Yesterday, I contacted members of the Georgian government, among others Vakhtang Lejava -First Deputy Minister, Ministry of Economic Development- and Goga Melikidze -advisor of the prime minister- to inform them about the status of our Tbilisi iCity (Free Industrial Zone - FIZ) project.
We identified one break point: the existing legislation is purely designed for Physical Goods FIZs. Actually, for Poti FIZ and the ideas of the Rakeen Group that bought the harbour of Poti. We advised to look closely at the ecommerce and services legislation in Dubai, as we need a services FIZ Law or amendment, to protect the interestes of future investors.
Further, we see four more contingencies:
1. the corporate income tax (profit tax) may stepwise come down to 0% (it is already quite low with 15%), following the Estonian example
2. War with Russia, although the likeliness has sharply decreased with Obama in office in the White House
3. pressure from the West not to create FIZs at the threshold of Europe in exchange for aid
4. governmental instability, as we see now the third Prime Minister in just 6 months. And continuously government officials are kicked out: "Kakha Bendukidze will be leaving his position of Chief of Government Chancellery on Monday", Giorgi Dartsimelia reported today.
The Rakeen Group, also still does not have a FIZ license for Poti. And it seems unlikely that they will get it soon, somehow, as they constantly say to expect the license "within weeks".
Sunday, February 8, 2009
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2 comments:
Georgia had a long political debate on free economic zones sinse late 1990s however not until recently the idea was supported by the government. Foreign investors welcomed adoption of the Law on Free Industrial Zones in 2007 was followed by the respective sub-laws on regulation of the rules for establishment and operation of Free Industrial Zones in 2008. However no such zones have been established. Even Poti free zone, that seemed most prepared to start investment and operation is not there. 2008 was a difficult year from Georgia because of August war and global financial crisis has possibly contributed in creating obstacles for foreign investors' initiatives. Allowing so needed benefits for Georgia such as inflow of foreign investments and creation of thousands of new jobs should certainly be on the priority list of Georgian government. Hence the Government itself does not seem making further steps to modify or improve legislation and provide more protection for potential investors of prospective Georgian free zones.
FEZ Free economic Zone - Invented to enslave citizens of developing countries. Nothing is more disgusting and humiliating than giving out homeland piece by piece under the control of foreign capital depriving your nation from the right to exercise sovereignty on motherland
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