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Legal Alerts

16/10/2020

Ministry of Industry and Technology Establishes Industrialization Committee

Legal Alerts
Mergers & Acquisitions
General

What’s New? 

The Presidential Decree No. 68 (“Decree“), published in the Official Gazette No. 31274 dated 14 October 2020 and entered into force on the same date, establishes an Industrialization Committee (“Committee“), whose secretariat will be the Ministry of Industry and Technology (“Ministry“).

Recent Development

The Industrialization Committee is established to ensure the development of domestic production and technological capabilities (including public procurement) in different ways; and to facilitate the investment, production and financing processes of producers and increase their competitiveness. The Decree sets out the duties and powers of the Committee regarding these objectives.

The Committee will consist of the Minister of Industry and Technology, the Minister of Treasury and Finance, the Minister of Trade, and the Head of Strategy and Budget, under the leadership of the President. The President will have the authority to call the Committee to a meeting and determine the meeting agenda. If the President deems it necessary, he may also invite the representatives of relevant institutions and organizations to the Committee meetings.

Some of the duties and powers of the Committee are:

  1. Take necessary measures to facilitate the investment, production and financing processes of industrialists and technology producing institutions and organizations in line with the national and domestic industrialization goal.
  2. Take measures to ensure that tender specifications and contracts are prepared in a way that will not prevent localization and that the technological components required by the sectors are localized.
  3. Render decisions that will enable investments in strategic areas where there is limited domestic production.
  4. Render decisions regarding merger and acquisition transactions in companies critical for the state, where such the transactions may put the continuity of domestic production and national security at risk.
  5. Render decisions that will increase the global competitiveness of the real sector by ensuring inter-institutional coordination in areas such as finance, customs, environment, infrastructure, logistics and energy.
  6. Render decisions to guide public practices in order to strengthen the capital structures of manufacturing companies, to encourage company mergers when necessary, and to design policies to increase efficiency and product diversity.

Public institutions and organizations selected by the Committee will form an Industrialization Coordination Unit to work in coordination with the secretariat of the Committee. This unit will work with the secretariat and coordinate with the secretariat on provisions preventing the purchase of domestic products in tender specifications and contracts, and encouraging local traders and ensuring compliance with the legislation.

Conclusion

The European Union has similar laws, known as the “Golden Powers”, whereby the Committee’s decision-making process and principles have not yet been regulated. Therefore, the scope of the Committee’s authority, for example, the definition of “companies that are critical for the country” and “changes of controls that may risk the continuity of domestic production and national security”; and whether the Committee’s approval will be condition precedent for M&A transactions are to be further understood from the decisions of the Committee or other regulations.