New Regulation for Industrial Zone in Turkey

Last week Turkish government introduced a series of regulations promoting industrial zones in Turkey together with certain incentives that may attract investors to start up in or carry their businesses into such zones.

On May 10 of this year, Industry and Technology Minister had announced through its Twitter account that 6 investor friendly less bureaucratic industrial zones were established in order to decrease actual deficit of Turkey by 1,7 billion USD. Accordingly, based on the Industrial Zones Law Nr. 4737 (“Law 4737”) these investor zones have been founded in 5 different cities being Istanbul, Balikesir, Izmir, Bursa, and Mardin out of which 2 zones are located in Istanbul, Arnavutkoy next to the location of new Istanbul Airport. Certain areas/sites in the mentioned zones have been already granted to companies supported by Turkish government and doing business in machinery, energy, tourism, mining, and steel. Since more areas/sites are expected to be granted to investors in these zones, it is worth to look closer on the newly published industrial zones regulation of last week.

According to the Industrial Zones Regulation (the “Regulation”), three different types of areas/sites can be determined, organized, and operated in industrial zones established by Turkish Ministry of Industry and Technology (the “Ministry”), which are combined/specialized industrial zones, specific investment areas, and special industrial zones. Combined/specialized industrial zones are designed to attract investors to do business in information technology, medical technology, and agricultural industry using cutting-edge high technology specified in government’s development plans and enabling research and development studies. Specific investment areas, on the other hand, can be led by either local and/or foreign investors, if applied, and can be allocated to sectors with priority as determined in government’s development plans or to those highly or semi highly developed sectors bearing certain conditions the Ministry is seeking for. Lastly, special industrial zones can be published as such zones upon application of individuals or legal entities owning at least 51% of the proposed area in the relevant zone and /or a time limited right in rem to operate in such zone or having granted a permission for usage for a limited time period. It goes without saying that operation in all three types of the aforementioned zones require an application by the relevant investor to be submitted to the Ministry.

Less Bureaucracy to Operate

As those local or foreign investors still operating in organized industrial zones and free trade zones would recognize, there are strict rules prescribed by the laws and regulations stipulating the requirements that any investor has to comply with if they are operating in an organized industrial zone or free trade zone within Turkey. The newly established industrial zones will, however, be operated by managing companies to be established in form of joint stock companies of which duties and responsibilities along with their structures or incorporation approval procedures are differentiated from each other based on the type of industrial zone to be set. Nevertheless, as promised by Turkish government, industrial zones look like aiming to operate as more investor friendly environments by avoiding bureaucratic tackles when it will come to move any brick or to pound a nail on the wall.

Application Procedures

Nevertheless, despite of the fact that less bureaucracy is on the way, application procedures of all types of industrial zones require meeting certain requirements and gathering of documentation / information prescribed by the Ministry.

For example, combined / specialized industrial zones will be established by the Ministry either upon application of companies and incorporations or the operating company of the relevant industrial zone or ex officio by conducting site selection study. Site selection studies will be bound to a report, which will be approved by the Ministry for selecting areas/sites that bear the requirements of an industrial zone. If companies and incorporations or the operating company of the relevant industrial zone would like to initiate such selection process, they have to provide the Ministry with a feasibility report outlining the grounds of their request. Upon review of such feasibility report, the Ministry will start with the selection study, if found appropriate. In cases where the site selection is processed by the Ministry, the relevant feasibility report will either be prepared by the Ministry itself or get prepared by a third party nominated by the Ministry. The form of feasibility report requested by the Ministry is determined by the same and includes the location, cadastral status, and other geographical conditions of the relevant area/site together with the sectors and activities to be conducted in such area/site.

As mentioned above, since each of the industrial zone type that can be established under the Regulation have different procedures, advise of qualified experts will be required. Please contact us for more details so that we can provide you more information based on the type of industrial zone you would like to invest.