Turkey: Regulation On The Determination Of Investment Zones

Last Updated: 26 March 2019
Article by Gönenç Gürkaynak Esq, İlay Yılmaz, Noyan Utkan and Cansu Kavan
Most Read Contributor in Turkey, September 2019

The Regulation on the Determination of Investment Zones ("Regulation") was published by the Ministry of Industry and Commerce ("Ministry") in the Official Gazette on December 1, 2018, and entered into force on the date of its publication.

The scope and purpose of the Regulation is to determine available areas for organized industrial sites, industrial estates, technology development zones, and free trade zones, in order to expedite their establishment process, and to determine the procedures and principles for building the infrastructures of those areas that are considered to be suitable for this purpose. The Regulation sets forth which relevant bodies of the Ministry will designate the suitable areas and also specifies how they will carry out their duties.

The Regulation has been drafted in accordance with Articles 385 and 390 of the Decree on the Presidential Organization, which was published in the Official Gazette on July 10, 2018 ("Decree"), and which regulates the duties and authorities of the Ministry and its directorates. The Minister of Industry and Commerce has stated that, as a result of the Regulation, the planned industrial zones will be completed more rapidly, land procurement costs will be reduced, and the Treasury lands can be evaluated without necessitating expropriation studies.

Article 4 of the Regulation designates the procedure for the preliminary determination of the suitable investment areas. According to Article 4, the Ministry will first carry out a preliminary determination of the investment zones by identifying the non-forest lands and/or unregistered areas belonging to the Treasury, and by identifying areas that are suitable for the environment and land-use plans. Furthermore, private properties can also be incorporated into these areas, if there is a technical requirement to do so in terms of land, planning, and infrastructure integrity.

The Regulation further stipulates and sets forth the procedure for the "location preference survey." As per Article 5 of the Regulation, the location preference survey of the explored areas, which is the second step after the preliminary determination, will be conducted by the Ministry at the relevant sites, and the Ministry will be entitled to obtain any kind of information, documents and maps from the relevant authorities which are necessary for conducting the location preference survey. Article 6 of the Regulation enumerates the various sections of the location preference survey, which include the following: (i) introduction, (ii) threshold analysis, (iii) identification of areas and processing of boundaries, (iv) features of the properties, (v) outcome, (vi) sources, and (vii) annexes. Moreover, the Regulation specifies the content of each individual section (Article 7 through Article 11).

The evaluation of the location preference survey report for the suitable investment areas, as well as the finalization and determination of their status, is regulated under the third section of the Regulation. If the location preference survey report submitted to the General Directorate of the Ministry ("General Directorate") is approved, then the "threshold analysis map" and the numerical data concerning the site in question will be prepared by the General Directorate and sent to the institutions and organizations included in the annexes (e.g., the Ministry of Commerce, the Ministry of Culture and Tourism, the Ministry of Interior Affairs the Ministry of Defense, etc.) in order to obtain their opinions on the matter. If the relevant institutions and organizations do not submit their opinions within thirty (30) days, except for the areas protected by legislation, they will be deemed to have given an affirmative (i.e., favorable) opinion and assented to the suitability of the site in question.

Article 13 of the Regulation governs the finalization of the site of the investment zone. If affirmative or conditionally affirmative opinions are obtained from all the relevant institutions and organizations, the preparation and approval of the "observational geological survey report," as determined by the Ministry, and the registration of the non-registered areas, if any, shall be carried out by the relevant governorship. In order to ensure that the investment areas can be used in the appropriate manner, an annotation will be added by the governor to the applicable land registry, stating that sales, transfers and assignments to third parties cannot be processed, unless the infrastructure, structure or facility are constructed in accordance with the allocation or sales conditions. The annotation on the land registry will be added after the determination of the status of the investment zone, in case the land is owned by an individual.

Article 14 of the Regulation relates to the determination of the status of investment zones. According to Article 14, the works and operations regarding the infrastructure of the organized industrial sites, industrial estates and technology development zones, whose status is determined by the Ministry, will be carried out under the relevant legislation following their establishment. Article 14 also states that the resettlement location preference process will not be carried out if the use of the investment areas is deemed suitable for the applications submitted before the Ministry in the electronic environment for the establishment of organized industrial sites, industrial estates, technology development zones and free trade zones.

Applications for the establishment of a free trade zone will be submitted to the Ministry of Trade. If the use of the investment areas determined by the Regulation as a free trade zone is approved by the Ministry of Trade, then the location and boundaries of the free trade zones to be established at these sites will be determined according to the Law No. 3218 on Free Trade Zones.

We observe that the Turkish government now expects to perform the procedure for legally identifying the land on which investment areas will be established within a month. It is also anticipated that the Regulation will minimize the costs associated with the infrastructure work that the investors will carry out, and thus, the Regulation is expected to increase the economic benefits of these investments.

This article was first published in Legal Insights Quarterly by ELIG Gürkaynak Attorneys-at-Law in March 2019. A link to the full Legal Insight Quarterly may be found here"

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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