World Bank will provide a $300 million (TL 2 billion) funding for Turkey’s Organized Industrial Zones (OIZ) to enable them to become more efficient, environmentally sustainable and competitive, the bank said in a press release Monday.
The World Bank-funded project is set to be implemented by the Ministry of Industry and Technology and will support investments in basic infrastructures such as new roads, water and gas pipelines, power lines and logistics facilities as well as in green infrastructure, including improved energy and water efficiency facilities, advanced wastewater treatment plants, energy-efficient buildings, LED street lighting and renewable energy assets, including solar, wind and biomass. This will be the first component of the project amounting to $290 million.
Along with the green infrastructure investments, it will support investments in OIZ innovation centers, including model factories to demonstrate new technologies and new practices, skills upgrading, standards and testing services for small- and medium-sized enterprises (SMEs), and programs that would link firms in the OIZs to local universities and research institutes to help them introduce or commercialize innovative ideas.
The statement from the bank noted that, meanwhile, the second component of the loan – $10 million – will also be allocated for technical assistance, capacity building and project management. It will provide technical assistance and capacity building for the Industry and Technology Ministry and OIZs and support the Project Implementation Unit (PIU) to be established under the Ministry.
The OIZs in the country, currently amounting to 346 and located across 81 cities have a significant contribution to both exports and employment. It provides more than one-third of the exports and employs 2.1 million workers – approximately one-third of total industrial employment in the country. Turkey has most recently stepped up efforts to boost railway infrastructure to directly connect the OIZs to port cities to facilitate exports.
Meanwhile, many of the OIZs require upgrades to their infrastructure systems, including roads, water pipelines, stormwater and sewer pipelines, gas and electricity networks and improvements in their sustainable use of available resources – especially electricity and water – through investments in green infrastructure, which are all included in the new fund project.
Auguste Kouame, World Bank country director for Turkey, whose views were included in the bank statement said the ongoing COVID-19 pandemic has further highlighted the need for the project, which is crucial for laying the foundations for a sustained and “green recovery.”
“Besides, innovation centers will enable OIZ firms to maintain or deepen their participation in global value chains post-COVID by increasing the competitiveness of OIZs around the country,” Kouame noted.
“The project addresses key issues in Turkey's industrial sector – which suffers from high carbon content, low female labor-force participation and a need for investment in innovation,” Stefka Slavova, lead economist at the World Bank and co-task team leader for the project, said, noting: “This project will benefit OIZs by focusing on the broader decarbonization agenda and by paying special attention to gender gaps, through the collection of detailed data to address gender aspects of female employment in OIZs and develop suitable solutions – such as the establishment of child care facilities in select OIZs.” The pandemic has only broadened women's disadvantages in Turkey's labor market, according to a U.N. survey.
Lastly, Slavova, added: “The improved innovation infrastructure in select OIZs that will be created will have a positive 'demonstration effect' for the economy overall.”
The project is well poised to contribute to Turkey’s climate change agenda by contributing to the mitigation agenda through investments in renewable energy generation and energy efficiency, emphasized Yeşim Akçollu, senior energy specialist at the World Bank and co-task team leader of the project, given the country’s vulnerability to both climate change and natural disasters. Turkey has several projects to fight climate change spearheaded by first lady Emine Erdoğan.
“The project will also contribute to the adaptation agenda by investing in industrial infrastructure that will utilize appropriate climate-adaptation techniques to strengthen the resilience of infrastructure to withstand floods, landslides or extreme weather events,” she added.
It is aligned with Turkey's Country Partnership Framework (CPF) – which focuses on the three strategic areas of growth, inclusion and sustainability – and is a fixed-spread loan with a final maturity of 10.5 years, including a grace period of five years.