Document of The World Bank FOR OFFICIAL USEONLY ReportNo: 43 174-TR PROJECTAPPRAISAL DOCUMENT ONA PROPOSEDLOAN INTHEAMOUNT OFEURO 135.0 MILLION (US$203.0 MILLION EQUIVALENT) TO THE REPUBLIC OF TURKEY FORA LAND REGISTRY AND CADASTREMODERNIZATION PROJECT April 7,2008 SustainableDevelopmentDepartment Europeand Central Asia Region This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosedwithout World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective November 8,2007) Currency Unit = New Turkish Lira YTL1.17 = US$ 1 US$O.85 = YTL 1 US$ 1.5039 = Euro 1 FISCAL YEAR January 1 - December31 ABBREVIATIONS AND ACRONYMS APL Adaptable Program Lending ARIP Agriculture ReformImplementation Project C/B Cost/Benefit CPS Country Partnership Strategy DA DesignatedAccount EMF Environmental Monitoring Framework EMP Environmental Monitoring Plan EU EuropeanUnion F M Financial Management FMR Financial Management Report FMU Financial ManagementUnit GASB Government Accounting Standards Board GDP Gross Domestic Product GDPA GeneralDirectorate for Public Accounting GIS Geographic Information System GPS Global Positioning System HR Human Resources ICB International Competitive Bidding IEG IndependentEvaluationGroup IP Implementation Progress IRR Investment Rate of Return ISR Implementation Status Report IT Information Technology IUFR InterimUn-audited Financial Report NPV Net PresentValue LA Land Administration MEER Marmara EarthquakeEmergencyReconstruction Project MOU Memorandum of Understanding NCB National Competitive Bidding NSDI National Spatial Data Infrastructure O&M Operation and Maintenance OPM Orthophoto Maps PFMC Public Finance Managementand Control * . 11 FOR OFFICIAL USE ONLY PFS Project Financial Statements PMB Project ManagementBoard QCBS Quality and Cost Based Selection SBD StandardBidding Documents SDD Strategy DevelopmentDirectorate SIL Specific InvestmentLoan SPO State PlanningOffice TAKBIS Turkish ComputerizedCadastre and Land Registry System TKGM Turkish Land Registry and Cadastre Agency TCA Turkish Court of Accounts UNECE UnitedNationsEconomicCommissionfor Europe Working Partyon Land WPLA Administration Vice President: Shigeo Katsu Country Director: UlrichZachau Sector Director: Peter Thomson Task Team Leader: Wael Zakout This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. Its contents may not be otherwise disclosed without World Bank authorization. ... 111 TURKEY LandRegistry and CadastreModernizationProject CONTENTS Page I STRATEGICCONTEXTANDRATIONALE . .................................................................. 1 A. Country and sector issues ........................................................................................................ 1 B . Rationale for Bank involvement .............................................................................................. 2 C . Higherlevel objectives to which the project contributes ........................................................ 3 I1. PROJECT DESCRIPTION .............................................................................................. 3 A . Lending instrument.. ................................................................................................................ 3 B . [IfApplicable] ProgramobjectiveandPhases........................................................................ 4 C . Project development objective and key indicators .................................................................. 4 D Project components................................................................................................................. . -4 E . Lessons learned and reflected inthe project design ................................................................ 6 F . Alternatives considered and reasons for rejection................................................................... 7 I11. IMPLEMENTATION ....................................................................................................... 7 A . Partnership arrangements (ifapplicable) ................................................................................. 7 B . Institutionaland implementation arrangements ..................................................................... -7 C. Monitoring and evaluation o f outcomeshesults ...................................................................... 8 D. Sustainability ........................................................................................................................... 8 E. Critical risks and possible controversial aspects ..................................................................... 8 F. Loadcredit conditions and covenants ................................................................................... 10 I V. APPRAISAL SUMMARY .............................................................................................. 10 A. Economic and financial analyses........................................................................................... 10 B. Technical ............................................................................................................................... 11 C. Fiduciary ................................................................................................................................ 11 D Social ..................................................................................................................................... . 13 E. Environment .......................................................................................................................... 14 F. Safeguard policies.................................................................................................................. 14 G. Policy Exceptions and Readiness .......................................................................................... 15 Annex 1: Countryand Sector or ProgramBackground .......................................................... 16 iv Annex 3: ResultsFramework and Monitoring ......................................................................... 19 Annex 4: DetailedProjectDescription ...................................................................................... 25 Annex 5: ProjectCosts ................................................................................................................ 35 Annex 6: ImplementationArrangements .................................................................................. 38 Annex 7: FinancialManagement and DisbursementArrangements ..................................... 42 Annex 8: ProcurementArrangements ....................................................................................... 50 Annex 9: Economicand FinancialAnalysis .............................................................................. 60 Annex 10: Safeguard PolicyIssues ............................................................................................. 69 Annex 11: ProjectPreparationand Supervision ...................................................................... 72 Annex 12: Documentsinthe ProjectFile .................................................................................. 73 Annex 13: Statementof Loans and Credits ............................................................................... 74 Annex 14: Country at a Glance .................................................................................................. 77 Annex 15: Maps ........................................................................................................................... 79 V TURKEY LANDREGISTRYAND CADASTRE MODERNIZATION PROJECT PROJECT APPRAISAL DOCUMENT EUROPE AND CENTRAL ASIA ECSSD Date: April 4, 2008 Team Leader: Wael Zakout Country Director: UlrichZachau Sectors: Central government administration Sector ManagedDirector: Peter D.Thomson (100%) Themes: Land administration and management (P) Project ID: P106284 Environmental screening category: Partial Assessment Lending Instrument: Specific Investment Loan Project FinancingData [XI Loan [ 3 Credit [ 3 Grant [ ] Guarantee [ ] Other: For Loans/Credits/Others: Total Bank financing: Euro 135.0 million (US$203.0 million equivalent) Proposedterms: IBRDflexible loan with variable spread. Disbursement linked schedule, a maturity of 23.5 years including a 5 year grace period. Front-end Fee payable by the Borrower equal to 0.25% of the Loanamount. International Bank for Reconstruction and 199.40 3.60 203.OO DeveloDment Total: 203.80 6.30 210.10 Borrower: Republic of Turkey Turkey ResponsibleAgency: Land Registry and Cadastre Agency Turkey vi Estimateddisbursements (BankFY/US$m) FY 9 10 11 12 13 14 4nnual 20.00 40.00 43.00 50.00 30.00 20.00 Zumulative 20.00 60.00 103.00 153.00 183.00 203.00 Project description [one-sentence summary of each component] Ref: PAD II.D., Technical Annex 4 Component 1: Cadastreand Land Registry Renovation and Updating. The component will support (through cadastrerenovation) the conversion (into digital format), updating and integration of existing analogue and digital cadastreinformation, land registry and related data, into updated, accurate, consistent and standardizedlegally agreed cadastral renovateddigital map and data sets, that will be available for entry into the Turkish Computerized Cadastre and Land Registry System (TAKBIS). Component 2: Improved Service Delivery. The component will support the modernization of the TKGM infrastructure so as to improve TKGM's ability to provide coreservices to the Government and citizens of Turkey. Component 3: Human Resourcesand Institutional Development. The component will support the development of strategic plans andhumanresourcesdevelopmentplansto ensure that the TKGMpersonnel skills matchthe strategic needs ofthe organization. Component 4: Property Valuation. The componentwill investigate and develop policies and vii institutional options for the introduction o f the property valuation function inTurkey inline with internationalbest practices. The component will also finance the development of interim guidelines and piloting o f property valuation intwo municipalities and support the building o f the requiredcapacities. Component 5: Project Management. This component will finance the project management costs, including the procurement and financial management consultants, the incremental operation costs to supervise the central and field activities, and the monitoring and evaluations costs including the costs o f customer surveys. Which safeguard policies are triggered, if any? Ref: PAD IKF., TechnicalAnnex 10 The project is rated as environmental assessment Category B accordingto the World Bank OP 4.01 and an Environmental Management Framework (EMF) was prepared and disclosed by the Government. Simple environmental management plans (checklist format) following the example presented inthe EMFwill be included as biddingdocuments for Contractors for all proposed constructionsites (once they are determined). Because the specific buildingshave not been identified yet, and could potentially include historic buildings or be within a historic district, the project will trigger the OP 4.11 on PhysicalCultural Resources. Specific measures are included inthe EMFto protectphysical cultural resources inline withthe Turkishregulations and the OP 4.11. Significant, non-standard conditions, if any, for: Ref: PAD III.F. Board presentation: None. Loadcredit effectiveness: None. Covenants applicable to project implementation: The Borrower, through the TKGM, will submit progress reports outlining achievements, outstanding issues, and proposed actions, by September 30 and March 3 1 o f each year, starting from September 30,2008. The Borrower, through TKGM, will preparea mid-termreviewreport no later than March 15, 2011,outlining achievements, outstanding issues, and proposed actions, including proposals to re-allocate the loan proceeds, ifneeded. The mid-termreview mission will be undertakenno later than April 15,201 1. The Borrower, through the TKGM, will maintain financial management systems acceptable to the Bank. The project financial statements will be audited by independentauditors, Le., the Treasury Controllers, inaccordance with International Auditing Standards. The annual audited statements and audit report will be provided to the Bank within six months o f the end o f each calendar year and at the closing of the project. a TKGM will complete a strategic plan including a humanresources development plan by December 3 1,2008. TKGM will develop a policy on data sharing and data pricing inthe context ofthe NSDI and e-government initiative by June 30,2009. VI11 ..I 0 The Borrower shall through TKGM, implement Project activities in accordance with the EMP and shall include adequate information on the carrying out o f the EMP inthe progress reports. ix I. STRATEGICCONTEXTANDRATIONALE A. Countryand sector issues 1. Turkey has a long history o f protectiono f property rights. More than 95% of land in Turkey i s mapped and registered, and the Turkish Land Registry and Cadastre Agency (TKGM) plans to complete the registration by 2008. Nevertheless, significant improvements are needed to fully modernize the TKGM and bring it to European standards. 2. Inthe last years, Turkey has experienced an economic growth with an average rate of 7.5% per annum since 2001. The housing and construction sector has beenvery active and is growing at a 7% rate. In major cities, the residential, industrial and commercial Construction i s taking place at a rapid pace and all support services, including property surveys and subdivision, are stretched to keep-up with increasing demand. Most secondary city areas have grown in size, some approaching 50 % into rural areas in the last decade. The resulting demand for cadastral survey services from both the public and private sectors continues to grow. 3. While the Turkish Cadastre and Registration system is considered one o f the most effective inthe region as registrationof property transaction is done within one day inmany offices, there are still many shortcomings that require to be addressed to ensure that the system modernizes to reach the same service level as inthe European countries. 4. Still, many o f the Cadastre and Land Registry offices rely on manual systems, with old documents, some o f them dating back to the Ottoman times. The TAKBIS system (the computerized Cadastre and Land Registry Software) runs in only 140 out o f the 1000 offices. There are plans to expand the computerizationto other offices inthe coming years. 5. The most challenging aspect is that cadastral maps continue to be ina paper format, vary in accuracy and consistency, and are not linked to the national network. This makes it difficult to support E-government applications as cadastre maps serve as a base mapping for many government applications. Furthermore, in many localities maps are out o f date and do not correspond with the ground locations and areas, differing sometimes by up to 10 meters. This situation resulted from the varying quality o f surveying technologies used in the last 100 years and the lack of requiredresources and regulatory means to keepthe cadastre up to date and to be truly representative o f the realities on the ground. Over time, several different geographical coordinate systems for the cadastre have been used in Turkey, ranging from graphical systems 100 years ago, then local systems, and finally, in the last 20 years, to a national coordinate system. Coordinates are central to digital spatial information systems, and at present, there is no standard system inuse for the country's cadastre. This lack o f a consistent coordinate system is a critical shortcoming for both developers, spatial analysts and users, and it will take several years to rectify. 6. Property valuation for taxation i s less developed in Turkey than in similar economies. Inthe wider context of Europe, survey work on behalf of the United Nations Economic Commission for Europe Working Party on Land Administration (UNECE WPLA) in 2001' confirms that the large majority (84%) of respondent countries' either have (72%), or were developing (14%), mass valuation systems for taxation purposes3.Land administration agencies are substantially the most common type of agency to have responsibility for mass valuation of real estate and maintenance of the appropriate databases4.There is no property valuation law in Turkey which would assign institutional responsibilities or provide the framework for property valuation guidelines and grievances procedures. Current property taxation relies on the minimum value of property provided by local governments. The minimum value is in many cases less than 10% of the fair market value. This significantly reduces the taxes the government collects on real estate transactions. The government has enacted several regulations to improve property valuation for accounting purposes as well as property appraisal to support mortgage lending. However, there are no similar initiatives to ensure that broader property valuation function develops in line with international standards. 7. The Government of Turkey is aware of the outstanding needs and decidedto modernize the cadastre inorder to realize the economic and social benefits of up-to-date information for future development. The E-government initiative, of which the cadastre and registration is a central part, is one of key government priorities. The transition from the paper-based to the computer- based land registry and cadastre is aimed at improving customer services, supporting E- government initiatives, and making information available to other government and private users. The digital cadastre information provides the base maps and related information for many E- government functions such as municipal services, emergency management, land use planning and development control, postal services, real estate monitoring, utilities management and property taxation. Most countries in Europe, including many of the transition economies, have moved from paper-based to computer-based land registry and cadastre systems. The success of the Turkish transition to a uniform digital environment will require significant efforts to deal with data renovation and updating, building the IT and communications infrastructure in the TKGM central and field offices, and significant human resources development program to upgradethe skills of TKGM staff to operate effectively in the new environment. B. Rationale for Bank involvement 8. In Turkey the basic pre-requisites for land administration (LA) are in place - a viable and strong single agency and a comprehensive and coherent legal framework. The Government of Turkey has approachedthe Bank for support for further improvements to its LA system with the goal to modernize the cadastre and registration system and integrate it into the E-government initiative. The government is keenly interested inreforms inthis sector as demonstratedby their ' Land (Real Estate) Mass ValuationSystemsfor Taxation Purposes in Europe, 2001, FederalLandCadastre Serviceof Russiaon behalfof UNECEWPLA: http://www.unece.or~ihlm/documents/2OO2~ub/~l~mass,valuation,~df Respondent countries were: Armenia, Austria, Azerbaijan, Belarus, Belgium, Bosnia and Herzegovina, Cyprus, Denmark, Estonia, Finland,France, Georgia, Germany, Hungary, Iceland, Italy, Latvia, Lithuania, Malta, Netherlands,Norway, Romania,RussianFederation,Slovak Republic, Slovenia, Spain, Sweden, Switzerland, UnitedKingdom The remainingfour countries all have taxes basedon net wealth/assetsand on real estate. 13 o f the 25 countries responding:Armenia, Azerbaijan, Belarus, Belgium, Cyprus, Estonia, France, Iceland, Italy, Latvia, Lithuania,Russian Federation, Spain 2 commitment to the ARIP and MEER projects. TKGM, has shown solid commitment to this proposedproject and has completedthe project design successfully within a relatively short time. 9. The proposed project will build on the experience gained in the Turkey's Agricultural Reform Implementation Project (ARIP) and Marmara Earthquake Emergency Reconstruction (MEER) projects. Both projects had significant land administration components. The ARIP Land Administration component is around US$104 million while the MEER provided US$15 million in funding to TKGM activities. Support for this proposed project is complementary to ARIP and MEER projects and for the first time will support capacity building of TKGM. The Bank is currently financing several similar projects in the region (e.g., Russia, Azerbaijan, Bosnia, Croatia, Macedonia, Romania, Bulgaria, Ukraine, and Serbia) and will bring to Turkey a wide regional and global experience inland policy and administration reforms. C. Higherlevel objectives to which the projectcontributes 10. The Government's gthdevelopment plan for 2007-2013 puts great emphasis on improving the efficiency and quality of public services through spreading E-government applications. The project will contribute to the achievement of this objective through integrating land registry and real estate information into the National Spatial Data Infrastructure (NSDI). Furthermore, the EU accession process will require upgrading the quality and cost effectiveness of public services. The proposed project aims at enhancing and bringing the land registry and cadastre services to the Europeanstandards. 11. The project i s inline with the priorities set out inthe Country Partnership Strategy (CPS) for 2008 - 2011 which was discussed by the Board of Executive Directors of the World Bank on February28,2008. One of the key planned areas of the World Bank engagement is the support to efficient delivery of high quality public services, including modernization of land registry and cadastre. The project will also contribute to the CPS objective of improving local delivery of public services through supporting the development o f property valuation policies in line with international standards. 11. PROJECTDESCRIPTION A. Lendinginstrument 12. The Specific Investment Loan (SIL) was selected as the most suitable lending instrumentfor the project to be implementedover the period of 5 years. However, the land registration and cadastre renovation in Turkey may take between 10 and 15 years, and the government may use the TKGMRevolving Fundto completethe entire program. 13. The project will be supported through an IBRD loan of 135.00 million. The exchange rate between Euro and U S Dollar effective on February 29, 2008 i s 1 = US$1.5039. It will be a single currency loan, with variable-spread interest, a maturity of 23.5 years, including a 5 year grace period, disbursement linked repayment schedule. The Loan repayment dates will be 3 February 15 and August 15. The front-end-fee of 0.25% of the loan will be paid from the Borrower's budget. B. [IfApplicable]Programobjective and Phases 14. Not applicable. C. Projectdevelopment objective and key indicators 15. The overall goal of the project is to contribute to government agenda to improve quality and effectiveness of public services through spreading and making effective e-government applications. The specific objective of the proposed project is to improve the effectiveness and efficiency of the land registry and cadastre services. This objective will be achieved through: (i) renovating and updating cadastre maps to support digital cadastre and land registry information; (ii)makingthe digital landregistry andcadastreinformation available to public andprivate entities (iii)improving customer services in land registry and cadastre offices; (iv) improving humanresourcesinthe TKGM; (v) developing policies and capacity to introduce inTurkey best international practices inproperty valuation. D. Projectcomponents 16. The project will include the following components: 17. Component 1: Cadastre and Land Registry Renovation and Updating (US% 175.39 million). The component will support (through cadastre renovation) the conversion (into digital format), updating and integration of existing analogue and digital cadastre information, land registry and related data, into updated, accurate, consistent and standardized legally agreed cadastralrenovateddigital map and data sets, that will be available for entry into TAKBIS. 18. The component will up-date around 4.1 million priority parcels over the 5 year project period5 with the goal to complete cadastre renovation of settlement areas primarily in five high priority regions (Ankara, Antalya, Istanbul, Izmir, and Gaziantep) and initiate cadastre renovation in the remaining regions in the country. The resulting renovated parcel information will be enteredinto the national cadastre and land registry systems thereby increasingthe fidelity and security of the parcel information and the title overall. The component will include the following activities: 0 Cadastre renovation (in line with articles 22/a of Law no.3402); 0 Base mapping inselected areas; and Supervision and quality control. 5/ TKGM estimates that there are 55 million real estate parcels in Turkey which have been surveyed to varying degrees of precision and accuracy over the history and recent years recorded on over 325,000 cadastre plans. These plansreflectthe history of the growthofthe cadastre over the last 70 years with some purely graphical, others are in localcoordinate systems, while others are inthe nationalUTMsystem and are purely digital. 4 19. Component 2: Improved Service Delivery (US$ 19.35 million). The component will support the modernization of the TKGM infrastructure so as to improve TKGM's ability to provide core services to the Government and citizens of Turkey. It includes consultancy services to provide strategic advice on critical issues affecting the national implementation of TAKBIS in LandRegistry and CadastreDirectorates. Model offices will be establishedinthree regions so as to provide examples of office layouts that support streamlined, improved and integrated workflows involving both Land Registry and Cadastre Directorates of TKGM and the operation of the integrated version of TAKBIS. This component will also support procurement of furniture and equipment that may be required for the new model land offices. Furthermore, the component will support the government's e-Government initiative through making available an E-Cadastre data through the planned Turkish National Spatial Data Infrastructure. It will provide access to land registry and cadastre data. 20. The component will includethe following sub-components: Cadastre integration consultancy support; 0 Provision of furniture and office equipment; and Model Office constructiodrenovation. 21. Component 3: Human Resources and Institutional Development (US$ 6.02 million). The component will support the development of strategic plans and human resources development plans to ensure that the TKGM personnel skills match the strategic needs o f the organization. The component will also finance training, study visits to countries which have undertakensimilar modernization programs inthe last few years, and support the development of video conferencing capability between regional directorates and HQ for management, core and specializedtraining. 22. The component will include the following activities: Development of Human ResourcesDevelopment Strategy; BusinessPlanning and Strategic Planning including stakeholder analysis and the private sector roles; and Training and Study visits. 23. Component 4: Property Valuation (US$ 4.96 million). The component will investigate and develop policies and institutional options for the introduction of the property valuation function in Turkey in line with international best practices. The component will also finance the development of interim guidelines and piloting of property valuation in two municipalities and support the building of the required capacities. It will includethe following sub-components: Policy development (proposals on legal, institutional and technical arrangements); 0 Pilot implementation; and 0 Capacity building. 24. Component 5: Project Management (US$2.2 million) This component will finance the project management costs, including the procurement and financial management consultants, the 5 incremental operation costs to supervise the central and field activities, and the monitoring and evaluations costs including the costs o f customer surveys. E. Lessonslearnedand reflectedinthe project design 25. The project design i s based on the Turkish Cadastre Agency experience in cadastre modernization, renovations as well as the experience o f other countries insimilar programs. Key lessons incorporated inthe design include: 26. Focus on improving government services. While most o f project investments are oriented towards renovation o f cadastre, the ultimate objective o f the proposed operation i s to improve government services in registering property rights and in providing land and real estate information to public and private sectors. A base line survey was conducted before the start o f the project and surveys of customer satisfaction will be conducted inthe mid-termof the project and at its end. This will provide information to the TKGM whether the objectives o f the project are being achieved and to guide the agency on a possible need for adjustments in the project duringthe mid-termreview. 27. Use of private sector surveyors. The number o f cadastre parcels that require renovation i s about 10 million, o f which 5 million parcels will be renovated using the project funds. The capacity o f the public sector to undertake this massive task i s limited. Experience under the Marmara Earthquake Emergency Reconstruction (MEER) and the Agricultural Reform Implementation (ARIP) projects has shown that the private sector in Turkey i s fully mature and capable o f providing the services under this task. In fact, in 2006 and 2007, about 100 contracts for cadastre surveyshenovations, each around US$1 million in value, were issued by TKGM to private sector surveyors. Other countries' experience also shows similar positive results in using private sector surveyors. 28. Involvement of local government. Cadastre renovation is very important for local governments as it provides base maps that support many local government functions, including land use planning and development control, utilities management, property taxations, etc. Because o f this importance, several local governments have initiated cadastre renovations with support from TKGM. In the course o f the cadastre renovation process, TKGM will need information from local governments to carry out the cadastre renovation. Therefore, it i s important that the agency reaches out to local authorities to seek their support. To facilitate this cooperation, a Memorandum o f Understanding (MOU) will be signed with each municipality which will outline obligations o f both parties. 29. Building on best international practice The project will incorporate, where possible, European best practice in land registration and cadastre systems including: (i)business driven approaches with cost recovery; (ii) systemsput inplace that can be sustained and maintained; the (iii)`joined-up government' with related government agencies sharing information where possible (through NSDI); and (iv) involvement with the private sector, including partnerships. 30. Use o f new technologies. New technologies speed up the cadastre surveys, map digitization, data entry and transformation, and minimize the chances o f errors. In the course o f project implementation, both TKGM and the private sector contractors will be using modern 6 technologies which entail: active GPS (CORS), digital mapping techniques, digital aerial cameras, OPMs (orthophoto maps) and high resolution satellite imagery, information systems, and data base management systems. The products o f the project will be delivered on CDs, DVDs, and hard driveswith paper copies, as appropriate. F. Alternativesconsidered and reasons for rejection 31. Lending instrument. An Adaptable Program Loan (APL) was considered by the preparation team as the timeframe for the completion o f the whole task o f cadastre renovation i s ten years; however, it was rejected on the grounds that Turkey may well have entered the EU by the time of a second stage of the cadastre renovation. Also it was considered that TKGM may not need loan funds for a second phase as it would have the capacity, skills and revenues from its revolving funds and government budget to complete cadastre renovations. However, if the government desires so, the Bank stands ready to further support the program beyond this project. 32. Further support to TAKBIS. Further support to the computerized cadastre and registration system (TABKIS) was proposed under the project. However, it was rejected based on the fact that the system i s already financed by the national government budget. Instead, the project will provide funds to hire consultants to assess TAKBIS performance and provide advice to T K G M to improve its operation. Possible improvements may require some additional hardware and software as well as communications equipment. Therefore, those will be considered inthe course o f project implementation. 33. Simple digitization.The team considered the option o f simple digitization o f cadastre maps instead of cadastre renovations. Digitization will be utilized when original cadastre maps are already renovated (already in the national projection system and in compliance with national accuracy standards). However, digitization o f un-renovated cadastre maps (that are not in compliance with cadastre standards) will not guarantee the accuracy o f the boundaries and therefore, will introduce errors that will undermine the property system in Turkey. Therefore, this option was rejected. 111. IMPLEMENTATION A. Partnership arrangements(if applicable) 34. Not applicable. B. Institutionaland implementationarrangements 35. The project will be managed through the existing structure of the TKGM. The General Director o f the TKGM will have the ultimate responsibility for the project. The Deputy General Director for Technical Affairs has been nominated as the project coordinator. A similar project management structure to that used for the ARIP project will be used in the TKGM and will perform the function of the Project Coordination Team. A project director will be designated to be responsible for the project. The project coordination team will also be 7 responsiblefor procurement; financial management; planning and budgeting; and monitoring and evaluation. 36. Actual implementation of the project will be the responsibility of the various departments within TKGM. The Director of the Department will have ultimate responsibility of the component. A small committee (called Working Group) will be established for each component to ensure proper coordination among the various departments. The Working Group will include members from other related departments. 37. At the regional level, the head of the regional office will be responsible for the implementation of the activities intheir region including supervision of work and certification of payments. The payment will be made inthe central TKGM after being endorsed by the Director who is responsiblefor a given region. C. Monitoringand evaluationof outcomeshesults 38. Monitoring and evaluation will be essential in determining the results of the project. The monitoring will include two areas: (i)regular performance monitoring of project outputs; this will be supported by a computerized monitoring and evaluation system to be established for project implementation. The system will monitor number of properties renovated and other aspects of the projects; and (ii)two rounds of customer surveys/social assessment (first assessmentjust before the mid-termreview and the second by the end of the project) to monitor customer satisfaction and compliance with service standards as well as issues related to cadastre renovations and their impact on people. A base line customer survey was recently completed by TKGM. Furthermore, a social assessment was done under ARIP project to assess the social issues related to the cadastre component. The project design benefited greatly from this assessment. 39. The Project Coordination Team will be responsible for regular reporting to the senior management of the TKGM. Output and outcome indicators will be also monitored on a semi- annual basis, both to the senior management of the TKGM and the World Bank supervision team. D. Sustainability 40. Sustainability of project gains will be determined by the success of completion of the cadastre renovation and by improvement in service delivery of TKGM, including the ability of the agency to provide real estate information to government and private sector. Because of the changes in TKGM operations from manual to the computerized system, the project will provide significant resources for training of TKGM staff inworking in a computerized environment. The ability of TKGM to use the revolving funds to maintain the computer systems reduces the budgetary uncertainties often faced by other similar institutions. E. Criticalrisks and possiblecontroversialaspects 41. Turkey has one of the most secured property rights in the ECA region. Almost all land i s registered, and a simple transaction, such as registering an apartment, can be completed within a 8 few hours (in offices that are already computerized). Modernizing the cadastre and moving towards digital cadastre and registration system to support E-government initiative have, however, severalrisks.These include: 42. Legal Recognition of E-signature and Digital Data (Moderate). To gain the full benefit of the computerized registry system (TAKBIS) several steps need to be taken including government approval of legal authorization for electronic signature, digital archiving instead of paper records, and in time a computerized title as the legal title within the registry system (instead of a document). At present, the digital system runs in parallel to the paper based (manual) system since only the documents created through the manual system constitute legal documents under the current laws. This dual system creates a large burden inthe registry offices and over time, there may be some deviation betweenthe digital and the manual system-produced records. The government is addressingthe issue of e-signature outside the scope of this project as it is an essentialcomponent of the overall e-government initiative. 43. Data Sharing Policy (Moderate). Agreement on the National Spatial Data Infrastructure format, pricing, and access rights, standards for data formats and information sharing among the various government agencies is neededto ensure that the spatial data generated under the project can be used by other government agencies and private sector entities. The government already established a task force that is chaired by TKGM and included membership of 17 agencies to develop this policy. The TKGM already hiredconsultants to help them to preparethe policy. It is expectedthat a draft policy be preparedaround December2008. 44. Capacity of Private Sector (Low). The Turkish private sector firms performing surveying and mapping are well established. They were successfully engaged with the cadastre surveys undertaken under the ARIP and the MEER projects. In fact, there are around 60 on-going contracts for cadastre surveys performed by private sector simultaneously in the last year under ARIP project. It is anticipated that the existing private sector will expand to meet the demand. The project will also encouragethe participation of foreign firms through the increaseof contract size, which will make it attractive for foreign firms to bid for the contracts or to associate with Turkish companies which will extend additional financial resources for Turkish firms to expand to meet the demand. 45. Human Resources of TKGM (Moderate). The agency is operating efficiently using a manual system. A computerized registration system is being introduced gradually to TKGM offices since 2003. The change from the manual to the computerized system will require changes inthe operating cultureof TKGM, including changes inwork flow procedures,diversification of skills, human resources policies and policies related to provision of real estate cadastre information, including privacy and liability issues. The project will support TKGM to prepare a strategic plan and a human resources development plan in the first two years of the project. Government has requested all government agencies to prepare strategic plans before December 2008. 46. Communications Network (Low). The computerized land registration system is a centralized system that operates on a server in the TKGM headquarters. With the increase in a number of offices connected to the system and the integration of the cadastre information, the 9 system performance may be affected by the available communications network. Rolling out the computerization to the various offices will take into consideration the availability o f the communications network. Furthermore, regional servers may be installed to improve performance. F. Loadcredit conditions and covenants 47. Effectiveness Conditions None 48. Covenants: The Borrower, through the TKGM, will submit progress reports outlining achievements, outstanding issues, and proposed actions, by September 30 and March 31 of each year, starting from September 30,2008. The Borrower, through TKGM, will prepare a mid-term review report no later than March 15, 2011, outlining achievements, outstanding issues, and proposed actions, including proposals to re-allocate the loan proceeds, if needed. The mid-term review mission will be undertaken no later than April 15,201 1. The Borrower, through the TKGM, will maintain financial management systems acceptable to the Bank. The project financial statements will be audited by independent auditors, Le., the Treasury Controllers, in accordance with International Auditing Standards. The annual audited statements and audit report will be provided to the Bank within six months ofthe end of each calendar year and at the closing of the project. TKGM will complete a strategic plan including a human.resources development plan by December 31,2008. 0 TKGM will develop a policy on data sharing and data pricing inthe context o f the NSDI and e-government initiative by June 30,2009. 0 The Borrower shall through TKGM, implement Project activities in accordance with the EMP and shall include adequate information on the carrying out o f the EMP in the progress reports. IV. APPRAISAL SUMMARY A. Economic and financialanalyses 49. Joint Financialand FiscalAnalysis. TKGM earns fee income for the Government which i s three times larger than what it receives from the budgetary allocation. The fee income i s collected through the registry offices. The tariff i s fixed by the Government and updated annually. The most popular transaction i s sales, which account for 85% o f fee income, and up to three-fourths o f revolving fund revenue. 50. In addition to central Government budgetary allocations, TKGM also operates a revolving fund whose revenues are used as a budget supplement. TKGM revolving fund revenues come 10 from two sources: cadastral services and registry services. The single most important revenue earning item i s sale operations at registry. TKGM charges YTL 100 per sale operation, and this alone accounted for YTL 138 million in revenue in 2006. The TKGM system earned a very significant level o f income amounting to YTL 1.34 billion in 2006. This would suggest that the estimated capitalized value o f TKGM would be close to YTL 10 billion. 51. The methodology for the analysis i s based upon cadastral income and expected induced growth in property markets only. Net cadastral income (net o f tax and O&M) from renovated cadastre i s estimated at a rate o f YTL 6S/parcel/year. At full development, this would generate an annual revenue stream o f about Y T L 27 million. The project i s expected to induce non- spontaneous growth inthe number o f sales operations due to sub-divisions and new construction. This growth is estimated at 1% of the number of renovated parcels and it would reach some 41,000 sales per year, for a total o f 325,000 sales, and generating some YTL 33 million in additional fee income over the 10-year planning horizon. Even under such highly conservative levels for key variables, the project would yield positive fiscal balance exceeding YTL 334 million, while allowing TKGM revolving fund to directly recover 94% o f the investment costs. These results can be radically improved by assuming higher and more realistic levels for the above key variables. 52. Economic Analysis. It i s plannedthat the project will support renovation o f the cadastre for 4.1 million parcels on roughly 3.2 million hectares, for a combined Bank and Government investment cost o f YTL 309 million. The expected project benefits are: (a) higher value and enhanced TKGM services to users, (b) savings to users for avoiding duplication o f efforts involving the production o f similar material, and, (c) savings to the society from reduced litigation involving cadastre. The estimated ERR i s 18% and C/B ratio is 1.23. B. Technical 53. The project will utilize the state-of-the-arts surveying equipment to undertake cadastre renovation, including Global Positioning System Technology, Orthophotography and Electronic Distance Measurement Devices. All o f these newer technologies are available in the Turkish private sector survey firms and are expected to reduce the costs and time to complete the cadastre renovation. The TKGM i s also installing GPS base stations around the country in the coming years which will make it easier to do kinematic GPS surveys with only one GPS receiver. This will further reduce the cost, and also will improve the accuracy o fthe cadastre maps. 54. The computerized land registration system i s a web-based application that runs over a central server in the TKGM headquarters. The performance of the system will be monitored carefully as the government expands the computerization o f offices. A consulting firm will be hired to assess the performance of TAKBIS to ensure that it is kept an acceptable level, even after the expansion and the introduction o f the cadastre information into the system. C. Fiduciary 11 55. Financial Management. The task team conducted an assessment of adequacy of the project financial management system at TKGM and concluded that the current financial management arrangements are not yet fully satisfactory to the Bank and an action plan to bring them to a satisfactory level is included inAnnex 7. 56. The FM risk i s assessed as substantial before the mitigation measures, and it rated as moderate after the mitigation measures are implemented. There is no overdue audit in this implementing agency or sector. 57. The following table briefly summarizes the agreements reached with respect to various elements of country system which would be used for financial management: Element of country Extent usedfor this project system Budgeting The national budgeting procedurewill be used. Internal Controls TKGM's existing controls, which were established in line with the Public Financial Managementand Control Law, will be used. Staffing TKGM's appointed F M staff supplemented by an F M Consultant with relevant experience will work on the project Accounting and TKGM will install a financial management software as its current system Reporting Flow of funds Auditing 58. As per the national legislation, TKGM can only disburse the categories and amounts that are inits budget. The Budget Law for 2008 is approvedby the Parliament andthe project is included inTKGM's budget andinthe 2008 investmentprogram. 59. In order to bring its financial management arrangements to a satisfactory level, TKGM has nominated the F M staff that will work on the project, additionally will recruit an F M consultant with relevant experience, procure and install financial management software to maintain the accounting of the project and generate relevant reports. TKGM has established internal control procedures. It will also prepare a financial management manual to include the internal controls that are relevant for the project. The audit of the project accounts will be done on an annual basis by the Treasury Controllers inline with the TOR provided by the Bank. 60. Procurement. The Project will be implemented in accordance with the World Bank's "Guidelines: Procurement Under IBRD Loans and IDA Credits" dated May 2004 (revised in October 2006); and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated May 2004 (revised inOctober 2006) and the Anti-Comption Guidelines dated October 15, 2006 applicable to all IBRD loans, IDA credits and grants and the provisions stipulated inthe Loan Agreement. 12 61. The procurement assessment of the TKGM has been carried out in accordance with the requirements of OP 11.OO. The agreements covering procurementmethods and thresholds have beendeterminedfor Turkey according to its capacity and experience with Bank procurementand are consistent with ERA assistance guidelines. The procurement agreements have been appraised and detailed in the procurement plan for the first two years of the project (as summarized in Annex 8). The General ProcurementNotice i s to be issued on or about January, 2008. 62. Procurement will be accelerated by using NCB Technical Services contract template developed and successfully implemented for the ARIP Project in procuring the technical services, including cadastre renovation, mapping, registry, updating and digitalization of cadastre maps contracts with cost less than $5,000,000 per contract (this threshold may be increased to 10,000,000 ifforeign firms do not show interestto GPN ). 63. The works includingrenovation and refurbishment of cadastre offices shall also be procured through NCB Works template developed for similar Works contracts in Turkey. D. Social 64. The project is expected to have several positive social outcomes due to the envisaged cadastre modernization. The improvements inthe delivery of cadastral and land registry services will directly benefit the general population. The better quality of land and cadastral data will not only be reflected in the cadastral and land registry offices' records and the services provided by them but also will affect other agencies and local authorities where land information is used. Therefore, improvement in accuracy of records o f these other institutions and data accessibility will benefit the generalpublic (e.g., issuanceof building permits, postal services, utilities, etc.). 65. The efficiency and speed of registry services is likely to enhance business climate and facilitate land transactions. The digitization and web-based applications will enhance accessibility to land and cadastre data and the transparency of transactions. The transparency of the land registry and cadastre system will be strengthened through establishment of clear and publicly known procedures and standards facilitated by modem I T technologies. Accuracy of data on land parcels which will be achieved through the cadastre renovation is also an important factor in buildingpublic trust inthe government institutions. 66. The social impact of project will be monitored through the customer surveys carried out at the mid-term of the implementation and towards its ending. The baseline study was already carried out by the TKGM allowing for better measurement of results deriving from the project. The mid-term survey will inform on the need for possible adjustments in the project which would ensure achievement of expecteddevelopment outcomes. 67. The cadastre and land registry offices renovations and reconstructions will be carried out in situ or in a case of construction in a new location, the buildings will be erected on the vacant government-owned land. Therefore, no resettlements are expected in the course o f project implementation. 13 68. Turkish laws are gender neutral regarding land ownership: men and women have equal rights. Gender and related property matters are considered inthe Civil Code 2005 which directs the equal division of property acquired duringmarriage. Inaddition, inOctober 2001, Article 41 o f the Constitution was amended, redefining the family as an entity that i s "based on equality betweenspouses." 69. The social assessment under the ARIP project shows that in case o f forest cadastre, the Ministryof Forestry and Environment contested the titles issuedto the beneficiaries insideforest. Inmany cases, the court has awarded the titles inthe name o f the state as forest land. While the social assessment confirmed that no beneficiary was pushed out o f their land as a result, issuing a title as forest land caused insecurity to the beneficiaries. The government i s currently pursuing a legal change in law to recognize the rights o f people who live in forest areas. Due to this issue and in order not to undermine the security o f rights o f people who live in the forests, it was agreed that the project will not renovate cadastre inforest areas. E. Environment 70. Environmental effects o f the project, if any will be minor, short-term and o f localized impact; they will relate mainly to physical renovations (e.g., painting, wiring, installation o f new windows, upgrading o f sanitary conditions) and possible to new construction o f selected cadastral and land registry offices proposed throughout the country under the project Component 2. Therefore, the project will be limited to only small scale civil and construction works connected to the renovation and reconstruction o f existing buildings and structures on existing properties without changingtheir ownership. 71. An Environmental Management Framework (EMF) for these minor rehabilitation or small- scale office construction was preparedby the TKGM. The EMF provides the key elements o f an Environmental Management Plan (EMP) to meet World Bank Environmental Assessment requirements under OP 4.01 including a checklist-type format that will cover the following aspects: (i) environmental and social baseline analysis the project specifics in terms o f physical - location, the institutional and legislative aspects, the project description, and description o f the public consultation process; (ii)typical mitigation approaches to common civil works contracts with localized impacts, and (iii)a monitoring plan for activities during project construction and implementation. The EMF was publicly disclosed inlocal language inthe country and inEnglish inInfoshopbeforeproject appraisal. F. Safeguard policies Safeguard PoliciesTriggered by the Project Yes N o Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Involuntary Resettlement (OP/BP 4.12) 14 Indigenous Peoples (OP/BP 4.10) [ I [XI Forests (OP/BP 4.36) [ I [XI Safety o f Dams (OP/BP 4.37) [I [XI Projects inDisputedAreas (OP/BP 7.60)* [ I [XI Projects on International Waterways (OP/BP 7.50) [I [XI 72. The project i s rated as environmental assessment Category B according to the World Bank OP 4.01 and an Environmental Management Framewoik (EMF) was prepared by the Government. Simple environmental management plans (checklist format) following the example presented in the EMF will be included as bidding documents for Contractors for all proposed construction sites (once they are determined). Because the specific buildings have not been identified yet, and could potentially include historic buildings or be within a historic district, the project will trigger the OP 4.11 on Physical Cultural Resources. The Bank in the past reviewed the Turkish regulations concerning interventions with regard to cultural property. Specific measures are included in the EMF to protect physical cultural resources in line with the Turkish regulations and the OP 4.11, The EMF checklist encourages screening all civil works to ensure that they are not affecting negatively cultural sites. In case the project may affect culturally sensitive areas and/or culturalhistorical sites are found during project construction stage, the checklist for the respective site will identify procedures consistent with the local regulations on these matters. G. Policy Exceptions and Readiness 73. No policy exceptions apply. * By supporting theproposed project, the Bank does not intend to prejudice thefinal determination of the parties' claims on the disputed areas 15 Annex 1: Countryand Sector or ProgramBackground TURKEY: LandRegistryand CadastreModernizationProject 1. Background. Turkey has a land area of 780,580 sq km of which 32% is arable land, 20% permanent crops and pastures, 19% is forest and woodland, and 29% other uses. Turkey's population in 2006 was 73 million with a growth rate of 1.3% per annum. The resulting average population density is about 90 people per sq km. The capital of Turkey is Ankara with a population of 4 million which i s also the most crowded city; Istanbul has a population of 12.5 million (in 2006). In 2006 some 70% of the population lived in urban areas. The family size i s an average 4 members. Turkey's economic progress inthe last 6 years has been impressive with per capita GDP in 2006 reaching US$5,500 and the GDP growth rate since 2002 averaging 7% per annum. The unemployment rate was 10.3%; the inflation rate about 8.4% for 2007. Interms of the structure of the economy (in % of GDP): agriculture makes up 12%, industry 24% and services 64%. Administratively Turkey i s divided into 81 provinces, 22 regions, with 3,215 municipalities and 50,800 villages and districts (in 2007). In2005 Turkey commenced its talks for accessionto the EUand they continue today with Turkey actively pursuing all requirements. 2. The country has a long history of protection of property rights. More than 95% of land in Turkey is mapped and registered, and the Turkish Land Registry and Cadastre Agency (TKGM) plans to complete its cadastre by the end of 2008. Nevertheless, significant improvements are neededto fully modernize the TKGM andbring it to Europeanstandards. 3. Land and Housing Market Challenges. The housing and construction sector has been very active and growing at a 7% rate since 2002. In major cities, the demand for support services i s strong, including property surveys and subdivision with TKGM stretched to keep-up. Several secondary city areas have grown in size some by up to 50 % into rural areas in the last decade (e.g., Konya). Property and housing companies are challengedto keep up with housing demand, and some experts estimate an annual 50% shortfall in housing units. The challenge is compoundedwith as estimated 50% of housing in Turkey built without building permission and insome locations built on state land without a title. Under the project, greater use of the private sector will be made for cadastre survey and data entry. 4. Cadastre Records in Urgent Need of updating and system up-prading. Many of the Cadastre and Land Registry offices rely on manual systems, with old documents, some of which date back to the later time of the Ottomans. A good start has already been madeto modernize the cadastre with the TAKBIS system (the computerized Cadastre and Land Registry Software) running in 250 out of the 1,004 offices, with 10 trial offices running the new cadastrehegistry version of the TAKBIS system. There are plans to expand the computerization to other offices inthe coming years. 5. The most challenging aspect is that the old cadastre maps vary in accuracy and consistency, and are not linked to the national network. This makes it difficult for TKGM to support E- government applications requiring base maps. Furthermore, in many localities maps are out of date and sometimes they do not correspondwith the site location and area, differing at times by up to 10 meters or more. This situation resulted from the varying quality of surveying 16 technologies used in the last 100 years and the lack o f required resources and regulatory means to keep the cadastre up to date and to be truly representative o f the realities on the ground. Over time, several different geographical coordinate systems for the cadastre have been used in Turkey, ranging from graphical systems, then local systems, and finally, inthe last 20 years, to a national coordinate system. Coordinates are critical to digital spatial information systems, and at present, there i s no standard system in use in the country's cadastre. This lack o f use o f a consistent coordinate system i s a critical shortcoming for both developers, spatial analysts and users, and it will take several years to rectify. Addressing these issues i s a central objective o f the project under Component 1. 6. Need for Uniform Property Valuation Systems. Property valuation for taxation i s less developed in Turkey than in similar economies. Inthe wider context o f Europe, survey work on behalf o f the United Nations Economic Commission for Europe Working Party on Land Administration (UNECE WPLA) in 2001 confirms that the large majority (84%) o f respondent countries either have (72%), or were developing (14%), mass valuation systems for taxation purposes. Land administration agencies are substantially the most common type o f agencies to have responsibility for mass valuation of real estate and maintenance o f the appropriate databases. There i s no property valuation law in Turkey which would assign institutional responsibilities or provide the framework for property valuation guidelines and grievances procedures. Current property taxation relies on the minimumvalue o f property provided by local governments. The minimumvalue i s inmany cases less than 10% o f the fair market value. This significantly reduces the taxes the government collects on real estate transactions. The government has enacted several regulations to improve property valuation for accounting purposes as well as property appraisal to support mortgage lending. However, there are no similar initiatives to ensure that broader property valuation function develops in line with international standards. 7. Demand for Improved Service Delivery - Systems, Data and Training. The Government o f Turkey is aware o f the outstanding needs and has decided to modernize the cadastre under this project in order to realize the economic and social benefits o f up-to-date information for future development. The E-government initiative, o f which the cadastre and registration i s a central part, i s one o f the key government priorities. The transition from the paper-based to the computer-based land registry and cadastre i s aimed at improving customer services, supporting E-government initiatives, and making information available to other government and private users. The digital cadastre information will potentially provide the base maps and related information for many E-government functions such as municipal services, emergency management, land use planning and development control, land development, postal services, real estate monitoring, utilities management and property taxation. Most countries in Europe, including many o f the transition economies, have moved from paper-based to computer-based land registry and cadastre systems. The success o f the Turkish transition to a uniform digital environment will require significant efforts to deal with data renovation and updating, building the IT and communications infrastructure in the TKGM central and field offices, and significant human resources development program to upgrade the skills of TKGM staff to operate effectively inthe new environment. 17 Annex 2: Major RelatedProjectsFinancedby the Bank and/or other Agencies TURKEY: Land Registryand CadastreModernizationProject 1. Turkey Agricultural Reform Implementation Project AMP (P070286) - the ongoing - project includes a Land Registration component supporting the production of cadastral maps and issuance of titles to the documented owners, and establishment o f computer systems to keep cadastral records electronically. The project targets rural land parcels in 20 selected provinces. The recent Implementation Status Report (ISR) rates the overall project ImplementationProgress (IP) as Moderately Satisfactory and the progress towards DO as Satisfactory. 2. Turkey Marmara Emergency Earthquake ReconstructionProject- MEER (P068368) - the project was closed in December 2006 and included a Cadastre Renovation and Land Management component which had as an objective the establishment o f a land information system to support the reconstruction and development of the Marmara region. In particular, the component was to support activities to supply current and reliable land ownership information to cope with the post-earthquake situation, and update and improve the obsolete registers and maps. The Independent Evaluation Group (IEG) rated the overall project as Satisfactory. 18 Annex 3: Results Framework and Monitoring TURKEY: Land Registry and Cadastre Modernization Project Results Framework PDO Project Outcome Indicators Use of Project Outcome Information Effectivenessand efficiency Improvedcustomer satisfaction Formulategovernment policies o f the landregistryand of Cadastre Services. andprograms regardingland cadastre services are managementand administration. improvedinthe projectareas. Reducednumber of cadastre disputes incourts (from 4% to 2%). Increased income of TKGM from Cadastrerelated services. Core services of TKGM (registrationand cadastre information)are deliveredas part of the E-governmentprogram. Improvedaccess of land related data by government and private sector entities. Reducedtime to deliver cadastre data to government agencies and privatesector. Intermediate Outcomes IntermediateOutcome Use of Intermediate Outcome Indicators Monitoring Cadastremaps are Around 4.1 million parcels Assess the outstanding needs for renovatedhpdated and stored renovatedhpdatedand in digital cadastral mapping. in a digital format. format. Around 40,000 sq km of base maps includingorthophoto maps produced. ModelTKGM offices for co- Designof model office is The operation ofthe new land located land registrationand completed by the end ofthe first registry and cadastre offices cadastre directorates are year of projectimplementation. provides a model for changes in established. other TKGM offices in the 1 modeloffice i s constructed and country. 19 operational inthe secondyear and 2 offices are completed by the third year ofthe project. Government agencies, local Policy on access and charges of The performance will feed into ~ government, banks and civil land registry and cadastre data is the government decisions on the society have easy access prepared and approved. increased access and use of land through the net to the land registration and cadastre. registration and cadastredata. External users have on line access to digital land registry and cadastre information. Human resourcesare Increase innumber of Assessment of the outstanding improved inTKGM. transactions per staff in pilot human resourcedevelopment offices. needs in TKGM. Training sessions are completed and study tours were undertaken. Property valuation pilot is Provisional policies are prepared. The results of the pilot will complete and draft property inform the decision-makers on valuation policy is prepared. Pilot projects in Property the future direction of property Valuation are completed. valuation policies and subsequent large-scaleapplication pf large- Draftproperty valuation policy is scale valuation methods. completed and submitted to government for approval. Study visits undertaken. 20 6 ii VI u Y e, '? e, a e '? ae li li -0 -0 5 5 .-0 2 ..e rg t m v) .. b C C .e 0 e v) i 'E W D. 2 r +P 1 4Y b 8E :e 0 eb b t 0 8 0 e d 0 0 8 m -* i 0 0 8 a 0 m - 0 -3 83 i 3s z- 0 0 m N m d E: 0 N - S 8 - 1 I c QI 0 .-.-> Y VI VI 0 N -0 zx N Annex 4: Detailed Project Description TURKEY: Land Registry and Cadastre ModernizationProject 1. The projectwill includefive components: Component 1: Cadastre and Land Registry Renovation and Updating(US$175.39 million) 2. The nearly complete Turkish cadastre is large andcomplex by any world standard. When completedat the end of 2008 it will comprisesome 55 million parcelscovering49.5 million hectaresand 13.5 million owners. Itwill cover urban, rural and forest lands and will be of great benefitto civil society and public sector organizations. Started in 1908, the cadastre development was haltedseveraltimes over the next 90 years, including during WWI, upon the fall ofthe Ottomans, on the formation of modernTurkey, and during WWII. Inthis timeframe it has been subjected to several re-startsunder different laws and regulations,with each bringingthe use of several different technologiesas their development advanced. The most rapidchanges have been with the arrival 25 years ago of digital technologies,computers, satellite positioningand imaging. 3. ComponentImplementation: The component will be implementedand led by the Land Technicaland Scientific Department, supported by the Cadastre and Photogrammetricand Geodesy Directorates,and ProjectOffice of TKGM. The cadastre renovationwill be contractedcompetitivelyto qualified private sector survey firms, usingnational procurement procedures. The TKGM staff who is involved in the implementationof the ARIP and MEER projects will be transferredto work on this new project. The legal framework for the component is considered suitableto undertakethe project since similar activities were undertaken under the AMP and MEERprojects. TKGM improvedthe laws and regulations for the cadastre renovationcomponent in 2006 althoughfurther possible improvementsmay be requiredduringthe project.These can be made as necessary by the Director General of TKGM. 4. The component includesthe following two sub-components: Sub-component 1.1 Cadastre Renovation and Modernization and Registry Updating 5. Objectives:The objectives ofthis sub-component is to support the updatingand modernizationofthe real property cadastreand registry informationand systems into an accurate, consistent and maintaineddigital cadastre system; to incorporatethe changes and up-date related information in the land registry system (TAKBIS); to contribute to modernizingthe survey and mappingsystem to be more responsive to Turkey's rapid economic growth. As a result, cadastral informationwill be renovated so as to be digital, updated, consistent with site and legally valid, thus it will be a basis for spatial information systems. 6. Background: Given Turkey's size and the cadastre's development timeframe, the resultingcadastre is made up of informationthat is, on average, over 25 years old and of varying quality. In many localitiesmappedboundaries do not correspond with parcel sizes and shapes on the ground, sometimes by up to 10meters. There are also areas where cadastre maps have not been compiled, meaningthat only isolatedgraphicalsurveys/plans are 25 availableas separate plans.This situation has come about because ofthe varying quality of surveyingtechnologies used over time and the lack of requiredresources and regulatory meansto keepthe cadastre up-to-dateor to represent the true ground situation. Several different geographicalcoordinate systems for the cadastre have been used; none at the start, then local systems, and finally in the last 25 years, a nationalcoordinatesystem. Coordinates are central to spatial information systems and Turkey at present has many systems beingused within the cadastre. This lack of use of a common and consistentcoordinate system is a critical shortcomingfor developers, spatial analysts and users, and it will take several years beyondthis projectto fully rectify this situation. In short, a significant percentageofthe boundariesinTurkey are unreliable and are not adequate to be used in a modernaccurate registrationand cadastre system. Accordingly, they cannot be put into a digital environment. Moreover, without cadastre renovation, the cadastre is not in a suitable form to be shared with public and privatesector agencies. Against this backgroundthe Governmentof Turkey decidedin 2006 to updatethe cadastre through `cadastre renovation' procedures to realize the economic and socialbenefitsof up-to-datecadastral information for future developmentand provide importantdigital information to the E-governmentinitiative. This componentwill be a central part ofthe support. 7. Description: This componentinvolvesone major action cadastre renovationand - modernizationand registryup-dating. The componentwill update around4.1 millionpriority parcelsover the 5 year project period'. The componentwill supporta detailed comprehensive inventory of all cadastre information inTurkey and identify which cadastre maps need renovationand which maps are already renovated. It is estimatedthat 10million parcels will require cadastre renovation.Cadastre renovation(office and field review) of the existing parcelswill be supportedin all regions of Turkey but the goal under the project is to complete the up-datingwork in primarily five high priority regions (Ankara, Antalya, Istanbul, Izmir, and Gaziantep) and initiate cadastre renovationin the remainingregions inthe country.The entire programwill be completedwith financing from TKGM revolving fund for the rest of regions. 8. The resultingrenovatedparcel informationwill be entered into the national cadastre and landregistrysystems thereby, increasingthe fidelity and security of the parcel information and the title overall. The resultingproductswill also be made available to public and private sector institutions, including municipalities for their developmentcontrol purposes (in urban areas) and to serve as a basemap for their municipal information systems. 9. Inthe field, the task will be speededby the use ofmoderntechniquesincluding the new Turkish active Global Positioning System (GPS funded by the Turkish Science Foundation) - which is goingto be operationalnationwideby June 2008. It will use new or recent orthophotomaps (OPM) to help plan, manage, supervise and carry out quality control, as well as to minimize the amount of field work undertaken(see under Component 3). Conventional survey techniques (e.g., total stations) will also be used. This sub-componentwill use the cadastre renovationprocedures and regulationsthat were put in place in 1983 and 2006 under the Cadastre RenovationLaw. Under the sub-component, about 160,000 existing cadastre plans (out o fa total of 325,000 across Turkey) will be analyzed, information extractedand transformed, with the old plansretiredand archived. The resultingrenovated(new) digital '/ TKGM estimates that there are 55 million real estate parcels in Turkey which have been surveyed to varying degrees of precision and accuracy over 100years recorded on over 325,000 cadastre plans. These plans reflect the history of the growth of the cadastre over the last 70 years with some purely graphical, others are in local coordinate systems, while others are in the national UTM system (with 3 degree zones) and are purely digital. 26 cadastremaps will contributeto the new Turkish cadastre system. The priority projectareas includethe four regionsofprimarily Ankara, Antalya, Istanbul, and Izmir provinces, with a fifth inthe east of Turkey, inGaziantep province. The priority areas were chosen on the grounds of demand, economic potentialand growth rates. Where and when needed, the project will also support consultingservices for preparationof procurementand training documents, provide guidance on supervision, and acceptanceprocedures. Sub-component 1.2 Base Mapping 10. Objective: The objective of the sub-component is to provide new rectified orthophoto maps, to enable their use as a tool for rapiddeterminationofthe up-to-datednessor otherwise, ofthe existingcadastremapping, and to help in decision makingas to the need for cadastre renovation. Moreoverthe orthophoto mapswill be usedfor managementplanning, supervisionand quality control o fthe cadastre renovationprocess. Also, where necessary, vector maps will be produced. This orthophotography will be made available to other public agencies (including municipalities)as part of TKGM's responsibilityfor the National Spatial Data Infrastructure. 11. Background: Orthophotoshave been found to be an extremely cost effective means of providing a base map that supports cadastre renovationwork. The areastargeted by the projectare where considerable development and land use change are occurring. For this reason, there is considerable demand for consistent base maps on which to planand manage this dynamic land use situation. The provision of new rectified orthophotos(consistentwith the cadastre) will facilitatebetter planning, landuse management and development. The provision of new rectified orthophotoswill be greatly facilitatedby the implementationof the nationalnetwork of permanent GPS base stations in 2008. TKGM will prioritise the implementationofthis networkto ensure it will support the controlling of new aerial photographycampaigns requiredto produce the new orthophotosthrough this sub-component. 12. Description: Tasks to be undertaken under this sub-component include: New aerial photography; aerialtriangulation, vector map production and orthophoto map production, Sub-component1.2 Supervisionand Quality Control 13. Objective: The objectiveofthis sub-component is to providesupervisionand quality control ofthe cadastre renovations. 14. Description: The cadastre renovationwill be undertaken by private contractors.To ensure that work is carried out in accordancewith technical specifications,the TKGM will hire consultants who will supervise the work of the cadastre renovationscontractors.The consultantswill be responsible for reviewingthe quality and certify the delivery (accordingto the technicalspecifications).TKGM will use the certification ofthe supervisionand quality control consultants beforethey authorizepaymentsto the contractors. Component 2: Improved Service Delivery (US$19.35 million) 15. The component will improveTKGM's ability to provide its core services to the Governmentandthe citizensofTurkey by assistingwith key initiativesto modernizeTKGM infrastructure. This support will includeconsultancy services to provide strategic adviceon 27 critical issuesaffectingthe national implementationo f the integratedcadastre and registration versionofTAKBIS in Land Registryand Cadastre Directorates. The component will support the constructionof new office space or the constructionof new officesto provide at least three "model" integratedregistrationand cadastreoffices. The goal is to improve the quality o f services o f TKGM to its customers. In areas where it is deemed necessary for TAKBIS and where nationalbudget or revolving fund cannot provideresources it will also support procurementof furniture andequipmentfor the modeloffices. The national implementation ofthe integratedregistrationand registrationversion ofTAKBIS will have several advantages including: (i)improvethe quality of landregistry and cadastre informationheld inthe TAKBIS database, (ii)allow land registry andcadastre informationto be kept up-to-date following First Cadastreand Cadastre Renovation,(iii)allow office proceduresto be streamlinedand made more consistentacross Turkey, (iv) protect registrationand cadastre data from naturaland man-made disasters and, (v) in combination, ensure TKGM provides a level o f service delivery that is in line with Western European standards. 16. Component Implementation: Implementationof this component will be leadby the TechnicalDepartment of TKGM. The projectwill finance TA consultancy,goods (furniture and equipment) andworks (new constructionor office renovations). Sub-component2.1 Cadastre IntegrationConsultancySupport 17. Objective: The objective ofthe sub-component is to provide solutionsto critical issues affectingthe national implementationof an integrated(Land Registry and Cadastre) version o f TAKBIS. 18. Background: The implementationof an integrated (Land Registryand Cadastre) version ofTAKBIS is essential for the future efficient and effectivefunctioning o f boththe Land RegistryandCadastre Directoratesso as to meet TKGM's statutory responsibilitiesand specific Governmentinitiatives such as the E-governmentprogramandthe establishmentof a national SpatialDataInfrastructure. Inrecent years, TKGM has implementedTAKBIS in a number of LandRegistry Directorates. TKGM has also developed an integratedregistration and cadastre version ofTAKBIS and have a planto implementthis integratedversion of TAKBIS in all LandRegistry and Cadastre Directoratesinthe comingfive years. The implementationofthe integratedversion ofTAKBIS provides an excellent means of providing superior and more consistentservices to TKGM clients. 19. Description: The implementationof the integratedversion o f TAKBIS will require solutions to a range of relatedissues as the transitionis made from paper-basedwork flows, processes, recordsystems and approaches to service delivery to those ofthe future involving a computerizedinformation system coveringthe whole country but providing decentralized services. The initial issuesto be examined will be a review ofthe best system architectureto ensure good system performancein each Cadastre and Land Registry Directorateand a review of the initial processto load integratedregistrationand cadastre data into the TAKBIS database (including spatial components). Subsequent issues are likely to include the design of revisedwork flows and improvedmeans of service delivery. Sub-component2.2 Model Offices 20. Objective: The objective of the sub-component is to provideexamples of model office layouts inthree regionsthat take advantage o fthe opportunitiesfor the streamliningof 28 workflows involving registrationand cadastre processeswhen the Land Registry and Cadastre Directoratesare co-located,cadastre renovationwork is largely completedand the integrated cadastreand registrationversion of TAKBIS has been implemented. 21. Background: Existing office layouts for both Land Registry and Cadastre Directorateswithin TKGM are typical of a government agency operatingpaper-based processesand a high degree of autonomous operation within each Directorate. The move away from paper-basedprocessestowards more integratedwork flows (supportedby information systems) and a greater awarenessof the needto providebetter services to clients have highlighteddeficiencies in the existingoffice layouts. 22. Description: The selectionof provincial office locationsto be "model" offices will need to be carefully made and basedon criteriasuch as: (i)Cadastre and Land Registry Directoratesmust be co-locatedwithin the modeloffice; (ii)Cadastre Renovationmust be largely completed;(iii)the cadastre and registration integratedversion ofTAKBIS must be implemented(or ready for implementation);(iv) there must be an active land market (as evidenced by the number of transactions presented for registration); (v) the availability of a suitable (new) site or the renovationof existingoffice space (to create a modeloffice) can be achieved while day to day operations of the affected Directoratescan be maintained; and (vi) be within the regions supported by the project as a whole. The design of model office layouts shouldoptimize opportunitiesto improve service delivery utilizing both integratedworkflows and the cadastre and registrationintegratedversion of TAKBIS. The model offices will provide TKGM with examples for the optimum office layoutto be followed in any future office renovations.Particularattentionwill be given to client waiting and client interface areas (including public counter), in providing a good work environmentfor TKGM staff and to appropriatelyaccommodate the computingequipment supportingTAKBIS. The sub- component will finance office renovation(or new construction, ifneeded), furniture and office equipment. The component will also finance TA to help design and monitor the new office lay out and new work flow procedures. The component will also provide fundingto undertake policy studies to improvethe efficiency of the registration system, improvetenure security and promotethe development of efficient land and property markets. Sub-component 2.3 Integrationof E-Cadastreinto the National SpatialData 23. Objective:The objective o f the sub-component is to make an up-to-dateand consistent versionofthe cadastreavailablethroughthe Turkish National Spatial DataInfrastructure. 24. Background: In 2008, Turkey will implementthe initial technologyrequiredto support the nationalspatialdata infrastructurethrough its own budget funding. The onus will then be on public agencies, such as TKGM, to make available data themes, in particular spatial themes such as the cadastre, in a form that conformsto nationaland internationalgeospatial standards (suchas OpenGIS and I S 0 TC211 standards) in support of the national spatial data infrastructure.It is this effort that the projectwill support. 25. In additionto the web-based publicationofthe cadastre, there is an increasingnumber o f public agencies implementing geographic informationsystems (GIS) that depend on the cadastreas a foundation data layer in their GIs. The supply ofthis digital cadastreand a regular update service to ensure the cadastre layer in these GIS remains consistent with the official cadastre is currently only undertaken on an ad hoc basis and there is an urgentneedto regularizeand standardize this service. 29 TAKBIS implementation (supportedby Component 2) involves the compilation of a digital cadastre based on the paper-based maps and including those maps created in the cadastre renovation work (supported by Component 1). The digital cadastre will be updated and maintained by the Cadastre Directorate through the processingo f land registry and cadastre applications and transactions using the integratedversion of TAKBIS with a phased national implementation to be completed by the end of 2012. As an interim measure, until the integratedversionof TAKBIS is implemented, this data maintenance is done in many offices using an existing customized CAD software package. Other public agencies (such as municipalities) with GIS are using the digital cadastre data from TKGM where it is available but typically the initial supply of cadastre data is on an ad hoc basis with respect to data formats. The arrangements to update this data within the other organization's GIS are also typically on an irregular basis resulting in inconsistenciesbetween these GIS and the official cadastre. 26. Description:Tasks to be undertaken under this sub-component include: The definition of requirements o f the necessary software enhancements to TAKBIS for new softwareroutinesto performthe following data extracts: ... a version of the cadastre to be publishedas a web basedview-only continuousmap o f the cadastre; a standard report to provide web based view-only access on the current status of registrationand cadastre transactions; GIS users such as public agencies and municipalitieswith a cadastre data layer (in a standardvector baseddata format with associatedattribute data). 0 The preparation of a technical specification for an out-sourced contract to establish and operate a TAKBIS Information Dissemination service including an up to date web based version of the cadastre, a web basedregistrationand cadastre transaction status report and cadastre layer supply and update service for GIS users; 0 The operationofthe TAKBIS Information Disseminationservice for 3 years. 27. These activitieshave already been initiated by TKGM and are being financed by TKGM resources. Component3: Human Resourcesand InstitutionalDevelopment (US$6.02 million). 28. The component will support the development of strategic plans and human resources developmentplans to ensure that the TKGM personnel skills matchthe strategic needs o fthe organization. The component will also finance training and study visits to countries which have undertaken similar modernizationprograms in the last few years. Training will be phasedand sustainable, and it will includemanagement, leadership, technical, administrative, and legal training. The component will support the following sub-components: Sub-component 3.1 Human ResourcesDevelopmentStrategy 29. The sub-component will support the TKGM in assessingthe existinghumanresources and skills, identify desired skills levelsthat will support the effective functioning of the organizationinthe E-governmentenvironment, and identify the training needs for various levelsofthe organization. The strategy will also identify the proper promotionrequirements to ensure that staff is placed inthe right position. 30 30. The sub-component will support consultants' services to help TKGM to prepare the HR strategy. Sub-component 3.2 Business Planning and Strategic Planning including Stakeholder Analysis and Private Sector Roles 3 1. While TKGM is consideredone of the most effective organizationsin land registriesand cadastre, continuous improvementis neededto ensurethat the organizationadopts itselfto the major economictransformation ofthe country. The sub-componentwill support the TKGM indevelopingastrategicplanand a business planthat will outlinethe goals andstrategic changes inthe organizationthat will supportthese goals. The businessplanwill also review the revenues and budget ofthe TKGM and investigatethe viability oftransformingthe TKGM into a self-financingorganization. The sub-component will also support preparation of policy studies to ensure protectionofproperty rights and promotedevelopment of efficient land and property market. 32. The sub-componentwill finance consultant services to helpthe TKGM to prepare the strategic and business plan. Sub-component 3.3. Training and Study Visits 33. The sub-componentwill support the delivery oftraining identified in the Human Resources Development Plans, including the costs of the trainers and allowancesand travel costs of all trainee. The componentwill also support (ifneeded) the establishmentof regional training centers through furnishing of offices, furniture and equipment. Distancelearningwill be one ofthe means ofcore and specializedtraining to be used. Video-conferencing capability will be developedbetweenregional directoratesand TKGM headquarters. This video-conferencingcapability will be also usedfor managementpurposes and will be financedby TKGM resources. The componentwill also finance study visits to other countries that have undertakencadastre and landregistry modernizationinrecent years. Component 4: Property Valuation (US$4.96 million) 34. The component will develop policies and institutional options for the introduction of the property valuationfunction in Turkey consistent with normal Europeanpractice in this area8. 35. Legal frameworks, institutional responsibilitiesand professionalcapacitiesfor most types of propertyvaluationfunctions are inadequateor non-existent in Turkey. A partial exception to this is for valuations for accountingand mortgagepurposes, regulatedunder Turkey's Capital MarketsBoard, which has adopted the InternationalValuation Standards ofthe InternationalValuation Standards Committee. 36. Effective, reliable, standard-based valuationsof property, supportedby reliable data on markettransactions, are critical for a wide range of purposesand are the basis for many important functions and decisionscontributing to building a fair, efficient and prosperous society and economy. Conversely, where these are lackingor inaccurate, inequity, inefficient Land (Real Estate) Mass Valuation Systemsfor TaxationPurposes in Europe, 2001, Federal Land Cadastre Service o f Russia on behalf of UNECE WPLA: h~p:llwww.unece.orglhlmldocuments/2002/hvbiwvl~mass.valuation,udf 31 use of resourcesand increased risk for inappropriateand non-transparentdecision-makingas a result of deficientknowledgeon property values, have the potentialto undermine socialand economic growth. 37. The component will finance the development of guidelinesand piloting of mass property valuation for local propertytaxation in two municipalities. The two pilots will be selected in the first year ofthe project accordingto criteria, including strong commitment ofthe municipality, range ofproperties, includingurbanand rural, an active property market, renovated cadastral data, and good basic landuse and improvementsdata. The valuation pilots will enable the development and assessmentof appropriatemethodologiesfor securing reliabledata on market values and for undertakingmass valuations in accordance with internationalpracticeand guidance and for accurate assessment ofthe costs and benefits of extendingthis across the country. 38. The component will also provide support for building the necessary capacities in property valuationwithin the relevant institutionsof government and inthe universitiesthrough targeted support for graduate training inthis area, for key personnelin bothTKGM andthe selected pilot municipalities,and for development of appropriateuniversity programsin property valuation. 39. Component Implementation: Implementationof this component will be ledby a designated group reportingat DeputyGeneral Director level ofTKGM. The projectwill finance TA consultancies, goods (computerand office equipment) and works (office renovations),and educationalandtraining activities. TKGM has no current institutional capacity in property valuation and is, therefore, offering itself as an interim institutional home at the national level for the performanceof this essential policy advisory work, in partnership with selected municipal governments for piloting purposes, using appropriateconsultancyand other inputs. Sub-component 4.1 Policy Development 40. Objective: The objective ofthe sub-component is to developand support agreement on provisional property valuation policiesas the basis for implementationof the municipal valuation pilots. On completionofthe pilots, the sub-component will support the finalization of policiesand recommend legal, institutionaland technical frameworks for Turkey's property valuation requirements. 41. Background: Although propertyvaluations for accountingand mortgage purposes are regulatedby the Capital MarketsBoardusingrelevant InternationalValuation Standards, market valuations for transactions are not regulatedand there are no prescribedqualifications for such practice. Propertyvaluations for statutorypurposes, including for propertytaxation and compensation are inadequate and do not reflect best practiceinthe wider European context. They result in valuations for property tax that are not transparent, are inequitable,and may be as low as 10% ofthe market value. Strongreliance is placedon non specializedcourts to deal with the very high level of compensation appeals. There is no transparency o fmarket data on which to base market valuations and no objective, authoritative reportingon this importantarea. 42. Description: Policy development for property valuation in Turkey will be undertaken in two phases. To allow the valuationpilot to be implementedwithin a rational, 32 structuredframework, the first twelve to eighteen monthsofthe project will include intensive developmentof provisionalpoliciescoveringvaluation policy and standards, property taxation, and education, training and capacity building. Giventhe existinglack of capacity in property valuation, these will be addressedby the preparationof provisionalpolicy papers, reviewedby stakeholder workshops including civil society participation, supported by study visits for key personnel, and by seminars presentingrelevant internationalexperience. These provisionalpolicieswill form the basisfor the implementationofthe valuation pilots under sub-component 4.2, which address the major issues of market data and mass appraisal. On the basis ofthe outcomes of these pilot activities and capacity development within Turkey under sub-component 4.3, the final eighteen monthsofthe project will review the provisional policies, present final policy recommendations for adoption, and prepare any necessary legislativeand regulatorymeasuresfor their implementation. Sub-component 4.2 Pilot Implementation 43. Objective: The objectiveof the sub-component is to prepare provisional methodologiesand standards, in accordance with best internationalpractice, for the implementationof appropriateproperty market data analysis and mass appraisal techniques in two selected municipalities. The resultsofthese pilot exercises will allow for detailed assessmentand cost-benefitofthe most appropriateapproaches for future large scale implementation. 44. Background: No reliable, objective data sources are available as the basis for estimatingreal marketvalues of propertiesor for analyzingmarket trends in Turkey. To allow accurate marketvalue basedvaluationsto be undertaken, and encourage confidence in realestate markets, reliable data is required,basedon accurate market information on transactions. Existing approaches to municipalpropertytax and transaction tax assessment are inefficient, not transparent, and do not reflectthe rapidly developingapproachestowards market value-based mass appraisal in wider Europe. Municipal property taxes offer particularly significantprospects for improvementin their equitability and efficiency. 45. Description: Provisionalmethodologiesand standards for gatheringaccurate market value data and for implementingmass valuationsaccordingto internationalbest practiceswill be developed and agreed in the first eighteen monthsof the component's activities. Implementationdocuments addressingpilot implementationplans, data sources and their integrationand valuation methodologieswill be developed in detail duringthis period. At the same time, two pilot municipalitieswill be selected accordingto appropriatecriteria to test implementationin the field. On completionof the pilots, the provisionalmethodologiesand standards will be reviewedand finalized appropriatelyas the basis for subsequent large scale application. Sub-component 4.3 Capacity Building 46. Objective: The objective ofthe sub-component is to develop appropriatepolicies for capacity building in propertyvaluationthat will advance appropriatepublic and private sector skills. 47. Background: Propertyvaluation or appraisalis a very recent innovationin Turkey and, consequently, there is very limited valuation education andtraining capacity inthe country and a very thin skills baseboth inthe private sector and inthe various levelsof 33 government. Relevantskills in valuation are extremely limited in all levelsof government, includingat TKGM and in the municipalities. The Capital Markets Boardand the recently established AppraisersAssociationare encouraging the development of appropriateeducation and training capacities and skills. This pattern of development of educationand qualifications is not an uncommonone in countries at Turkey's stage of development, and, as elsewhere, is beingdriven by demand from increasinglysophisticatedand standardized requirementsfor advice, particularly in relationto valuations for accountingand mortgagesecurity purposes. As the range of valuation requirementsextend with the rapidly developingeconomy so there i s avital needfor ensuringthat programsdevelop in the context of best internationalpractices ineducationandtraining for valuation. 48. Description: The building of appropriatecapacities inthe context of the rapidly developingeconomy ofTurkey is challenging. The bulk ofthis, at least for private sector needs in the longrun, will be through developingmarket demand. This sub-component, in co-operationwith, where appropriate, professionalassociation(s) and others, will reinforce and support further development of existingvery limited university capacity inthis area. In addition, it will devise and support appropriatetraining for the developmentof core capacities within TKGM and other central government agencies, and in the municipal governments, particularly in those selected for the valuation pilots. These activities will be supported by the preparationof an appropriatepolicy paper, by targeted study visits, seminars of international experience and policy workshops, and postgraduate training o f selected individuals from government stakeholder agencies and appropriateuniversities. Component 5: Project Management (US$2.2 million) 49. This component will support the TKGM to managethe project. It includesthe costs o f contractedstaffto managethe project, incrementaloperatingcosts, and monitoring and evaluation, andtwo rounds of customer surveys. 34 Annex 5: ProjectCosts TURKEY: Land Registryand CadastreModernizationProject Local Foreign Total us us us Project Cost By Component and/or Activity $mi1lion $miI1ion $million Component 1: Cadastre and Land Registry 174.87 0.52 175.39 Renovationsand Updating Component 2: Improved Service Delivery 17.89 1.46 19.35 Component 3: Human Resourcesand 4.00 2.02 6.02 Institutional Development Component4: Property Valuation 2.72 2.24 4.96 Component 5: Project Management 2.14 0.06 2.20 Unallocated 2.15 0.03 2.18 Total Baseline Cost 203.77 6.33 210.10 Total Project Costs' 210.10 Total FinancingRequired' 210.10 `Identifiable taxes and duties are US$ m 31.72, and the total project cost, net oftaxes, is US$m 176.21, Therefore, the share of project cost net of taxes i s 84%. 2 Price and Physical Contingency will be provided primarily by TKGM revolving funds. 35 FinancingPlan Source Local Foreign Total Borrower 4.4 2.7 7.1 International Bank for ReconstructionandI 199.4 3.6 203.0 Development Total: 203.8 6.3 210.1 36 DisbursementCategories ComponentTotal Percentageof Bank DisbursementCategory cost Financing (e) YO GOODS 450,000 100% WORKS 8,830,000 100% TECHNICAL SERVICES 114,890,000 100% CONSULTING SERVICES 8,220,000 100% TRAINING and WORKSHOPS 770,000 100% OPERATING COST 390,000 100% UNALLOCATED 1,450,000 100% Total 135,000,000 37 Annex 6: ImplementationArrangements TURKEY: Land Registryand CadastreModernization Project InstitutionalAnalysis 1. Overview. General Directorate of Land Registry and Cadastre (TKGM) is one of the oldest public agencies in Turkey; established in 1847, TKGM has acted as a land registry agency. 2. Cadastre and land registry information in Turkey is produced and archived under the government's security by TKGM and in accordance to Turkish Civil Law (No.4721), Land Registry Law (No. 2644) and Cadastre Law (No. 3402 and revised with Law No.5304). The government (through TKGM) is responsiblefor keepingthe registry. According to the Law Amending the Law For Establishment and Tasks Of General Directorate Of Land Registry And Cadastre (Law No.3045); major tasks and responsibilities of TKGM are defined as follows: 0 To carry out the registry and approval procedures for the contracts related with property; to keep and maintain the land registry record which is under the responsibility of the Treasury; to follow up on any revisions, transactions or changes in the registry records, control; and to protect all the information and related documentationin accordance with relatedregulations; 0 Set the principles for new land registry records to ensure full coordination and to establish the first cadastre throughout the country; to follow up any revisions or changes on cadastre information; to control and to renovate cadastral maps which are not up-to-date; 0 Develop mapping services related to the production of cadastral and topographic maps; take air photos; identify triangulationpoints; set the basic principleso f mapping services; evaluate the work done; and ensure coordination, 0 Develop mapping services related to land registry and cadastre; follow up applications; control and supervise; set the minimum criteria for staff; plan and provide necessary training and procurerelevant services. 0 Establishthe infrastructureofthe spatial information system. 3. Number of staff working for TKGM is more than 16,000 and about 1,300 o f the staff work inthe GeneralDirectorateandthe rest works for regionaland provincial directoratesfor land registry and cadastral services. There are 22 regional directorates for land registry and cadastre throughout the country and reportingto them 1,004 directoratesfor land registry and 325 directoratesand 133 local departments for cadastral services. Numberoftotal transactions in a year is about 4 millions, servingabout 15 millions citizens per year. 4. Implementationof Bank-supportedproiects. TKGM started numerous projects in order to completethe first establishment cadastre for Turkey, to renovate the old or outdated cadastral maps as well as to enhance the equipment and IT capacity o f the agency. The agency successfully implementedthe Cadastre Renovation and Land Management sub-component o f MEER Project o f over US$20 million in value. In another Bank-supported project, the ongoingARIP project, TKGM has been managing a budget o f five times of MEER Project. A Project Management Unit was established under the General Directorate for the implementation of ARIP which is responsible for preparation o f technical specifications, 38 bidding documents and requests for proposals, monitoring and coordination of projects activities, planning and budgeting as well as overall supervision o f all contracted technical works. Provincial and regional directorates of TKGM are part of this project management structurewith the responsibilityof on-site control and supervisionof quality ofthe work. 5. This project managementstructure set up for the ARIP project worked smoothly over the course of implementation and as of today, US$84 million of the total funds allocated is disbursed. Total World Bank funds allocatedto TKGM under ARIP is US$103million. 6. Agency implementation capacitv. TKGM budget comes from central government allocations and its revolving fund which provides a certain degree o f financial autonomy and flexibility. For the year 2007, budgetary allocation to TKGM by the central government is US$288 million, investmentbudget is US$80million and the revenue generated by TKGM is about US$1,142million. 7. Since TKGM has significant human resources capacity, with high level of technical expertise and has demonstrated satisfactory performance during the implementation of two other Bank-supported projects, Le., MEER and ARIP, the proposed new project will be managedthrough the existingstructureo fthe TKGM. ImplementationArrangements 8. The General Director of the TKGM will have the ultimate responsibility for the project. The Deputy General Director for Technical Affairs has been nominated as the Project Coordinator. A similar projectmanagement structurethat is usedfor the ARIP projectwill be applied in the proposed project, performingthe function of a new ProjectCoordinationTeam and assigned with additional responsibilities and authorities as the project necessitates. The TKGM Project Coordination Team will have the following functions and responsibilities: procurement, financial management, planning and budgetingand monitoring and evaluation. In order to perform these functions satisfactorily, additional procurement and financial management staff with hands-on experience in World Bank procedures will be hired as needed. This was discussed during the procurement and financial management assessment carried out by the Bank. It is recommended that 2 procurement experts, 1 financial management specialist, 1 disbursement officer, 1 monitoring and evaluation expert with hands-on experience with World Bank procedures, and 1 translatorhterpreter, will be hired to support the Project CoordinationTeam. 9. The Project CoordinationTeam will be headed by a Project Director who will report to a small Project Management Board. Members of the Board will be the heads of related departments which will have technical responsibility for the implementation of different project components. The Project Management Board and chairing it the Deputy Director Generalfor Technical Affairs will ensure proper coordination among the various departments within the TKGM. 10. Actual implementation of the project will be within the responsibility of the various departments of TKGM. At the central level, the DepartmentDirector will have be responsible for the component and, similarly to the structure used to coordinate ARIP, will have a team implementingeach component. There will be a Project Manager for each component and, ifa component will be implementedin various regions, like renovationworks, local teams will be established for given project area. Deputy Project Managers will be assigned to each team in order to assist the Project Manager. 39 11. At the regional level, the head of the regional office will be responsible for the implementation of the activities in their region, including supervision of work and certification o f payments. Teams will be established to perform quality control and supervisionof the contractedwork. Actual payments will be made by the GeneralDirectorate of TKGM after being endorsed by the Director who is responsible for the region. Similar implementationstructure will be established for each component. 12. Payments will be done in line with the existing procedures in TKGM. The project financial managementteam will work closely with other relevant departments. Same principle will apply for planning and budgeting. Financial Management team will do the detailed planning and will prepare the budget o f the project which will then be incorporated in the overall plansand budget ofthe TKGM by its relateddepartment. 13. These arrangements were discussed and confirmed during the procurement and financial managementassessment. 40 Y u o '7 a EI I Annex 7: FinancialManagementand DisbursementArrangements TURKEY: LandRegistryand CadastreModernizationProject FinancialManagementRisk 1. The FM risk table is presented below. Accordingly, the FM risk is substantial before mitigationmeasures, andratedas moderateafter the mitigationmeasuresare implemented. FMRisk Risk Rating Risk Mitigating Measures Residual Risk Country Level. The Public Financial Moderate The government is processing with Moderate Management and Control (PFMC) Law is improvingthe implementation of the PFMC under implementation although there are law. The issues are included in the 2008 still some gaps in the implementation of the Government Program. law in full. Entity Level. Although TKGM has some Substantial The lack of capacity in TKGM with respect Moderate prior experience in the implementation of to accounting and project reporting will be World Bank projects, it will take over the overcome by establishing a proper FM projectFMresponsibilityfor the first time. system by procuring adequate software and by developing the skills of the designated FM staff with an FM consultant with relevant experience. Project Level The project does not include Low Not applicable Low complex activitieswith respectto FM Overall Inherent Risk Moderate Moderate Budgeting. The project is included in the Low Low government investment budget. Accounting. TKGM does not have an Substantial The risk will be mitigated by nominating Moderate accounting unit as the accounting in line TKGM staffthat will work on the FMofthe agencies is maintained by the Ministry of project, hiring an FM consultant FinanceGDPA offices. experienced in World Bank procedures and procuring an FM software that will be tailored to the needs of the project. Internal Controls. TKGM has established Moderate An FM manual will be prepared. The Low internal controls in place. There is a need manual will include a section on internal for preparing a document summarizing the controls that are relevant for the project internalcontrols relevant for the project. Funds Flow Moderate Traditional disbursement techniques will be Moderate used. Financial Reporting TKGM has no Substantial The risk will be mitigated once the FM Moderate accountingand reportingsoftware software and the reporting module therein are functional. The interim un-audited financial report templates will be attached to the MinutesofNegotiation. Auditing. The audit of the project accounts Low Not applicable. Low will be done by the Treasury Controllers in line with TOR providedby the Bank.. Overall Control Risk Substantial Moderate 42 Country Issues 2. Until 2001-02, public financial management in Turkey was based on an outdated legal framework. Enactment o f the Public Financial Management and Control (PFMC) Law in 2003 was a defining moment for public financial management in Turkey. The law articulates a modern view o f performance orientedpublic sector management. It clarifies the nature o f ministers' and officials' accountability to the public by strengthening public expenditure and financial management processes in line with EUpractice. Implementation o f the law enacted in 2003 and amended in December 2005, however, represents a major challenge. In addition, Turkey has implemented a state-of-the-art accounting system, adopted accrual-basis of accounting, established a Government Accounting Standards Board (GASB) as the general government's sole standard-setting authority, several extra budgetary funds have beenclosed down, and a new law has been drafted for the Turkish Court o f Accounts to strengthen the audit function. 3. TKGM is listed among Chart Iinstitutions in the PFMC Law and is thus a general budget institution. Chart Iinstitutions do not maintain separate accounting systems. The detailed books and records for accounting are maintained in the Ministry o f Finance's General Directorate o f Public Accounting (GDPA) offices in cities and towns throughout the country. Controls with respect to payments by verifying the documentation supporting the payment and compliance with rules and regulations are exercised by the Strategy Development Directorates of the institutions before payment. Strengths 4. The significant strength that provides the basis o f reliance on the project financial management system i s that T K G M has experience in implementing World Bank projects as it handled a sub-component o f the Agricultural Reform Implementation and Marmara Earthquake Emergency Reconstruction Projects, and TKGM has an effective internal control system inplace for expenditures made by the institution. Weaknesses and Action Plan 5. TKGM has some prior implementation experience, but it is the first time that it will have direct financial management responsibility for a project. Accordingly, the financial management environment o f TKGM has some weaknesses with respect to handling the project accounting and preparing the financial reports as requiredby the Bank. The following action plan i s proposed to address the deficiencies inthe TKGM financial management environment: Action Responsibility Deadline The necessary additional allocation for 2008 expenditures will be obtained TKGM As per national from the Higher PlanningCouncil. procedures The accounting and reporting software will be procured, installed and FM unit and Within 2 months functional. Project after effectiveness Coordinator Chart of accounts for project transactions in line with the reporting FMunit and May30,2008 requirementswill be preparedand uploadedto the accountingsoftware. Project Coordinator 43 A financial management specialist (FM Consultant) who will be responsible TKGM Within 2 months for the accounting, reporting and disbursements ofthe project will be hired. after effectiveness ImplementingEntity 6. TKGM has started numerous projects in order to complete the first establishment cadastre of Turkey, to renovate the old or outdated cadastral maps as well as strengthening the equipment and I T capacity of the agency. To this end TKGM successfully implemented Cadastre Renovation and Land Management sub-component of the World Bank funded Marmara Earthquake Emergency Reconstruction (MEER) Project. TKGM was also involved inthe World Bank funded Agricultural Reform Implementation Project (ARIP). 7. The general implementation arrangements are described in Annex 6. The implementation arrangements with respectto financial managementare describedbelow: 8. A project F M unit will be established. The FM unit (FMU) will be responsible for the preparation of the project budget, funds flow, accounting, reporting, internal controls and documentation and will work under the coordination of the Project Director. TKGM will nominate staff that will work on the project financial management and also hire a financial management consultant after effectiveness. 9. The risk associated with the implementing entity is assessed as substantial, The rating will be assessedas moderate once the entity establishesthe project FMunit. Budgeting 10. The overall responsibility for budget preparation and monitoring lies with the Strategy Development Directorate (SDD) of TKGM as per the Regulation no. 2006/9972 enacted on January 6, 2006 based on the Public Financial Management and Control Law No.5018. Accordingly, the investment budget of TKGM is prepared under the coordination of the SDD that i s responsiblefor compiling the investment proposals of the spending units and preparing the final investment budget proposal of TKGM. SDD then sends the proposed TKGM budget to the Ministry of Public Works and Settlement which sends it to the State Planning Organization inthe third quarter of the year. The agreed budget with the SPO is then included inthe general budget and sent to the General Assembly that approves the Budget Law for the following year. The Land Registry and Cadastre Modernization Project will be no exception to this procedure and the budget preparation and approval mechanismbriefly describedabove will be valid for that too. 11. The project is included inthe 2008 investmentprogram. 12. TKGM will have the project budget prepared in line with the reporting requirements of the Bank and those budget figures will be entered into the budget module integrated into the accounting software to enable comparison with the actual expenditures and monitor any variances.. It will be the responsibility of TKGM through the Project Director and the FMU to ensure timely preparation of the project budget in the detail explained above. The budgeting procedureswill be described inthe Financial Management Manual. 13. The risk associated with the budgetingprocess is assessed as low 44 Accounting 14. Stuffing. Although the supervision o f works and the certification o f payments to contractors will be done by the relevant technical departments at the headquarters and inthe regional offices, the project accounting, reporting and corresponding documentation will be centralized in FMU. The FMU will be staffed with the personnel from TKGM with appropriate background who is already appointed and an FM consultant that will be hiredwithin two months after effectiveness. This structure will contribute significantly to the capacity development within TKGM by ensuring a skills mix through combining the experience of its own personnel with the external and market experience of the consultant. 15. Information Systems and Accounting Procedures.. The main transactions o f the project will be accounted for by the Ministry o f Finance's GDPA office inTKGM in Turkish Lira. However, the Ministry of Finance's Say2000i accounting system does not allow double-currency accounting and it i s not possible to open the necessary sub-accounts to properly record, monitor and report the project transactions with respect to activities and categories .Thus, the project accounting will be maintainedby the FMUon a cash basis. For this purpose, TKGM will procure a financial management software including modules for foreign currency accounting, budgeting and reporting tailored for the specific needs o f the project. TKGM confirmed that the procurement process of the accounting software i s initiated. Accordingly, the software will be procured, installed and implementedwithin two months after effectiveness. The project financial management software will allow TKGM to account for the project transactions both in YTL and foreign currency and generate the project financial statements with budget comparisons. In the meantime, incase of occurrence o f expendituresbefore the installation o f the software, the FMU will use Excel spreadsheets as a transitional measure. The Excel spreadsheets will be sufficiently detailed to follow up the project transactions. The data in the spreadsheets will be entered into the accountingsoftware once it is installed. 16. The FM staff will prepare the project's chart o f accounts for later upload to the accounting software by May 30, 2008. The chart o f accounts will need to be harmonized with the selected software. This chart o f accounts that will allow the generation o f the project reports in the desired detail will be uploaded to the accounting module o f the software for it to become functional within two months after effectiveness. 17. The FMUwill be responsible for the accounting and reporting o f the project as well as the documentation o f project transactions that will be subject to the audit o f the Treasury Controllers. The spending departments will submit all documentation including authorizations and approvals for payment to the FMUunder the coordination o f the Project Director. FMUwill prepare the payment orders/ bank transfer orders for execution o f payments. The transactions will be bookedinthe accounting software on a cash basis. 18. The FM staff will prepare a financial management manual (FM Manual) that describes the financial management arrangements o f the project. This document will mainly cover: (a) the financial and accounting policies and procedures for the project; (b) organization o f the financial management unit, functions, staffing and relevant job descriptions with special emphasis on the 45 segregation o f duties; (c) the financial management information system; (d) disbursements; (e) project budgeting, planning procedures and financial forecasting; and (0 project reporting. The draft FMManual will be ready by negotiations. 19. The risk associated with accounting is considered substantial. The rating will be revised as moderate once the staffing of the FM unit i s completed and the accounting software i s purchased and functional. InternalControlandInternalAuditing 20. TKGM falls within the scope o f the Public Financial Management and Control (PFMC) Law which requires internal control departments to be established at Government institutions. Thus, TKGM has a pre-financial control department under its Strategy Development Directorate (SDD) which performs its duties within the scope of the TKGM Directive on Pre-Financial Control Transactions prepared incompliance with the PFMC Law and other relevant regulations. Accordingly, all contracts and commitments that will result in expenditures exceeding 1 Million YTL (approximately USD 750,000) for goods and services purchases and 2 Million YTL for construction works are subject to pre-financial control. All the procedures and the documentation to be provided in the control files are described in the above mentioned Directive. The SDD finalizes its controls within 10 business days and sends its approval letter and a copy o f the file to the spendingunit for processing o fthe payment. 21. The transactions made within the scope o f the Land Registry and Cadastre Modernization Project will be subject to pre-financial control as described above as per the internal procedures o f TKGM. In addition, the TKGM through the FMU will document the internal control procedures for the project in the project financial management manual. To strengthen internal controls, TKGM would minimize the risk o f misuse or fraud with respect to financial management inthe following ways: 0 The FMUwill process the payments to contractors upon receipt of the payment request letter by the spending unit, supported by the invoices and other payment documents containing all required technical approvals. The FMU will also make sure that the payment requests are line with the contracts and that the confirmation letter of the SDD is available inthe files. 0 The FMU will be responsible for making regular reconciliations o f the Designated Account and the loan account at the World Bank. The reconciliation files will be supervised and signed by the Project Director on a monthly basis. 0 The assets and equipments purchased from the project funds will be followed in a separate asset register. Annual asset counts will be performed by a committee whose members are appointed by the Project Director will be performed and documented. 0 The FMUwill ensure that regular back-ups o f the financial management system are taken and kept in a safe place. One copy o f the back-up files should be kept off-site to prevent any data losses. 22. The risk associatedwith internal control is assessed as moderate. 46 FundsFlow 23. There will be one Designated Account (DA) for the project for disbursements.The DA will be in the currency o f the loan and will be held at The Central Bank o f Turkey. All payments to the contractors, suppliers and consultants will either be made directly from the loan account or from the Designated Account with the authorization o f the responsible personnel. The SDD FM will be responsible for ensuring that payments are made as well as counterpart fund contributions. 24. The project i s in the investmentprogram of the Government. The funds flow i s summarized inthe chart below: Land Reglstry and Cadastre Modernization Project Fininclai ManagementArrangements for Dlsbursements, Repienlshments, Payments ............................. ......... . .................................... .,.......,,.., ...,,..... repom .flD*oIIunb anddocuments The risk associated withfundsflow is considered as moderate Financial Reporting 25. The FMU will maintain records and will ensure appropr,dte accounting for tile funds provided for the project. Financial statements for the project will be prepared by the FMU. The interim un-audited financial reports (IUFR) will be prepared on a quarterly basis and will be submittedto the Bank no later than 45 days after the end of the quarter. Moreover, FMU will ensure that these reports are automatically generated from the accounting software that will be procured for project accounting purposes. 47 26. The IUFRwill includethe following reports: ExpenditureTablesper activities ExpenditureTablesper categories, DesignatedAccount Statement, 27. The IUFR templates will be attached to the Minutes of Negotiations. The financial management manual of the project will include a section on the IUFR and formats of these reportswill be detailedthere. 28. The risk associatedwith reporting and monitoring is assessed as substantial. The ratingwill be assessed as moderate once the accounting software is procured, the reporting module integratedto it and functional within two monthsafter effectiveness. Auditing 29. As part of the Bank's auditing requirements, the financial statements of the project will be subject to external auditing. The first set of audit reports will be submitted to the Bank before June 30 of the year following the calendaryear inwhich the first disbursement from the loan has beenmade. 30. The project financial statements will be audited by the Treasury Controllers in accordance with International Auditing Standards. The Treasury Controllers are the external auditors for all projects implemented in the ministries and government institutions and their TOR is already agreed upon. 31. TKGM i s subject to the audit of the Turkish Court of Accounts (TCA) - Sayistay, that doesn't prepare any reports unless a weakness, deficiency or error has been noted during their reviews.TCA did not prepare any report for TKGM for 2006. 32. The following chart identifies the audit reports that will be requiredto be submitted by the projectimplementingentity together with the due date of submission: Audit Report Due Date Entity financial statements Not applicable Project financial statements (PFS), including SOEs and designated Within six months after the end of each account. PFS include sources and uses of funds by category and by calendar year and also at the closing of components; SOE statements, Statement of DesignatedAccount, notes the project. to the financial statements and reconciliationstatement. B. DisbursementArrangements 33. One DesignatedAccount (DA) will be opened at the Central Bank o f Turkey and will have an authorized allocation of Euro 13.5 million. Two signatures indicatedin the list of authorized signatures submittedby TKGM will be requiredon the withdrawal applications. 48 34. Applications for replenishment o f the DA will be submittedto the Bank on a quarterly basis, or when the balance o f the DA is equal to about half o f the initial deposit or the authorized allocation, whichever comes first, and will include a reconciled bank statement as well as other appropriate supporting documents. 35. Disbursements from the IBRD Loan Account will follow the transaction-based method, i.e., traditional Bank procedures: Advances, Direct Payments, Special Commitments and Reimbursement (with full documentation and against Statements o f Expenditures (SOEs). For certain payments, above the MinimumApplication Size, as specified inthe DisbursementLetter, the Borrower will submit withdrawal applications to the Bank for payments to suppliers and consultants directly from the Loan Account. The withdrawal applications will be prepared and authorized by TKGM. 36. Disbursements will be made on the basis o f full documentation for (a) contracts for goods costing more than the equivalent o f US$1,000,000 each; (b) contracts for works costing more than the equivalent o f US$10,000,000 each; (c) contracts for technical services more than the equivalent o f US$5,000,000; and (d) services under contracts o f more than the equivalent of US$350,000 for each consulting firm and more than the equivalent o f US$lOO,OOO each for individual consultants. Disbursements below these thresholds will be made according to certified Statement o f Expenditure (SOEs). Full documentation in support of SOEs would be retained by TKGM for at least two years after the Bank has received the audit report for the fiscal year inwhich the last withdrawal from the Loan Account was made. This information will be made available for review during supervision by Bank staff and for annual audits which will be requiredto specifically comment on the propriety of SOE disbursementsand the quality of the associated record-keeping. C. SupervisionPlan 37. During project implementation, the Bank will supervise the project's financial management arrangements as follows;(i) during the Bank's supervision missions financial management and disbursement arrangements will be reviewed to ensure compliance with the Bank's minimum requirements (ii)project's quarterly interimun-audited financial reports as well as the project's annual audited financial statements and auditor's management letter will be reviewed. As required, a Bank-accredited Financial Management Specialist will assist in the supervision process. 49 Annex 8: Procurement Arrangements TURKEY:Land Registry and Cadastre Modernization Project 1. General 1. Procurement for the proposed project would be carried out in accordance with the World Bank's "Guidelines: Procurement Under IBRD Loans and IDA Credits" dated May 2004 (revised in October 2006); and "Guidelines: Selection and Employment o f Consultants by World Bank Borrowers" dated May 2004 (revised in October 2006), and the provisions stipulated inthe Legal Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the Loan, the different procurement methods or consultant selection methods, the need for pre or post -qualification, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank inthe Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. The agreements covering procurement methods and thresholds have been determined for Turkey according to its capacity and experience with Bank procurement based on the capacity assessment conducted in November 2007. The procurement agreements have been appraised and detailed in the procurement plan for the first 24 months and summarized below. The General Procurement Notice i s to be issued on or about January, 2008. 2. Procurement of Goods, Works, Technical Services: 2. Goods: Goods procured under this project would include: Hardware and software to upgrade the cadastre offices. The procurement will be done using the Bank's SBD for all ICB and Bank's sample N C B document for ECA Region for Goods satisfactory to the Bank. Works: Works procured under this project would include: Reconstruction and/or refurbishment o f the cadastre offices buildings. The procurement will be done using the Bank's Standard Bidding Documents (SBD) for all ICB and Bank's sample NCB document for ECA Region for works satisfactory to the Bank. Technical Services: Technical services procured under this project would include: mapping, cadastre renovation, registry, updating and digitization. The procurement will be done usingthe Bank's Standard Bidding Documents (SBD) for all ICB and N C B document satisfactory to the Bank. 3. Thresholds for Goods and Works and Technical services a) Prior Review Threshold: Procedures described for prior and post reviews as stated inAppendix 1ofthe Procurement Guidelines shall apply Procurement ProcurementMethod Threshold PriorReview Comments Method Threshold 1. ICB > $ 1,000,000 -goods All > $ 10,000,000 -works > $ 5,000,000 -technical services 50 NCB <$ 1,000,000 -goods - IGoods>$S00,000 I <$ 10,000,000 -works Works and <$ 5,000,000 -technical services Technicalservices (thisthresholdmay be increased >$ SMillion to 10,000,000 ifforeign firms do Plus- Firsttwo not show interest to GPN) contracts of Goods, Works and Technical Services Shopping <$ 100,000-goods First contract of < $ 100,000 -small works each category <$ 100,000 -logistic servicesfor workshom and similar events Direct All Contracting b) Other SpecialProcurementArrangements: Logistic services required for the International and National Symposium, Seminars, Workshop, and other training programs shall be procured by Shopping procedures. In case o f very large International Symposiums and training programs exceeding the shopping threshold o f USD 100,000 N C B procedures satisfactory to the Bank shall be used. The works including renovation and refurbishment o f cadastre offices to cost less than $10,000,000 per contract , technical services (cadastre renovation, mapping, registry, updating and digitalization) contracts to cost less than $5,000,000 per contract (this threshold may be increasedto 10,000,000 if foreign firms do not show interest to GPN ) and the Goods manufactured within the country and readily available in the local market to cost less than $ 1,000,000 per contract may be awarded through NCB. During the negotiations N C B conditionality shall be agreed as per issues listed below: i)Eligibility Bidding shall not be restricted to domestic bidders. No restriction shall be applied to foreign bidders who wish to submit a bid. ii)Procedures Invitations to bid shall be advertised in the Official Gazette or in at least one widely circulated national daily newspaper or in an electronic portal o f free access allowing a minimumofthirty (30) days for the preparation and submission of bids. iii)Assessmentofthebidder'squalifications Inthe procurement of goods, works andtechnical serviceswhere pre-qualificationis not used, the qualifications of the bidder who is recommended for award of contract shall be assessed by post- qualification, applying minimum experience, technical and financial requirements which shall be explicitly stated in the biddingdocuments and which shall be determined by a `pasdfail' method, notthroughuse of a merit point system.. 51 iv) Participationby Government-ownedEnterprises Government-owned enterprises in the Republic o f Turkey shall be eligible to participate in bidding only if they can establish that they are legally and financially autonomous, operate under commercial law and are not a dependent agency o f the Government. Furthermore, they will be subject to the same bid and performance security requirements as other bidders. v) BiddingDocuments Procuring entities shall use the Bank's sample N C B documents for ECA Region for Works and Goods and shall draft contract and conditions o f contract acceptable to the Bank. vi) BidEvaluation (a) Evaluation of bids shall be made in strict adherence to the monetarily quantifiable criteriadeclared inthe biddingdocumentsand a merit point system shall not be used. (b) Extensionof bid validity shall be allowed once only for not more than thirty (30) days. No further extensions should be requestedwithout the prior approvalof the Bank (c) Contracts shall be awarded to qualified bidders having submitted the lowest evaluated substantiallyresponsivebid meetingthe post qualificationrequirements.. (d) No domestic preferenceshall apply underNationalCompetitiveBidding. vii) Price Adiustment Civil works contractsof longduration(Le. more than eighteen (18) months) shall containan appropriate priceadjustment clause. viii ) Re-iectionof All Bids All bids shall not be rejectedand new bids solicited without the Bank's prior written concurrence. 4. Selectionof Consultants Consulting services under the project comprise i)Services for the design and construction supervision o f the reconstruction and refurbishment o f cadastre offices, ii)supervision o f the cadastre renovation, registry, updating and digitization, iii)technical assistance for property valuation, iv) technical support to the Project Coordination Team and iv) other services required under the project. 52 1. CompetitiveMethods (Firms) > $350,000 The first two QCBS QCBS/QBS/LCS/CQS/ contracts are subject to prior review irrespective of contract amount 2. Single Source(Firms) All 3. Individual Consultants > $100,000 The first individual consultant contract and all singlesource contracts are subjectto Bank prior review irrespectiveof contractamount b) Short list comprising entirely of national consultants: Shortlist o f consultants for services, estimated to cost less than $ 200,000 equivalent per contract, may comprise entirely o f national consultants in accordance with provisions o f paragraph 2.7 o f the Consultant Guidelines. 5. Operating Costs: TKGM/PMU Incremental Operating Costs including P M U staff salaries and staff per diems (excluding salaries and per diems of the government employees) and lodging as well as travel costs for field trips related to the implementation o f the project, office rent, supplies and utilities communication cost including internet, telephone , transport, costs for training o f TKGM/PMU staff, seminars and workshops, office equipment, hardware and software, furniture and M&O o f hardware and software shall base on a agreed budget annually approved by the Bank. 6, Assessment of the agency's capacityto implementprocurement Procurement activities will be carried out by Project Coordination Team o f the TKGM An assessment of the capacity of the ImplementingAgency to implement procurement actions for the project has been carried out on 5-7 November 2007. The below assessment, outlines the organizational structure for implementing the project and the interaction between the project's staff responsible for procurement and the Agency's relevant central unit for administration and finance. TKGM has been implementing numerous projects in order to complete the establishment of cadastre for Turkey, renovate the old or outdated cadastral maps as well as to enhance the equipment and IT capacity of the agency. The agency has been implementingBank financed projects since 2000. During the 2000-2006 period successfully implemented the Cadastre Renovation and Land Management sub-component o f Bank financed MEER Project and during 2001-2007 period cadastre maps sub component o f the Agricultural reform ImplementationProject (ARIP), Loan 4631-TU with external support for Bank's procurement procedures , financial management/disbursement from the related standalone PIUs established for the implementation and coordination o f those projects. A Project Management Unit was established under the General Directorate for the implementation o f MEER & ARIP which i s responsible for coordinating the preparation o f technical specifications, bidding documents and requests for proposals, monitoring and coordination of projects activities, planning and budgeting as well as 53 overall supervision o f all contracted technical works. Provincial and regional directorates o f TKGM are part of this project management structure with the responsibility of on-site control and supervision of quality o f the work. 7. ProposedImplementationArrangements for Land Registryand Cadastre Modernization Project The General Director o f the TKGM will have the ultimate responsibility for the project. The Deputy General Director for Technical Affairs has beennominated as the Project Coordinator. A similar project management structure that i s used for the ARIP project will be applied in the proposed project, performing the function o f a new Project Coordination Team and assigned with additional responsibilities and authorities as the project necessitates. The TKGM Project Coordination Team will have the following functions and responsibilities: procurement, financial management, planning, budgeting, monitoring and evaluation. In order to perform these functions satisfactorily, inaddition to inhouse staff two procurement, one financial management, one disbursement; and one monitoring &evaluation staff with hands-on experience in World Bank procedures shall be hired. If needed individual technical experts on specific fields and relevant support staff such as translator, team assistant shall also be hired to support the project management team. The Project Coordination Team will be headed by a Project Director appointed by the TKGM who will report to a small Project Management Board. Members o f the Board will be the heads o f related departments which will have technical responsibility for the implementation o f different project components. The Project Management Board shall be chaired by the Deputy Director General for Technical Affairs who will ensure proper coordination among the various departments within the TKGM. Actual implementation o f the project will be within the responsibility o f the various departments o f TKGM. At the central level, the Department Directors will be responsible for the relevant component and, will have a team implementing each component. There will be a Project Manager for each component and, local teams will be established for given project area at the regional district offices. Deputy Project Managers will be assigned to each team in order to assist the Project Manager. At the regional level, the head of the regional office will be responsible for the implementation of the activities in their region, including supervision of work and certification o f payments. Teams will be established to perform quality control and supervision o f the contracted work. Actual payments will be made by the General Directorate o f TKGM after being endorsed by the Director who is responsible for the region. Similar implementation structure will be established for each component. Banks Standard Bidding Documents shall be used for the procurement o f goods, works and consultant services. NCB document prepared and used for the technical services contracts under the ARIP project shall be updated and revised and shall be used as a template for all technical services contracts under the Loan if satisfactory to the Bank. Similarly a NCB document template for Works satisfactory to the Bank shall be prepared for the use o f works contracts subject to NCB under the Loan. Technical specifications shall be prepared by the relevant departments in the TKGM. Tender committees shall composed o f minimum three experts 54 qualified and experienced in the bid evaluation and nominated by the relevant departments subject to approval of the General Manager or authorized deputy o f the TKGM. Previous experience revealed that bid evaluation committees are hesitating to decide on the substantial responsiveness o f the bids to the qualification criteria originating from their precedent strict responsiveness to the rules in the public procurement law. To overcome these bottlenecks a procurement training particularly for the evaluation o f bids for Goods, Works, Technical Services and Consultant Services under Bank financing is planned at the project launch workshop for the TKGM staff potentially nominated for bid evaluation committees. No. Expected outcome / Estimated Estimated Activity Description Cost ($) Duration Comments 1 Procurement Training during - Two days To be providedby ProjectLaunch Workshop PAS The overall project risk for procurement is Medium. 9. Procurement Plan The Borrower, at appraisal, developed a procurement plan for project implementation which provides the basis for the procurement methods. This plan has been agreed between the Borrower and the Project Team on 11 December 2007 and i s available at TKGM at Ankara Turkey. It will also be available inthe project's database and inthe Bank's external website. The Procurement Plan will be updated inagreement with the Project Team annually or as requiredto reflect the actual project implementation needs and improvements in institutional capacity. 10. Frequency of Procurement Supervision In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment o f the ImplementingAgency has recommended annual supervision missions to visit the field to carry out post review of procurement actions and physical verifications on a sample basis. 11. Details of the Procurement Arrangements a) Goods, Works, Technical Services and Non Consulting Services 1 2 3 4 5 6 7 8 9 Ref Number Review by Expecte . Domestic Contract (Description) Bank d Bid- Comments Contract of Procureme P-Q Preferenc (Prior, Opening No. nt Method S e (yes/no)post)(1)(2) Date(3) 55 2 3 4 6 7 + Number Domestic Review by ExDecte Contract (Description) of Procureme Bank d 'id- yil Contract nt Method Preferenc (Prior I Dpening Comments S e (yedno) Post)(I)0) Date (') Cadastral Renovation works in first group regions (Ankara, Istanbul, 1 ICB No Prior 2009 Izmir, Antalya, Gaziantep, Bursa) Cadastral Renovation I works in first group regions (Ankara, Istanbul, 19 NCB No Post July (I) Izmir, Antalva 2008 Gaziktep, Bursa) -I- Cadastral Renovation I works insecond group regions (Sanliurfa, Samsun, Erzurum, 6 NCB August No Post (') Kastamonu, Sivas, Trabzon, Diyarbakir, Konya) Cadastral Renovation works in third group regions (Van, Yozgat, 7 NCB No No Post (I) 3ct 2008 Elazig, Eskisehir, Denizli, Edime, Hatay, Kayseri) Base Mapping including Ortophoto and Vector Maps in first group regions (Ankara, Istanbul, 1 NCB No No Post (I) 2008 Izmir, Antalya, Gaziantep, Bursa) Base Mapping including Ortophoto and Vector Maps in second group regions (Sanliurfa, July Samsun, Erzurum, 1 NCB No No Post (I) 2008 Kastamonu, Sivas, Trabzon, Diyarbakir, Konva) Base Mapping including Ortophoto and Vector Maps inthird group August regions(Van, Yozgat, 1 NCB No No Post (I) 2008 Elazig, Eskisehir, Denizli, Edime, Hatay, Kayseri) Construction and/or Renovationof Model 3 NCB No No Post March (I' Offices 2009 Consultation Workshops for preparation of human resourcesdevelopment 3 S No No Post(2' Jan 2009 strategy Consultation Workshops for preparation of Business Plan and 3 S No No Post 2009 Strategic Plans - 56 - -1 2 3 4 5 6 I 8 9 Ref Number Domestic Review by Bank Expecte Contract (Description) Of Procureme P-Q Preferenc (Prior Opening Bid- Comments No. Contract nt Method e (yes/no) Post) (1) (2) Date (3) - S Study visits within the June 11 context of modernization 5 S No No 2008 - of TKGM Printing of Training and 12 Workshop Materials in 4 NCB No No post(1) SeP - various topics 2009 Study visits within the context of policy July 13 developmentand capacity Multiple S No No 2008 building in the field of - property valuation International seminars 14 and policy workshops 4 S No No Post (*' SeP related with property 2008 - valuation Equipment support for 15 March capacity building in the 1 ICB No No Prior 2010 field of property valuation - - - subject to prior reviewand the rest of the NCB packagesare subject to post review. (2) The first package of each shopping (i.e goods, small works and logistic services) i s subject to prior review and rest of the Shoppingpackages are subject to post review. (3) Estimated bid opening date for the first package of each item. b) ConsultingServices Lis1 o f consulting assignments: - -1 2 3 4 5 6 7 Number Expected Ref. Description of Assignment of Selection Bank (Priorby / Submission Comments Review Proposals No. Contracts Method post)(1) - Date(') I 1 1 ConsultingServices for supervision of cadastral renovation works in 1 first group regions (Ankara, 1 QCBS Prior July2008 Istanbul, Izmir, Antalya, Gaziantep, - Bursa) Consulting Services for supervision ofcadastral renovation works in 2 first group regions (Sanliurfa, 1 Samsun, Erzurum, Kastamonu, - Sivas, Trabzon, Diyarbakir, Konya) Consulting Services for supervision of cadastral renovation works in 3 second group regions (Van, Yozgat, 1 Elazig, Eskisehir, Denizli, Edirne, Hatay, Kayseri) I Cadastre Integration Consultancy 4 Support - InternationalConsultant I IC Post(I) June 2008 - 57 4 5 6 I Number Expected Selection Review by Bank (Prior / Proposals No. Contracts Method Post) Submission omments 1 1 (') Date (') 1 1 Cadastre Integration Consultancy Support - Consulting Firms 1 QCBS Post"' Oct 2008 Design and Supervision of Model August Offices 1 QCBS Prior 2008 , Assistance for Preparationof I I human resources development strategy, Business and Strategic 1 QCBS Prior Plans and Policy Studies for TKGM Jan2009 Design preparationand disseminationof training programs relatedwith modernization of 1 QCBS Prior March 2009 TKGM International Valuation adviser and International Standards consultant for policy development in the field of property valuation and 5 IC Prior April 2009 International Pilot valuation I 1 consultant Pilot Implementation - Valuation Feb 2009 pilot team (National consultants) 4 IC Post'" 2008 Pilot Implementation - Pilot Valuation Cost (Data: assembly, 11 quality, analysis, strategy, 1 QCBS Prior May 2009 Valuation: testing, methodologies, implementation) International Valuation Education 12 and training consultantfor capacity building inthe field of property 1 IC Post (I) Jan 2009 valuation Support training for TKGM staff, selected municipality staff and surveyors (National consultants) on 6 CQ Post (I) March 2009 property valuation Support for Turkish universities to 14 develop programs and courses, support for selected postgraduate 1 QCBS Prior Sep 2010 training on property valuation Financial Management System and 15 Information Management System 1 CQ Post (I) April 2008 for PMU TA to PMU (procurement specialist, financial management 16 specialist, disbursement officer, 6 IC Prior April2008 monitoring and evaluation expert translator and team assistant) Consultants services, base line and 17 follow up surveys for project 3 August CQ 1 1 management purposes Post'" 2008 (1) The first two packages of any QCBS and first package of each other selection procedure are subject to prior review. The rest of the QCBS packages and the rest of the packages of other selection procedures are subject to post review. 58 (2) Estimatedproposal submissiondate for the first package of each item. (b) Consultancy services provided by firms estimated to cost above $ 350,000 per contract and individual consultancy services estimatedto cost above $ 100,000 per contract and all single source selection of consultants (firms) will be subjectto prior review by the Bank. 59 Annex 9: Economicand FinancialAnalysis TURKEY: LandRegistry and CadastreModernizationProject A. Overview of CadastreRenovation 1. InTurkey, cadastral andproperty registration documents (mainly cadastral sheets) produced inthe past no longer meet today's needs and requirements, althoughthey were sufficient to cater to the economic and social needs o f the era during which they were prepared. This deficiency is mainly due to the use o f old technology and techniques, lack o f modern technical equipment as well as inadequate skills o f the staff that prevailed during the time the existing cadastral information was assembled. 2. Turkey now needs to undertake cadastral renovation for about 4.1 million priority parcels out of a total o f 55 million parcels, and embrace appropriate and modern technology to support this effort. In addition to being an integral part o f the overall spatial information system in Turkey, the demand for cadastral renovation arises due to: (a) rapid urbanization as a result of rural to urban migration, (b) zoning applications by local government, and (c) appreciation in property values, all which necessitate more precise cadastral measurements and better access to data. Such conditions, which generally characterize the urban areas, will also be applicable for the rural areas inthe near future. 3. Cadastral information and records not only secure property ownership, they also supply the necessary base data for the design and implementation o f most infrastructural projects with a spatial character. Hence, such cadastral data must meet quality assurance for the planning, design and application needs o f infrastructural projects and to do so, they must be accurate, reliable and up-to-date. Given that a good portion o f the cadastral data were compiled about 40 to 50 years ago using the available the technology o f the time, the Government cannot even assure basic property rights, let alone meet other needs, such as cater to the information requirementsof modern infrastructural projects. According to an information note by the Chamber o f Cadastral Engineers in Turkeyg, some 60% o f the cadastral work in Turkey needs to be renovated in order to meet current needs and expectations. The tentative estimate for this colossal renovation effort i s about a billion U.S.dollars. B. Scope for Economic,Financial and FiscalAnalysis 4. How Vital is Cadastre?:Giventhe all pervasive nature o f cadastre and its social, economic and fiscal ramifications across the entire country, an analysis o f cadastre must primarily look at the actual scope of this essential discipline. The modern definition of cadastre is that it is an information system modeling the relationship between human beings and the land. As stipulated inthe Turkish Civil Code, cadastre provides for the establishment of modern property registry to establish ownership, seeks resolution o f property related disputes, strives prevention o f loss o f tax revenue, provides an avenue for orderly urbanization, promotes investments in real estate, creates a workable land registration system, supports e-Government, supplies a basis for spatial information systems, establishes the legal basis for ownership and land as related to public 9 http://www.hkmo,org.tr/resimler/ekler/l2a3c9878efeae8~ek.doc?tipi= 14&sube 60 infrastructural (Rural and Urban Development, Urban Development, Construction of Roads, Dams and Irrigation Schemes, Expropriation Works and Arrangements for Land). Taken individually or collectively, any o f the above ingredients are amenable to economic, financial and fiscal analysis, which may helpjustify significant investments incadastre. C. Analytical Framework for an Economic, Financial and Fiscal Analysis of Cadastre Modernizationand RelatedInterventionsat TKGM 5. The project's impact (or the occurrence of its benefits) will manifest in three ways: economic, financial and fiscal, each o f which merit some discussion. It i s not always possible to maintain a neat division between disciplines due to natural overlaps. In order to carry out this analysis, it would be useful to separate out the project's intervention domain into three segments: the first segment considers impact to be generated within the TKGM system, the second segment studies impact to be generated between the TKGM and the larger economy (or the users), and finally, the third segment probes into the impact to be generated within the economy. The following schema outlines the basic approach. Analytical Fran work Description Economic Financial Fiscal Within Enhancement of Increased ability to TKGM operational cost generate internal System effectiveness. funding for investment NIA Higher quality and financing, and reducing more accurate service burdenon the state production with higher budget. value to users. Increased agency performance. Greater ease of system maintenance. New opportunities for greater cost recovery. Between Value added services to users Increased revolving Increased fee income TKGM and inthe form ofdigital dataand fund revenue as aresult for the Government Larger expert advice. of enhancedefficiency inthe use of staff time Economy Cost savings to principal clients (Municipalities, for fee earningcadastral Forestry, DSI etc) by services. providing them with the Sale of digital data and neededcadastral data at lower improved service cost than what they can resulting in increased produce on their own. revolving fund income. Cost savings to the society because of reducedcadastral disputes. Immense time savings to professionalgroups (realtors, assessors, lawyers) who would access digital cadastraldata on-line. 61 Within the Stimulate property markets by Increased property tax Larger increasingthe supply of revenuefor the local Economy building landwithin cities. Government, and Enable developersto build NIA Increased incometax affordable housing. revenuefor Government Facilitate large infrastructural Sizable savings to the projectsby acceleratingthe treasury for linking DIS process. paymentsto farmers to Speed up expropriation objective land process and providefor fair ownership data. compensationto land owners. Diminish the risk of financial losses and encourage developmentof specialized financial markets(such as REITs) via a modemcadastral system which publicizes complete legalsituation of land. Assist with landconsolidation effortsthat can increasethe efficiency ofthe agriculture sector. Capacity building and employment generationwithin the surveyors' profession. D.Joint Financialand FiscalAnalysis 6. TKGM is one of the rare public agencies that generate fee income for the Government which i s three times larger than what it receives from the Government by way of budgetary allocation. The below tables conveys this essential fact by providing figures for the last seven years. 62 Allocations From Central Government Budget Fee Income Year Operations IInvestments Total Earned 2001 I 96.3 1 5.90 102.21 2002 I 89.16 5.5 1 III 94.67 2003 107.21 6.08 113.29 433.33 2004 105.53 6.47 112.00 430.26 2005 214.59 59.78 274.37 651.85 2006 356.24 122.30 478.54 838.04 2007 287.86 80.00 367.86 1,142.00 7. TKGM generates its fee income through the registry offices by charging fees for its services. The fee tariff is set by the government and updated annually. The table below supplies data for TKGM earnings in2006 from fee income, all of which were returned to the Government. In any given year TKGM encounters 15 million Turkish citizens and services them in various ways. The most popular transaction is sales, which account for 85% of fee income, and up to three- fourths of revolving fund revenue. Infact, ninety percent of the fee income (which is returned to the Government), comes from property sales and mortgage operations, both of which involve sales. TKGMBasic TransactionData -2006 -andFee Income Value of Service Percent Number of Operations Average Share of Description of Operation or Service (Million Transaction Value Transaction Service Operations YTL) Fees (YTL) (YTL) Fees Sales 1,377,533 38,009.44 1,025,512,110 27,592 85.19% Other Services 3,612,605 142,395 178,272,65 1 39,416 14.81% Totals 4,990,138 180,404 1,203,784,761 36,152 100.00% , 8. TKGM Revolving Fund: In addition to central Government budgetary allocations, TKGM also operates a revolving fund whose revenues are used as a budget supplement. The single most important revenue earning item is sale operations. TKGM revolving fund charges YTL 100 per sale operation, and this alone accounted for YTL 138 million inrevolving fund revenue in 2006. When TKGM reports on its budget and performance, it separates central government allocations from its revolving fund activity. The revolving fund is regulated under special legislation. TKGM has greater discretion on the use of income accruing from the revolving fund. TKGM revolving fund revenues come from two sources: cadastral services and registry services. The tables below show approximate allocations of earnings from land registry and cadastre. 63 Revenuefrom Revenuefrom 1 Years Total Revolving Land Registry Cadastre (approx. Fund Revenue (appox. three one fourth) fourths) ApportioningRevolvingFund Revenue by Profit Center 2003 42 30 12 2004 75 60 15 2005 116 86 30 2006 140 100 40 2007 (estimate) 180 135 45 9. The below table summarizes the income generation aspects at TKGM in tabular form. Information in the table underscores the fact that the TKGM system earned a very significant level o f income amounting to YTL 1.34 billion in 2006. At an interest rate o f 15%, this would suggest that the estimated capitalized value o f TKGM would be about YTL 9 billion, plus the value o f its assets (physical and human) as well as the intrinsic value o f the public goodwill created over many years o f excellent service. Hence, judged by any standard, TKGM i s a multi- billion dollar national asset with a significant size and undeniable economic importance. Descriution of how TKGMIncome is Generated FunctionalSource of Fee Income for RevolvingFund Income Income Government In Relative Terms Registry 100% About three fourths (3/4) Cadastre None About one fourth(1/4) In Absolute Terms in 2006 Registry YTL 1,204 million YTL 100 million Cadastre YTL 0 YTL 40 million Total YTL 1,204 million YTL 140million Grand Total YTL 1,344 million 10. Joint Financial and Fiscal Impact: Recent developments in information and communication technology (ICT) are expected to improve the quality, cost effectiveness, performance and maintainability o f cadastral systems" . Following the project, improvements in quality, cost effectiveness, performance and maintainability will help streamline operational efficiency at TKGM. Also, use o f state o f the art technology incadastral work will have financial and fiscal repercussions within TKGM and enhance its revenue generation ability through the sale of cadastral data. 11. The below methodological approach limits the analysis to two key variables: cadastral income and expected induced growth inproperty markets. Cadastral income net o f tax and O&M lohttu://www.fig.net/uub/fin 2002/Js13/JS13 vanoosterom 1emmen.pdf 64 from renovated cadastre i s estimated to accrue at a rate of YTL 6.5/parcel/year. At full development this tariff would correspond to a net TKGM revenue generation capability of about YTL 27 million annually. On top of this, the project is expected to induce non-spontaneous growth in the number of sales operations due to sub-divisions and new construction. It is assumed that, in any given year, this non-spontaneous growth would correspond to a minimum o f 1% of the number of renovated parcels and reach some 41,000 sales per year at full development, for a total of 325,000 sales over 10 years. This would generate about YTL 33 million in additional fee income for TKGM over the 10 year planning horizon. Below, the analysis is presentedin a tabular form. By assuming highly conservative levels for key variables (sale price of new cadastral data and number of incremental sales operations induced by improved cadastral service), the proposedproject would yield positive fiscal balance of YTL 334 million, while allowing TKGM Revolving Fund to recover 94% of the investment cost. These results can be radically improved by assuming higher and more realistic levels for the above key variables. Undiscounted,Partial Financial and Fiscal Analysis" Description FinancialImpact(for Fiscal Impact (for TKGM-tax free) Government) ProjectCosts Investments YTL 309 million less VAT of YTL 309 million inclusiveof 18%= YTL 262 million over 5 VAT of 18% in 5 years years RecurrentCosts Negligible or negative due to Negligible or negative due to technologicalefficiency technologicalefficiency ProiectReturns CadastralServices YTL 6.5 per parcelper year (a) VAT payableto Government amountingto YTL 212 million in from investment:YTL 47 M net (tax free) cadastral income (b) Revolving fund income over 10years correspondingto potential savingsto central Government in budgetary allocations(investment cost inparticular) amountingto YTL 212 million, (c) VAT payableto Government on earnedrevenue for YTL 45 M. Registry Services Assuming 1% of incremental (a) Transaction tax from 325,000 growth in property markets induced sales over 10years, (sales). There will be 41,000 new valued at an averageof YTL transactions per year at full 27,500 per property,andtaxed at development, amountingto a 3%, amountingto YTL 269 total of 325,000 induced sales and million, YTL 33 million (a,YTL (b) Avoided public expenditure of "Theanalysisused4.1millionparcelsandYTL 309Mforoverallprojectcost.Ifthenumberofparcelsandproject funding is increased(decreased) in a proportionalmanner, the results of the analysis (ERRS)would still remainvalid since scalingdoes not affect ERR. 65 I1Oo/sale) in incremental IYTL 33 million in added TKGM revolvingfund income over 10 income for the Revolvingfund. years. Balance Income: YTL 262 million Income: Avoided fiscal (212M+ 33M = 245M) expendituresvia retained Project Cost: YTL 262 million earnings at TKGM (fees and Net: Negative 18 Million- income= 250M + 33M= 283M) Almost Breakeven and VAT and transaction taxes collected (47M + 45M + 269M = 361M).Total fiscal income YTL 649M Project Cost: YTL 309 million Net: YTL 334 million E.EconomicAnalysis 12. The Real Estate Market in Turkey: According to latest TKGM data, the total value of property sales inTurkey was about YTL 38 billion in 2006, with an estimated year end value of over YTL 40 billion in 2007. Property comprises all kinds of land, houses, buildings, estates as well as apartments. Roughly speaking, apartments constitute two thirds of the market value. Considering undervaluation of property by up to 10 fold (Paul-Munro Faure report), the real market value that materializes between the buyer and seller is higher than what the above sales magnitudes convey. Meanwhile, some valuation authorities estimate that property on average is valued at a fourth of its real value. Not withstanding the above, there exist some properties, particularly in large cities, which are overvalued in official records relative to the market. Given these variations between real and reported property values, it would be safe to assume that the real estate property market inTurkey is perhapsinthe order of some YTL 100 billion per annum. Ankara, Istanbul and Izmir (inthe sense of individual provinces and not TKGM regions) account for 24% of all sales transactions while they represent 45% of the real estate market. The average transacted property value in is about YTL 27,500, which is below those recorded in the three large cities. 2006 Analysis of Property Sales I Number of Value of Average Fee Income City Transactions Transactions for Central Units Billion YTL Y T L Million Y T L Ankara 64,860 2.18 33,611 36.28 Istanbul 188,578 12.45 1 66,020 328.8 Imir 78,028 II 2.42 I 31,015 II 70.58 Total 3 Cities 331,466 17.05 51,438 435.66 Turkey 1,377,573 38.00 27,585 1,025.51 3 Cities as a Percent of Turkey 24% 45% 186% 42% 13. Economic Analysis Model: The "with project" case i s what the World Bank and Government will finance for YTL 309 million (US$200 million in WB loan), includingtechnical 66 services for cadastre renovation and complementary investments, such as technical assistance, training, real estate valuation and equipment support. The major thrust o f the project consists o f renovation o f cadastre for 4.1 million parcels on roughly 3.2 million hectares. For analytical purposes, the counter-factual case against which the project will be compared assumes that no such cadastral renovation or associated investments will take place without Bank finance and assistance. The project benefits are: Enhanced TKGM services to users, mainly for land information systems (set o f 3: cadastre information, line maps and orthophotos) with consequent higher value added, Savings to users for avoiding duplication o f effort which involves the production o f similar material using internal resources or local market, and Savings to the society due to reduced litigation involving cadastre. Description Without Project With Project Number of Parcels to be None 4.1 million Renovated Project Life N/A 5 years Enhanced TKGM YTL 2/parcel YTL 6.5 /parcel - hence YTL Service: Price of 4.5/parcel of new value added Information and Service Supply by TKGM Per Parcel Savinw to Users of N/A YTL 3/parcel in incremental Cadastral Data: Due to benefit for procuring fill avoided duplication of cadastre and land information effort. package from TKGM. Reduced Litimtion: 4% of number of existing 2.5% of number of renovated Cadastral Court Cases parcels,distributed over 10 parcelsover 10years, hence 0.25 Initiated by Owners to years, hence 0.4% per annum YOper annum Remedv Deficiencies in Cadastkd Work Legal fees and costs bornI YTL 2,250 per court case YTL 1,950 per court case bythe plaintiff resolved. resolved. Unit Investment Cost per N/A YTL 64 per parcel including Parcel for Cadastral cadastre and other component Renovation Work costs NPV Costs 99 Million NPV Benefits 122 Million C/B Ratio 1.23 67 Economic Analysis for CadastralRenovationand Associated Investments Projest Emclency Parameleis ERR I 18%1 NPV 01 Bend* at OCC = 12% I 12211 lMllll0"YTL NPV ~ I C o s mat OCC = 12% I 90 02 IMllionYIL Coil BenefitR d o I 1231 MerNtlvi CornputatlonWlth lnduoedIIncremmlal~S.ks Number 01 lndumd Tianiacboni ITranlacbon ICmDLlhtionl 2,050 I 14,350 I 28,850 I 38,900I 41,000 I 41,OW I 41,000 I 41,WO I 41,OW I 41,000 TKGM Revdvini FundRevenue IYTLM ICmpUtWnl 0211 1 4 4 1 2671 3891 4 1 0 1 4101 4101 4101 4101 410 Cash FlowWnh InducedTrsnsnstloni IYTLM IComelalaal 117 I (5250)l (408711 1177011 2558 I 51 78 I 51 78 I 51 78 I 51 78 I 51 78 ERR wlh InducBd Trmaastions I P%l 14. Under the above conservative assumptions utilized and partial consideration o f direct project benefits only, the estimated ERR is 18% and CiB ratio i s 1.23. If a further assumption i s made that there would be induced sales at a rate o f 1% of the number o f renovated parcels, the ERR would improve to 22%. The most pessimistic case scenario for sensitivity analysis involves reducing project benefits by 20%, while increasing project costs by 20%. Under these circumstances, the ERR is around 8% (and 11% with induced sales), which may still be deemed admissible for a project o f this size and natureI2. '*Note: The Excelworksheets are inthe project files. 68 Annex 10: SafeguardPolicyIssues TURKEY: LandRegistry and CadastreModernizationProject 1. The overall goal of the proposed Land Registry and Cadastre Modernization Project is to contribute to the Government o f Turkey efforts to improve the effectiveness and efficiency o f public services related to land registry and cadastre information. The project will specifically address the modernization o f the Turkish national cadastre system, throughout the entire country, covering selected areas. The project will also strengthen the capacity o f TKGM personnel related to the proposed modernization cadastre programs and will finance the development o f property valuation function inTurkey in line with international best practices. ProjectEnvironmentalAspects 2. Component 2 o f the Project will include physical renovations or reconstruction works for selected cadastral and land registry offices that will represent model offices in three regional directorates. Proposed renovation works will include painting, electrical wiring, installation o f new windows and doors, modernization o f archives, and possible minor demolition of existing partitioning walls that will allow adaptation o f the existing offices to development o f new modern cadastre services. New construction o f small buildingsdesignated for such future model offices may take place inthose urban areas where specific buildings have not beenidentifiedyet or where such offices do not exist. Given that the project will include small scale construction works connected to buildings renovation and reconstruction, the proposed project i s classified as environmental assessment Category B according to the World Bank policy OP 4.01 based on which preparation o f an Environmental Management Framework (EMF) i s requested as condition for project appraisal. 3. The possible environmental impacts associated with these small scale rehabilitation or reconstruction works are minor, short-term and mainly during the construction phase including temporary emissions o f particulate matteddust to the air, noise pollution, accumulated piles o f construction waste, mild soil erosions, potential contamination o f water and soil from improper material storage or usage o f construction equipment, impact on buildings with architectural, historical or cultural significance, and exposure o f workers to asbestos containing materials. Because the specific offices' to be renovated or reconstructed could potentially be within a historic district, the Bank safeguard policy on Physical Cultural Resources (OP/BP 4.11) i s applicable to these investments. All these possible impacts may be prevented through mitigation measures and monitoring actions that are presented inthe project EMFand will be inserted inthe technical specifications of the contract provisions for the contractors who will perform the rehabilitationworks. 4. The EMF was prepared by TKGM and disclosed as draft on their website on December 9, 2007 and at the Bank's Infoshop inWashington DC on December 10, 2007. 69 ProjectEnvironmentalManagementFramework(EMF) 5. The project EMFrepresents a simple tool that ensures that the proposed minor rehabilitation or small-scale public building constructions implemented through the project comply with the existing Turkish laws and regulations as well as with the Bank's Operation Policies on Environmental Assessment (OP/BP 4.01) and Physical Cultural Resources (OP/BP 4.11). The EMF briefly presents the foreseen environmental impacts and an update of the Turkish legislation directly applicable to the proposed reconstruction works. It also provides good operational practice to control emissions (e.g. dust, noise, and exhaust fumes), wastewater discharge and solid waste management on the construction site. These practices covering typical mitigation approaches to common civil works contracts with localized impacts are presentedin a checklist-type format specifically related to the project site (e.g., office renovation or construction site) that could be directly used in bidding documents and as an integral part o f contract documents for the proposed civil works. 6. The practical application o f the checklist would include site-specific information such as: (i) a descriptive part o f the project specifics in terms of physical location, the institutional and legislative aspects, the project description, inclusive o f the need for a capacity building program and description o f the public disclosure process; (ii)environmental and social screening related to foreseen works, as obtained from the design documents, followed by mitigation measures for any given activity; and (iii)a monitoring plan for activities during project construction and implementation. This monitoring plan i s developed site specifically and in necessary detail, defining clear criteria and parameters which can be included inthe works contracts, which reflect the status o f environmental practice on the construction site and which can be observed/measured/ quantifiedherified by the inspector during the construction works. 7. Based on the project design, the project is not expected to affect any knownphysical cultural sites. However, the EMF checklist encourages screening all civil works to ensure that they are not affecting negatively cultural sites. In case the project may affect culturally sensitive areas and/or culturalhistorical sites are found during project construction stage, the checklist for the respective site should identify procedures consistent with the local regulations on these matters. 8. Preparation o f the site-specific checklist i s the TKGM responsibility as soon as the specific building sites for rehabilitation, extension and/or demolition and complete reconstruction are selected and an approximate program for the potential work elaborated. The detailed design and tendering phase for the respective civil works, including specifications and bills o f quantities, shall take in consideration the environmental provisions presented in the check-list. During the works implementation phase the environmental compliance will be checked on site alongside other quality construction criteria by the TKGM's site certified inspector(s). 9. Monitoring the compliance o f the implementation o f the EMF (including the checklist) is the responsibility o f the selected regional directorate (where the office i s rehabilitated/constructed) in coordination with the local environmental authorities (Regional inspectorate, local 70 environmental protection agency) and the TKGM. Also, a construction inspector will be designated for the monitoring o f the Contractor's safeguards due diligence. The site inspector's monitoring report will be provided quarterly to the TKGM and will represent condition for full payment o f the contractually agreed remuneration, the same as technical quality criteria or quantity surveys. 10. Monitoring reports will focus on measuring compliance with pollution standards and requirement o f related permits (wastewater discharges, air quality, construction permit, water permit, etc.) as well as criteria including the use of protection and safety equipment by workers on the site, dust generation and prevention, amount o f water used and discharged by site, presence o f proper sanitary facilities for workers, waste collection o f separate types (mineral waste, wood, metals, plastic, hazardous waste, e.g. asbestos, paint residues, spent engine oil), waste quantities, degradation o f historical and cultural sites, proper organization o f disposal pathways and facilities, or reuse and recycling wherever possible. Social Safeguard(Land Acquisitionand InvoluntaryResettlement)Issues 11. The project will not support land acquisition or associated involuntary resettlement. The project also does not support eviction or similar enforcement o f laws addressing illegal occupation of state land. All civil construction works will be executed on existing land plots which are already inthe possession o f the respective regional directorates. 71 Annex 11: ProjectPreparationand Supervision TURKEY: Land Registry and CadastreModernizationProject Planned Actual PCN review 07/24/2007 Initial PID to PIC 07/31/2007 Initial ISDS to PIC 08/09/2007 Appraisal 12/14/2007 Negotiations 03/15/2008 03/17/2008 Board/RVP approval 05/22/2008 Planneddate of effectiveness 06/23/2008 Planneddate of mid-term review 04/15/2011 Plannedclosing date 09/30/2013 Key institutions responsiblefor preparation of the project: TurkishLand Registry and Cadastre Agency (TKGM) Bank staff and consultants who worked on the project included: Name Title Unit Wael Zakout Task Team Leader ECSSD Ibrahim Sirer Sr. ProcurementSpecialist ECSPS Jolanta Kryspin-Watson OperationsAnalyst ECSSD Halil Agah Sr. Rural Development Spec. ECSSD ElifAyhan Institutional Specialist Consultant Niel Pullar Land Management Specialist Consultant Lynn Holstein Cadastre Specialist Consultant Paul Munro-Faure Land Management Specialist F A 0 Ruxandra Floroiu Environmental Engineer ECSSD Zeynep Lalik Mete Financial Management Spec. ECSPS Irina Kichigina Sr. Counsel LEGEM Koshie Michel Program Assistant ECSSD UlkerKaramullaoglu Program Assistant ECCU6 Valencia Copeland Program Assistant ECSSD Bank funds expendedto date on project preparation: 1. Bank resources: US$221,720 2. Trust funds: 3. Total: US$221,720 EstimatedApproval and Supervision costs: 1. Remainingcosts to approval: US$30,000 2. Estimatedannual supervision cost: $120,000 72 Annex 12: Documents in the Project File TURKEY: Land Registry and Cadastre Modernization Project "Property Valuation and Taxation inTurkey"; Paul Munro-Faure; FAO; 2006 "Cadastre Modernization Project Full Economic and Financial Analysis", Suha Satana; December 2007 73 Annex 13: Statementof Loans and Credits TURKEY: LandRegistryand CadastreModernizationProject ~~ Differencebetween expected and actual Original Amount in US$Millions disbursements Project ID FY Purpose IBRD IDA SF GEF Cancel Undisb Orig Frm Rev'd PI00383 2007 ISTANBUL MUNICIPAL 322.15 0.00 0.00 0.00 0.00 322.15 0.00 0.00 INFRASTRUCTUREPROJ. PO96801 2007 ELECT DISTRIB REHAB 269.40 0.00 0.00 0.00 0.00 276.70 0.00 0.00 PO96400 2006 ECSEE APL #3 (TURKEY) 150.00 0.00 0.00 0.00 0.00 154.51 13.94 0.00 PO96262 2006 AVIAN FLU - TR 34.40 0.00 0.00 0.00 0.00 33.45 7.42 0.00 PO93765 2006 GAS SECT DEVT 325.00 0.00 0.00 0.00 0.00 322.19 93.52 0.00 PO85561 2006 ELECTRICITY GENERATION REHAB 336.00 0.00 0.00 0.00 0.00 376.99 0.00 0.00 & RESTRUCTU PO82822 2006 ACC TO FIN FOR SMEs 180.21 0.00 0.00 0.00 0.00 267.20 128.50 0.00 PO77328 2005 RAILRESTRUCT 184.70 0.00 0.00 0.00 0.00 180.46 112.60 -1.48 PO78359 2005 SEISMIC RISK MITIGATION 400.00 0.00 0.00 0.00 0.00 407.97 134.46 0.00 PO81880 2005 MUNICIPAL SERVICES 275.00 0.00 0.00 0.00 0.00 282.62 3.58 0.00 PO93568 2005 EFIL 3 305.00 0.00 0.00 0.00 0.00 102.89 -84.79 0.00 PO94167 2005 PSSP 2 465.40 0.00 0.00 0.00 0.00 294.34 13.80 0.00 PO94176 2005 ECSEE APL #2 (TURKEY) (CRL) 66.00 0.00 0.00 0.00 0.00 55.47 6.92 0.00 PO66149 2005 SEC EDUC 104.00 0.00 0.00 0.00 0.00 102.58 19.19 6.04 PO75094 2004 WATERSHED REHAB (GEF) 0.00 0.00 0.00 7.00 0.00 4.05 1.93 0.00 PO74053 2004 HEALTH TRANSlT (APL # 1) 60.61 0.00 0.00 0.00 0.30 49.70 43.60 1.oo PO72480 2004 RENEW ENERGY 202.03 0.00 0.00 0.00 1.01 112.10 38.08 0.00 PO82801 2004 EFIL 2 303.10 0.00 0.00 0.00 0.00 0.07 -84.I O 0.00 PO70950 2004 ANATOLIA WATERSHED REHAB 20.00 0.00 0.00 0.00 4.30 12.06 1.30 0.00 PO59872 2003 BASIC ED 2 (APL #2) 300.00 0.00 0.00 0.00 19.00 14.46 33.46 33.46 PO70286 2002 ARIP 600.00 0.00 0.00 0.00 39.86 138.06 177.92 177.92 PO44175 2000 BIODIVNTRL RES MGMT (GEF) 0.00 0.00 0.00 8.19 0.00 0.94 0.94 0.14 PO48852 1998 NAT'L TRNSM GRID 270.00 0.00 0.00 0.00 35.75 21.32 57.07 22.59 Total: 5,173.00 0.00 0.00 15.19 100.22 3,532.28 719.34 239.67 TURKEY STATEMENT OF IFC's Heldand DisbursedPortfolio InMillions of USDollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. 2005 Acibadem 20.00 0.00 0.00 0.00 20.00 0.00 0.00 0.00 2006 Acibadem 40.00 0.00 0.00 0.00 30.00 0.00 0.00 0.00 1996 Arcelik 3.50 0.00 0.00 0.00 3.50 0.00 0.00 0.00 2005 Arcelik 101.99 0.00 0.00 101.99 101.99 0.00 0.00 101.99 74 2000 Arcelik LG Klima 2.82 0.00 0.00 0.00 2.82 0.00 0.00 0.00 2002 Assan 15.00 0.00 0.00 0.00 15.00 0.00 0.00 0.00 2005 Assan 20.00 0.00 10.00 30.00 0.00 0.00 0.00 0.00 2002 Atilim 4.39 0.00 0.00 0.00 4.39 0.00 0.00 0.00 2005 Avea 120.00 0.00 0.00 0.00 120.00 0.00 0.00 0.00 2000 Banvit 6.67 5.00 0.00 0.00 6.67 5.00 0.00 0.00 2002 Beko 27.79 0.00 0.00 13.85 27.79 0.00 0.00 13.85 2001 Bilgi 6.00 0.00 0.00 0.00 6.00 0.00 0.00 0.00 2006 Bilgi 15.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1997 Borcelik 6.36 0.00 0.00 0.00 6.36 0.00 0.00 0.00 I994 CBS Holding 3.50 0.00 0.00 0.00 3.50 0.00 0.00 0.00 I990 Conrad 2.69 0.00 0.47 0.00 2.69 0.00 0.47 0.00 2002 Conrad 2.10 0.00 0.00 0.00 2.10 0.00 0.00 0.00 2002 EKS 8.11 0.00 0.00 0.00 8.11 0.00 0.00 0.00 1995 Entek 16.00 0.00 0.00 4.97 16.00 0.00 0.00 4.97 2006 FinansLeasing 25.50 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2001 Gunkol 4.47 0.00 0.00 0.00 4.47 0.00 0.00 0.00 1998 lndoramaIplik 3.75 0.00 0.00 0.00 3.75 0.00 0.00 0.00 2005 Intercity 15.00 5.00 0.00 27.75 15.00 5.00 0.00 27.75 2006 Intercity 44.62 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1998 Ipek Paper 0.00 0.00 5.00 0.00 0.00 0.00 5.00 0.00 1988 Kirk 16.24 0.00 0.00 0.00 16.24 0.00 0.00 0.00 1990 Kirk 10.96 0.00 0.00 0.00 10.96 0.00 0.00 0.00 2004 Koclease 30.00 0.00 0.00 0.00 30.00 0.00 0.00 0.00 1991 Kula 5.17 0.00 0.00 0.00 5.17 0.00 0.00 0.00 2004 MeteksanSistem 0.00 0.00 7.56 0.00 0.00 0.00 7.56 0.00 2002 Milli Re 50.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2006 MilliRe 50.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2002 Modem Karton 5.00 0.00 0.00 0.00 5.00 0.00 0.00 0.00 2005 Modem Karton 40.00 0.00 0.00 20.00 0.00 0.00 0.00 0.00 2004 OPET 25.00 0.00 0.00 40.00 25.00 0.00 0.00 40.00 2004 Oyak Bank 38.89 0.00 0.00 0.00 38.89 0.00 0.00 0.00 2005 PALEN 2.00 0.00 0.00 0.00 2.00 0.00 0.00 0.00 2005 PALGAZ 10.00 0.00 0.00 0.00 5.00 0.00 0.00 0.00 1998 Pinar ET I.57 0.00 0.00 0.00 1.57 0.00 0.00 0.00 2000 Pinar SUT 8.52 0.00 0.00 0.00 4.89 0.00 0.00 0.00 1999 SAKoSa 3.91 0.00 6.52 0.00 3.91 0.00 6.52 0.00 2006 Sanko Group 75.00 0.00 0.00 100.00 20.14 0.00 0.00 26.86 1990 Silkar Turizm 0.67 0.00 0.00 0.76 0.67 0.00 0.00 0.76 2003 Sise ve Cam 34.68 0.00 14.54 24.14 34.68 0.00 14.54 24.I 4 2006 Standard Profil 19.12 3.82 0.00 0.00 0.00 0.00 0.00 0.00 2006 TDD 31.87 0.00 0.00 0.00 31.87 0.00 0.00 0.00 2005 TSKB 0.00 0.00 50.00 0.00 0.00 0.00 50.00 0.00 1989 Trakya Cam 0.00 0.00 0.03 0.00 0.00 0.00 0.03 0.00 I996 Trakya Cam 0.00 0.01 0.00 0.00 0.00 0.01 0.00 0.00 1999 Trakya Cam 0.00 0.02 0.00 0.00 0.00 0.02 0.00 0.00 2002 Turk Ekon Bank 6.67 0.00 15.00 0.00 6.67 0.00 15.00 0.00 2005 Turk Ekon Bank 0.00 0.00 50.00 0.00 0.00 0.00 50.00 0.00 2001 Turkish PEF 0.00 9.59 0.00 0.00 0.00 6.40 0.00 0.00 75 I999 Uzel 6.11 0.00 0.00 3.30 6.11 0.00 0.00 3 30 1998 Viking 4.32 0.00 0.00 0.00 4.32 0.00 0.00 0.00 2005 YUCE 4.10 0.00 0.00 0.00 4.02 0.00 0.00 0.00 Total portfolio: 995.06 23.44 159.12 366.76 657.25 16.43 149.12 243.62 Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic. 2005 Avea 0.00 0.00 0.00 0.30 2001 Akbank 0.03 0.00 0.00 0.00 2002 TEB 111 0.00 0.00 0.00 0.05 2006 Intercity I1 0.00 0.00 0.00 0.01 2002 Milli Reasurans 0.00 0.01 0.00 0.00 2004 Akbank BLoan Inc 0.00 0.00 0.00 0.02 Total pendingcommitment: 0.03 0.01 0.00 0.38 76 Annex 14: Country at a Glance TURKEY: LandRegistryand CadastreModernizationProject Europe L Upper- POVERTY and SOCIAL Central mlddle- 2evelopment dlamond' Turkey Asla Income 2006 Population, mid-year(millions) 726 473 599 GNIper capita (Atlas method. US$) Life expectancy 4,7D 4,lQ 5,625 GNI(Af/asmettmd,US$ billions) 3421 1945 3,368 T Average annual growth, 1889.06 Population(Yd 15 00 06 Laborforce (%J 16 06 12 GNI Gross per primary M oat recent estlmate (latest year avallable, 1899-06) capita enrollment P0verty (%0f populatio n belownational po vertyline) 27 Urbanpopulation(%of totalpopulation) 67 64 72 Lifeexpctancyat birth(pars) 70 69 69 I Infantmortality (per 1000livabirths) 28 28 23 Childmalnutntion (%ofchi/dmnunder5) 4 5 7 Access to improvedwatersource Access to an improved watersource (%ofpopulation) 96 92 94 Literacy(%of population age 159 a7 97 94 Gross pnmaryenrollment (%of school-agepopulation) - 93 '04 0 7 Turkey Male ge '05 0 8 Upper-middle-incomegroup Female 90 '02 06 KEY ECONOMIC RATIOS and LONG.TERM TRENDS 1986 1996 2004 2006 GDP (US$ billions) 672 6 9 3 3026 3833 Gross capital formation1GDP 6 5 255 257 248 Exports of goods and services1GDP 159 199 Trade 289 274 - Gross domestic savings1GDP t34 210 9 9 8 2 Gross national savings1GDP 771 248 199 8 4 I Current account balanceIGDP -11 -14 -52 6 4 Domestic Capital Interest paymentsIGDP 20 2 0 18 Total debt1GDP savings formation 387 436 534 Total debt serviceleqorts 403 301 366 Present value of debt1GDP 552 Present value of debtleqorts 6 06 I Indebtedness 1986-96 1996-06 2004 2006 2006.09 (averageannualgrowth) GDP 4 2 32 8 9 74 4 2 turkey GDP percapita 2 0 15 7 4 6 0 3 1 Upper-middle-incomegroup Exports of goods and services 7 4 '09 P5 85 98 STRUCTURE o f the ECONOMY 1986 1996 2004 2006 (%ofGDP) Growth o f capital and GDP (oh) ~gnculture 204 6 4 2 9 119 50 T Industry 271 300 22 4 23 7 ~anufactunng 7 7 206 t39 I40 0 Services 525 535 647 64 5 HousehoIdfinal consumption eqenditure 791 682 66 9 68 7 .50 Generalgov't final consumption eqenditure 75 '08 0 2 0 1 Imports of goods andservices 190 244 347 34 0 I -GCF &GOP 1986.96 1996.06 2004 2006 (averageannualgrowth) Growth of export8 and Imports (Oh) Agnculture 13 10 20 57 40 T Industry 52 24 8 8 8 6 20 Manufactunng 5 8 3 2 '01 63 services 40 34 83 6 5 0 Householdfinal consumption eqenditure 37 24 99 8 8 -20 Generalgov't final consumption expenditure 34 26 05 2 4 Gross capital formation 54 3 3 27 4 '03 Imports of goods and services 94 86 24 7 115 Note 2005data arepreliminaryestimates This table was producedfrom the Development Economics LDB database 'Thediamondsshowfourkeyindicatorsinthecountry(inbold)comparedwithitsincome-groupaverageIfdataaremissingthediamondwlll be incomplete 77 Ttirkev PRICES and GOVERNMENT FINANCE 1985 1995 2004 2005 /inflation Domestic prices (%change) 1I Consumerprices 450 881 86 8 2 Implicit GDP deflator 531 872 99 54 Government finance (%of GDP includes current grants) Current revenue 216 402 415 00 01 02 03 04 OS Current budget balance 0 9 -26 2 5 Overall surplusideficit -4 1 -47 -24 ----GDPdeflator -CPI TRADE I 1985 1995 2004 2005 (US$ rniliions) p x p o r t and Import levels (US$ mlll ) I Total exports (fob) 8,255 21,636 67047 76863 1150 000 - Agncuiture and livestock 753 947 2645 3464 I Mining and quarryproducts 240 391 649 8 0 1 1 Manufactures 7,262 20 298 59579 68756 /1W000 t Total Imports (cif) 11,344 35 709 97540 16553 Food 4 6 1678 528 643 Fuel and energy 3.895 4,578 14400 2179 Capitalgoods 3,050 8,215 7397 20344 Export priceindex(20OO=WO) 132 9 8 P 2 2 9 I 98 00 01 02 03 04 OS import pnceindex(ZOoO=WO) P O 9 3 722 128 f3EXPOflS Ol!TQDflS Terms of trade (ZOOO=r00) 85 n 4 n o n 1 BALANCE o f PAYMENTS 1985 1995 2004 2005 ICurrent account balance to GDP (%) (US$ rni/lions) Exports of goods and services n.873 36,575 89,975 132,709 Imports of goods and services P,268 lh 40,r)7 z)1,069 PI524 Resource balance -1,395 -3,532 -11094 -6,815 Net income -1,307 -3,205 -5,637 -5,744 Net current transfers 1,984 4,398 1,P7 1468 Current account balance -728 -2.339 -15,604 -23,091 Financing items (net) 842 7,344 6,428 40,938 , Changes innet reserves -P4 -5.005 -824 -17,847 Memo: Reserves includinggold (US$ millionsj 3655 21934 52.150 66,741 Conversionrate (DEC loca//US$) 5220 458453 142E.16 134E.16 EXTERNAL DEBT and RESOURCE FLOWS 1985 1995 2004 2005 (US$ rni//ions) lComposltion o f 2004 debt (US$ mill.] Total debt outstanding and disbursed 26023 73781 61,595 IBRD 3432 4939 6.153 5829 ! A 6 153 IDA 778 no 77 71 Total debt service 4.601 11451 33,940 I C 21.507 IBRD 400 1278 780 1003 D 1659 IDA 5 7 7 6 E 5,954 Composition of net resourceflows Official grants 115 439 280 I I Officialcreditors 424 -1283 8 3 Pnvate creditors 1 801 7,935 Foreigndirect investment (net inflows) 99 885 2,733 Portfolio equity(net inflows) 0 195 1,427 F 94.345 World Bank program Commitments 839 6 2 1586 A-IBRD E- Bilatwal Disbursements 636 422 1499 461 B IDA - D. Other mllilatetal F - Private Principal repayments 159 888 586 761 C - I M F G. Short-ler Net flows 477 -466 914 -300 Interest payments 246 397 201 249 Net transfers 231 -863 7 P -549 Note This table was producedfromthe Development Economics LDB database 8/'13/06 78 MAP SECTION TURKEY PROVINCE CAPITALS* NATIONAL CAPITAL RIVERS TURKEY MAIN ROADS RAILROADS PROVINCE BOUNDARIES* This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information INTERNATIONAL BOUNDARIES shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. *Province names are the same as their capitals. 26°E 28°E 30°E 32°E 34°E 36°E 38°E RUSSIAN FEDERATION RUSSIAN FEDERATION BULGARIA BULGARIA Black Sea 0 50 100 150 200 Kilometers To To To To 42°N Burgas Burgas Kurdzhali Kurdzhali 0 50 100 150 Miles GEORGIAGEORGIA 42°N Edirne Edirne Sinop Kirklareli Kirklareli To To Bartin GREECKomatiniDardanelles E Bosporus BatumiBatumi Zonguldak Tekirdag kirdag Istanbul Istanbul KastamonouKastamonou Kuzey Samsun Artvin Artvin Kura To To To KarabükKarabük Ardahan Ardahan Sea of KocaeliKocaeli Trabzon KirovakanKirovakan AZER-AZER- (Izmit) (Izmit) DüzceDüzce Anadolu Ordu Marmara Devrez Rize Rize Yalova lova BAIJAN BAIJAN SakaryaSakarya Daglari GiresunGiresun BoluBolu Kars Kars (Adapazari)(Adapazari) ÇankiriÇankiri Kizil Amasya Amasya Çorum Çorum Çoruh ARMENIAARMENIA 40°N Kelkit ¸ Çanakkale Çanakkale GümüshaneGümüshane 40°N Bursa Bursa Bilecik Bilecik Tokat To Baybur Bayburt Agri Dagi Sakarya Aras (5166 m) Balikesir Balikesir Eskisehir Eskisehir ANKARAANKARA Cekerek Igdir Igdir Erzurum Erzurum AgriAgri Kirikkale Kirikkale ErzincanErzincan Yozgat zgat Sivas Sivas Kütahya Kütahya Firat To To AZER.AZER. Maku Maku Kizil Kirsehir Kirsehir Tunceli nceli Afyon Afyon BingölBingöl Manisa Manisa Izmir Izmir Lake ISLAMIC Usak Usak Tu Tuz To To GölüGölü ElazigElazig Murat MusMus Van VanVa AksehirAksehir NevsehirNevsehir Salmas Salmas KayseriKayseri REP. OF 38°N GölüGölü BitlisBitlis AksarayAksaray Aydin Ay MalatyaMalatya HoyranHoyran IRAN Gölü Gölü DiyarbakirDiyarbakir Siirt Siir Denizli Denizli NigdeNigde Batman Batman To To BaysehirBaysehir AdiyamanAdiyaman Burdur Burdur Oroumieh Oroumieh IspartaIspartaGölüGölü KonyaKonya Kahraman Kahraman Tigris HakkariHakkari MuglaMugla Seyhan Ceyhan Maras Maras SirnakSirnak GREECE Euphrates MardinMardin To To Osmaniye Osmaniye Gaziantep Gaziantep Dahuk Dahuk Sanliurfa Sanliurfa To Damir Damir Antalya Antalya Göksu KaramanKaraman Kabu Kabu Adana Adana To To Al Hasakah Al Hasakah IBRD Gulf of Icel Kilis Kilis Antalya IRAQ IRAQ 36°N To To JUNE Toros Daglari (Mersin) Hatay (Antakya) Aleppo Aleppo 33501R1 SYRIAN ARAB SYRIAN ARAB 2007 Mediterranean Sea 28°E 30°E 32°E 34°E REPUBLIC REPUBLIC To Ladhiqiyah 42°E 44°E