State monopoly scares maritime lines off Georgia
17 February, 2011
State monopoly scares maritime lines off Georgia

The much trumpeted new economic course of Georgian government starting at the end of 2010 to mitigate the state crackdown on business, scares maritime freight liners off the country. 
Customs Clearance Zone (CCZ) opening at Poti, the Black Sea outlet of Georgia, makes international maritime shipping companies worry. CCZ deployment throughout the entire country is a part of Georgian government’s recent new economic course aimed to make business-climate more friendly.
The CCZs  opened in Tbilisi and Batumi, another Black Sea

outlet of Georgia became a stumbling block between government and entrepreneurs.
According to government, through one-step window CCZ cuts down time of customs clearance procedures service from several days to 15 minutes, halves costs and makes available 24-hour service to any number of importers [simultaneously] for the entire week. Thanks to one-step window Revenue Service of the Ministry of Finances (MOF) assumes responsibilities of filling all due papers and provides importers with full information on customs clearance procedures as well as by experts and technical personnel service. Moreover, payment can be done in 5 days by banking installments, while before importers had to pay by cash instantly.
MOF assured that the state-owned CCZ was introduced to ease the business life by raising competition with private terminals operating before CCZ establishment. Private terminals say the competition is killed in fact as CCZ seized their cargos and a bankruptcy looms in prospect. Some of them have already been shut down in Tbilisi.
Some importers mostly those focused on food staff import appear quite pleased by the new CCZ service cutting down time and costs of customs procedures. Some claim the CCZ affects their business and increases costs. 
Among CCZ “victims” are importers involved in car import/re-export and international maritime freight shipping liner companies handling with car transportation. The service they offer to importers includes cargo shipping to Poti Port and Terminal Handling Charges (THC) [cargo unloading, delivery to customs container terminals and terminal service]. For about 20 years each of them implements  service through contracted private customs-container terminals [operating in Poti Port based on MOF licenses] and as the contracted terminals offer different prices it enables maritime lines to offer different prices too that insures fair competition. 
Official opening of Poti Customs clearance Zone scheduled on February 11, 2011 was postponed for a while. But maritime lines have already suffered of it. All companies received notices early in February to move car containers to CCZ territory that launched functioning in testing regime. 
The problem is that the state obliges them to implement customs clearance procedures of cars [that makes about 40% of maritime lines’ entire cargo transportation] at the state-owned CCZ alone. This increases their costs by 61% and leads to the state monopoly over the market  as private business cannot offer different service prices since all companies have to use state customs infrastructure  fixing similar prices to all. One of the ways out is opening representations at CCZ that also enhances expenses and translates into price hike at car market.
Government explains  its standpoint by adoption of stronger anti-smuggling and security-oriented policy.
According to Goga Tskhakaia, Head of Revenue Service, there were about 13 terminals and they could not implement comprehensive security and anti-smuggling control over them for too many people were standing between the state and importers. They practiced illegal commercial deals, swindles, and lost  cargos cases were not random. Besides, he assures that both Tbilisi and Batumi CCZs cut costs by 50% and Poti will be no exception. 
“Nobody minds if cargos are kept at private terminals as in customs warehouses, but customs clearance of risky cargos subjected to import control and supervision is the state competence,” Tskhakaia told Georgian Journal elaborating that car is a risky cargo.
Representatives of international maritime lines [that prefer to remain incognito] say they never encountered such a state interference in any other country [they operate globe over] and do not rule out to quit Georgia. Georgian forwarding companies disapprove of the state monopoly. They think Georgian transit image will suffer if the questioned lines really leave the country and the only winner will be neighboring Turkey where the offended companies are supposed to go.

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