Turkey Publishes Industrial Zones Regulation

Recent Development

The Ministry of Industry and Technology (“ Ministry “) published the Regulation on the Industrial Zones (“ Regulation “) in the Official Gazette on August 6, 2019. The Regulation contains detailed provisions on the establishment, management and operation of mixed/specialized industrial zones, exclusive investment sites and private industrial zones.

What’s New?

Mixed/Specialized Industrial Zones

Specialized industrial zones refers to regions utilized by advanced technology sectors specified in the government’s development plans and operating in areas such as information technology, medical technology and agro-industry. In that regard, the Regulation provides detailed regulations on the procedures for the establishment and declaration of specialized industry zones.

Application Process

Relevant institutions and organizations or the management company may apply to the Ministry for the establishment of specialized industry zones. The Ministry may also carry out the relevant procedures ex officio for the establishment of a special industry zone.
The applicant prepares a feasibility report and applies to the Ministry. After the Ministry approves the application, it conducts a site selection assessment to determine the area that meets the needs of a specialized industrial zone.
The Ministry receives the opinions of the Ministries of Environment and Urbanization, Energy and Natural Resources, Agriculture and Forestry, Culture and Tourism, National Defense, Health, Transportation and Infrastructure or the relevant municipality regarding the areas where the site selection studies are conducted. If the Ministry is not notified of the relevant institution’s opinion within 30 days, the opinion is deemed in favor of the area selected. However, if there is already an industrial area where the site selection studies are conducted that meets the needs of a specialized area, the Ministry would only require the Ministry of Environment and Urbanization or the relevant metropolitan municipality’s opinion.
After the Ministry determines the area to be used for the industrial zone, a threshold analysis map and a site selection report is prepared for the area.
Following the completion of the site selection, the Ministry prepares a summary evaluation report and the relevant area is declared an industrial area upon the President’s decision.

Applicant and Investors’ Obligations

The industrial zones cannot be used for any purposes other than carrying out social, administrative, logistics, commercial or any other activities necessary for the investments made in that area.
The applicant or, in case the Ministry conducts the relevant procedures ex officio to declare an industry zone, the relevant Chamber of Industry or Chamber of Commerce and Industry must establish a management company before the application is submitted to the President.
The management company will be responsible for managing and operating the industrial zone, making the necessary payments for the infrastructure and superstructure of the industrial zone and performing other duties stipulated in the Regulation.

Ministry Allowance

After the declaration of the industrial zone, the Ministry will allocate an allowance for the investment program in the industrial zone. The Ministry’s allowance will cover expropriation costs, infrastructure costs and other expenses listed in the Regulation regarding the industrial zone.
If the Ministry deems it appropriate, the managing company or investors may also cover these expenditures.

Expropriation, Servitude and Utilization Permit

The privately owned immovable properties in the industrial zone will be expropriated. Immovable properties that belong to the Treasury and state-owned areas will be assigned as industrial zones.
The management company or investors will be granted a servitude of 49 years for the expropriated properties. For state-owned immovable properties, a utilization permit for a period of 49 years will be granted to the management company or investors.

Zoning and Subdivision Plans

The Ministry or the management company will be prepare a zoning plan for the industrial zone in accordance with the provisions of the Regulation. After the Ministry approves the zoning plan, the zoning plan will be published on the Ministry’s official website for a week and the stakeholders will be able to object to the zoning plan within the seven day publication period. The Ministry or the management company will then prepare subdivision plans for the organization of the lands and properties. Similarly, the subdivisions plans the Ministry approves will be published on the Ministry’s official website for a week and the stakeholders will be able to object to the subdivisions plan within the seven day publication period.
Zoning and subdivision plans, infrastructure and superstructure plans, and the relevant licenses and permits will be subject to the Ministry’s approval and the supervision. The Ministry will grant the workplace opening and operation license and the relevant institutions will grant the other permits, authorizations or licenses within 15 days. In addition, the management company and the investors will be exempt from paying legal fees regarding licenses and the permits.

Investor Permit

Investors willing to invest in the industrial zone must apply to the Ministry, either in person or through the management company, for their pre-allocation requests.
After the Ministry approves the investor’s pre-allocation request, the investor must obtain an environmental impact assessment (EIA) report regarding its operations in the industrial zone. The investor must then obtain an “EIA Positive” or “EIA Not Required” decision from the Ministry of Environment and Urbanization regarding its EIA report. In addition, the investor must also pay the fee set forth in the Regulation to the Ministry. After the investor fulfills all of these requirements under the Regulation, upon the Ministry’s opinion, the Ministry of Environment and Urbanization will grant a servitude or utilization permit to the investor.

Exclusive Investment Zones

Exclusive investment zones refer to the areas allocated for investments in the primary sectors stated in the development plans or investments relating to high or medium-high technologies that meet the Ministry’s criteria. The application procedures followed for specialized industrial zones will be largely applicable to the exclusive investment zones.

The Application Process and Additional Requirements

Domestic or foreign persons wishing to make an exclusive industrial investment must apply to the Ministry and obtain a feasibility report. The Ministry must carry out a site selection study regarding the application and prepare a summary assessment report. The applicant must obtain an “EIA Positive” or “EIA Not Required” decision from the Ministry of Environment and Urbanization in line with the EIA legislation. Finally, the application will be submitted for the President’s approval.
For exclusive investment zone applications, there are additional requirements to be fulfilled such as having a fixed investment undertaking amounting to TRY 280,000,000 in place or using high technology for the operations in the investment zone.
The applicant must also establish a joint stock company for the management and operation of the investment zone before the President makes a decision on the declaration of the investment zone.

Servitude and Utilization Permit

The applicant will be granted a servitude or a utilization permit for a period of 49 years for the area declared an exclusive investment zone, provided that the applicant pays to the Ministry the amount determined by the President, which is less than 0.5% of the fixed investment amount.

Zoning and Subdivision Plans, Licenses and Permits

The provisions on the zoning and subdivision plans regarding specialized industrial zones will be largely applicable for the exclusive investment zones. The relevant licenses and permits to be obtained for the exclusive investment zones will be subject to the Ministry’s approval and supervision. The investors will also be exempt from paying the legal fees for the licenses and permits.

Private Industrial Zones

Application Process and Additional Requirements

In accordance with the Regulation, real or legal persons owning at least 51% of an area or holding a servitude or utilization permit for at least 51% of that area may apply to the Ministry for the declaration of the area as a private industrial zone.
The procedures relating to the preparation of a feasibility report and conducting site selection for the specialized industrial zones and exclusive investment zones will be largely applicable for the private industrial zones. If there is an industrial facility established in the relevant area, the zoning plans and occupancy permit approved and obtained from the relevant institutions must also be submitted during the application.
The Ministry seeks additional requirements for the private industrial zone application: the area must be the minimum size stipulated in the Regulation or the applicant must have a new investment undertaking amounting to TRY 570,000,000 in place for the area.
After the Ministry completes the site selection, it will prepare a summary evaluation report and the applicant will obtain an “EIA Positive” or “EIA No Required” decision from the Ministry of Environment and Urbanization. The application will be submitted to the President for his approval.
The applicant must establish a joint stock company for the management and operation of the area before the President makes his decision and declares the area a private industrial zone. However, this requirement will not be applicable for areas declared private industrial zones before August 6, 2019.
The private industrial zones will not be used for purposes other than social, administrative, logistic, commercial and similar activities necessary for the investments in the area.

Servitude and Utilization Permit

The Ministry will grant the applicant a servitude or a utilization permit for the private industrial area for a period of 49 years.

Zoning Plan and Subdivision Plan

The provisions on the zoning and subdivision plans regarding the specialized industrial zones will be largely applicable for the private industrial zones.

Licenses and Permits

Licenses and permits to be obtained for the private industrial zones will be subject to the approval and supervision of the Ministry, and investors will be exempt from paying the legal fees for these licenses and permits. The permits, authorizations and licenses previously obtained for investments in the private industrial zones will remain in effect.
Other permits, approvals and licenses to be obtained for the activities investments for which are approved by the Ministry will be issued by the relevant institutions within fifteen days.

Conclusion

The Ministry continues to take legislative steps to support the industrial sector and improve local production activities. Accordingly, the Regulation revised the application procedures for the establishment of industrial zones.