1. Introduction
Infrastructure plays a pivotal role in driving economic growth.
As populations expand and urbanization accelerates, the demand for
modern and resilient infrastructure intensifies. In both
Türkiye and the global landscape, infrastructure needs are
rapidly evolving in response to technological advances,
environmental concerns, and shifting societal demands.
From the rise of electric vehicles to breakthroughs in
information technology, infrastructure investment priorities are
transforming. Green infrastructure, in alignment with the
United Nations Sustainable Development Goals (SDGs), is
increasingly at the forefront of national agendas, in fact the new draft Climate Law of Türkiye promotes
green infrastructure. This article explores Türkiye’s
infrastructure investment landscape in comparison with global
trends, focusing on emerging priorities, sectoral gaps, and
financing challenges.
2. Türkiye’s Infrastructure Legal
Framework
Türkiye’s infrastructure development is governed by a
combination of constitutional provisions, sector-specific laws, and
strategic investment frameworks. At the core is the Public Procurement Law No. 4734, which
regulates the tendering of public infrastructure projects and
ensures transparency and competition. For large-scale
infrastructure investments involving private sector participation,
Public-Private Partnership (“PPP”) mechanisms are
primarily regulated through sectoral laws (e.g., the Health PPP
Law, the Electricity Market Law) and administrative regulations,
rather than a unified PPP law. These fragmented legal provisions are coordinated
under the oversight of the Ministry of Treasury and Finance and the
Presidency of Strategy and Budget, which review project
feasibility, financing models, and risk allocation
frameworks.
A critical aspect of Türkiye’s legal infrastructure
environment is the Build-Operate-Transfer
(“BOT”) model, which has been widely
used in transportation, energy, and airport projects. BOT contracts
often incorporate international arbitration clauses, reflecting
investor preferences for neutral dispute resolution mechanisms.
Additionally, the Environmental Law No. 2872 and the Environmental İmpact Assessment
Regulation are other important legal frameworks governing
infrastructure investments. In contrast to the existing legal
regime, the Climate Law integrates sustainability and environmental
compliance into project approvals—aligning national practices
with global ESG standards.
As Türkiye seeks to increase the share of
long-term foreign infrastructure investment it has been attracting
for decades, there is also a vivid discussion on improving its
already comprehensive PPP legislation, which has been shaped,
albeit in a somewhat scattered manner, by decades of experience
that brought together domestic and international contractors as
well as various financing parties in a wide range of PPP projects
across numerous sectors. In line with global trends,
sustainability, encompassing both environmental and social
dimensions, together with the introduction of new financial and
legislative tools to expand the pool of financing for
infrastructure projects, will be the primary driver of improvements
to the legislation.
3. Türkiye’s Growing Infrastructure
Needs
Türkiye has experienced robust economic growth over the
past decade, averaging 4.5% annually. Rapid urbanization,
population increase, and industrial expansion have fuelled a
corresponding rise in infrastructure demand. To bridge the gap
between need and available resources, Türkiye has relied
heavily on public-private partnerships (“PPP”s). Yet,
this strategy has not fully closed the investment gap.
Projections suggest that Türkiye will invest approximately
USD 569 billion in infrastructure by 2040
(Chart 1). However, actual infrastructure needs are estimated at
USD 975 billion—a substantial shortfall. Over half of this
demand is attributed to the transportation sector, with energy
accounting for roughly a quarter. As of 2024, nearly half (49%) of Türkiye’s
infrastructure budget is allocated to railway projects,
underscoring the central role of transportation in the
country’s development strategy. (Chart 2)
3.a. Telecom Infrastructure: Lagging Behind
While transportation dominates Türkiye’s infrastructure
agenda, the telecommunications sector remains underdeveloped. By
2040, Türkiye is expected to require approximately USD 100
billion in telecom infrastructure. Globally, digitalization has
surged, particularly post-pandemic, prompting companies to
significantly expand digital capacity.
Türkiye, however, trails behind. The country ranks 111th
out of 181 nations in fixed internet speed and continues to operate
largely on 4.5G networks while many developed countries transition
to 5G and explore 6G. This lag signals a critical area for policy
attention and investment.
3.b. Sustainability and the Green Infrastructure
Agenda
Sustainability is reshaping infrastructure priorities worldwide.
Carbon pricing mechanisms, such as the EU’s carbon border
adjustment mechanisms, the proliferation of electric vehicles
(“EV”s), and the shift toward renewable energy all point
to a growing emphasis on green infrastructure. The draft Climate
Law of Türkiye is expected to establish the carbon taxonomy
and increase investment in green infrastructure. In that regard, the 2024 public investment breakdown programme
contained sustainable development goals-related investments and
divestments in the agenda.
Based on the 2024 programme, Türkiye has made notable
strides in this area. For instance, the emergence of TOGG, a
domestic EV brand, has catalyzed EV adoption. By 2035, Türkiye
is projected to have between 5 and 11 million EVs on the road. In
renewable energy, Türkiye ranks among the top 10 countries
globally in terms of capacity growth. Between 2022 and 2027, renewable capacity is
expected to grow by 64% to reach 90 gigawatts. Solar energy will
account for 49% of this expansion, with wind contributing
24%.
With the Decision No. 32613 published in the Official Gazette
dated July 26, 2024, the implementation procedures and principles
of the Green Transformation Support Program have been
outlined by The Ministry of Industry and Technology. This program
aims to support investments in Türkiye that are aligned with
the circular economy approach, protect natural resources,
contribute to climate and sustainability goals, and promote
resource-efficient and low-carbon production. Investors wishing to
benefit from the advantages provided by the relevant regulation are
required to prepare a report outlining the green transformation
practices roadmap to be implemented at the facility level in line
with their green transformation strategy. In this report, the
investor must define one or more project goals for the proposed
investment that include concrete and either quantitatively or
proportionally measurable improvements.
For a project to be eligible for support, the roadmap report
must be approved, the project must align with the objectives of the
program, include measurable targets, incorporate green
transformation practices, and meet the conditions in regulations.
The General Directorate of the Ministry of Industry and
Technology evaluates the application based on the Application Assessment Report, which the
investor prepares. It communicates its acceptance, rejection,
or revision decision to the investor via the program portal.
Investors whose projects are approved will be granted the types of
support defined under the program.
The Capital Markets Board of Türkiye (SPK) published the Guide on Green Debt Instruments, Sustainable Debt
Instruments, Green Lease Certificates, and Sustainable Lease
Certificates on September 22, 2022 for financing of green
infrastructure, and subsequently released the Draft Guide on Green, Sustainable, and Social
Capital Market Instruments on September 6, 2024 to contribute
to the financing of projects with significant environmental and
social impact.
4. Global Infrastructure Trends and Investment
Gaps
Securing adequate financing remains one of Türkiye’s
most pressing infrastructure challenges. Domestic savings are
insufficient to meet investment needs, and external financing has
become more difficult to access due to global economic volatility
and rising interest rates.
Between 1986 and 2023, Türkiye secured USD
204 billion in infrastructure investment through PPPs. However,
the scale of future requirements—USD 569 billion by
2040—means PPPs alone will not suffice. Innovative financing
solutions and diversified funding sources are urgently needed.
Globally, the majority of infrastructure investment demand
through 2040 is expected to originate from Asia. China alone faces a USD 2 trillion gap between its
USD 28 trillion infrastructure needs and current investment
trends.
In addition to Türkiye’s domestic market circumstances,
the global investment has been decreasing according to United Nations Trade and Development (UNCTAD)
reports. However, the investments in renewable energy projects
and green and sustainable infrastructure projects lead the global
investment and hold the biggest potential both globally and in
Türkiye, according to the same report.
This global competition for investment capital poses additional
risks for Türkiye. While the country’s strategic location
between Europe and Asia is an asset, increased competition for
global financing may further complicate efforts to close its
infrastructure gap.
5. Conclusion
Türkiye’s infrastructure expansion and renewal needs
will continue to rise in the coming decades. Transportation remains
the dominant sector, but there are also urgent needs in telecom and
sustainability-related infrastructure. While Türkiye has made
commendable progress in renewable energy and electric vehicles,
substantial challenges remain, particularly in financing and
digital infrastructure.
To remain competitive and resilient, Türkiye must diversify
its funding models beyond PPPs and align infrastructure priorities
with global trends in digitalization and sustainability. Achieving
this will be essential for ensuring long-term economic growth and
national competitiveness in an increasingly interconnected
world.
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