Freer Economy for Ajara
14 March, 2013
Freer Economy for Ajara
Ajara will remain the haunt for Free Industrial Zones (FIZ) development. New government plans to develop several such zones in Ajara. However, the idea is still under elaboration and the authorities don’t disclose taxation or any other kind of economic preferences that must lure investors to Ajara.
In spite of failed FIZ projects deployed by ex-powers throughout country on purpose, to attract investors and give an impetus to sluggish Georgian economy, new government does not discard
the FIZ idea. On the contrary, Ajara’s administration appealed to the central government at the end of 2012 with the request to allow development of several free industrial zones within Ajara and the economy minister said “yes” with reference to big potential of Ajara , which the new government intended to use thoroughly.
However, neither the Ajarian nor the central administration specifies what preferences they will give to the upcoming FIZ projects. Final decisions will be made after the ongoing negotiations with potential investors will be through although authorities already promise that all businesses will be treated equally with no separate privileges to enjoy.
Ex-government of National Movement initiated the FIZ idea starting 2007 by deploying the FIZ at the Poti Port adjacent territory. Such zones were beyond customs zones and exempted from Value Added Tax and property tax. Government was responsible to insure development of communication and engineering infrastructure including roads, water, gas and electricity supply. The overwhelming majority of economic analysts opposed the FIZ idea as redundant against the backdrop of the already liberalized Georgian business climate, small market, low quality and not cheap labor force, as well as political risks in conflicting regions that might trigger smuggling within FIZ territories. The best world practice proves that free economic zones are created in countries with big markets, robust and sustainable economic development when all tools of liberalization of economic climate expire while Georgia is just developing and overliberalized.
Nevertheless, free industrial zones were deployed in Poti, Kutasi, and Tbilisi and although in 2009 ex-government acknowledged that the FIZ projects were falling much behind the par, in 2010 President Saakashvili decided to make economy freer in tourist haunts too and started from Kobuleti in Ajara. Khelvachauri was the next stop. To attract investors in the targeted zones ex-government assumed engineering and communication infrastructure development obligation. In Kobuleti construction land spots with the total area of 11.3 thousand hectare were handed to investors for GEL 1 of symbolic price and those capable to complete hotel constructions within 14 months were exempted from income and property taxes for 15 years. 30 hotels were expected to be constructed in this way however only 2-3 projects are still developing at a low pace, Archil Khabadze, Head of authority of Ajara Autonomous Republic of Georgia, said. In Khelvachauri ex-powers did not meet their infrastructure development obligations after which potential investors were supposed to take the FIZ area under rent. Nevertheless, new authorities plan to go with Kobuleti and Khelvachauri projects ahead. Ditrikh Muller, a co-founder of Georgian Investment Group, believes first and foremost business climate must be improved, fair court restored and firm guarantees of investors’ rights protection to be created.
“The lack of trust toward the previous government caused by outrageous property violation practice and governmental interference in the business affairs undermined the FIZ projects,” Muller said. “And now the trust should be restored.” He believes the reputation of Bidzina Ivanishvili, a billionaire Prime Minister of Georgia, is a significant plus as big fishes of international business world do trust him. However, gambling having been luring tourists from neighboring countries with prohibited gambling opportunities to Ajara must be as a trump card to free zones in Ajara.
Paata Sheshelidze, President of New Economic School, thinks that development of free economic zones is unreasonable in Georgia for it is a small and fiscally centralized country; moreover, a fortiori, old projects failed and nobody explained why by means of proper analysis.
“If we had a decentralized fiscal system and regions could compete with different taxation regimes, it would be more flexible,” he said.
Other Stories
Doing business in Georgia has become easier than in America
According to the Doing Business 2019 report published by the World Bank, Georgia ranked 6th among 190 countries in terms of simplicity of doing business. This was an improvement over two ranks compared to last year.
Problems that foreigners frequently face in Georgia
The importance of Georgia as a tourism hub is growing year after year.
Tbilisi TV Broadcasting Tower – Better than the Eiffel Tower?
It is planned to renovate the Tbilisi TV Broadcasting Tower, one of the landmarks in the capital.
Georgian Fusion Menu by The Biltmore Hotel Tbilisi
5,895,914 international visitors have visited Georgia between January and August of 2018. Compared to the previous year the number has increased by 12.2 per cent.
Advertising of gambling and lucrative games may become banned in Georgia
Advertising of gambling and lucrative games may become banned in Georgia. Those who violate the new rule would be fined GEL 10 000.
Lebanese café-lounge Beirut opens in Tbilisi
What is necessary to organize an unforgettable event? – Fun, emotions, lots of surprises, good music and delicious menu.
Georgia second among the fastest growing tourist destinations in Europe
Georgia is among the fastest growing tourist destinations in Europe. The data is published by the UN World Tourism Organization.
Bitmain launches world digital mining summit in Tbilisi, Georgia
Bitmain CEO Jihan Wu and Roger Ver, CEO of Head Speaker List featuring Circle, and Genesis Mining when Digital Mining Leaders Convene In Tbilisi on September 21-23
TBC Bank and Gazelle Finance have teamed-up to support Medical City, a leading healthcare provider in the western region of Georgia to launch the Western Regional Center Of Modern Medical Technologies.
Equivalent to buried treasure – resources that are underused in Georgia
For 2018 the IMF Commission has forecast an annual economic growth for the Georgian economy of about 5,5%.
Does the quality of Georgian wine increase and how the export affects it
If we look at the data collected about modern Georgian wine, we will find out that the Georgian wines produced between 2015-2017 are much better in terms of their quality and Oenologic features rather than the wines produced between 2009-2011.
Japan simplifies the visa requirements for Georgian citizens
Diplomatic and economic relations between Georgia and Japan are now moving to a new phase. Recently Japan has decided to simplify the visa requirements for Georgian citizens.
M&S (Marks and Spencer) and H&M collections to be produced in Georgia
Garments manufacturer MGMTEX will start production of the M&S and H&M trendy collections from this September.
The World Digital Mining Summit to be held in Georgia
The summit is scheduled to take place between 21st-23rd September in the Hualing Hotel, Tbilisi, Georgia.
Galt and Taggart - Tourism Boom Continues in Georgia
Tourism has become one of the key drivers for the Georgian economy. Galt and Taggart has recently published research about the Georgian tourism sector in the first half of 2018.
"The worst dream for Putin is that Russians want to live in Georgia"
This year, visitors to the Adjara region would notice that there is a boom in construction in and around Batumi.
Underground gas storage facility to be built in Georgia
KfW, a German government-owned development bank signed a EUR 150 million promotional loan with the state-owned Georgian Oil and Gas Corporation (GOGC) for the construction of the first underground gas storage facility in Georgia.
New gambling rules for Georgia
Georgian lawmakers are preparing a new draft law relating to online-casinos and gambling that will seek to curb gambling addiction in Georgia.
How expensive is it to visit Georgia?
The Georgian Lari (GEL) is the official currency of Georgia and is the only legal means of payment in the entire territory of Georgia.
Trade with the EU and the Commonwealth of Independent States (CIS) has grown significantly
Trade with the EU and the CIS has grown by 26% and 33.5 % respectively, says GeoStat, the Georgian National Statistics Office.
The unemployment rate decreases in Georgia
The unemployment rate decreased in Georgia by 1,9% and amounted to 12.1% in the 2nd quarter of 2018 compared with the previous quarter,
Memorandum of Understanding to be signed between Georgia and Malaysia
According to the Georgian Ambassador to Malaysia Nikoloz Apkhazava, Georgia plans to sign a Memorandum of Understanding (MoU) with Malaysia.
“Blauenstein Georgia” due to expand in Georgia
“Blauenstein Georgia” is planning to open more shops in Georgia. It is an agriculture company that sells meat products, meat and convenience food.
The amount of Direct Foreign Investment rises in Georgia
According to the information of the National Statistics Office of Georgia, the amount of direct foreign investment in Georgia has risen
It’s going to get  harder for foreigners to get residence permit in Georgia
It’s going to get harder for foreigners to get permit of residence in Georgia.
Exchange Rates
GEL Exchange Rate
Other Stories
Recently Toyota rolled out Global Campaign under this slogan that reflects the Olympic and Paralympic Spirit of Encouragement,
A couple from Switzerland combines Swiss tradition and technology with Georgian products. Their cheese is made in the Georgian mountains and sold in local stores and hotels.
It has been more than five years since the residents of Lilo village, near Tbilisi, cannot open their windows.
63 000 GEL was received by the Georgian Agro Export Group which is just a small part of the European Neighbourhood Programme for Agricultural and Rural development.
Georgian entrepreneur Guka Tavberidze, who runs his own business in the UK and does it quite well, has been invited by BBC
The grand opening of 7-star The Biltmore Hotel Tbilisi took place in Georgia’s capital on July 31.
DUSHETI, Georgia – The Georgian government and the World Bank will allocate USD 5.6 million (12 million GEL) to fund
A new Georgian clothing brand named Person has emerged in Georgian market.
Georgia is in the midst of an economic maelstrom, Euronews reports.
Situation at Georgia’s mineral water market is interesting: over the last year, the volume of export has grown by 56 percent. According to “GeoStat”, over $114 million worth of mineral water was sold
GEL Exchange
November 2018
Mon Tue Wed Thu Fri Sat Sun
1 2 3 4
5 6 7 8 9 10 11
12 13 14 15 16 17 18
19 20 21 22 23 24 25
26 27 28 29 30