The Ras Al Khaimah United Arab Emirate will invest up to $500 million in Georgia's busiest Black Sea port of Poti over the next four to five years through its investment authority Rakia, senior executives in its Georgian subsidiaries said in interviews this week.
Poti, which was briefly seized by Russia after August 2008's war over the breakaway territory of South Ossetia, is a key transit route linking the Caucasus and Central Asia to Europe, and Georgia's government has been working with Rakia to establish a free industrial zone on the territory which would allow companies to operate tax free and export goods.
Rakia already fully owns Poti's existing port, plans to finish construction of the zone by the end of May, and will start to build a second port adjacent to it next year at a cost of $300 million.
"Rakia will hold a majority in the new port, we're funding it but also looking for big international banks to become involved," said Khaled Chatila, Poti Sea Port's general manager. Rakia will also expand the first port, which handles oil and general cargo, to increase grain and cement capacity, he said.
Some 15 companies have already signed up for the free zone and 50 are expected by the end of 2010, according to Joseph Nibladze, Rakia Georgia's senior marketing executive.
“They will include furniture makers, chemical manufacturers, steel fabricators and agricultural producers from Azerbaijan, Armenia, Turkey and the United Arab Emirates,” he said.
Georgia's economy, fuelled by $2 billion in foreign investment, grew 12.4% in 2007. But the war and world economic crisis scared investors away and it shrank by 3.9% last year. The government is predicting a return to growth of 4.5% in 2010.
Another free industrial zone in Kutaisi in western Georgia is already up and running, with Egyptian household goods manufacturer, Fresh, assembling gas cookers and water heaters there for export to Azerbaijan and Armenia.
“Two more zones are planned, one in Gonio near the Turkish Georgian border, and one in the east of the country,” said Finance Minister Kakha Baindurashvili.
"Our theory with the free industrial zones is that both the investor and the government do well. They get a free tax environment, free trade and good logistics and we get increased employment and dollar flows," he said, The Wall Street Journal reported.
