Issue 3, 2016. June-July

   

FIZs IN GEORGIA: INDUSTRIAL HOTSPOTS IN KUTAISI, POTI AND TBILISI

Over 100 companies receive the benefits of being registered at a Free Industrial Zone (FIZ) in Georgia. Currently, four FIZs are active around the country.

Nino Bakradze


Poti's 300 Hectare FIZ

The history of Free Economic Zones (FIZs) in Georgia starts in 2008, when RAKIA Georgia Free Industrial Zone LLC, founded by the RAK Investment Authority (RAKIA), a government agency of the Emirate of Ras al-Khaimah, bought an over 3-million-square-meter tract of land in the seaside city of Poti. The Poti Free Industrial Zone has been fully functional since 2011.

Today, the Poti FIZ offers 300 hectares of land, of which over 120 hectares are currently occupied by businesses. According to David Barker, director of RAKIA Georgia Free Industrial Zone LLC, the company that operates the Poti FIZ , the FIZ supports services of almost 80 licensed investors in a wide range of industries, including vehicle equipment suppliers, construction materials, industrial liquids, textiles and pharmaceuticals. According to Barker, Poti FIZ had proceed 3,777 containers in 2015. Since inception, however investors in the Poti FIZ have invested about $44 million in the Georgian economy and employed 380 people.

From Kutaisi to Portugal

After it initiated the Poti FIZ, the government decided to establish its next FIZ in Kutaisi, and, in 2009, allocated 27 hectares of land to LLC Fresh-Georgia adjacent to Kutaisi's former truck manufacturing plant. LLC Fresh-Georgia, a subsidiary of the Egypt-based Fresh Electric Company, serves as an administrator company of the Kutaisi FIZ to the present day.

Mikheil Tigishvili, General Director and Founder of the Kutaisi Free Industrial Zone, says that the Kutaisi FIZ contains 20 companies. Most of them produce home appliances, including gas cookers, water heaters, and washing machines, as well as textile goods like environmentally friendly pillows, blankets and bed sheets. Tigishvili highlights that the total value of goods produced in the Kutaisi FIZ is over $50 million per year. Goods produced in the Kutaisi FIZ are largely exported to post-Soviet countries. This year, companies in the Kutaisi FIZ have started to export their products to Poland and Portugal, as well.

A New Generation of FIZs

After a six-year break, the government licensed two more FIZs in Georgia in 2015.

Pursuant to to a decision of government of Georgia signed in March, 2015, a land plot of over 350,000 square-meter was given to the Georgian Huashun International Industrial Investment Group Ltd in order to run a FIZ at Kutaisi for 30 years, the Hualing Kutaisi FIZ.

Initial investment in the Hualing Kutaisi FIZ was $150 million. The Hulang Kutaisi FIZ started operating in October 2015 and already contains about 15 different companies.

As Giorgi Rogava, Sales and Development Manager of the Hualing Kutaisi FIZ says, most of these companies produce furniture and plastic goods, processed wood and stone raw materials. The total value of production in the Hulang Kutaisi FIZ has been over $2 million since last October, Rogava told Investor.ge.

Two months after the Hualing FIZ's presentation in Kutaisi, the government announced a new project, this time in Tbilisi, the Tbilisi Free Zone.

BitFury, world's leading blockchain technology company, is the owner and developer of the property. The Tbilisi Free Zone was initiated in the autumn 2015 on a 17 hectare land plot in a Tbilisi suburb. According to the government's decision, BitFury will run the FIZ in Tbilisi for 49 years.

Currently, BitFury runs energy efficient immersion cooling mega Data Center in the Tbilisi FIZ, which processes transactions using BitFury's latest generation 28 nm and 16 nm ASIC chips. As Juliet Kinkladze, Business Development Manager of Tbilisi Free Zone, told Investor.ge, BitFury has already invested $30 million in the project and employs over 70 people. According to Kinkladze, the Tbilisi FIZ is focused on but not limited to high tech projects. The team is working on attracting pharmaceutical, trading or textile companies to the FIZ as well.

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