Project’s intervention modality is based on a holistic local economic development approach, which takes into account both short- and long-term needs of the local economy and industry. As such, the Project has been designed in such a manner to achieve success stories in the short-term and to improve the institutional capacities to sustain the impact of the Project.
The Project has been designed to have long-lasting impact on the target groups and beneficiaries.
First of all, by analysing and identifying the competitive sectors, and attracting investment in these sectors, the Project will contribute to the economic development in the Province. The impact on this front will be further improved by provision of business development services to the local enterprises, especially to those located in the OIZ.
Secondly, the Project will develop local mechanisms, which will sustain the impact of the Project. The tools and plans that will be developed within the Project will assist these local mechanisms in pursuing their socio-economic development goals, and making local industries more competitive.
Thirdly, the Project will improve the capacities of local and national institutions by providing training programmes and organising international and national study tours to best practices.
Fourthly, the Project’s intervention modality places special emphasis on sustainable development. This will be achieved mainly by development of plans and roadmaps that are environmentally and socially sustainable and economically viable.
The Project is expected to produce the following results:
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An Integrated Industrial Development Plan developed for Sanliurfa,
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The investment opportunities in the 2nd OIZ (Organised Industrial Zone) promoted,
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Incumbents of the 2nd OIZ selected fairly, competitively and transparently,
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Capacity of the local enterprises developed,
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Capacity of the local and national institutions improved.
The Project is composed of five components:
Component A Development of Integrated Industrial Development Plan: Component A will identify the “strategic sectors” that possess the potential for being competitive nationally and internationally, and analyse the needs of these sectors. Identification of “strategic sectors” is expected to provide a basis for selection of companies and to guide potential investors. The needs assessment on the other hand will demonstrate the types of actions that need to be taken to improve regional competitiveness of these sectors. Clearly some of these actions might be taken during course of the present Project; however some others will need to be formulated as follow-up actions to be financed by local stakeholders and/or international organisations, including the European Commission. Although the integrated industrial development plan will primarily target Sanliurfa as the focus of the analyses, such an exercise cannot be satisfactorily pursed without taking issues related to regional and national competitiveness. To that end, the TAT will take previously conducted studies into account during the development of the said plan for Sanliurfa.
Component B Investment Promotion: One of the objectives of the Project is to attract investments to the Organised Industrial Zone (OIZ). Leveraging on the studies to be conducted within the scope of the Component A, Component B will promote investment opportunities nationally and internationally. MIGA (Multilateral Investment Guarantee Agency), which is a “member of the World Bank Group”, is one the leading international agency that supports national governments for developing and implementing investment promotion strategies. Although MIGA (through FDI Promotion Centre) concentrates exclusively on foreign direct investment, its guidance is useful for attracting both national and international investors.
Component C Assessment of Applications: Component C concerns collection and assessment of applications of the companies to make an investment and to operate in the OIZ. This process will be managed transparently, and will aim at selecting the best applications that will improve the competitiveness of the Province and contribute to its socio-economic development.
Component D Business Development Services: Component D has two main objectives: (a) improving the capacities of local enterprises and (b) establishment of local structures and systems that will ensure sustained impact of the Project. The global experience on enterprise development initiatives has repeatedly demonstrated that the success of enterprise development services hinges heavily on the existence of a favourable local context, in which the enterprises can flourish. Thus these two objectives are complimentary: (a) Improving capacities of local enterprises: This will be mainly achieved through provision of business development services (i.e. training programmes, advisory services, and information) to the local enterprises; and (b) Establishment of local structures and systems that will ensure sustained impact of the Project: This is planned to be achieved through adoption of an integrated local economic development approach, which will support establishment of local structures (i.e. competitiveness platform) and systems (i.e. sectoral working groups). The structures and systems that are going to be established within the Project are not necessarily expected to be formal/official bodies. Local structures, such as competitiveness platforms, and systems, such as sectoral working groups, provide a platform for continuous interaction between the local stakeholders and economic agents. As such, the main objective here is to create “local mechanisms”, which can sustain the impact of the Project over the long term. The actual governance structure and legal status of these mechanisms will need to be elaborated further during the implementation of the Project.
Component E Institution Building: The final component will seek to improve the local capacity and will contribute to the sustainability of the Project. This component will include organization of workshops, training programmes, and national and international study tours (please see CE.1.3) for the local actors, business leaders and government officials.
The main rationale behind Component E is to develop the national and local capacities to make the Project a role model for consecutive action of the Ministry and the local stakeholders. As such, development of the institutional capacities will eventually lead to improvement of the business environment, in which the enterprises will operate.
How will Turkey benefit?
Improved competitiveness of the Southeast Anatolia Region in general, and Sanliurfa in specific, will contribute to elimination of regional disparities and to improvement of regional and national wealth through creating of new investment and employment opportunities and improving regional competitiveness in national and international markets.
Who are our partners?
The immediate governmental counterpart of the project is the Ministry of Industry and Trade. However implementation of the project will require close collaboration with a number of governmental and non-governmental organizations including, but limited to, State Planning Organisation, GAP Regional Development Administration, Investment Support and Promotion Agency, KOSGEB (National SME Development Agency), TOBB, Delegation of the European Commission to Turkey, Sanliurfa OIZ Management, Sanliurfa Chamber of Commerce and Industry and Sanliurfa Commodity Exchange.
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