Güven Sak, PhD - [Archive]

The TOKİ model dates from the 1930s 10/07/2012 - Viewed 4159 times

Why can't the TOKİ model deliver any good even with good intentions?

Sudden floods claimed lives in Russia and Turkey last week. Twelve people were killed in Turkey’s Samsun and 170 people in Russia’s Krymsk. Krymsk made it into the news as it lies close to Sochi, which will host the 2014 Winter Olympics. The flood in Samsun put the Housing Development Administration of Turkey (TOKİ) back on top of the agenda. I believe that TOKİ is the best example of the recent ghost of statism of the 1930s in Turkey. If the judge, the prosecutor, and the police are the same, can the system produce justice? No, it cannot. Designed with the same logic, TOKİ also cannot deliver any good.

Why can't the TOKİ model deliver any good even with good intentions? First, TOKİ represents the power concentration in urban land creation, town planning and reconstruction, and construction projects. The concentration of power is bad as it hinders transparency. Let me enumerate the  powers TOKİ: First, it has the authority to develop any treasury land for housing.  Second, it has the authority to decide the procedures for housing development. Third, it has the single authority to decide whom to authorize for construction projects and directly subcontracts such projects. Fourth, instead of annoucing a project and taking bids, it directly chooses the winning company “via tendering procedures among certain bidders.” Fifth, it necessarily creates rent and personally distributes rent without abided by any rule or procedure. TOKİ per se is the modern supporting column of the central-rightist tradition, “Yes, I gave it. It's none of your business,” quipped former prime minister Süleyman Demirel upon claims of a corruption incident. TOKİ, therefore, is the core of politics. And it is very uncontrolled. This is the first point to state.

And the second one: I think TOKİ has the major role in the dominance of subcontractors in the construction sector. Unfortunately, it is TOKİ that is shaping the future of Turkey’s construction sector. I believe that TOKİ is the culprit of the international successes and failures of Turkish construction companies. And let me tell why I say “unfortunately.” Do you think TOKİ is aware of the harm it is doing? I think not. I believe that TOKİ is not aware of the harm has done to the Turkish economy.

So, what is TOKİ’s role in the dominance of subcontracting in the construction sector? The first one is obvious: a company that does construction work in Turkey in essence works as TOKİ’s subcontractor. TOKİ’s working principle prevents the creation of a competitive environment. Private companies that first build and then sell houses cannot compete with the Administration that has the authority to use public land free of charge. Second, construction companies abroad also have become subcontractors mainly. Today, Turkish construction companies have been operating all around the world, but they are not involved in projects with a larger design element and thus larger value added. If value added is low, economic contribution is low.

Here, TOKİ’s role is twofold. First, it is the reason for the international successes of Turkish construction firms. Companies of the old era that did not want to become local subcontractors of TOKİ inevitably went international. Lacking support and a strong structure, however, they became global subcontractors. TOKİ was the driving force behind this transformation. Let me add a third point: The main problem with TOKİ is that the outcomes of its decisions are not evaluated. TOKİ’s impact on Turkey’s construction materials industry has not been analyzed so far. Neither has its precise position within urbanization policies. Is it a good thing to sweep neighborhoods away and turn cities into places composed of strictly separated ghettos dominated by car traffic? I don’t think so. But this is how TOKİ conceives of urban transformation. The current practices are closely related to the lack of a tradition of conservatism in Turkey. It is bad that decisions on the future of Turkey’s cities are made in a nontransparent setting. This is also bad for the economic growth process.

TOKİ hinders the ability of Turkish construction companies to grow like their Korean counterparts. We have to keep this in mind. Though established with good intentions, the TOKİ model is harmful. The road to hell is paved with good intentions.

This commentary was published in Radikal daily on 10.07.2012