World Bank's IFC lends US$45 to Arkas Group to expand Turkey's logistics facilities

INTERNATIONAL Finance Corporation (IFC), a member of the World Bank Group, has announced the signing of a loan agreement with Arkas Holding, Turkey's biggest containership owner, to bolster the country's economic growth by expanding port operations and developing logistics facilities in the Anatolian region.

Limitations in Turkey's transportation sector are a major impediment to economic growth; hence developing the sector is a priority, said a World Bank statement. High logistics costs hinder Turkey's competitiveness, and the country's ability to grow its container-based trade is limited by its container port facilities.

The IFC loan of US$45 million will help reduce infrastructure bottlenecks through modern and efficient use of maritime, rail, land, and air transport.

"The loan will facilitate our ongoing investments in container vessels, port facilities, port equipment, rail wagons, trucks, and logistics centres in Anatolia," said Arkas Holding chairman Lucien Arkas.

"In 2007 we enlarged our fleet of container vessels by acquiring six ships worth over $220 million. In 2008 we have budgeted $50 million for investments related to our core activities," he said.

Most of the country's key container ports operate at about full utilisation and need to expand, while the level of containerisation of Turkey's general cargo, at around 40 per cent, remains well below the 80 to 90 per cent of mature markets.

Said IFC vice president Declan Duff: "We are very pleased to partner with Arkas in its efforts to expand its operations, which will help lower transport costs. Infrastructure investments are of utmost importance for sustainable economic growth in emerging markets and form a key part of IFC's strategy."

Said Shahbaz Mavaddat, IFC director for southern Europe and central Asia: "Turkey is at the crossroads of intercontinental transportation routes between central Asia, Europe, the Middle East, and north Africa. A well-functioning port and better transportation infrastructure are vital to reducing bottlenecks, sustaining rapid economic growth, and promoting trade between these regions and within Turkey itself."