1. Technology Infrastructure SCIENCE & TECHNOLOGY PARKS IN TURKEY MUSTAFA ATİLLA CEO, Ankara Cyberpark, Turkey Knowledge Economy Forum IV March 22-24, 2004 Istanbul, Turkey “

2. GERD / GDP: around %0.64 R&D expenditures by sector: %60 in universities %30 in private sector %10 in public sector Number of registered patents: around 1,200 (less than 100 of which are native patents) Number of scientific publications: more than 10,000 Number of people in R&D by Sector (SSI, 2004) TURKEY R&D CAPACITY

3. Source: OECD MSTI database, Nov. 2003 TURKEY R&D CAPACITY

4. Legislation (particularly inefficient and insufficient incentive mechanisms) was the biggest barrier in front of R&D activities for many years. An important portion of R&D investment is made by governmental institutions or universities Insufficient financial resources and bureacuracy in access to existing financial resources Absence of incentive mechanisms for R&D commercialization Weak innovation culture and poor R&D infrastructure IT related products and software form an important import category. There is a big negative imbalance in IT exports/imports. The imbalance between the number of scientific publications and patents is an important indicator showing Turkey’s inability to convert the scientific research studies into applicable knowledge and technological products. SOME R&D RELATED PROBLEMS OF TURKEY

5. HOW STPs EMERGED IN TURKEY? Technopark concept taken in the agenda of Turkey only in the mid 90’s (40 years after establishment of Silicon Valley!) Like many developing countries, such as India, China, Malaysia, Singapore, Taiwan, Thailand; Turkey also started to use STPs as its primary strategy for;  promoting research and development, and technology transfer,  reducing brain drain by providing employment for high- skilled IT and R&D workers  attracting foreign direct investment and generating foreign exchange from selling software and R&D products for export  generating sustainable economic growth and local know how

6. TECHNOLOGY DEVELOPMENT ZONES LAW (LAW NO:4691), TURKEY To promote the establishment of science and technology parks under the guidance and lead of universities some legislations were made by Ministry of Industry and Trade: Technology Development Zones (TDZ) Law (Law No:4691), which came into force on 06.07.2001, and Application Regulation of this Law, which came into force on 19.06.2002. With this law, companies are encouraged to invest more in R&D and software development, through tax incentives. Any kind of software development activity is considered as an R&D activity according to the law. In establishing a STP, involvement of an higher education or a research institution as a founder is a mandatory requirement in the law

7. The aim of the law is: to increase synergy between universities, research institutes and industry, to increase international competitiveness and export potential of industry by adapting/developing high/advanced technologies, to facilitate more innovations, to increase the quality of technological products, to increase productivity, to commercialize technological knowledge, to support technology based entrepreneurship, to enable SMEs to adapt to new and advanced technologies, to create investment opportunities in technology intensive areas, to create employment opportunities for researchers and qualified persons, to help technology transfer, to provide technological infrastructure attracting foreign capital and international firms providing high/advanced technologies. TECHNOLOGY DEVELOPMENT ZONES LAW (LAW NO:4691), TURKEY

8. Tax Exemptions and Incentives provided with the law (till the end of 2013) : Income and corporate tax exemptions for the operating company Income and corporate tax exemptions for the incomes generated from software development and R&D activities of the companies operating in these zones Income tax exemptions for the salaries of the researchers, software development staff and R&D personnel working in these zones VAT exemptions for the sofware development activities Sponsored aid and donations for the individuals and institutions having R&D activities in the zone Right of recruitment of individuals from government research organizations or universities in the zone with the approval of their organizations. (The income obtained in the zone by academicians or research personnel are exempted from the university revolving fund deductions) Legal permission for academicians to establish firms or become a partner of existing firms in the zones to commercialize their academic works (with the approval of their university) TECHNOLOGY DEVELOPMENT ZONES LAW (LAW NO:4691), TURKEY

9. Similar R&D Tax Incentives in USA and Europe

10. TDZs in TURKEY (As of March 2005) Ankara Cyberpark (Bilkent University, Ankara) METU Technopolis (METU, Ankara) Hacettepe Technopolis (Hacettepe University, Ankara) GOSB Technopark (Sabancı University and Kocaeli University,Kocaeli) TÜBİTAK MAM (TÜBİTAK MAM, Kocaeli) İstanbul Teknik University ARI Technopolis (İTÜ, İstanbul) İzmir TDZ (İzmir YTE, 9 Eylül Univ., Ege Univ., İzmir) Yıldız Teknik Üniversitesi TDZ (YTÜ, İstanbul) Kocaeli Üniversitesi TDZ (Kocaeli University, Kocaeli) Eskişehir TDZ (Anadolu Univ., Yunus Emre Univ., Eskişehir) İstanbul University TDZ (İstanbul University, İstanbul) Selçuk University TDZ (Selçuk University, Konya) Batı Akdeniz Univ. TDZ (Batı Akdeniz University, Antalya) Karadeniz Teknik Univ. TDZ (Karadeniz Tek. Univ., Trabzon) Erciyes University TDZ (Erciyes University, Kayseri) Çukurova University TDZ (Çukurova University, Adana)

11. 1 32 5 8 4 7 11 9 10 6 12 13 14 15 Active Technoparks: 1.Cyberpark 2.METU 3.Hacettepe 4.GOSB 5.TÜBİTAK MAM 6.İTU ARI Technoparks at Initial Dev. Stage: 7. İzmir 8. Yıldız 9. Kocaeli 10. Eskişehir 11. İstanbul 12. Selçuk 13. Batı Akdeniz 14. Karadeniz Teknik 15. Erciyes 16. Çukurova 16 TDZS in TURKEY (As of March 2005)

12. TDZS in TURKEY Number of Companies: more than 300 Number of R&D personnel: around 2500 Number of support personnel: around 1100

13. HOW STPs ARE INTEGRATED WITH THE OTHER COMPONENTS OF NATIONAL INNOVATION SYSTEM OF TURKEY? R&D support infrastructure in Turkey have been comprised of some institutions providing R&D financing, while these supports are usually very limited and diffucult to obtain. After the Technology Development Zones Law providing important incentives for companies located in STPs, STPs have been important components added to our national innovation system. A new R&D loan : In 2005, more than 300 million USD R&D loan is allocated from the governmental budget, which will be distributed through TÜBİTAK.

14. INSTITUTIONS PROVIDING R&D FINANCING 1. TTGV - Technology Development Foundation of Turkey Technology Development Financing - Support R&D activities on marketable product and process development / improvement Venture Capital Technoparks -Innovation Centers – Start-ups Training, Tech. Assist. and other activities Sources of Fund: Treasury-World Bank funded R&D Programs UFT Undersecreteriat of Foreign Trade funded R&D Program Own resources

15. INSTITUTIONS PROVIDING R&D FINANCING 2. TÜBİTAK-TİDEB / Scientific and Technical Research Council Of Turkey-Technology Monitoring and Evaluation Board As of 2004, total support of around $ 160 M for 2000 R&D projects Support on grant basis From concept development to trial production stages, exclusively the costs of the research activities Sources of Fund: UFT Undersecreteriat of Foreign Trade Fund (DEFİF*-Support and Price Stabilization Fund) New R&D Loan: > 300 million USD for 2005 (support mechanisms will be determined soon)

16. INSTITUTIONS PROVIDING R&D FINANCING 3. KOSGEB - Ministry of Industry and Trade / Small and Medium Size Industry Development Organization Technology R&D Support Supports on Repayable Basis Supports on Grant Basis Source of Fund: State Budget 4. International Resources, like 6th Framework Program

17. HOW BEING LOCATED IN A STP PROVIDES AN ADVANTAGE? Some research findings (UKSPA 2003) show that STPs have a positive affect on economic development of a region / country. Accordingly, STP based companies : Have higher growth rates than similar companies at other locations in terms of employment, business potential and physical area. Have better overall commercial performance than similar firms located elsewhere. Have higher proportion of qualified scientists and engineers than off-park companies. Have easier access to finance, like venture capital and governmental grants on R&D. Believe that STPs are prestigeous places to work on. Believe that the joint facilities create a better working and living environment.

18. SOME PERFORMANCE INDICATORS OF STPs in TURKEY Research among different Turkish STPs showed that: Through tax incentives, companies are encouraged to invest more in R&D and software development, so R&D expenditure of the on- park companies have generally increased. IT related activities and the establishment of new companies working on software development increased Since the cost of R&D personnel have decreased, employment of qualified staff has increased among on-park companies, as well as increased employment through newly established companies Positive effects to universities: increased image, additional income, increased joint R&D projects with private sector Increased usage of university resources (academics, students, laboratories, social facilities etc.) by on-park companies

19. FACTORS AFFECTING THE SUCCESS OF STPs Legislation, particularly related to incentives and tax exemptions Existence of qualified human resources and scientific know-how in the region Existence of supporting research and higher education institutions Sufficient financial resources to make the necessary investment Entrepreneurship and business know-how in the region to convert the scientific studies into commercial products and services Geographical factors such as the location of the park, as well as the local community’s social, cultural and economic status Supporting governmental and non-governmental organizations Demand for high technology and technological products in the region Overall macro-economic situation of the country/region

20. Governmental aids through Ministry of Industry and Trade, for land acquisition, infrastructure and management building construction costs World Bank credit to STPs by Industrial Technology Project through TTGV (only to Cyberpark, ARI technopark) Other international credits and funds like World Bank InfoDev Incubator Initiative (Cyberpark Technology Incubator) KOSGEBs support for TEKMERs FINANCIAL SUPPORT MECHANISMS FOR TECHNOPARKS AND INCUBATORS IN TURKEY

21. INCUBATORS IN TURKEY Parallel to the poor entrepreneurial culture, incubation culture is too poor as well. Currently available incubators (12) in Turkey, called TEKMERs (Technology Development Centers), are managed by KOSGEB (SME Development Organization), a governmental agency. There is no private or PPP incubator except Cyberpark Technology Incubator which has been granted with 250,000 USD WB grant through InfoDev Incubator Initiative Program. Only two TEKMERs are located in STPs and have tax incentive advantages. Grants available for incubatees for many purposes, however access is relatively bureaucratic and limited. Services provided by KOSGEB in TEKMERs are rapidly improving, but still an effective private or PPP model incubation is required.

22. MAIN CHALLENGES & RECOMMENDATIONS Insufficient know-how and best practices in STP management Insufficient financial resources for land and institutional development (limited governmental support, need for international loans with favorable conditions, like from WB, EIB, etc.) Need for support mechanism for private incubators (Knowledge Economy Project may reserve some funds for supporting private incubators.) Need for effective R&D finance mechanisms like seed or venture capital funds Establishment of most of the STPs as land development projects Poor Institutionalization, insufficient technical infrastructure and support services in existing STPs (absence of technology and business support mechanisms, incubators, consultancy on IPR, access to financial resources, etc.) Need for being a Business Park before being a STP

23. Wrong location selection for some STPs (absence of required R&D and industrial capacity, insufficient scientific, technological, cultural and social infrastructure in the selected zone) Need of more emphasis to modify the existing education system - education of academics to have more entrepreneurial skills Requirement of an NGO to provide a platform for cooperation and best practice sharing (Turkish Science and Technology Parks Association) Too much focus on ICT, need for attracting other technologies to have crosssectoral R&D. Need for other attraction elements, other than tax advantages, providing the permanent success Need for implementing auto control mechanisms – incentives are open to abuse! MAIN CHALLENGES & RECOMMENDATIONS

24. Requirement for special purpose STPs by considering regional capacities and priorities (Agroparks, mediparks, etc.) Lacking synergies among different STPs and host universities (Most of the universities impose barriers for their academics to work in other universities’ science parks) Need for funding of commercialization of R&D studies Need for promotion of collaborative studies & international cooperations especially to direct funds to more relevant activities (like FP6) Requirement for additional tax incentives to some crucial support organizations like venture capital funds Importance of international recognition and attraction of FDI.

25. THANK YOU ! Cyberpark / Contact Information Tel: (312) 265 00 40 Fax: (312) 265 00 48 Address: Cyberpark Cyberplaza B Blok Kat 1 Bilkent 06800 ANKARA Web: www.cyberpark.com.trwww.cyberpark.com.tr E-mail: info@cyberpark.com.trinfo@cyberpark.com.tr