public-private partnerships: lessons learnt from turkish experience

tepavThe Economic Policy Research Foundation of Turkey

Sibel Guven

10 October 2011, Batumi

Public-Private Partnerships:Lessons learnt from Turkish experience

Framework What do we mean, when we say PPP? Any role chambers can play? Two examples from Turkey

Organized industrial estates creating conducive local business environment.• Turkish case

Border management companies to facilitate trade.• GTI example of TOBB

Turkey′s experience in PPP solutions Slide 2

Public-private partnerships Problem definition

Not all public-private interaction is a partnership Two essential prerequisites for PPPs:

• Joint decision-making• Risk-sharing• Financial return should be less than economic return

Why do they matter?The gray/intersection area between markets and

states• Market failures and state failures

Key for the effective functioning of both The complexities of the private sector

development process

Turkey′s experience in PPP solutions

A PPP is collaboration among government and business A collaboration, in which risks, resources

and skills are shared in projects that benefit each partner as well as the community

PPPs can effectively overcome complex public policy problems by bringing together multiple stakeholders

PPPs expand the set of resources by not only bringing together financial assets but also each partner’s skills

Slide 4Turkey′s experience in PPP solutions

PPPs strengthen the alignment of public and private value PPPs can accomplish what outsourcing cannot:

creating and sustaining public value by leveraging the combined assets The scale and sustainability of a PPP depends on the

strength of the alignment of public and private value created by the project

• Public value aims to attain a desirable collective social outcome, • Private value aims to attain or exceed privately established

benchmarks, such as returns and earnings.

Due to these differences, simply outsourcing when the government does not have the resources to perform a service becomes problematic.


Not every project is appropriate for PPP

PPPs are appropriate under certain conditionshaving trust and credibility between partners

having a competent and committed executive body

neither of the parties are able to complete the task on their own

creativity in handling the problems where money is not the only answer

no warped priorities of partners and unsuitable assets, such as national security

A competent use of political management among partners


Chambers as natural PPP catalyzers Chambers play a very key role

because of their structure both private and public features strong dialogue mechanisms integral role in private sector development

process

Two cases from TurkeyOrganized Industrial ZonesBorder Crossing Arrangements


Case 1: Turkey’s Organized Industrial Zone Experience Governments cannot deliver adequate services

everywhere equally and efficiently Designating certain areas as “more equal” for

improving the investment climate

250+ Organized Industrial Zones, 70 fully operational Started as a urban development tool in the 1960s, with

a loan from the World Bank

Private-public partnerships were facilitated through the local chambers Evolved over time to obtain regulatory oversight

The Law on OIZs was enacted in 2000


PPP model in Industrial Zones A mixed structure of the Management Body

Public involvement• through local government bodies• through chambers

Private involvement• Investors of the OIZ

Areas of joint risk sharing and decision-making Land development Utilities provision Regulatory authorities (licenses and permits)


Roles of actors in OIZs Public support

Land expropriation Credit for infrastructure construction Investment incentives (tax breaks for relocation)

Private contribution Partially or wholly financing construction and land

development Utilities provision Management Investment promotion Maintenance Regulatory support to investors


Performance of OIZs in Turkey

0

5

10

15

20

25

Other OIZs Other OIZs Other OIZs

Telephone connection Electricity connection Water connection

Time for Getting the Permit and the License (days): inside and outside the OIZs

Infrastructure Setup Time (days): enterprises inside and outside the OIZs

Kaynak: TEPAV – World Bank Investment Climate Survey 2005

020406080

100120

Others OIZs Others OIZs Others OIZs

Construction Permits andLicenses

Operation Licenses Health permits


OIZs surely play a role in the diversification performance of the Turkish Industry

1 1 12 2 2 2 2 2

3

56

10

14 14 14

17

0

2

4

6

8

10

12

14

16

18

Bahra

in

Jord

an

Oman

Bulgar

iaIra

n

Mor

occo

Saudi

Arabia

Tunisi

a

Ukrain

e

Greec

e

Sloven

ia

Roman

iaIsr

ael

Turke

y

Hunga

ry

Russia

Czech

Rep

.

2000 2005

Turkey′s experience in PPP solutionsSlide 12

65 % of MENA regions Industrial exports are fromTurkey..

)

Number of export items with a volume over 1 billion USD

(SITCrev2 classification in 2 digits)

Case 2: TOBB has launched the modernization projects of border gates in Turkey TOBB / GTI has modernized customs gates with a

private-public partnership model Easing bottlenecks at the gates First project completed in 2003 Now 8 gates: İpsala, Habur, Cilvegözü, Kapıkule, Sarp,

Dereköy, Hamzabeyli, Nusaybin Build-Operate-Transfer model

No burden on public budget Effective daily management Transfer of a modern facility to government after the

concessionperiod

Goal is to improve trade facilitation through a PPP scheme


What do we mean by trade facilitation? Enhancing border management facilities

Effective customs administration ICT usage Logistics Institutional capacity building

border crossing timesReducing inland clearance

physical inspection

Upgrading and adjusting transport infrastructure interoperability of transport systems Multi-modal systems

Private sector capacity enhancing

Turkey′s experience in PPP solutionsSlide 14

TOBB-GTI border gate modernizations

İpsala to Greece



Sarp to Georgia



Habur to Iraq



Cilvegözü to Syria


TOBB-GTI: private management is accomplished, next step is to facilitate the public part What is in the new gate model?

Effective daily management User-friendly architecture Facilitation of customs formalities A high level of ICT use

Next step: facilitate the public part Multiple public agency involvement Feedback-based approach (surveys of private logistics

companies) Shorten the time & reduce cost in each step, starting from

the longest Target: full integration of all public agencies involved

Ultimate target: Fully integrated border management

Slide 19

Private sector control

Public control


Next Step: Fully Integrated Joint Border Gate Management One-window for controls of both countries

First pilot: Tel Zivan border crossing between Turkey & Syria

Bolstering strategic partnership framework Increased trade volume between two countries

Improvement in the logistics sector

60-70 % decrease in the border waiting time - Threefold the capacity

Investment and operational costs will get significantly lower

A concrete example for the revitalization of the Modern Silk Road in the big picture

Slide 20


Takeaways from a PPP framework PPPs are key to private sector development

Chambers have an essential role to play for creating conducive business environments

It is not only national Easing bottlenecks have cross-border spillovers

It is not only public sector Critical role of private sector in design and financing

It is not only demand-driven Projects to create access to new markets

It is not only economic Transport issues as a vehicle to bring conflicting parties

together

Slide 21


public-private partnerships: lessons learnt from turkish experience

Documents

ppp solutionsa ppp

ppp solutionsslide

publicprivate interaction

private value ppps

ppp solutionsnot

ppp solutions4ppps

alignment of public

natural ppp catalyzerschambers