1. REGIONAL COMPETITIVENESS OPERATIONAL PROGRAMME 10 TH SECTORAL MONITORING COMMITTEE MEETING 27 June 2012 – Ankara

2. 1.Opening statements – by the Head of the Operating Structure, and by the Commission (HoS + EC) 2.Approval of the Minutes of the last meeting and the agenda of the Meeting (HoS + EC) 3.Information on the Annual Audit Activity Report for the RCOP (Audit Authority) 4.Information on programming (OS) - 1st project package - 2nd project package - 3rd project package (OS+EIF) - 4th project package 5.Information on implementation (OS) - Tendering and contracting - Implementation -Absorption (n+3), procurement plans and disbursement forecasts -Updated payment forecast and payment cycle for 2012 (OS+NAO) 6. Information on technical assistance and communication activities (OS) 7. Monitoring activities (OS) -Discussion and Endorsement of 2011 Sectoral Annual Implementation Report -Information on Monitoring Report and Monitoring Sheets 8. Information on Accreditation of Finance and Contracts Unit in RCP CID and follow-up of conferral of management audit findings of the DG REGIO (OS+EC) 9.Information on the revision and extension of the Operational Program for years 2012/2013 (OS +EC+ Strategic Coordinator) 10. Indicative date for the next Sectoral Monitoring Committee (HoS + EC) 11. AOB Agenda For the 10 th Sectoral Monitoring Committee Meeting For the Regional Competitiveness Operational Programme in Turkey (27 June 2012, 13:30)

3. PROGRAMMING -1st project package -2nd project package -3rd project package -4th project package

4. STATE OF PLAY OF THE 1st PACKAGE of PROJECTS UNDER THE RCOP

5. 1st Package of Project TOTAL BUDGET: 98.100.205 € KOSGEB Establishment of 3 Business Incubators in Selected Regions and Development of a Network among Incubators in Turkey, KOSGEB TUBITAK Establishment of Innovation Centre for Food- INNOFOOD CENTER, TUBITAK MoSIT-DG for Science and Technology Establishment of 3 Technology Development Zones, MoSIT-DG for Science and Technology Ministry of Culture and Tourism Winter Tourism Corridor in Erzurum, Erzincan and Kars, Ministry of Culture and Tourism TOBB Enlargement of the European Turkish Business Centres Network to Sivas, Antakya, Batman and Van, TOBB Ministry of Economy Empowering SMEs for networking and inter-regional cooperation, Ministry of Economy MoSIT – RCP-CID Technical Assistance + Publicity, MoSIT – RCP-CID

6. 1st Package of Project TUBITAK, TUBITAK, The Scientific and Technological Research Council of Turkey INNOFOOD MAJOR PROJECT  First Submission of the Documents – 26.02.2010  Admissibility Letter – 23.04.2010  Comments from the EC – 11.10.2010  Second Submission of the Documents – 29.07.2011  Comments from the EC – 22.03.2012  Third Submission of the Documents – July 2012

7. STATE OF PLAY IN SECOND PROJECT PACKAGE

8. SECOND PROJECT PACKAGE - STATE OF PLAY 1- Business Development Center 2- Big partnership of small enterprises 3- Hazelnut Licensed Warehouse and Spot Exchange 4- Strengthening the Infrastructure for Furniture Production 5- Tea Research and Application Centre 6- My Bee, My Honey, My Honeycomb 1- Business Development Center 2- Big partnership of small enterprises 3- Hazelnut Licensed Warehouse and Spot Exchange 4- Strengthening the Infrastructure for Furniture Production 5- Tea Research and Application Centre 6- My Bee, My Honey, My Honeycomb Name of Proposal Submission Date Approval Date 26. 10. 2010 23.11.2010 7- Sustainable Tourism Development Location Van Tokat Giresun Kayseri Rize Ordu Van Tokat Giresun Kayseri Rize Ordu Mardin 08.02.2011 03.03.2011 8- Establishment of Cereals Exchange and Licensed Warehouse 9-Hand-“Made in Hatay” 10-Establishment of a “CuF” for Industrial Forestry Products 11- Impr. of the Shared Industrial Infr. of the Pistachio Pros.Sector 12- Increasing Competitiveness of Middle Black Sea Region (TR83) 13- Establishment of a CuF for Furniture and Mechanics 8- Establishment of Cereals Exchange and Licensed Warehouse 9-Hand-“Made in Hatay” 10-Establishment of a “CuF” for Industrial Forestry Products 11- Impr. of the Shared Industrial Infr. of the Pistachio Pros.Sector 12- Increasing Competitiveness of Middle Black Sea Region (TR83) 13- Establishment of a CuF for Furniture and Mechanics Ş.Urfa Hatay Kastamonu Siirt Samsun Amasya Ş.Urfa Hatay Kastamonu Siirt Samsun Amasya 01.03.2011 04.05.2011 13.06.2011 18.04.2011 18.06.2011 03.11.2011 04.05.2011 13.06.2011 18.04.2011 18.06.2011 03.11.2011

9. SECOND PROJECT PACKAGE - STATE OF PLAY Name of Proposal Submission Date Approval Date Location 16- Natural Stone Manufacturing and Marketing Support Centre Gaziantep 13.05.2011 17.01.2012 Budget Total : 163.600.231 € 14- Regional Industrial Collaboration in Cotton Fibre Manufacturing Laboratory Diyarbakır 13.05.2011 18.07.2011 15- Samsun Metals Metrology and Calibration Laboratory Samsun 08.06.2011 03.11.2011 17- Regional Industrial Design and Modeling Centre Bayburt 20.04.2011 04.11.2011 18- Osmaniye Enterprise Development Center (İŞGEM) Osmaniye 05.01.2012 23.03.2012- by e-mail 19- Maraş Pepper Cluster 20- Activation of “Specialty Foods Cluster” in “GAP Region” K.Maraş 24.04.2012 14.05.2012- by e-mail 15.06.2012- by e-mail Ş.Urfa-İzmir 19.01.2012 21- Sorgun Enterprise Development Center (İŞGEM) 22.06.2012- by e-mail Sorgun/ Yozgat Sorgun/ Yozgat 18.05.2012 22- Yeniçam Shipyard CuF 21.06.2012- by e-mail Trabzon 04.05.2012

10. SECOND PROJECT PACKAGE – PLANNING Name of Proposal Location Çankırı Indicative Budget : ~ 34.837.566 € 23- Karatekin University – SETEM 24- Marble Production Common Use Facility 25- Enterprise Development Center 26- Whey Powder Production Facility Amasya Elazığ Trabzon Status Waiting ERA’s response Waiting EC’s comments Submission Date 26.11.2011 18.05.2012 28.05.2012 02.05.2012

11. SECOND PROJECT PACKAGE – PLANNING 27- Aydınlar Tourism Promotion Project 28- FIKAP 29- Investment Promotion Center 30- Atatürk University – Technology Oriented Supp. Cen. 31- Apricot Valley and Green Energy Storage Facility 32- Winter Tourism Center 33- Enterprise Development Center 34- Milk Processing CuF 35- Olive oil CuF 36- Mount Pamuk Highland Tourism 37- Kommagene – Nemrut Tourism Development 38- İshakpaşa Palace Tourism Promotion Project 39- Enterpreneurship Consultancy Center 40-Increasing the Regional Competitiveness in Kars, Ağrı, Ardahan and Iğdır 41- Bafra Business Dev. Cent. 27- Aydınlar Tourism Promotion Project 28- FIKAP 29- Investment Promotion Center 30- Atatürk University – Technology Oriented Supp. Cen. 31- Apricot Valley and Green Energy Storage Facility 32- Winter Tourism Center 33- Enterprise Development Center 34- Milk Processing CuF 35- Olive oil CuF 36- Mount Pamuk Highland Tourism 37- Kommagene – Nemrut Tourism Development 38- İshakpaşa Palace Tourism Promotion Project 39- Enterpreneurship Consultancy Center 40-Increasing the Regional Competitiveness in Kars, Ağrı, Ardahan and Iğdır 41- Bafra Business Dev. Cent. Name of Proposal Estimated Submission Date 3rd Quarter of 2012 Location Indicative Budget : ~ 47.965.288 € Siirt Giresun Yozgat Erzurum Malatya Ardahan K.Maraş Kars G.Antep Iğdır Adıyaman Ağrı Bitlis Kars, Ağrı, Ardahan, Iğdır Samsun-Bafra Siirt Giresun Yozgat Erzurum Malatya Ardahan K.Maraş Kars G.Antep Iğdır Adıyaman Ağrı Bitlis Kars, Ağrı, Ardahan, Iğdır Samsun-Bafra

12. STATE OF PLAY IN THIRD PROJECT PACKAGE

13. THIRD PROJECT PACKAGE - STATE OF PLAY 32 M.€ IPA Contribution 500 m.€ Credit Volume for SMEs Under implementation EIF provided info. first results 4 Steering Com. held. Need Assess. For KGF carried out Greater Anatolia Guarantee Facility - GAGF 16.3 Mil. € Budget Contribution Agreement - 31.08.2011 Official launch of the project – 19.01.2012 Publication of Call for Expression of Interest for fund managers - 20.01.2012 7 eligible applications by deadline -20.03.2012 Evaluation of proposals – on-going Selection of a fund manager – expected in July Commitment to G43 VC – expected by the year-end G-43 Anatolian Venture Capital Fund Establishment of Technology & Innovation oriented fund, Extension of GAGF New project proposals

14. Results as of May 2012 Total Volume: ~ EUR 310 million Total Number of Loans: >3,500 Total Number of SMEs: >3,500

15. Results vs Objectives Portfolio of EUR 310m 62% of the target EUR 500m Number of SMEs reached surpassed the target of 2,500 by 50%

16. Regional Breakdown of Loans* * As of end of 2011

17. PROGRESS IN 1ST 2ND AND 3RD PACKAGE

18. PROGRESS BY PRIORITY AXES IN 1ST 2ND AND 3RD PACKAGE Priority 1: Improvement of Business Environment (349.794.316 €)

19. Priority 2: Strengthening of Enterprise Capacity and Foster Entrepreneurship (32.846.459€) PROGRESS BY PRIORITY AXES IN 1ST 2ND AND 3RD PACKAGE

20. STATE OF PLAY IN THE FOURTH PROJECT PACKAGE

21. OVERVIEW of FOURTH PROJECT PACKAGE CRITERIA APPLIED FOR IDENTIFICATION OF PROJECT  Alignment with objectives of the RCOP  Potential regional impact of the project idea on competitiveness  Originality of the project idea  Maturity of the idea  Province not previously covered by 1st and 2nd package projects  New project idea; ie not overlapping in concept or region with 1st or second package Received Project Ideas : 107 Long Listed Project Ideas: 23 Shortlisted Projects: 12 (including 1 major project)

22. PRIORITIZED LIST OF PROJECTS IN 4TH PACKAGE (IND. 90.000.000 € )

23. TIMELINE FOR the 4TH PACKAGE May 12June 12July 12August 12September 12 Weeks1234512341234123451234 1 E-mail to the ERAs 2 Receiving First Draft of OIS 3 Establishment of Technical Assistance Team (TAT) 4 Kick-off Technical Meetings with ERAs with the Participation of TAT 5 Site Visits 6 Finalization of OISs

24. IMPLEMENTATION -Tendering and contracting -Implementation -Absorption (n+3), procurement plans and disbursement forecasts -Updated payment forecast and payment cycle for 2012

25. Tendering and Contracting

26. Realised and Foreseen Number of Signed Contracts, component based

27. * Until the end of 2014 foreseen budget that will contracted is 246m € Realised and Foreseen Contracted Budget

28. Finalized Contracts Totally 7 contracts Type of Contracts WorksSupervision Technical assistance / FW Supply Total (euros) Number of Contracts 00257 Budget (euros) 00187.968865.4701.053.438

29. Contracts under Implementation Totally 15 contracts Type of Contracts WorksSupervision Technical assistance SupplyDirectGrant Total (euros) Number of Contracts 6430215 Budget (euros) 18.162.6831.947.22515.989.195048.300.00084.399.103

30. Projects coming to Implementation Totally 28 projects / 83 components Type of Components WorksSupervision Technical assistance Supply Budget (euros) 201200304.432.036 1st Q / 2013233226.822.545 2nd Q / 201312155350.592.372 3rd Q / 2013402736.717.659 4th Q / 2013 004314.020.403 2014006927.975.263 Total no of components 18 2324 160.560.278 Budget (euros)61.178.0757.405.16041.597.08750.379.956

31. DISBURSEMENT FORECAST AND N+3 GAP FOR RCOP 2007-2011 PROGRAMMING PERIOD

33. DISBURSEMENT FORECAST AND N+3 GAP FOR RCOP 2007-2013 PROGRAMMING PERIOD

35. MONTHLY EXPENDITURE FORECAST FOR 2012

36. TECHNICAL ASSISTANCE ACTIVITIES -Technical Assistance Plan (2012 – 2017) -Technical Assistance on Institutional Building for the Implementation of RCOP

37. Technical Assistance Plan (TAP) 2012-2017 Preparation of TAP was started in December 2011. Taking into account comprehensive needs identification carried out in the RCP-CID, where all the departments identified their needs for TA Taking into account training need analysis of ERA Approved by the Commision in 10 May 2012.

38. CONTRACTS UNDER 2012 - 2017 TECHNICAL ASSISTANCE PLAN NoMEASURE CONTRACTS TYPE OF CONTRACT Expected starting date Expected completion date INDICATIVE BUDGET(Euro) Total Ind. Budget EUNATIONAL 13.1. TA to RCP-CID (Technical Assistance and Capacity Building for Further Strengthening of RCP CID in its Operations) Service Q2 2013Q4 20153.800.000 3.230.000570.000 23.1.TA to RCP-CID IIService Q4 2015Q2 20171.100.000 935.000165.000 33.1. Project Preparation Facility Service Q1 2014Q4 20163.200.000 2.720.000480.000 43.1.TA for MISService Q2 2015Q2 2017900.000 765.000135.000 53.1.MIS Supply ProjectSupply Q1 2016Q2 2016 250.000 212.50037.500 63.1. Supply of Equipment for RCP-CID Supply Q3 2013Q4 2013250.000212.50037.500 73.1. TA to RCP-CID (FWC, Direct Financing of expenditures, etc.) Service Q3 2012Q4 20131.195.438 1.016.122179.316 83.2. TA for Publicity and Visibility Service Q3 2015Q1 20171.832.3531.557.500274.853 TOTAL 12.527.79110.648.6221.879.169

39. Main activities January - June 2012 Support to the hand-over process from CFCU to RCP-CID after succesfull Accreditation Process (February 2012) Support to preperation of TA Plan (2012-2017) Support to pipeline development (4th Package) Preparation of Tender Dossiers Training and capacity building Study tours to Poland and Spain Technical Assistance on Institutional Building for the Implementation of RCOP

40. Training and capacity building Capacity building to RCP-CID: Quality Assurance and Risk management training for new staff Project Development Training course (16-18 January 2012) Project Pipeline Management (20-25 February 2012) Publicity and Visibility (13 April 2012) FIDIC Training workshop (29-30 March 2012) Training of trainers (13-14 June, 20-21 June 2012) Internal workshops on budgeting, contracting, payment procedures and financial reporting

41. Training and capacity building Capacity building to end-recipients: − Guidelines for ERAS (End-Recipients) designed and under revision − First training for national ERAs (first package) delivered: 28 May to 01 June 2012

42. Study tour to Poland and Spain Study Tour for FCD to Poland prepared and delivered 14 – 18 May 2012 Study Tour for Programming Department to Spain prepared and delivered 21 – 25 May 2012

43. Main activities planned for July to December 2012 Revision of RCP-CID manual, systems and tools Support to preparation of Technical Documents within the new TA Plan (2012-2017) Preparation of Tender Dossiers Organization of one Study tour and internships Support to pipeline development to Programming Department Support to FCD Training and capacity building for RCP-CID staff and ERAs

44. FOLLOW-UP OF CONFERRAL OF MANAGEMENT AUDIT FINDINGS OF THE DG REGIO

45. Conferral of Management Audit Findings of the DG REGIO AREA: AREA: Formal establishment of accountability, responsibility, delegated responsibility and any necessary related authority for all tasks and positions throughout the organisation. SUMMARY FINDING RECOMMENDATION /FOLLOW UP ACTIONS CURRENT STATUS A smooth hand-over of all tendering and contracting files should be safeguarded between the Ministry of Science, Industry and Technology and Central Finance and Contracts Unit upon the conferral of the tendering, contracting and financial management functions. According to the first addendum (December 2010) of the initial Cooperation Agreement, there were specific provisions arranging in detail the handover of the public procurement documents according to the status of the tenders/contracts managed by CFCU. However, in a second addendum (May 2011), it is stated that following the accreditation and conferral of management powers, all the contractual responsibilities should be undertaken by the Ministry of Science, Industry and Technology. This uncertainty put into question the effective functioning of the management and control system concerning tendering, contracting and financial management. Specific provisions arranging in detail the transition of the tendering, contracting and financial management files should be laid down in an agreement between the two institutions. Regarding the transfer of tendering and contracting files, a meeting was held on 8th of March 2012 between CFCU and MoSIT. It is concluded in the meeting that all tender or contract files at different phases will be transferred to the MoSIT. It has been agreed on that files at the tendering phase will be transferred to the MoSIT at the end of the relevant stage (shortlisting, evaluation, contracting or signature), and files at implementation phase will be directly transferred to the MoSIT after realization of payment requests if any made at the end of the meeting. Before transfer of files, CFCU will send an addendum to EUD for tenders under evaluation or contracts under implementation. To conclude, the procedure agreed by the both sides regarding transition of the tendering, contracting and financial management files sent by the CFCU with an official letter with the date of 12 th of March 2012. In addition, to maintain smooth transition, close cooperation was achieved and workshops were carried out with CFCU and EUD during the transition period which enabled the experience sharing and know-how transfer between institutions.

46. Conferral of Management Audit Findings of the DG REGIO AREA: AREA: Internal audit including handling of audit reports and recommendations SUMMARY FINDING RECOMMENDATION /FOLLOW UP ACTIONS CURRENT STATUS The set up and functioning of the internal audit function in the Ministry of Science, Industry and Technology has weakened since the initial conferral of management decision and is considered as an important weakness in the current management and control system. No IPA related, internal audit activity was carried out, nor planned, in 2011. The requirement of Commission Regulation (EC) No 718/2007 Article 28(2)(k): The operating structure shall be responsible for managing and implementing the programme or programmes concerned in accordance with the principle of sound financial management. For those purposes, it shall carry out a number of functions that include: ensuring internal audit of its different constituting bodies; in the current situation it is not fulfilled. Recruitment and retainment of qualified internal auditors should be given the highest priority. Internal audit training programmes, in accordance with international internal audit standards should be implemented and further intensified. IPA related internal audit work should be regularly performed. Relevant follow-up information should be provided to the Commission concerning - recruitment - training - audit work carried out. A detailed audit plan for 2012 including the follow-up of previous internal audit findings should be submitted to the Commission. It will be subject to recruit at least 2 internal auditors until the end of 2012. In addition 1 of Internal Auditors of the Ministry has been nominated for the purpose of dealing with the operations of the RCP-CID. Training strategy document for EU funded projects will be prepared and submitted to the RCP-CID to ensure that the trainings proposed within the scope of this strategy would be provided with sources of the TA Project. “The Tendering Documents Preparation Activities” of the Regional Competitiveness Operational Program and Implementation Department was audited in terms of system and compliance between 17/08/2011-08/02/2012. The 2012 Internal Audit Program was sent to the Commission. It is planned in the 2012 Internal Audit Plan to carry out an audit on “Reporting Irregularities” and to implement follow up.

47. Conferral of Management Audit Findings of the DG REGIO AREA: AREA: Security procedures (IT) and Evaluation SUMMARY FINDING RECOMMENDATION /FOLLOW UP ACTIONS CURRENT STATUS At Strategic Coordinator level the horizontal Integrated Management Information System (IMIS) is still not functioning and the Commission has been made aware of technical problems. In parallel, the Ministry of Science, Industry and Technology plans to develop an individual Management Information System addressing specific implementation and financial reporting needs at a measure, project and contract level. The integration between the IMIS, the MIS and the accounting system should be given a priority and proper procedures should be added in the manual of procedures. The finalisation of the MIS is foreseen for the end of 2013, in the meantime an alternative information system will be used. The requirement of Commission Regulation (EC) No 718/2007 Article 28(2)(i): The operating structure shall be responsible for managing and implementing the programme or programmes concerned in accordance with the principle of sound financial management. For those purposes, it shall carry out a number of functions that include: setting up, maintaining and updating the reporting and information system; in the current situation only partly fulfilled. The technical problems with the IMIS system should be solved with the highest priority. Possible interfaces should be developed between the different systems in order to prevent double entry of data and similar entry mistakes. Priority should be given to the finalisation of the MIS. Relevant follow-up information should be provided to the Commission concerning - The functioning of the IMIS System - the planning and progress concerning the interfaces - progress of the MIS - Training provided. The integrated structure between the different IT systems will be ensured by the Management Information System which is at the PN publishing phase at the moment. The ToR of MIS is prepared by taking into consideration of that integration matters. Estimated date of contract Signature for MIS: 2 nd quarter of 2013. On the other side, the user trainings for MIS will be given after the completion of the system. Furthermore, System Admin Trainings will be given to RCP-CID staff in order to ensure sustainability Till MIS will be fully operational; interim IT solutions (the File server for archiving and hierarchical electronical document sharing, the excel worksheets developed by each department according to their own needs ) and other systems (IMIS, PRESTO) will be on use. Moreover, training programme for PRESTO was organized for the relevant staff in the third quarter of 2011.

48. Conferral of Management Audit Findings of the DG REGIO AREA: AREA: Security procedures (IT) and Evaluation (Continued) SUMMARY FINDING RECOMMENDATION /FOLLOW UP ACTIONS CURRENT STATUS The technical problems with the IMIS system should be solved with the highest priority. Possible interfaces should be developed between the different systems in order to prevent double entry of data and similar entry mistakes. Priority should be given to the finalisation of the MIS. Relevant follow-up information should be provided to the Commission concerning - The functioning of the IMIS System - the planning and progress concerning the interfaces - progress of the MIS - Training provided. Within this scope, training programmes were organized regarding IMIS for the staff of Operating Structures and their end recipients in 2010. Training of trainers programme was organized by the Ministry of Development (MoD) for the staff of the Operating Structures in 1-5 March 2010. Training programme was organised for the first and third project package end recipients of the RCOP and staff of RCP-CID between 29 th of April and 2 nd of May 2010. IMIS has become operational as of September 2010 and was accessible at the web page of the Ministry. 2 nd half of 2011- January 2012: Period of Technical problems and efforts for solutions. Remindful training was delivered on 13 th of January 2012 by RCP-CID to the first and third project package end recipients. In this context, IMIS opened to active usage of the first and third project package end recipients on 16 th of January 2012. In the forthcoming period, it is planned to organise trainings and open the system to the end recipients of second project package.

49. THANK YOU FOR YOUR ATTENTION Ministry of Science, Industry and Technology Regional Competitiveness Programme Coordination and Implementation Directorate e-mail: ipa@sanayi.gov.tr Web adress: ipa.sanayi.gov.tr