There are a lot of free economic zones in the world. Which priorities will be to form Free Industrial Zone in Georgia, and what is it coordinated?
We can be the country's geographical location, the proximity to Azerbaijan, Armenia, Russia, Turkey, Ukraine, and markets of Central Asia believe that prior to the formation of Free Industrial Zone. It is also envisaged that the direct neighbor of Georgia on the Black Sea is Euro Union.
It must be mentioned that the portPoti is the biggest in the Black Sea region. It is the largest port services Caucasian dry cargo, it is situated in the corridor TRASECA and the most important part of the Caucasian Transit Transport Web. The harbor is through a direct view of the sea towards Europe and Asia's largest ports, is connected, has direct ferry connection with Ukraine, Russia, Bulgaria. The port is connected to the railway network in the country, it is with every Georgian city with the automobile road is connected, has relationships with potentiometerAirport and the international airport in Batumi. This port city offers all types of cargo. It is ISO-9001-2000.
Poti port can expand conductivity and serves more than 25 million tons of cargo annually.Together the geographical location, proximity to the international transit arteries and cheap labor are also looking at the front.
They are on free industrial zone on 400 hectares and is adjacent to the harbor from the north to open and followed the sea beachLine.
That provoked advantage position of the free economic zone and an extremely liberal legislation needs to attract foreign investment, the investment environment in Georgia is not very attractive from the various angles. First, the definition of the investment environment is the size of a market. Larger the size of the market is more attractive. Georgian market is no different with large scales.
The second factor is the law. Georgian legislation is liberal.Heritage Foundation holds us to be attractive country in that direction. According to the index of economic independence, Georgia 32nd Takes place. This means that it has fairly liberal barrier for the ad business and industrial initiatives in Georgia.
An interruption factor is political instability. It is known that the fee guarantees Inventor great attention to the political stability and investment. One problem for the territorial integrity of our country, leading toGeorgia 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 Creation of a free industrial zone is to facilitate investment, growth of business activity and employment in the region to achieve. This country has the advantages of financial conditions form to the investors for making their choice in favor of Georgia, among many others. We will see in the future, how much success the functioning of the free industrial zone, and if instead of inflow of investments.
Call for free industrial zones offshore Ones. These are the areas whichunder the dubious eyes of all, because it is less uncontrolled. Its facility in Georgia was followed by opposition and critical dependence. The majority of Georgian experts have a negative function of free industrial zones, as is assumed to be the sphere of action without reducing the private interests of certain persons for whitening 'black money', sales of capital, as a way of avoiding regulations and taxes, perspective which is very doubtful in Georgia. To their eyes, it isunderstand why there is no need for the establishment of free economic zone in the country in which it has been made important steps towards liberalizing the economic and industrial environment. Full liberalization of foreign trade was in the 90s. This meant that the export was released from the tax. Duty-free cuts, such as quota and licensing were abolished. Since 1998, monetary operations have complete independence. In 2006, they reduced high tariffs. Today, customDuties on agricultural production 12%, based on construction materials - 5%, others are set to zero. It simplified licensing and rights at the beginning of industrial activities and their implementation. A professor who encourages economic expert Vladimir Papava: "creation of a free economic zone under conditions of free economy is the invalid step. Just for this I think is the creation of free economic zone in Georgia is nonsense."
He finds the following statement about his views. There aretwo types of countries in the world - those who suffer from excess investment and for it from them. Surplus countries to strengthen domestic investment investor in its free economic zone. That is, the land forms such conditions that the investor invests money in the free zone on the territory of his country and not take it out of him. Creation of free economic zones, hardens in the land hunger of the investment in the situation, as the investor does not come into theCountry itself, but in the zone. Local investor will try to do the same. Georgian economy is not fixed and ruin the creation of free economic zone economy of the whole country.
The expert Temur Giorkhelidze writes: "The fact something that is of a whole town and country is done will be raised is an illusion. A zone is not the international capacity. Insufficient development of the industrial environment in all the territory of the country in to cause chaos in this zone! "
The authors of theProject and supporters of the foundation of the FIZ estimate of its founding as positive and believe that Georgia will be better developed and easier to overcome poverty if the economy is open and liberal.
The author of the bill Kakha Benduqidze considers to be such a zone, to increase business activities in the Georgian regions required. This is industrial area with high technologies and the manufacturing industry, working in the industrial people in the neutral regime, to do somethingadditional impetus for the provision of their business.
Deputy Minister for Economic Affairs Vakhtang Lezhava writes: "It is very liberal system of economic regulation in Georgia. Main aim Free Industrial Zone is the creation of a liberal industrial environment in the specific area of the country towards real employment will be targeted." Lezhava calls that "Georgia is not in the off-shore zone is converted, there are no prerequisites for this." After the government declaration,bring increased economic free economic zone, the country is.
Thus the creation of free industrial zone was followed by various criteria. There is a constant question - "What will bring bases of the Free Industrial Zone in Georgia?" say in this situation many times that "a stick with two ends" or are there like this as positive, so one-sidedly negative. You must analyze which side surpluses and other decision-making advantage, it is positive or not found at FIZGeorgia.
Let's discuss the expected risks and problems of establishing free economic zone:
Founding Director of FIZ is followed by expenditures in the first phase, because the tax payments, and household income reduced.
Attractive statutory regulation of free commercial zone will be inflected for investment, a specific region of the country at the expense of others. This is less interesting regions from the point of ruin pf investments. This can lead toOpposition among the various regions, as people in this or that region can say that they are oppressed and have no way designed for the present.
It is defined by statute, that the free economic zone can be established in every region of the country, it is possible to open them in each region. That is exactly where the experts see the danger as the foundation of FIZ is possible on the border areas, where there is ethnic diversity, such as Free Industrial Zone comes from economicDomain of our country and it will be possible to fully integrated, for the territories of neighboring country from an economic standpoint.
it is negative, since a further uncontrolled area of the country in which trade can not be controlled, as will those sections of the Roki - Down Zaramaga and eagles - Gantiadi. It is very difficult to implement custom controls
it is necessary to foresee specific measures of security that can not be because the production on the suppliedArea of the zone to the internal market through illegal ways. You need to reduce input and maximum and opportunities posed by closely monitoring. There is a risk of smuggling in the free economic zone. They see the danger in the existence of the fictitious companies to consider how much money himself. Although the authors of the plan call it leverage in the law to avoid this danger.
Free Industrial Zone is increasing the risk of giving a "whitening" money. There are a lot of methods to"Whitening" money. Operations with cash, illegal use of banks and other financial institutions with expensive operations, movable and immovable property, gambling, considered as a classic procedure. The easiest way to "lighten" money is in the process of privatization and the free zones. A free zone is the best way for the entry of goods on the way contraband.
It is well known axiom that in those countries where the liberalization of the economy,Opening of borders, transit development, entry into foreign investments, a growing movement of natural persons are under way in countries where relatively large proportion of the population is abroad and the countries of malevolent, surrounded the possibility of "whitening" "Black "money is very high.
Georgia "met" almost all of the above condition and can be one of the zones for "whitening" money. The fact that constitute so-called off-shore companies, the symbols"Whitening" money activities in Georgia, increased this risk.
In my opinion, the danger of "whitening" money in the FIZ is greater than in the entire territory of Georgia, the anticipation of the fact that the registration of such companies, since the banks prohibited FIZ. I believe that this process is under way in Georgia is today anyway, because foreign investors, which do not belong to their sources in Georgia by the number of transparent capital owners. In fact, there is no civilized capital flows inGeorgia. The invested capital will be registered by the companies entered into off shore areas (eg, Marshall Islands, and Virginia), and this of course means that they are doubtful.
Free Industrial Zone, in my opinion, supports the growth of inflation. Foreign investment comes FIZ. This will rise to the growth of the masses of foreign currency in the country that there be devalued in the context of lari, and that is bad for exports.
There is no political stability in Georgia, the rights ofThe owners are abolished and the workforce is not qualified. Permanent changes in the legislature is still in progress. Accordingly, there is a risk that the detriment to predict business environment, short of foreign capital of FIZ called doubtful that the country will run out as fast as the economy deteriorated a bit in order to provoke and to finance economic destabilization in force.
There is a risk in selecting an operator. FIZ not b together, if they Operatornot recognized worldwide and a successful investor in this business. For being together, it is also necessary to Georgian FIZ part of the industrial infrastructure of the world and integrated production chain.
Creation of Free Industrial Zone has its positive sides. There are great opportunities for expanding and growing business. It is possible to develop backward region, set to zero and the tax regime will be further impetus for the provision of company.
A positivePage of the Free Industrial Zone is also the fact that the leading technologies and know-how is to enter the country.
It will increase inflow of foreign currency, since the goal is the capital in nature moves to the place where it is low pay. Inflow of investment has the potential for economic and social development. The investments will grow to provide for the creation of jobs, relatively - employment.
Creation of Free Industrial Zone in Georgia, when shesay, is not calculated for the fiscal impact, it is necessary to investment opportunities and attractive environment for new businesses and new jobs.
Can be increased with the free industrial zone export potential. The bulk of production will gradually be produced for export, are definitely for Georgia, as firming Lari in the country to compensate resulted in the increase in prices for exports and the deterioration of taxation. Thus, for example, data for imports and exports by 32% in1995, in 2000, it was up to 46%, for today it is reduced to 23%. From 1995 to 2007 increased the volume of export has been 8 times and viewed 11 times - for import. Nominal WIP in the same period has increased from 3.9 billion to 17 billion Laris ie 4.36 times, while real per WIP was increased only to 2.1. Compensate for the currency exchange rate led to the deterioration of taxation. Only 10% of production is manufactured in FIZ be allowed in Georgia, others will be exportedother countries. This will provoke improvements offset the tax.
Free Industrial Zone - in terms of territorial integrity. FIZ is aimed at territorial expansion. The area duels in 5-10 years. FIZ when joining the Guria, Samegrelo works successfully, Guria, Sukhumi, Ochamchire. Separatists will not be possible to block all the good of FIZ. For example, requested Turkish separatists of Northern Cyprus to take a successful economy of Cyprus.
To the expertsSpirit, economic integration is necessary. You need to joint investment projects with Abkhazians and Alans. The creation of these areas will lead to the central lob in the conflict regions, will play a positive role in regulating the issue of conflict. While this is only a dream today, as it is known to be a very good control and stability needed. Is the achievement of good administration is possible in the conflict regions, and investors have a sense of stability, it isreally possible, FIZ succeed. In today's reality, it is utopian, but we can not exclude that in the future.
Creation of free industrial zone has already been decided, and it will be activated very soon. FIZ is expected that a momentum for economic development in Georgia, although the opening of the Free Industrial Zone No wonder, it has not put its profit expectations, it is an ongoing process, the first results in 5-10 years.
Modern century is theGlobalization. A process of economic globalization in the world will not be prevented from Georgia, and it will be gradually integrated into the world economically. The process has to our minds, already begun. Establishment of the Free Industrial Zone suggests.
Georgian Government, the Law "On the global competitive capabilities of the financial sector," the foundation of the financial center provides. The main objective of the Act is the integration of Georgia into the world financial system.Items with the processing of "revolutionary package of legislation establishing prejudice offshore zone in Georgia. We believe foreign banks and asset per ten million dollars. According to the article will adopt in the legal, benefits the banks up to 100 million U.S. dollars are not taxed. In addition, affect the provision of the rule of the taxation of banking, financial transactions, capital and so on.
How much does it matter to find a financial center in Georgia against the background as the financial centersLondon, Milan and Hong Kong are at the highest level of development and do not need a representative in Poti. In the case when we give them the tax haven and really benefit conditions they can stop their choice on Georgia. Although it will not be enough, since foreign investors pay great attention to the countries with different economic and political stability, the class of Georgia that is not appropriate. There are no institutional, technical and economic infrastructure and a mechanism to protect theProperty is very weak in Georgia.
Even so, the integration of Georgia into the world economic domain is inevitable and that's just matter of time, because under the conditions of globalization, a total of no national government can exist without a total financial economic space.
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