GEORGIA is aiming to develop a new free industrial zone (FIZ) in its main port city of Poti as a logistical and manufacturing hub for tax-free trade between the EU and the Caucasus and Central Asia.

The FIZ project, located on the eastern Black Sea coast, is majority-owned by the United Arab Emirate’s Ras Al Khaimah Investment Authority (RAKIA) under an agreement signed in April 2008, and will be developed and operated by the recently-created RAKIA-Georgia FIZ LLC under a 49-year management concession.

RAKIA has committed to spend US$200 million on building the FIZ to high international standards, including renovating the port with a new cargo terminal, and plans to invest up to US$1.5 billion in the project.

According to RAKIA CEO and RAKIA-Georgia FIZ Chairman Khater Massaad, “it’s always about location, isn’t it? Georgia’s position in Europe, on the Black Sea and its highly developed transport and communications make it ideally placed to reach markets across both Europe and Asia.”

“But it wasn’t just geography that brought us here. Of all the world’s free industrial zones, I’d say Poti in Georgia is the freest: duty- and tax-free, naturally, and also free of the restrictions that hold back businesses elsewhere. When the Georgians say free they actually mean it. We’ve found their entrepreneurial spirit matches ours and we’re now the biggest overseas investor here. In our experience it’s rare that government and business want to head in the same direction.”

Building the basic infrastructure on the 300-hectare FIZ will be finished by April-May, and the first phase of the whole project is expected to be completed by the end of 2010, though the marketing of the facilities has already started. The second phase of the project will include development of warehousing complexes, container storage areas, distripark, offshore financial facilities and business centres.

The Poti FIZ is offering itself as a cost-effective logistical and manufacturing hub to companies from a wide range of sectors – including manufacturing, logistics, services & consulting, IT, high tech and agriculture – who want to target markets in the Caucasus and Central Asia and still have easy access to EU countries. Low energy costs – thanks to hydro-electric power generation – are also expected to attract interest from intensive industries like steel manufacture.

The main benefits of the Poti FIZ include: low cost of leasing land; 100 per cent foreign ownership of companies operating there; 100 per cent capital and profit repatriation; zero tax on profits in the free zone for foreign companies; 100 per cent duty-free Import and export of raw materials and finished goods; the right to source raw material from anywhere in the world; European-quality lifestyle; strategic location in the middle of ancient Silk Road; and being adjacent to the largest port of the Black Sea – Poti sea port.

The Poti FIZ project has the full support of the Georgian government, which is keen to ensure that the legal and regulatory environment is transparent and investor-friendly. It has therefore legislated to create the conditions for easy start-up and operation of new businesses, including simplified licensing procedures that can produce a license within 24 hours of receipt of an application.