WASHINGTON January 25th, 2021 — A new World Bank-funded project will help Organized Industrial Zones (OIZs) in Turkey become more efficient, environmentally sustainable, and competitive. The new, $300 million Organized Industrial Zones Project for Turkey, to be implemented by the Ministry of Industry and Technology (MoIT), will support investments in basic infrastructure - such as new roads, water and gas pipelines, power lines, and logistics facilities – as well as in “green” infrastructure - such as 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.
A smaller part of the loan will also be dedicated to enhancing the competitiveness OIZs through investment in innovation and training centers linking OIZs with science and research organizations, and academia.
Turkey’s 346 OIZs, across 81 cities, contribute to more than one-third of the country’s exports and employ 2.1 million workers - approximately one third of total industrial employment in the country. Many of these OIZs require upgrades to their infrastructure systems (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.
“The ongoing COVID-19 pandemic has made further highlighted the need for this project, which is crucial for laying the foundations for a sustained and ‘green’ recovery,” says Auguste Kouame, World Bank Country Director for Turkey. “In addition, 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.”
The project has two components:
Component 1: Supporting the infrastructure and the enabling environment for OIZ sustainability, competitiveness and efficiency ($290 million). This component will: support investments in basic OIZ infrastructure, leveraging “green” solutions; support investments in innovative green infrastructure in OIZ (such as improved energy and water efficiency, renewable energy investments, advanced water and wastewater treatment facilities, LED lighting and using waste/by-products as productive inputs (e.g., steam highways)); and 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 (SME)s, and programs which would link firms in the OIZs to local universities and research institutes to help them introduce or commercialize innovative ideas.
Component 2: Technical assistance, capacity building and Project management ($10 million). This component will: provide technical assistance and capacity building for MoIT and OIZs and support the Project Implementation Unit (PIU) to be established in MoIT.
“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. 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 childcare facilities in select OIZs. Lastly, the improved innovation infrastructure in select OIZs that will be created will have a positive 'demonstration effect’ for the economy overall,” remarked Stefka Slavova, Lead Economist at the World Bank and co-Task Team Leader for the project.
“Given Turkey’s vulnerability to both climate change and natural disasters, 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,” added Yesim Akcollu, Senior Energy Specialist at the World Bank and co-Task Team Leader of the Project. “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.”
The project is aligned with Turkey’s Country Partnership Framework (CPF) for the FY18-23, 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 5 years.