Poti FIZ: Interview with David Ebralidze

Poti FIZ: Unbeatable Strategic Investment Offers Available for Wise Investors

In this interview with the CEO of Poti Free Industrial Zone, David Ebralidze, he carefully highlighted the many interesting benefits that the current investors at Poti FIZ enjoy, and he also talked about several benefits that a potential investor would benefit at Poti FIZ.

The strategic location of any business is perhaps the biggest factor that determines the success of the business. With the Poti Free Industrial Zone, never has there been a better strategic location for investors who are looking to push their sales to other parts of Europe including the CIS, and the Middle East.

What distinguishes the Poti Free Industrial Zone from other industrial zones, and why should an investor be interested in investing in Poti FIZ?

One of the best international practices is creating free economic zones around ports. Industrial zones worldwide have a pivotal mission which is to facilitate the rapid receipt and delivery of goods, processing, and getting involved in all stages of the supply chain. Therefore, from the very beginning, when we started to think about the best location for FIZ in Georgia, Poti was the most strategic and preferred location not only in Georgia, but also in the Black Sea water territory. Located in the center of the Silk Road and other important international transport and logistics corridors, the location is one of the distinguishing advantages that Poti FIZ has over other free industrial zones in Georgia.

Poti FIZ’s strategic logistics location, its direct connection to Poti port and railway, its competitive operating costs, the easy and fast business registration / management process, and the free tax space makes Poti FIZ a priority for investors who plan to develop their business in CIS, Europe and the Middle East.

It is also worth mentioning that the flow of cargo and turnover in Poti FIZ is increasing annually, and this signifies the growth of Georgia as an important transit corridor and distribution center in the region. It also indicates the rapid increase in the number of export-oriented enterprises and trade companies in Poti FIZ.

Poti FIZ is especially attractive for manufacturing companies that enjoy land lease at a reduced price for a long period of time. With the tax breaks granted to FIZ, the possibility of obtaining a certificate of preferred origin, simplified customs procedures and fast delivery terms, compels manufacturers to offer customers competitive prices on their products.

The advantages we offer in FIZ includes: fast company registration based on the principle of “one window”, a space with tax benefits, different types of licenses (depending on the business sector), warehousing and land lease for a long period, modern infrastructure and continuous customs services, make it even more attractive. FIZ holds a lot of promises and great interest for investors who wish to embark on their production and trading activities in Georgia. Accordingly, our team will continue to actively attract small and medium-sized enterprises in the territory of Poti FIZ.

How many companies are currently operating at this stage of FIZ? What are their directions, and what is their main profile?

Today, about 120 businesses operate in FIZ, most of which are engaged in trade, import of various products, warehousing and export/re-export. The main geographical area of investment is limited to CIS countries, especially Azerbaijani companies, as well as Turkey, Ukraine, Russia, Georgia and others.

Despite the pandemic and its resultant challenges, we have successfully completed negotiations with several manufacturing companies. The Hazelnut processing plant is one of such companies which follows our work process and creates Georgian products for export to the CIS countries. It is noteworthy that during the pandemic the plant did not cease to operate and continued to process hazelnuts in accordance with the recommendations of the Ministry of Health. The Hazelnut processing plant currently employs about 20 locals, and it is certain that their numbers will increase as soon as cargo turnover improves in the region.

Also in 2020, the process of arranging the production building and installing the machinery was completed by G and T Engineering Solutions, a manufacturer of integrated circuits. This successful completion of the production building sends a good signal to other companies, and it will certainly encourage them to begin their production of high-tech products in Georgia. Unfortunately, due to the pandemic, the training of the staff was delayed, however, a visit of foreign specialists who will ensure the start of the full production process in a short time is slated soon.

In May 2021, Fargini, a sports masks production factory was officially opened in Poti FIZ. Despite the pandemic, Fargini was able to fully conduct the production process, provide appropriate machinery, and they were able to find and train local staff. Fargini sews masks for use under the Karting helmet, and these helmets will be exported to several EU countries as made in Georgia products.

Approximately 1 million GEL was invested in the textile factory from Polish investments, and this resulted in the employment of 25 local people.

What will be the main benefit for an investor who starts a business in Poti FIZ?

The strategic location of Poti FIZ, which is reflected in its proximity to the port of Poti, its direct access to international rail and land highways, as well as the location of the corridor connecting the ancient Silk Road, gives Poti FIZ a special advantage as a hub connecting these international trade corridors that promotes the fast movement of cargo in the region.

With the tax incentives granted to Poti FIZ, companies registered in FIZ will successfully carry out trade-production business, including import, re-export, and export procedures. Companies in Poti FIZ will produce and assemble various types of products which will then be delivered to Georgia, the CIS and other international markets.

Manufacturing companies will benefit from the free trade agreements between Georgia and different countries. These free trade agreements will encourage them to obtain preferential certificates of Georgian origin for products produced in Poti FIZ but billed for various markets, including EURO1 and ST1.

We offer one-stop-shop company registration and licenses according to the requirements of the business sector, long-term warehousing and land leasing, modern infrastructure and 24/7 continuous customs services. Our team at Poti FIZ is constantly developing services and infrastructure aimed at establishing Poti FIZ as a large-scale regional trade and production hub.

How did Poti FIZ’s management take care of companies in the pandemic?

During the pandemic, the Poti Free Industrial Zone was directly at the epicenter of restrictions on freight traffic. These restrictions affected the management of labor and disrupted the manufacturing processes of FIZ-registered companies. Following the protocol recommended by the healthcare bodies, our team was able to develop a new framework where the health of each employee, and the driver of the cargo, was maximally protected in the shortest possible time. Following these changes, we processed 62,000 tons of cargo smoothly and were able to create a flexible workflow during the crisis without closing the FIZ.

Of course, during the pandemic period, we also identified some shortcomings, which were mainly related to the timely delivery of various documents to registered companies, and this was due to the fact that it became technically difficult to manage the registration process remotely. Also, the closure of borders automatically led to delays in the registration of new companies, and this remains one of the most important issues for the full operation of Poti FIZ.

As I already mentioned, adapting to remote mode created problems especially in areas where we need to provide certain types of information to the investor quickly and efficiently. To this end, we have developed an innovative single window system space for each registered company. In this single window space, we gather all the information related to the investor, both in terms of registration documents and current news. All companies will enter the system remotely, with their own unique code, and with this system, they will have easy and fast access to any desired information.

We have also improved the remote registration system for new companies and this made it very easy for investors to register their business during the pandemic.

To what extent is the potential of Poti FIZ been utilized? And what should we expect from Poti FIZ e.g. In the next three years? What are your plans?

We have developed a post-pandemic strategy targeting specific sectors and regions. We have prepared sectoral surveys that are reflected in our commercial offerings. We are positioning to target medium and small business projects with an investment volume of up to 30 million GEL, but this does not exclude the possibility of attracting large projects in Poti FIZ.

In order to facilitate production and trade in Poti FIZ, we have developed specific commercial offers for manufacturers and trading companies. These offers can be used by any company if the investment conditions are met.

As for the current planned projects, between 2021-2022, we plan to build logistics terminals for copper and non-ferrous metal concentrates, we are looking to construct ferrosilicon briquettes enterprises and textile enterprises. These new projects will create an additional 100 new jobs and attract investment of up to 10 million GEL.

In order to facilitate production and trade in Poti FIZ, we have developed specific commercial proposals for manufacturers and trading companies that plan to lease land in Poti FIZ to build their own warehouses and production buildings.

Poti FIZ will issue them a construction permit up to the 4th grade (incl), for $1. In case of demand for electricity up to 200 kW, the connection to the electricity plot will be 50% co-financed by Poti FIZ, 50% co-financing will also be extended to the water connection fee, and each investor will have a personal assistant who will fully manage all issues related to Poti FIZ including the licenses.

In order to support women entrepreneurs, we have developed a special proposal which covers the establishment of any type of company in Poti FIZ without registration fee. A license and legal address is however required.

I would especially like to mention that we have an investment offer that is targeted at attracting foreign direct investment. If an investor invests up to $ 5 million, we will allow the investor to access the next 4 years lease free for the cost of only 1 year of land lease.