There are a lot of free economical zones in the world. What priorities will it have to form free industrial zone in Georgia, and what will make it successive? https://educatingroversi.com/
We may consider geographical locati on of the country, also closeness with Azerbaijan, Armenia, Russia, Turkey, Ukraine, and markets of Middle Asia to be prior for forming free industrial zone. It must also be foreseen, that direct neighbor of Georgia on the Black Sea is Euro Union.
It must be mentioned, that Sea port of Poti is the larges in the Black Sea. It is the largest port servicing dry Caucasian cargo, it is situated on the TRASECA corridor and it the most important part of Caucasian transit transporting web. The port is connected by direct sea directions with Europe and Asian largest ports, has direct ferry connection with Ukraine, Russia, Bulgaria. The port is connected with the railway web of the country, it is connected with every Georgian city with the automobile road, has relations with Poti airport and international airport of Batumi. The seaport serves all kinds of cargo. It has received ISO-9001-2000.
Poti port can widen conductivity and serving more then 25 million tones of cargo annually.Together with geographical location, closeness with international transit arteries and cheap working force also are considered to be prior.
They are going to open free industrial zone on 400 hectares, it borders to the seaport from the north and followed the sea beach line.
Exactly advantage location of free economical zone and extremely liberal legislation system must provoke attracting foreign investments, as investment environment in Georgia is not very attractive from the various points of view. First defining factor of the investment environment is the size of a market. Larger is the market size, the more attractive it is. Georgian market doesn’t differ with large scales.
Second factor is legislation. Georgian legislation is liberal. Heritage Foundation considers us to be attractive country in this direction. According to the index of economical independence, Georgia occupies 32nd place. This means, that there are quite liberal barrier for displaying providing business and industrial initiatives in Georgia.
An interrupting factor is political instability. It is known, that inventors pay large attention to the political stability and investment guarantees. A problem of territorial integrity of our country, what puts Georgia under the permanent danger of war is also added to all, mentioned above.
There are some problems from the point of executing law. Fixed facts suppressing private property influenced negatively upon investment surrounding. It is important to provide profitable activities and creation of the mechanisms of legislative protection.
Qualification of working forces is also a serious problem. it is very low in Georgia. Intellectual resource is also reduced.
Main reason of creating free industrial zone is attracting investments, growth of business activity in the region and achieving employment. For this the country must form advantage financial conditions to the investors, for making their choice for the benefit of Georgia among many others. We’ll see in the future how much successful the functioning of free industrial zone is, and if inflow of investments take place.
They call free industrial zones off-shore ones. These are the territories, which are under the doubtful sight of everyone, because of being uncontrolled. Its creation in Georgia has been followed by opposition and critical dependence. Most of Georgian experts have negative dependence upon free industrial zones, because it is considered to be the sphere of unreduced actions of private interests of definite persons, for whitening “black money”, selling capital in the way of avoiding rules and taxation, perspective of which in Georgia is very doubtful. To their mind, it is incomprehensible, why is there any need of founding free economical zone in such country in which there have been made important steps towards liberalization of economical and industrial surrounding. Complete liberalization of foreign trade took place in the 90s. This meant that export was released from taxation. Tariff-free reductions, as quoting and licensing were abolished. Since 1998, currency operations have complete independence. In 2006 they reduced high custom tariffs. Today custom tariff on agricultural production is 12%, on building materials – 5%, others are zeroed. They simplified licensing and rights on beginning industrial activities and their realization. A professor, economical expert Vladimir Papava exclaims: “creating free economical zone under the conditions of free economy is the most ineffective step. Exactly for this I consider creation of free economical zone in Georgia to be nonsense”.
He finds following explanation to his point of view. There are countries of two kinds in the worlds – those, which have surplus investments and which suffer lack of them. Countries having surplus investments strengthen inner investor in its free economical zone. I.e. the country forms such conditions, that the investor invests money in the free zone at the territory of his/her country and doesn’t take it out of it. Creation of free economical zones in the country being in hunger of investments hardens the situation, as the investor doesn’t come in the country itself, but in the zone. Local investor will try to do same. Georgian economy is not firm and creation of free economical zone will ruin economy of whole country.