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Wednesday, 20 June 2018


Dead area for the Georgian economy

2011-11-15 11:28

Dead area for the Georgian economy. 24444.jpeg

All of a radical transformation in the socio-political and socio-economic life of Georgia, carried out ​​during the presidency of Mikhail Saakashvili, one can describe in one sentence: "It does not work".


Moreover, during his regime even those institutions, that have demonstrated their effectiveness in a variety of state formations, have refused to function. A variety of free economic zones have long become one of these tools of improvement the socio-economic development. These areas with tax relief, and even without it, attract investors around the world. But not in Georgia's cities.

For business development, in Kutaisi in 2009, on the basis of the automobile factory, long since closed down, there was formed a free industrial area (FIA), where investors are exempt from income taxes and property taxes.

During its creation, the city administration have been hatching truly Napoleonic plans, hoping to bring the number of people, employed in factories located in the zone, to ten thousand people. These calculations were founded upon not just happen: in addition to administration, the initiators of the establishment of industrial zones were Egyptian company "Fresh" and its Georgian partner "Georgian International Holding". They managed to establish production of household gas and electronic equipment in Kutaisi. But the plans of the plans, and the real return of FIA regime was much more modest than the Kutaisi officials had been dreaming. Two years later, we can say about the failure of this project. Despite the fact that the Egyptian-Georgian holding is functioning more or less, they have failed to create ten thousand jobs. During this time, there have appeared only seven production sites where only about a thousand people could find a job.

Though, the head of the company-operator of FIA Michail Tigishvili promises that soon there will appear a new production, but in recent years, the Georgians have learned well that the promises of the authorities and businessmen affiliated with them have no value. No wonder that Mr. Tigishvili doesn't specify in his encouraging statements what projects it will be. So one might think, if they exist somewhere beyond his imagination.

A similar story is observed in other FIA, opened in Poti. It would seem, given the favorable geographical location, it won't be difficult to fulfill the plan of the authorities - to provide five thousand people earnings. However, in practice things there were more complicated than in Kutaisi. If in Kutaisi there was employment ten percent of the planned, in Poti - less on half. When they opened the industrial area in the seaside town, they expected to create at least five thousand jobs. According to Shalva Beraia, who heads the PR-department of "Rak Georgia", serving as the operator of the area, only 250 people have found jobs at enterprises located in the FIA.

In fact, projects of free industrial area in Kutaisi and Poti have appeared no more than a loud image project with any real results, like most other undertakings of Saakashvili's era. And now, when the major financial and economic centers of the world are plunging into the abyss of another recession, the likelihood that operators of both FIA will find new investors tends to zero.

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