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tepav The Economic Policy Research Foundation of Turkey Sibel Guven 10 October 2011, Batumi Public-Private Partnerships: Lessons learnt from Turkish experience
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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
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Slide 3 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
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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 4 Turkey′s experience in PPP solutions
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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. Slide 5 Turkey′s experience in PPP solutions
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Not every project is appropriate for PPP PPPs are appropriate under certain conditions having 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 Slide 6 Turkey′s experience in PPP solutions
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Slide 7 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 Turkey Organized Industrial Zones Border Crossing Arrangements Turkey′s experience in PPP solutions
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Slide 8 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 Turkey′s experience in PPP solutions
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Slide 9 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) Turkey′s experience in PPP solutions
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Slide 10 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 Turkey′s experience in PPP solutions
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Slide 11 Performance of OIZs in Turkey 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 Turkey′s experience in PPP solutions
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OIZs surely play a role in the diversification performance of the Turkish Industry Turkey′s experience in PPP solutions Slide 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)
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Slide 13 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 concession period Goal is to improve trade facilitation through a PPP scheme Turkey′s experience in PPP solutions
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What do we mean by trade facilitation? Enhancing border management facilities Effective customs administration ICT usage Logistics Institutional capacity building border crossing times Reducing 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 solutions Slide 14
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Slide 15 TOBB-GTI border gate modernizations İpsala to Greece Turkey′s experience in PPP solutions
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Slide 16 TOBB-GTI border gate modernizations Sarp to Georgia Turkey′s experience in PPP solutions
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Slide 17 TOBB-GTI border gate modernizations Habur to Iraq Turkey′s experience in PPP solutions
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Slide 18 TOBB-GTI border gate modernizations Cilvegözü to Syria Turkey′s experience in PPP solutions
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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 Turkey′s experience in PPP solutions
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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 Turkey′s experience in PPP solutions
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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 Turkey′s experience in PPP solutions
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