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2 0 0 7 Invest in Adjara

Batumi, Adjara 2007 www.adjara.gov.ge Chairman of the Government of of Adjara

Dear Investor, implement approximately 180 million EUR investments next three years, whereas, invest- The Autonomous Republic of Adjara is an im- ment potential of the Region is several billions portant region of both in of EUR. It should be mentioned that both terms of its geopolitical location and dynamic Georgian and foreign capitals are involved economic growth. into the privatization process in the Region.

Positive reforms taking place in the country’s Unique location of Adjara gives easy access to economy, as well as, restructuring public local and international markets. Mild climate, sector and employing qualified civil servants, rich natural resources, highly qualified labor adopting liberal Tax and Customs Code, also and developed transportation infrastructure is rapid infrastructural developments, estab- a key to your success. lishing transparent and equal conditions for businesses lead to commissioning of new We express our readiness to initiate real busi- enterprises and creating of new jobs. ness relationships. We believe that informa- tion offered to you in present leaflet covering Adjara’s annual GDP growth rate equals to vast potential and possibilities of our region 8-10 per cent. The Region offers advanta- will impress you. geous preconditions for development of ser- vices, tourism, industry and agriculture. The We shall make your visit successful! privatization process is underway and private sector is rapidly developing. During the last 3 years up to 300 small and large enterprises Welcome to Adjara! were privatized, the total revenues reached 40 million EUR. For that period some 30 million EUR worth investments were input- ted in privatized enterprises. It is expected to Strategic Geographic Location Georgia is a bridge connecting several eco- nomic regions and is a particularly important transit country. Located at the crossroads of Europe and Asia, it serves as a natural transport corridor. Georgia is the shortest transit route between the West and Central Asia for trans- portation of oil and gas as well as dry cargo.

 WELCOME TO ADJARA Adjara is an Autonomous cient historic and ethnographic part of Georgia republic within Georgia. nowadays being on the territory of Turkey) to the East. • Administrative centre: • Adjara is situated to the south-west of Present Adjara consists of five regions: , Georgia; , , , and Keda. Ac- • Total area: 3 thousand sq. km (4.2per cent cording to the 2002 census of enumeration data of total area of Georgia); the population of the Region consists of 400 • Population: over 400 thousand people thousand people. (82per cent ); • Borders with Turkey to the South; Adjara historically and geographically used to • Total border length: 270 km including 67 belong Highland , particularly km marine; Princedom. Ancient historical scripts mention • Administrative division: 1 administrative Adjara as “Land of Adjara”, “Adjara George”, centre – Batumi, and 5 administrative “Adjara Valley”. It used to divide into two parts, regions (Khulo, Shuakhevi, Keda, Khel- Highland Adjara, and Lowland Adjara. The cen- vachauri, Kobuleti), also 7 town type settle- tral part was called Shuakhevi. The central part ments; of Highland Adjara used to be Didadjara, then • Urban population: 48per cent; Khikhani in the Middle Ages, and later - Khulo.

Adjara is an Autonomous Republic within The first Adjaran settlements are found in the Georgia. It borders with to the North, Paleolithic Age. Early forms of manufacturing Samtskhe - to the South, and Shavsheti (an- are developed in the Neolith Age (VII-VI cc

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BC) there. The settlement turns into a metal- The most significant part of Adjaran history is logenic province creating the well-known the Late Ancient Age (I-IX cc AD). According Colchetian Bronze Culture in the Bronze Ages to Byzantine historian Procopy Caesarian (VI c (V-II cc BC). The first cradle of Georgian AD) Gonio-Apsaros became a rather developed statehood, Diaochi and Colcha kingdoms, city settlement having its own theatre and hip- was rocked at the Chorokhi River basin in podrome during that period. II c BC. Early Georgian kingdoms had close relationships with such ancient civilizations as Pursuant to historical notes, Adjara was the first Shumeri, Asureti, Kheta, Urartu, Greek and Georgian region where Christianity was spread Roman empires. Those relations are preserved by Apostle Andrew the First Called, Apostle in mythological legends, ancient architecture, Simon of Cannes, and Apostle Mathias in I c toponimic sources, and the . AD. According to historic scripts dated back to Such Greek myths as about Prometheus, Ar- IV c AD by Sophrone, Apostle Andrew preached gonauts, and motives by Homer’s Odyssey are Christianity through Greater Sebastopol, i.e. associated with the Region. Adjara used to be Tskhumi, also in Apsaros Fortress, current the early centre of bronze and steel manufac- Gonio, and along the River Phazisi. Sophrone turing in the ancient world. The Region had writes about St. Mathias, “He preached the New close trade and manufacturing relations with Testament to the Second Ethiopia, i.e. Colcheti, ancient centers of Greece and Rome. Most of where Apsaros Fortress stands. St. Mathias died land, marine, and river routs, including Trans- and was buried there.” According to the Kartli Caucasian Route, passed through Adjara. The Chronicles, Apostle Andrew the First Called routs connected powerful and wealthy Kartli together with Apostle Simon form Cannes visited Kingdom through the Ponto Sea, the River Trabzon, and then “a land of Didadjara”. Phazisi, the River Mtkvari, the , and Middle Asia further to Persia, India, and Adjara used to be a developed region during the China. Feudal Age. It was a highly developed cultural region at the time. There was developed archi- According to notes dated back to III-II cc BC tecture, literature, carpentry, handicraft, leather by Leonti Mroveli, Odzrikhi Princedom in- processing and manufacturing, etc. The region cluded Adjara. The Princedom itself was part of involved into the process of creation the unitary the Kartli Kingdom reigned by King Parnavaz. Georgian during I-VI cc AD.

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Petra-Tsikhisdziri became an important town and significant landmark of Egrisi Princedom Adjara Coastline The Adjara Coastline is 67km long and is during Byzantine-Persian War in VI c AD. stretched from the South (the Georgian - Adjara was a Georgian Princedom in VII c. It Turkish frontier) to the North up to the river became a part of the under (Guria-Adjara administrative border). reign of the Bagrationis from VIII c. From the Adjaran coastline is rapidly developed, both in middle of XI c Highland Adjara, together with terms of its speed and scale. Adjara has sought and Shavsheti, was part of the Abuseris- to diversify and revive itself initially as a tourism dzes Princedom. It became a part of Samtskhe- destination. Since infrastructure development Saatabago Princedom from XIII c. A famous is vital, the Government of Adjara is currently philosopher, writer, and scientist Tbel Abuseris- reconstructing and building coastline highways dze lived and created in Highland Adjara during to facilitate easy access to different cities of that period. Tbel Abuserisdze drew most of new the region. The littoral development is based astronomic calendar 350 years earlier than Pop on high skill and experience share. Still there Gregory XII that made it necessary to change is need in project management and financing, the calendar in XVI c. expertizing in order to diversify the investment base. Developers and investors are looking to From the second half of XVI c Adjara was expanding their activities on Adjaran coastline. invaded by Ottomans. They separated Adjara into Highland Sanjak and Lowland Sanjak and joined to Vilayet. Islam was spread Mountainous Region in Adjara from the end of XVII c. Despite Islam, the local population preserved national Development The Adjaran mountainous regions are at a short traditions, customs and habits, and the native proximity from the coastline. The priority is Georgian language. to promote this particular territories through the development of upmarket residential and After the Russian-Turkish War, 1877 - 1878, entertainment centres, hotel resorts, notably in Adjara was rejoined to Georgia. There was be- the upper zone of the whole coastline. Accord- gun development of local industry and economy ing to our master planning the Cultural villages there. The Black Sea shore and developed ma- can be developed in mountainous regions that rine routs together with the worldwide impor- tant supported to turning the region into a highly developed area.

From the early XX c. Batumi District was in- volved into great political and public activities. Troubles resulted in ceasing their activities by most of foreign companies that negatively influ- enced on the city’s development. Adjara turned into a battle arena for alien states during the World War I.

In July 1920, Adjara together with other ter- ritories of the south-western Georgia was again within the borders of the Democratic Republic of Georgia.

Since the 6th May 2004 Adjara is free from long-term feodal and anti state rules and stands on the way of democratic reforms.

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will be distinctive from neighbouring coastline de- velopment projects. Cultural Village will celebrate Batumi - Black Sea Pearl Batumi is first mentioned by Aristotle in his writ- Adjara’s own heritage as well as modern interna- ten scripts dated back to IVc. Ancient Batumi, a tional culture. To this end, the development will settlement within the Kingdom of Colchida was include restaurants and cafes, amphitheatres for situated on the bank of the River Korolistskali. live performance and cultural festivals, places for The town developed southward in XVII-XIX cc panoramic view from the villages to the sea. Also that mainly was due to advantageous geographic investors could use the reach potential of the un- position and deep bay making it available to serve inhabited landscape in order to develop a diverse greater vessels. Xenophonte and Apolonius of range of property including mixed-use properties, Rhodes claim this city to be well-known in the industrial parks, mega malls and business parks. It Ancient World and one of the significant sea- is recommended to construct a cable ways on the ports. Ancient Greek scripts and the legend about slopes of mountains in the upper regions. the Argonauts prove importance of Batumi for East and Aegean cultures. Ancient legends tell Average Annual Temperature Co us about the Colchic tribes discovering iron and Zones Spring Summer Autumn Winter steel, also making jewellery and pottery. Coastline 12.7-13.1 22.9-23.0 16.3-16.7 5.6-6.2 Local population passed through great many Mountainous 9.5-10.4 18.0-18.4 12.6-12.9 2.1-2.4 troubles and disasters caused by nature, bloody High battles, and three-century Ottoman yoke. On 25 1.3 11.7 5.8 -5.8 Mountainous August 1878 Batumi like the whole Adjara was rejoined to motherland Georgia. And from XIX c Batumi turns into town of trade and manufacture. Average Annual Precipitation mm Zones Spring Summer Autumn Winter In 1883 Batumi is connected to and Baku 318.8- 205.5- 948.5- 823- through the railway. The city got status of “Porto Coastline 412.8 246.7 1066.2 954.4 Franco” and Sea Port reconstruction was complet- 263.5- 186.2- 337.6- 476.7- ed by 1885. Lots of important plants and factories Mountainous 322 236.2 405.2 482.2 were built at that time. Advantageous geographic position and naturally deep bay resulted in High 201.1 167 199.3 191.4 turning Batumi into the world’s one of the most Mountainous important sea ports of XIX c. It became a large

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centre of oil export and industry. In 1888 Batumi got status of a city.

Nowadays, Batumi covers 1775.9h area. Its population is about 138 thousand people. Ba- tumi is the administrative centre of Adjara.

Advantageous climate conditions are harmo- nized with amazing nature and unique cultural sightseeing. Its marvellous landscape with mountains along the sea littoral touches every single visitor claiming it to be one of the most beautiful sites of the world. The city is decorated with magnolias and agaves, colourful flowers and evergreen palms. The uniqueness of the city is also shown by the fact that it is built accord- ing to the Roman style. Once you visit Batumi you will always keep its amazing memories. With the help of the parallel streets it is clearly divided into squares which make orientation easy. And as the numeration of the city begins from the sea, it is actually impossible to get lost in the city. http://batumicity.org

Batumi Seaside Park 5 km long Batumi Boulevard was built in 1884. The Seaside Park is one of the charms of the city. Batumi dwellers call it “Boulevard”. It stretches along the seashore to the north-west of Batumi like a green line. jected to mantle and place following entertain- ing and attracting facilities: a decorative pool, The territory used to be a garbage place at the fountain, different attractions, pier at Nurigeli beginning of 20th century. Time has passed Lake, zoo, etc. and a magic hand erected a beautiful garden on this garbage place. The original project of the Botanical Gardens Seaside Park was created by Reseller, a famous The Batumi Botanical Gardens are marvel- German gardener. He could not live so long as lous sight on 114h. The Botanical Gardens to carry out the project and his work was carried were founded in 1912. The place of loca- on by an equally prominent French gardener tion is called “Mtsvane Kontskhi” (the Green D’Alphonse. Cape). The Gardens are inseparably connected http://www.batumipark.com with the name of Andrey Krasnov, one of the acknowledged classics in botanical and physical Youth’s Park geography. Upon decision by Major General Smekalov, Batumi District Governor, there began develop- The wealth of the Gardens is represented by ment of the beautiful Youth’s Park launched by nine departments. These are departments of Reseller, gardener from German, in 1881. East Asia, North America, New Zealand, South Nowadays, the Park area covers 16h. Marvellous America, the Himalayas, Mexico, Australia, Nurigeli Lake circumference is 1.5km. It is pro- the Mediterranean Sea and Caucasian humid

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subtropics. The lower, upper and seaside parks are Gonio-Apsaros situated on the main road of the gardens. The gar- Gonio-Apsaros Fortress is located 12km south to den collection comprises 2037 taxonomic units of Batumi, on the left bank of the River Chorokhi. ligneous plants. Among them 104 are of Cauca- It is a real paradise for the lovers of historical and sian origin, and the rest are the representatives of cultural antiquities. The Fortress has a distinc- foreign flora. The above-mentioned departments tive architectural structure. The total length of with rare and unique plants are situated succes- the walls is 900m, height – 5m, the towers are sively in the Botanical Gardens. The splendid 7m high. Today the fortress contains 18 tow- diversity of flora is represented by centenary oaks, ers. It used to have 22 ones. 4 main towers were North American Veimut Pine, Pama Washingto- arranged at the corners of the fence. Earlier the nia, relict beech as well as Japanese compositions Fortress used to have four entrances but today of dwarf plants in miniature gardens. only the western gate is in function.

The Botanical Gardens are also important in the Gonio-Apsaros Fortress had a unique strategic sense that a plot has been created here for the significance: it protected the entrances to the selection of endemic fruit and berry species that Chorokhi and Acharistskali gorges that connected are rare or on the verge of extinction. south-western inlands to the Black Sea littoral. It was its location that made The sea view from the Botanical Gardens is really into one of the citadels of the Roman and then impressive. Equally impressive is the view of the the Byzantine Empires. It was the region where gardens from the sea. There is no season without Colchic Bronze culture and first Georgian state blooming in this Botanical masterpiece. It is espe- unions found their birthplace. cially fascinating in late spring, summer and early According to the Roman and Byzantine sources autumn, when exotic plants burst into colourful Apsaros was formed as a settlement during that blossoms in turn and wrap the whole cape in pas- period. Its history is closely connected to the sionate aroma. myth of the Argonauts. According to the legend http://www.batumibotanical.org this is the site where King Ayet buried his son Ap- saros, whose body was dismembered and thrown Petra Fortress into the sea by Jason. Ruins of the ancient historical city-fortress Petra is located in the village of Tsikhisdziri, Kobuleti The interested traveller can find out that the old- Region. It dates back to VI c. AD. est archaeological layer excavated here belongs to XVIII-XVII cc. BC. Burials of V c BC were found Historically this territory was the settlement place outside the southern wall in Gonio. The revival of one of the Iberian tribes – Lazes. The Byzantine of urban life had been traced since the Hellenistic Emperor Justinian built a city here because of its Age. A number of historians claim that Gonio unique military-strategic and trade-economical fortress used to be the strategic, political, eco- location. The city was crossed by the essential road nomic and cultural centre of the Eastern Roman connecting Western Georgia, Byzantine provinces, frontier. A theatre and hippodrome functioned and . Navigation was also well-devel- here in I-III cc. AD. oped there. Petra Fortress became so inaccessible by the Middle Ages that it was even called “Kajeti One of the twelve apostles of Christ St. Mathias Fortress” (the fortress of the Kajis). is buried in Apsaros. Archaeological excavations began in Apsaros in the 60-es of XIX century. In Petra is impressive and thought-provoking. Our 1974 an important jewellery hoard belonging to ancestors watch us from these proud walls, the an- II-III c AD was unexpectedly found. Systematic cestors who constantly fought against the enemies scientific works have been carried out here since and preserved our motherland and dignity to the 1994. Gonio-Apsaros fortress is declared the posterity. museum-preserve.

10 Welcome to Adjara

various methods to privatize state-owned prop- Liberal Economic erty such as tender, auction, lease and redemp- Environment tion, and direct sale), fairness-equal opportuni- The economy of Georgia has shown impres- ties for all potential buyers. sive growth rates year by year on the back of favourable conditions on the external export High interest of foreign investors in privatiza- markets, balanced state budgets and hence tion process should also be noted. It is perfectly controlled inflation, expansionary fiscal and seen from the big share of foreign investments monetary policies, growing capital investments in the total amount of privatized state and local by domestic and foreign investors and signifi- objects. cant growth in domestic consumption. Foreign capital in privatization The country is well positioned to remain one process (2005-2006 MLN.USD) of the fastest growing economies in post soviet countries due to highly qualified labour force 35 and unique business opportunities, and thus 40 represents an attractive destination for invest- 35 ments. One of the chief goals of the economic policy of the Georgian Government is to 30 promote the development of private entre- 25 preneurship by creating a favorable business 14 17 climate. 20 15 Economic reforms are aimed to ensure eco- 10 nomic and private sector development. To 3 this end, the Government has made a number 5 of important steps: lower tax, fewer licenses, improved technical regulation system, less 0 2005 2006 interruption by the state, customs reform, lower import duties from 2006 and no import Total Privatization Foreign Capital duties in 2008, aggressive policy of privatiza- tion, etc.

Privatization of the Sustainable Economic Growth State Property Economy on Adjara is boosting, the demand for Privatization is one of the most dynamic pro- new opportunities has been increased, and more cesses being underway in the post-revolution- foreigners visit the Region. Accordingly, there ary Georgia. The process is aimed to attract has developed growing demand for hotel cater- private capital to public owned assets in order ing and tourism business in Batumi. to introduce efficient management, increase investment and boost economic growth and The city has experienced dramatic infrastructural create jobs. The privatization process consid- developments in recent years. It became the ers attraction of local and international private centre of political, economic, and cultural events capital, proficient usage of all resources avail- for the region. able in Georgia, sustainable economic growth, flexibility, i.e. utilization of various sales meth- The Autonomous Republic of Adjara like ods (for promoting an efficient privatization the whole country has experienced following process the Government of Georgia utilizes changes:

11 Invest in Adjara

• Level of foreign direct investment increased and the trend is obviously upwards. One of Only Two Coun- • Number of foreign visitors and average level of tries in CIS enjoying income per capita recovered, resulting in increased demand for higher quality services. GSP Plus with EU and • While from total visitors on average, 48per cent Turkey choose hotels as their lodging place, the In July 2005, Georgia became one of the only two number of visitors in Adjara rose 30 times from beneficiaries (besides Moldova) of a new EU GSP 2004 to 2006 and this upward trend is Plus scheme in the entire CIS and one of the 15 projected to be continued. beneficiaries in the world. This is an important • Finally the frequency of visits to Adjara is grow- factor in terms of facilitating export from Georgia. ing approximately 50-60per cent. And in 2010 it is expected to reach 1 000 000 visitors annually. Under the old scheme Georgia was allowed to import only 3300 nomination of products to the EU market without any customs duty and 6900 Business and Trade nomination of products under certain preferences. Regulations After being granted the GSP Plus beneficiary Preferential Tariffs with the USA, Canada, Swit- status, Georgia can import 7200 nomination of zerland and Japan products to the EU market duty free. Georgia stands to benefit significantly as the country is already member of WTO, in addi- From 1 January 2006, Georgia enjoys GSP Plus tion to MFN tariffs with other WTO members, beneficiary status with Turkey as well. Georgia also benefits from a Generalized System of Preferences (GSP) when trading with the USA, Canada, Switzerland and Japan. Accordingly, Ratification of OECD lower tariffs are applied on goods exported from Technical Regulation Georgia to those countries. in Trade Georgia has ratified technical regulations of Euro- Visa Regime pean Council, Organization for Economic Coop- List of the countries whose citizens do not need a eration and Development (OECD), and its main visa to enter and stay on the territory of Georgia trading partner countries and permitted their for 90 days: comparable activities, which will consequently promote the development of business environ- • All countries of the European Union • United ment and the reduction of technical obstacles in States of America • Canada • Japan • Switzerland • trading. Lichtenstein • Norway • Israel • the Holy See • Principality of Andorra • San-Marino • Republic of Iceland • United Arab Emirates • State Tax Reforms The government made some changes to the new of Kuwait • South Korea • State of Qatar • King- 2004 Tax Code in order to promote business dom of Bahrain • Oman development in Georgia, particularly, • VAT reduced by 2%, from 20 to 18. Currency • Social and income tax shifted into a common The Georgian “Lari” is in circulation in the fol- tax (income tax 25%). lowing notes: 200; 100; 50; 20; 10; 5; 2; 1. Coins • Payroll tax reduced approximately by 10% and – “lari” 1; 2; “tetri”: 1; 2; 5; 10; 20; 50. became fixed 12%. 100 tetris = 1 Lari • Some local taxes were cancelled: manufacturing, advertising, hotel’s taxes. There are numerous exchange boxes in the Region. Tax rates reduction is not the only advantage of Exchange of currency is also available at banks. the new Tax Code…

12 Welcome to Adjara

Number of Countries VAT Income Profit Social Duties Georgia 18% 12% 10-20% 20% 7 18% 0-35% 25% 20-25% 10 Armenia 20% 10-20% 5-20% 25% 7 Ukraine 20% 1-26% 25% 37-50% 9 Russia 0-20% 13-30% 35% 35% 8 Lithuania 18% 15-33% 0-15% 34% 16

growth) sectors; It is forecasted that region’s Macroeconomic economy will continue growing and in 2007 Overview regional GDP is expected to reach 487mln The amount of Region’s GDP in 2006 was USD. about 423mln USD. Most of the added values were produced in transportation, According to existed data, production in the storehouse, and communication and also in Autonomous Republic of Adjara increased trade and technical services. GDP growth was by 17% and reached 423mln USD in 2006. mainly due to development of industry (31% Considering existing resources in Adjara, it is growth), transportation, storehouse, and com- expected that the economy continues growing munication (25% growth) and tourism (23% on average 7-10% in 2007-2010.

GDP Srtucture in 2006-2007 GDP growth 2007 Percent of 2006 compared to the forecast total GDP (mln USD) previous year (mln USD) 2007 (forecast) GDP 423,5 487,1 100 115,0 Agriculture, hunting, forestry. fishery 39,6 45,9 9,4 116,0 Production by Households 24,1 19,7 4,0 81,7 Industry 24,3 31,8 6,5 131,0 Constructing 22,8 27,1 5,6 118,6 Trade and technical service 71,5 85,3 17,5 119,3 Transportation, storehouse, communication 72,9 91,7 18,8 125,7 Tourism 17,6 21,8 4,5 123,3 Public Administration 18,5 20,4 4,2 109,8 Education 20,4 22,9 4,7 112,4 Health and Social Work 22,9 23,9 4,9 104,1 Different branches of service 39,0 42,2 8,7 108,1 Net taxes on products and imports 49,8 54,4 11,2 109,4

13 Invest in Adjara

Investments InvestmentS in infrastructure and transportation Investment activity has really been high for (2005-2007 MLN.USD) last years. More and more solid investors are 35,0 32,8 interested in investing their capital in different economic branches of Adjara: infrastructure, 30,0 23,4 tourism, industry, construction, agriculture, etc. 25,0 Such well-known brands as Radisson, Shera- 18,1 ton, Hilton, Hotel Belle Vue, Sea Shore Hotel 20,0 17,6 are expected to be built here by 2009. Projects 13,7 of $200mln USD worth are under way in the 15,0 12,1 12,1 Region. They include dwelling, tourism, leisure 10,0 and office buildings, boutique style restaurants 10,5 5,5 5,0 and coffee shops and yacht clubs. All is due to 1,1 objective and target economical and political 0,0 0,0 reforms occurred in the Region. Geostrategic Total Investments Road Transport Marine Transport Air Transport

location of Adjara, it’s strong and highly devel- Transport Sector oped infrastructure and financial sectors, lower 2005 2006 2007 barriers and risks to make business in the region are also main attracting factor. Financial Sector Investment Activity in Adjara (2004-2007 MLN.USD) Banking Sector is the mostly developed sector in Adjara as well as Georgia. Banks operating here 200.0 182,4 offer a wide range of modern services to their local 180.0 and foreign clients. All services are conveyed ac- 160.0 cording to accepted international banking practice. 133,6 140.0 114,7 120.0 67,6 According to 2006 data 97.1mln USD loans were 100,9 100.0 given, including 73,0 80.0 59,8 • Short-term loans - 40.5 million USD; 53,6 60.0 47,3 • Long-term loans – 56.6 million USD; 34,7 40.0 28,5

20.0 6,2 • Financial Institutions 0.0 There are 11 commercial banks and 3 micro 2004 2005 2006 2007 (forecast) financing credit institutions here.

Total Investments Inner Investments Foreign Investments Georgia has become less risky country and two of the leading Georgian banks TBC Bank and Pro- Economic development results in activating of Credit Bank were awarded B ratings by Fitch Rat- investment flows in to the high rated economic ing – indicating the risk reduction in the country. sectors such as: tourism, construction, refinery and reprocessing industry and transport infrastructure. On 6th December 2005, Standard &Poor’s Rating Serious political changes challenged Georgia to be Service (S&P) awarded Georgia first ever attractive for investments. In 2006-2007, among long-term sovereign credit rating B+. Rate change the most important and meaningful projects forecast – Positive. implemented in Adjara we should mention Batumi International Airport, first segment of the Batumi- According to the S&P press release, sovereign Kobuleti motorway tunnel, international motor- credit rating of Georgia is “Supported by the way surface reconstruction, several fruit and citrus government’s strong political commitment to processing factories, textile and sewing factories. prudent financial policies and market-oriented

14 Welcome to Adjara

structural changes, including tax reforms and the cent is imported and 5.3per cent is recent acceleration of privatization process”. exported.

In 2006 there were built new railway sta- •Retirement Funds and tions in Batumi and Kobuleti. Insurance Services There are some large companies offering big vari- Batumi Port ety of insurance and retirement funds services. Passing Azeri and Kazakh oil via Batumi Port further to Europe and Asia turns the given loans have the following structure: Georgia into the Eurasian transport cor- ridor.

Structure of Credit Portfolio in 2006 Batumi Sea Port - Natural, deep and well

Construction protected bay other 12,6% 12,7% Used since ancient times Transport and Comunication Port o Franco since 1878 3,7% Offers access to railway and interna- tional motorway

Phisical Pers Member of Association of Mediterra- 26,4% nean Cruise Ports – MEDCRUISE.

www.batumiport.com

Trade 44,3% Energy 0,2% Batumi Port Cargo Turnover (2003-2015 mln. Tons) Mining 0,1% Capacity of Port of Batumi 20 19

Infrastructure 17,5 Considering Georgia as gateway to the Black 15 Sea, Mediterranean and Caspian countries, 14,2 Adjara is one of the largest transportation hubs in Georgia. 10 9,7

Roads 5 • The Region has over 1328 km long motorways covered with hard surface, including 46km of international im- 0 portance. In 2005 there was opened 2003 2005 2010 2015 Kobuleti-Batumi international motorway tunnel. Air In 2007 there was opened new Internation- Railroad al Airport in Batumi. The Airport serves • The main domestic and international flights to Turkey and Ukraine. Turkish cargo and passengers are carried by rail- Airlines, Euroline and Airzena offer flights way. 72.4per cent of transported cargo Batumi-Istanbul, Batumi-Kiev, and Ba- is transit, 15.5per cent is local, 66.8per tumi-Kharkov.

15 New Projects in Adjara

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1. Hotel Complex designed by Sheraton 2. Hotel Complex designed by Chiperfield and De Lucchi 3. Sea Shore Hotel 4. Hotel Complex Belle Vue 5. Hotel Complex designed by Arci ê Invest in Adjara

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6. Batumi Plaza 7. Elit Electronics 8. Hotel Complex designed by Center Point 9. Dolphinarium

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18 Tourism Development

• Improving Tourism Infrastructure • Varieties of Tourism • Investment Opportunities service and create new jobs in the Region.

Tourism infrastructure development has high priority in Adjara. Care and heritage of historical Tourism is one of those products that Georgia has and cultural monuments has been undertaken and can use as an export material for the future. and a list of tourist memorials created.

The Government of the Autonomous Republic The Department of Tourism and Resorts of of Adjara aims to establish status of the Region as Autonomous Republic of Adjara organizes staff international tourism centre. The objective is to training as well as actions related to the tourism develop the tourism infrastructure, establish high communication and popularization. quality travel services, initiate new hotel resorts constructions, increase the volume of new tourist Varieties of Tourism in trends and travel operators. Adjara Currently the Government is working on the project “Entrance Tourism” and is making active Ecotourism promotions via media and international contacts Wild nature preserves remains of ancient ar- of those parts of Georgia, which can be attractive chitecture here in Adjara. Fortresses, churches, for tourists. monasteries erected on hills and cliffs, ancient settlements, caves, millennium-old archaeological The Department of Tourism is currently opening layers all have become inseparable precious parts several market centres abroad offering relevant of the Caucasus. Every single stone or rock gently information about places to visit for tourists. cherishes mystic pages of human history, adven- tures of mythological and Biblical heroes, lives of Christian saints. And Georgian rural culture, Improving tourism with its rich traditional architecture, lifestyle and infrastructure agricultural eco-production, is represented in Construction and reconstruction of motorways beautiful and fascinating landscape. is underway. The main goal is to make easy access to tourism sites, save traveling time and Adjara highlands still preserve old-fashioned reduce transportation fee. The Government wooden houses hand-built by old masters. They greatly supports any business activities related are constructed with high-quality wood. Such to construction of tourist objects that is di- houses rose interest in two respects – ethno- rectly linked to the significant increase of tour- graphic-cultural and material ones. These hand- ists number. Such projects provide high quality made houses are undoubtedly our ethnographic

20 and cultural treasure, some architectural details of which are even masterpieces of traditional wood cut. Adjaran rural culture attracts professional interest for representa- tives of various spheres, including histori- sorts in summer. Families used to stay in special ans, archaeologists, naturalists, psychologists, summer cottages on Mount Chirukhi, Jinaly, homoeopathists, lovers of polyphonic songs, Goderdzi Pass, Mount Gomi, Mount Sasadilo, sportsmen, lovers of cookery, hunters, etc. Sarichai and Koslitavi. One of real prides of Adjara mountain resorts is Beshumi, situated in the Alpine zone. Hunting and Fishing Tourism Georgia has originally been famous for hunting. Rich fauna, good hunting places and natural- Horse-Riding Tourism climatic resources create good conditions for This type of tourism has become especially popular among those who are lured by inimi- hunting tourism in Adjara. table mountain scenery, flora and fauna, wild and ecologically clean environment. You can hunt wild animals as well as migrating or water birds here. Photo hunting and hunt- Horse-riding routes in Kintrishi and Skhalta ing with trained birds is also allowed. Fishing is gorges are especially fascinating. Besides various also gaining great popularity which precondi- plants and animals you can also see historical tioned by closeness to the sea and rich hydro- buildings and monuments of inorganic nature resources. (rocky columns, towers).

Water-abundant rivers in Adjara are rich in Religious tourism trout, salmon, barbell, herring, while coastal Pilgrimage or religious tourism is one of the pools are rich in grey mullet, carp, crucian carp, most important directions of cultural tour- etc. ism. Great interest towards religious tourism is natural for Adjara as its territory is rich in Hiking-Climbing- religious monuments and relics. You can still Mountaineering find churches confirming the fact that Christi- It has always been acclaimed that Adjaran cli- anity was spread on the territory since ancient matic conditions improve health. Vast majority times. Due to Ottoman reign Islam also found of local population used to go to mountain re- its way here.

21 territories within the routes. It is possible to orga- nize the special science tour in high mountainous Adjara because of unique flora, Ispani preserve and other marvelous sites (e.g. herbariums or other information for scientists).

• Beshumi (mountainous resort), Khikhani, the ruins of old fortresses.

• Green Lake – summer mountainous resort; forest and fauna, Alpine valleys, wild ecosystem; organization of infrastructure: cottages, boats. At present representatives of various denomina- • Chkhutuneti (Machakhela Gorge) seaside vil- tions and religions co-exist in perfect harmony lage – tourist eco-village, ethnographic museum, in this region. All of them offer their places of waterfall, arched bridges, ruins of Chkhutuneti guidebook for religious tourism. Fortress, fishing. Way of income: promotional Sea tourism materials, guest houses, cafes, excursion, muse- ums, other entertaining events. Winter is warm and summer is hot in Adjara. The sea tirelessly warms Adjara with its monotonous • Makhuntseti (tourist centre) – some buildings breathing and adds colour and plenitude to its are available to make guest houses and restau- greenery. The sea itself is the owner of rich under- rants. The area can join arched bridge and wa- water world. Reefs along the whole Adjara littoral terfall. There is a tunnel, where can be made the are of exceptional beauty. museum of Georgia of Soviet Period. Advanta- geous of Makhuntseti is the closeness to Batumi. Adjara Black Sea littoral resorts are recommended for treating cardiovascular, central nervous sys- • Mtis Ubani – tourist eco-village (ethnographic tem, functional, joint and gynaecological diseases. museum, ruins of church, natural freezer, wild Investment ecosystem, Khikhani Fortress, lakes and under- opportunities ground waters). Hotel complexes and resorts. Way of income: promotional materials, guest houses, cafes, tours, museums, other entertaining Suggestions for investments: events. • Luxury hotel and resorts development • Restaurants and cafes Arrangement of • Casinos sport-healthy centers • Residential, commercial and retail zones • Golf Club Investor can plan to build a Golf Club in Adjara. Sea tourism A Black Sea style Adjaran Golf Club can include • Yachts-club (, Batumi) a concierge service to assist with travel, entertain- • Demonstration-science aquarium ment, private dinning room, signature restaurant, members’ trophy gallery, library, meeting room Ecotourism and equipment repair services. • Development of tourist routes Khino-Chvana- Nakrdzali, Khikhadziri-Tkhilvana-Goderdzi Pars • The Golf Courses topography will incorporate and marking other routes, arrangement of camp- Adjaran landscape’s natural features. The courses ing and picnic places, dividing into horse riding can include several holes along the shore and parts, special places for horse-riding course, fish- overlooking it, making a top level ing, maximal utilization of parks and protected golf facility truly unforgettable.

22 Urban Infrastructure Development • The City of Batumi • Booming construction&sustainable consumption • Investment opportunities Invest in Adjara

mentioned with its Greek name “Batius Liman”, i.e. “Deep Bay”. Scholars believe that it was here that two ancient cultures Antique and Colchic used to merge.

During the Ottoman yoke the geopolitical im- portance of Batumi was diminished. As a result, information about medieval Batumi preserved in historical sources is rather poor. At the end of XIX c. Batumi became the regional center of Adjara and accordingly, it took the central place in its economic, political and cultural life. In 1990’s it became a large center of oil export and industry as well as an important sea-port. The City of Batumi The period, when the city was announced “Porto-Franco”, is of great importance as well. Geographic Location The turnover of Batumi Sea Port had largely Batumi is the administrative center of the Au- increased by that time. Batumi Port became the tonomous Republic of Adjara. It is situated on biggest transit knot for transporting oil from the shore of the Black Sea, on the lowland of Baku. Khakhaberi, 2-3 meters above the sea level and During the Soviet period Batumi still kept a has a shape of the half-moon. The territory of status of an important industrial and tourist the city is 19sq.km. The littoral part of Adjara is town. mainly plain-lowland, characterized with mild subtropical climate. Batumi is the land and ma- rine gateway to Georgia with its largest sea port, Sights railway chain and international airport. The sights of modern Batumi and its outskirts are the oldest historic-architectural monuments, parks and squares decorated with exotic plants, History dolphinarium, aquarium, museums, art galleries, Plynius, Xenofonte and Apoloniusof Rodes give recreational, cultural and rest zones. us the first notes about a town built on the site of Batumi. They claim it to be one of significant sea- Yet at the beginning of XX century Batumi was ports well-known in the ancient world. The name considered as the most tolerant and multinational is originated from Greek. In early times it was town of the . That is why Ortho- 24 Urban Infrustructure Development

dox, Catholic and Gregorian churches, Mosque Significant growth of building activities and Synagogue stand side by side in Batumi. has been exercised since 2004; building areas increased seven times. Most part is occupied with dwelling space, hotels and Urban regeneration hotel-type dwelling houses. Demand on High profile large scale urban regeneration is a trade and commercial areas has greatly subject to city planners and the private sector. The Municipality of Batumi manages the urban increased that proves development of small regeneration project and invites private investors and medium business here. to participate in redevelopment of the City of Batumi. Construction of commercial and office Dynamics According to Premise Areas (2004-2007 sq.m) buildings by private entrepreneurs committed to purchase land plots or objects in the city. The Municipality and the land development com- 160000 panies are expected to design a master plan, and organize architectural competitions on each plot. 140000 The challenge is to help the public authorities to make a good and durable development. 120000 100000 Booming construction & sustainable 80000 consumption 60000 Nowadays Batumi area within the administrative 40000 borders occupies 1937h, more than 1300h of this area are developed. Currently, a process of joining 20000 prior territories for the city development is being 0 carried out resulting in doubling the territories of 2004 2005 2006 2007 Batumi. Dwelling Social Area Commercial Area

All these support attraction of new developing investments and creation of new dwelling, in- Several city-planning projects, detailed plan- dustrial and business areas. The above mentioned ning of areas, designing of new transporta- issue has become actual since starting booming tion arteries and rehabilitation and widen- constructions. ing of old streets have been implemented lately. Special attention is focused on Building Development in Batumi (2004-2007 sq.m) further development and improvement of landscape architecture monuments of green 350000 area of park and recreational sites stretched 300000 along the littoral. “Regulations for Devel- oping Areas and Exploitation of Territories 250000 of Batumi” drafted by Batumi City Council 200000 is ready to be adopted in order to encour- age and promote building activities and 150000 further liberalization of building policy. It 100000 will create a clear and transparent legal ba- sis for all the parties concerned (investors, 50000 developers etc.). 0 2004 2005 2006 2007 25 Invest in Adjara

Luxury Residential Property Developing residential areas of Batumi shall include 10-18-storey towers, shopping centres, offices and shopping malls, commercial centres, villas and luxury apartments.

Batumi City – Tourism Centre and Business Destination Investment • Seaside resorts opportunities • Mixed-use apartments Middle ground • Leisure and tourist destinations Focusing on the provision of top of the range luxury homes developers are neglecting the • Residential and commercial projects of dif- middle class of the Adjara. As the middle classes ferent standards meeting all social strata comprise 70% of any society - a large propor- • Utilization of vacant land plots lying be- tion of the population, investors can cater for the tween the old town and the new district of middle income groups without any compromise Batumi, the project can be implemented on on quality and can adopt a strategy to ensure that mixed use development including dwelling its developments will be differentiated in terms of price. Cost will be minimized by selecting the lat- space, hotels, retailing and community uses est construction and design technologies, prices • Shopping centres can be 25%-35% lower than the competition. • Business centres The development program can begin around the city of Batumi in uninhabited zones. • Refurbishing office and dwelling buildings

26 Energy Sector

• Adjara Hydro-Potential • Distribution Network and Capacity • Investment Opportunities

Industry

• Industry Development • Variety of Industries • Investment Opportunities Invest in Adjara

– 80-90 l/sec is characterized foothills of Meskhe- ti’s mountain-range.

Adjara is rich in hydro-energy potential and annual distribution of rivers flow is quite multiform (the rivers have one-spade, two-spades and almost equal hydrographs) thus, making it favorable for con- struction small hydro power stations directly on the flows of rivers. It should be considered that geologic and ecologic conditions do not allow construction of water-reservoirs in Adjara. In 1924-1937 there was built first HPS “Atshesi” with initial capacity of 16Mgwt. The HPS was built exactly on the river flow according to “The GOERLO” plan. During 30’s of last century there was decided to develop a derivation type HPS. Nowadays only three of them are functioning, i.e. “Machakhelahes HPS” with initial capacity – 1.43Mgwt, “Kinkishahes HPS” – 0.8Mgwt and “Achihes” – 1.0Mgwt.

Considering hydro resources and their potential, construction of small HPS has not alternative in solving power cut in the region. Distribution Network and Capacity Adjara’s major autonomous power source is pre- sented by “Adjaris Tsklis” HPS and “Chirukhsanalia” HPS, producing electricity of 50-100mln kwt/h.

Adjara has developed infrastructure of wiring networks and transformer’s substations. Generally power distribution and transformation is process- ing by 35 substations with capacity of 220kwt. At the same time 0.4-10kwt transformer units and 0.4-6-10-35-220kwt wirings are operating here. Hydro Potential of Investment Adjara Opportunities Hydro resources comprise significant part of natural According to specialist conclusions and market resources of Adjara. Rivers are fed by melted snow demand, the advantage should be given to the fol- and underground water flowing to the Black Sea lowing HPS investment projects: basin. Adjara is the richest Georgian region in rivers 1. Maglakonihes - 10mgwt power (total number 26 060, total length 58957km). 2. Chirukhi-Tbetihes – 8.3mgwt Average annual flowing of rivers along littoral is 3. Tbetihes – 3.5mgwt 40-45 l/sec per 1 sq.km area, at inward plateau 4. Tkhilnari-Tkhilnarihes – 1.6mgwt flowing – 25-30 l/sec, on foothills of Shavsheti’s 5. Khevahes (Shuakhevi Region) – 2mgvt mountain-range – 60-65 l/sec, by large flowing 6. Diakonidzeebihes (Khulo Region) – 0.5mgvt

28 Energy Sector/ Industry

Khulo Region Initial capacity - 200kwt Ghorjomihes HPS Serves villages: Varjnisi, Djaimela, Sasadilokheli Initial capacity-220kwt – 260 families Serves villages: Ghorjomi, Mkheidzeebi, Excess road to HPS, high voltage lines and Vanadzeebi. Gorgadzeebi, Merchkheti – 410 transformer are in use. families Excess road to HPS, high voltage line, trans- Khelvachauri Region former is in use. Khorolistskalihes HPS Initial capacity - 200kwt Shuakhevi Region Serves villages: Korolistavi, Ortabatumi – 220 Dolabihes HPS families Initial capacity -500kwt Excess road (1.5km) to HPS needs to be Serves villages: Oladauri, Matskvalta, Karapeti, repaired; 1km high voltage line needs to be Kviakhidzeebi, Goginauri, Lomanauri, stretched. Dgvani- 560 families Operated equipments moved of Chirukhi- Kobuleti Region Sanalihes HPS Chakvihes HPS Excess road to HPS, high voltage lines needs to Initial capacity -200 kwt be installed (1km). Serves villages: Chakvistskali Valley – 300 families Keda Region Excess road to HPS, 1.5 km high voltage line Tsoniarisihes HPS needs to be stretched. Industry Industry Development Potential in Adjara Industry sector develops rapidly that mainly depends on increasing refinery and power sup- ply and distribution branches. In 2006 there was produced goods worth of over 45 million USD. Industry GPD share was 24.3 million USD (growth rate 31%). There were employed 6470 people in the sector. High Developed Branches: • Textile; • Food; to Batumi Textile Factory. There are employed • Producing of constructing materials; over 1200 people there. Factory produces • Pharmaceuticals; clothes for “Marks & Spencer’s” company (sold • Scrape metals reprocessing; to USA and Western Europe).

Variety of Industries • “Kartu Tex Ltd.” – Turkish businessmen invested about 250 000USD in textile factory Textile (Akhalisofeli, Khelvachauri Region) employing There are 4 textile factories in the Autonomous about 220 people. When privatization pro- Republic of Adjara: cess is finished, there will be invested another • “Batumi Tex LTD” – Danish company Gree- 100 000USD, and total number of employers noak Textiles Ltd. invest about 3 million USD reaches 350 people.

29 Invest in Adjara

• Khulo Textile Factory – “Perrie LTD”, there is invested over 400 000USD, but this is not final Investment figures. After reconstruction “Perrie LTD” employs Opportunities 600 people. The company intends to supply its The industry sector in Adjara offers different- op textile production to 10 different trade partners portunities for a potential investor. The sector is and centers, such as: Tesco Stores, Bon Marcher, evidently growing. Infrastructure for a wide variety Primark, Penney’s, Peacocks, Dunne’s Stores and of branches of industry, as well as skilled labour, TK Maxx, also to Group Andre (France), Vroom including professional engineers, is at your disposal. and Dressman (Holland), Stockmann, Halonen Many enterprises are unique in the region. Despite and Anttila (Scandinavian countries). growing tendency, the potential of local industrial enterprises is far from being fully utilized. Both • LTD Georgian Kaz-Sa (Turkey) – invested over import and export market conditions are favorable. 1.5 million USD in Makhindjauri textile factory. The liberal privatization policy will attract foreign There are employed about 300 people there. direct investments. As a consequence, expected development of the sector, in combination with Another Turkish company is expected to open new the advantageous location of the country and the textile factory in Khelvachauri Region in near future. structure demand in the regional market, shall turn Total sum of investments is expected to be over 2 mil- Georgia into an ideal platform for production and lion USD and intended to employ about 900 people. export within the region. Food Industry • Textile Several large bread bakeries were opened during Rapidly growing demand on textile raises interest last years. Total number of employed staff is 200 in textile industry. It is expected to continue and people. open more new textile factories in nearest future. In 2006-2007 there were opened two large fruit and citrus reprocessing factories in Kobuleti and • Food Khelvachauri regions. Their average producing ca- Agricultural and natural recourses of Adjara give pacity is 20-25 tons per hour. Sum of investments wide potential for investment opportunities. Most is about 15.6 million USD. attractive sectors are: citruses and tea refinery, pro- ducing of tobacco, milk and beverage goods. Pharmaceutical Industry In March 2007 there was reopened Batumi Chemi- • Producing Construction Ma- cal and Pharmaceutical Factory being closed for terials many years. Implemented investments were 5 Adjara is very rich in its mineral and natural million USD. The factory will produce over 20 dif- recourses giving opportunities to develop such sec- ferent kinds of drugs, and pills of local natural raw tors as: producing of decorating stones, bricks and materials. The factory employs 200 people. blocks, construction mixed materials, etc.

30 Agricultural sector development

• Agricultural Potential • Local Agricultural Processing Enterprises • Farming Development & Generic Improvement • Investment Opportunities

Natural Resources

• Variety of Natural Resources • Potential Use of Natural Resources Invest in Adjara

worth. At the beginning of XX century most part of branch became out of date and uncompetitive.

Recently implemented reforms resulted in priva- tization and conversion process created several new and modern enterprises. Currently there are 104 manufacturing and refining companies in Adjara, which provide high quality and ecologi- cally pure juices, fruit and vegetable tins, wine, beer and alcohol free drinks, tobacco, tea, milk Agricultural potential products, confectionary, mushroom, fish, mol- in Adjara lusk food. Local landscape consists of 5per cent of lowlands, There were opened and operated two canny 80per cent of highlands, and 15per cent of farm- companies, “Fruit Company Narinji” Ltd. and ing hills. Land for agricultural purpose cover 2.9 “Georgian Product” Ltd., five mills factories, over thousand sq.km area, that is 25.1per cent (i.e. 20 bakeries, two fruit-packing factories, two tea 72 862 h), including cultivated area – 10 309h, processing factories, a mushroom factory, milk perennial plants area – 15 899h, mowing area – 7 and ice-cream factory for last two years. 159h, fields – 37 759h, posture – 1 736h and the rest – 1 234h. Farming development & Perennial plants area includes of 5 200h for generic improvement citrus, 5700h for tea, 4 340h for fruits, 54h for Today you can list 70 000 small farms in Adjara, subtropical persimmon, 80h bay-leaf and the rest which mainly cover one hectare. According to the 525h. Cultivated plots are mainly used for corn, concept of the development of agriculture there is beans, soy bean, there are 115 000 cattle, 50 000 expected unification of small farms into small and poultry and 10 000 bee units. Agricultural sector medium farms, cooperation and associations in employs 25per cent of total local labour. There the near future. Such farms will be provided with are grown and produced 9 450t of grain-crops, all modern facilities and technology. Unemploy- 35 050t vegetables, 9 500t fruit, 35 000t citrus, 2 ment reduction and income increase is expected 371t meat, 48 500t milk and milk products and accordingly. 4 000t fish. Investment Local agricultural opportunities processing enterprises 1. Hothouse; Till 90’s of last century Adjaran food and pro- 2. Seedling; cessing industries main fields were tea, tobacco, 3. Live-stock; wine, beer and alcohol free drinks, confectionary, 4. Poultry; bread-making, fish and vegetables, canning. There 5. Fishing; were produced over 180 kinds of products, and 6. Meat and meat-product, milk and milk were employed over 3 500 people. There were product, fish product and fruit and vegetable produced over 25 000 kinds of goods of 200mln processing.

32 Agricultural Sector Development/ Natural Resources

Natural Resources

have been used historically as drinking and Variety of natural healing (healthy) waters by local population. resources Currently up to 50 springs have been identi- Richness of Adjara in natural resources is fied. obvious. Its geographic location, geological composition, sea and high mountains, to- gether with the warm and humid climate have Potential Utilisation preconditioned presence of diverse landscapes. of Natural Resources 66per cent of the territory of Adjara is forestry with stabilizing soil, water and climate regulat- of Adjara ing and great aesthetic and recreational values. One of the main priorities of the national policy Currently there are 3 protected areas aiming on natural resources management is to support to conservation of unique Colchic forest and of development of business through introducing its sustainable use. The dominant landscape sustainable resource utilisation practices. Natural types include lowland and mountainous humid resources utilisation is regulated by the Law on Colchic forest, mountain coniferous forest and Licenses and Permits in Georgia. The new law high mountain grassland and shrubs. has introduced significant novelties, including the principle of “One window shopping” that Adjara is rich in mineral resources. Number simplifies and makes transparent the administra- of ore deposits has been explored and being tive procedures associated with licensing/permit- exploited, including “native” and “noble” met- ting, many of which have been abolished. als, construction materials, clays, ornamental stones, gems. Hydro mineral resources are The inventory of explored natural resources of available as in the coastal, as well as in the Adjara, which are subject to licensing, includes mountainous parts. The various compounds of over 100 objects, which can be grouped into the mineral water include hydro carbonate – sul- following categories (for the detailed informa- phate, sodium-magnesium, hydrocarbonate, tion please refer to the website of Directorate for chloride, iron-aluminum, sodium-calcium and Environment and Natural Resources of Adjara sulphate-hydrocarbonate types. These springs A.R. at www.denr-adjara.ge):

Number of ob- License issuant Group of licensing objects jects authority 1 Mineral and healthy waters 43 National 2 Noble metals: Copper, led, zinc, gold, silver 33 National 3 Aluminum 3 National 4 Construction industry: finishing rocks 9 National 5 Construction gravel and rock 7 Local 6 Brick clay 4 Local 7 Chemical industry: pyrite 3 National 8 Chemical industry: laterite and ochre 2 National 9 Underground fresh-water 2 Local 10 Ornamental stones and gems 5 National

33 Invest in Adjara

Investment Opportunities Construction materials Adjara currently undergoes a period of construc- tion boom that in its turn calls for large amount of construction material. In the nearest past there used to be only one quarry, which was the riverbed of R.Chorokhi. However due to the deficit of river sediments and associated problems of coastal erosion, it was decided first to reduce and since 2007 to close the R.Chorokhi quarry.

In order to facilitate the development of construction industry and production of construction materials, the Adjara Directorate of Environment and Natural Resources was delegated the authority to perform li- censing on construction materials and clay extraction. Although the demand is high, current production of construction gravel from the rock quarries is limited due to the high costs associated with their exploita- tion. Main demand is coming from the civil and Hydro-mineral road construction. resources Simultaneously, the DENRA has initiated the program Adjara is rich in hydro-mineral resources. for opening of rock quarries in order to cope with The mineral water outputs are available as in existing demand and provide the construction market litoral as well as in mountainous parts. with necessary material. Since May 2006 the Director- ate has organised over a dozen auctions with total 730 Mineral springs in the mountainous high- 000m3 of gravel disposed from 7 different quarries. lands of Adjara are rich in hydro-carbonate Besides, over 500 000m3 of brick clay were allocated sulphate-chloride and ammonium-potassium through auctions from 3 quarries. waters. Temperature varies between 6-15 ºC. Such springs are in the Danisparauli, Below is a table indicating current state of explored/ Dioknisi, Khikhadziri, Kokotauri, Uchamba, estimated, allocated through auctions and exploited Namonastrevi, Begauri, Merisi, Kapnistavi construction materials (thousand m3): areas.

The temperature of thermal water springs 25000 630 varies between 25-30Cº. Hydrosulphide thermal waters in the coastal municipalities 20000 (vil. , , Khutsubani) have healing qualities and are historically used by 3 15000 local population. Thermal water outputs are 23000 also explored in mountainous Adjara (Vil. Boghauri, Shubani, Tomasheti). According to 10000 100 T housand m 520 their chemical composition they belong to the hydrocarbonate-sulphate-chloride-iron group 7770 6646 5000 characterized with relatively low temperature, mineralization varies between 0.25-1.5 g/l, 0 and capacity 3500-10000 litre/24-hour. Finishing rock Construction Clay gravel 34 Allocated Estimated reserves Natural Resources of Adjara

Map: Hydro-mineral springs of Adjara.

The balneal-therapist qualities of mineral waters Types of resource utilization in the forestry have been researched. They have proven to be as determined by the law include: logging, useful in many conditions. Recommendations for medical plants collection, seed collection, treatment include joints, bones, muscle, nervous wild fruit collection, haying, grazing in the system, skin, cordial and reproductive diseases. allocated graze fields, extraction of mineral Despite of such richness and diversity, only few resources, recreational use, scientific-research mineral resources are being utilised commercially. and education activities.

Forestry Total area of Adjara A.R. is 290 000 ha, out of which 191 603.7 ha is forestry (i.e. 66.07per cent of the total area). 29500 ha of forest territories fall into two protected areas. Below there is given a table indicating percentage distribution of various categories of forests:

6668 1991 12422

Green zone forests 7084,1

5869 Drinking w ater catchment forests Near-settlements protective forests

Subalpine forests

Watercourses bank protection forests

Soil-stabilisation and w ater- regulation 128069,6

35 Objects for Sale

1 2

1. Former Administrative building of Ministry 2. Former building of Ministry of health of Post and Communication Address: 34, M. Str, Batumi. Address: 33, M. Abashidze Str, Batumi. Land area: 1200 sq.m Land area: 1960 sq.m Usable area: 1342 sq.m (197 sq.m private) Usable area: 3447 sq.m Property of Autonomous Republic of Adjara Property of Autonomous Republic of Adjara

3 4

3. Former building of “BIG BANK” 4. Former building of superior court Address: 17, Baratashvili Str, Batumi. Address: 2, Dumbadze Str, Batumi Land area: 1560 sq.m Usable area: 750 sq.m Usable area: 1615,42 sq.m State Property Property of Autonomous Republic of Adjara

5 6

5. Former building of provident bank 6. A under construction building of railway station Built in: 1890 - 1900 Address: Tamar Mepe Highway, Batumi. Address: 12, Gamsakhurdia Str, Batumi. Land area: 20 000 sq.m Land area: 375,4 sq.m (partly). State Property Total area: 847,9 sq.m (partly). Municipal Property 36 Map of Batumi

B l a c k S e a

Objects for Sale

7 8

7. SJC “Health-resort polyclinic of Batumi” 8. Building of a newspaper “Adjaria” Built in: 1985 Built in: 30’s of XX century Address: Seaside Park, Batumi Address: corner of M. Abashidze and I. Tavdadebuli Str, Batumi Land area: 700 sq.m Land area: 350 sq.m Usable area: 1037 sq.m Total area: 835 sq.m State Property

9 10

9. Commissariat building Teachers Training Center and Hostel Building Address: 20, Rustaveli Str, Batumi Built in: 1969-78 Land area: 1020.8 sq.m Address: 29, L. Asatiani Str, Batumi Usable area: 1158.29 sq.m Land area: 810 sq.m Usable area: 1213 sq.m

11 12

11. Former building of restaurant “Gemo” 12. Former building of maternity hospital Built in: XX century Built in: 70’s of XIX century Address: 42, Z. Gamsaxurdia Str, Batumi. Address: 39, Rustaveli Str, Batumi. Land area: 500 sq.m Land area: 4130 sq.m Total usable area: 822.41 sq.m Total usable area: 3565 sq.m (basement - 675 sq.m) 39 Territories for Sale

1 2

1. Free Land Plot – 4.2 ha 2. Free Land Plot – 40 ha Khelvachauri Region, vil. Gonio Khelvachauri Region, vil. Gonio

3 4

3. Free Land Plot – 300 ha 4. Free Land Plot – 80 ha Khelvachauri Region, vil. Gonio Khelvachauri Region, vil. Adlia

5 6

5. Free Land Plot – 22.3 ha H 6. Land Plot – 9.5 ha Khelvachauri Aegion, vil. Adlia 1, Mtsvane Str, Batumi

40 Map of Adjara

B l a c k S e a

Territories for Sale

7 8

7. Free Land Plots 8. Free Land Plot – 12.2 ha 1. 1.6 ha (long term lease offer) Plot in front of 13, Tbelabuseridze Str, Batumi 2. 1.3 ha H, 3. 1.2 ha Str, Batumi

9 10

9. Free Land Plot 2.3 ha 10. Free Land Plot –16 ha Pirosmani Str, Batumi Plot between General Abashidze and David Asgmashenebeli streets

11 12

11. Free Land Plot 12. “Batumi Electromechanical Plant” and surroundings total – 16.3 ha 15, Leonidze Str, Batumi 15, Leonidze Str, Batumi

43 Territories for Sale

13 14

13. Free Land Plot – 4.9 ha 14. Free Land Plot – 8.4 ha Coastline territory, Batumi Gogol Str, Batumi

15 16

15. Free Land Plot – 3.1 ha 16. Free Land Plot – 4.4 ha Bartskhana area, near the bridge, Batumi Territory in front of railway passing, Batumi

17 18

17. Free Land Plot – 1.6 ha 18. Free Land Plot – 5.6 ha Batumi Coastline, near Batumi Oil Refinery Batumi Coastline, near Batumi Oil Refinery

44 19 20

19. Free Land Plot 4.2 ha 20. Buildings and land plots 4.3 ha Kobuleti Administrative Region, Vil. Chakvi 389, David Agmashenebeli Str, Kobuleti Administrative Region

21 22

21. Free Land Plot – 7.5 ha 22. Free Land Plot 1.9 ha 383, David Agmashenebeli Str, Kobuleti Administrative Region 40, Megobroba Str, Kobuleti Administrative Region

23

23. Buildings and land plots 1.9 ha 42-44, Megobroba Str, Kobuleti Administrative Region

45 Useful Links/FAQ

Useful Links: : www.president.gov.ge : www.gse.ge

Parliament of Georgia: www.parliament.ge Information about Privatization in Georgia: www.privatization.ge Ministry of Foreign Affairs of Georgia: www.mfa.gov.ge Government of Autonomous Republic of Adjara: Ministry of Economic Development of Georgia: www.adjara.gov.ge www.economy.gov.ge Easy Way to Invest in Adjara: www.adjarainvest.ge www.mof.ge Ministry of Finance of Georgia: Ministry of Finance and Economy of Adjara: Ministry of Justice of Georgia: www.justice.gov.ge www.mofea.ge

National Agency of Public Registry: www.napr.gov.ge Batumi City Hall: www.batumi.ge

Georgian National Investment Agency: The : www.investingeorgia.org www.batumibotanical.org

Freaquently Asked Questions I. Macroeconom- 10.9per cent of GDP. 8. How many documents are ic Environment: 5. What is the ratio of tax rev- required to register a business? 1. What is Georgia’s GDP per enues to GDP? In general, the following docu- capita? Tax revenues were 22.7 percent of ments are required: GDP in 2006. GDP per capita reached $1,760 1. Application 6. What percentage of GDP is USD in 2006. 2. Company Charter 2. What was GDP growth rate the budget deficit? 3. Signature sample of the director for last year? In 2006 the budget deficit was 4. For limited liability companies 0.2per cent of GDP. Actual GDP grew 9.4per cent in and joint stock companies, docu- 7. What is the exchange rate of 2006 as compared with the previ- ment certifying the appointment to U.S. Dollar ous year. of directors and members of the 3. What is inflation rate? and Euro? supervisory board • The average annual USD / GEL Annual inflation rate for 2006 was 5. Receipt for payment of registra- exchange rate was 1.78 in 2006. 8.8 percent. tion fees. 4. What is the ratio of state • The average annual Euro / GEL 9. How many days are required debt to GDP? exchange rate was 2.22 in 2006. to register a business? State debt was 32per cent of GDP After submission of all documents, in 2006. Foreign debt was 16.9per II Starting a the Tax Inspection registers the cent of GDP, and internal debt was Business: business structure within three 46 business days. Individual entre- IV. Registering on the turnaround period re- preneurs are registered within one Immovable Prop- quested. business day. erty: Fees range from GEL 150 for one- 10. What institutions should 14. What documents are day service to GEL 7 for 10-day be contacted to register a busi- required to register immovable service. ness? 18. Can international arbitra- property? 1. Notary tion be used to resolve disputes The following documents are re- 2. Bank (twice: for fees payment over property in Georgia? quired to register ownership rights and opening a bank account) Yes, Georgia honors the parties’ on immovable property: 3. Tax Department agreement or contract to rely on 1. Application for registration international arbitration to resolve 2. Agreement on the transfer of III. Licenses and disputes concerning property rights on immovable property Permits: located in Georgia. 3. Certificate on non-encum- 11. How many documents are brance required to obtain a license? 4. Receipt for payment of the V. Tax System There are three general documents 19. How many taxes exist? registration fee to be presented: 7 types of taxes: Private Income 5. Copy of the identity card of the 1. Application Tax, Corporate Income Tax, VAT, property owner 2. Extract from Entrepreneurs Excise, Social Tax, Property Tax, 6. Cadastral drawing Registry 15. Where is property regis- and Customs Duty. 3. Receipt for payment of license 20. What are the tax rates? tered? fee. • Private Income Tax is 12%. Immovable property is registered Other documents may be required • Corporate Income Tax is 20%. at the National Agency of Public depending on the type of license. • VAT is 18%. Registry, which is subordinated to 12. How many documents are • Excise Taxes vary, depending on the Ministry of Justice of Georgia. required to obtain a permit? 16. How many days are neces- the product. There are three general documents sary to register property? • Social Tax is 20%. to be presented: • Property Tax rates vary, depend- Property registration takes 1, 3, 5, 1. Application ing on the type of property. or 10 business days, depending on 2. Extract from Entrepreneurs • Customs Duties fall into 3 the turnaround period requested Registry brackets: 0%, 5% and 12%. And and paid for. 3. Receipt for payment of license 17. What does the registration 90% of goods are in 0% category. fee 21. What are the rules for of a title to immovable prop- Other documents may be required treating capital expenditures erty cost? depending on the type of license. for corporate income tax calcu- The registration fee does not de- 13. Is there a “one stop shop” lation purposes? pend on the value of the property. principle? Tax Code of Georgia provides It is a fixed amount and depends Yes, there is. two options for deducting capi-

47 Freaquently Asked Questions

tal expenditures from taxable • Materials of limited circulation 28. What restrictions will income: • Arms and ammunition foreign investors face in repa- 1. Deducting of capital expen- • Dual-purpose goods triating capital? ditures through the depreciation • Therapeutic agents subject to None, Georgia has no restric- mechanism special control tions on capital repatriation. 2. 100% deduction in the year in • Endangered species Dividends are subject to a 10% which the capital expenditure is • Radioactive substances withholding tax. incurred without capitalization • Means of electronic surveillance and further depreciation VIII. Financial VII. Foreign Institutions: VI. Foreign Investments: 29. What is the average inter- Trade 25. Does Georgian law treat est rate? 22. What favorable trade resident and non-resident Interest rates for loans average regimes are applicable to investors differently? 15-18%; and for deposits 6-10%. Georgia’s foreign trade? The law on “Investment Ac- 30. Are foreign financial • MFN Tariffs with WTO Mem- tivities and Guarantees” secures institutions restricted from bers equal treatment and rights to opening branches or affiliates • Preferential Tariffs with the Georgian and foreign investors, in Georgia? USA, Canada, Switzerland and except for ownership of agri- There are no limitations on Japan cultural land. Foreign legal and opening branches and affiliate • GSP + with the European physical persons are allowed to companies of foreign financial Union and Turkey purchase land in Georgia, except institutions in Georgia. Licens- • Free Trade with CIS Countries for agricultural land. ing terms and conditions are 23. What goods are subject to 26. Does Georgia prohibit the same as those for Georgian import licenses or permits? foreigners from investing in residents. • Goods subject to veterinary / any sectors open to domestic phytosanitary control investors? IX. Pricing and • Materials of limited circulation Foreigners may invest in any sec- Tariffs: • Arms and ammunition tors open for private investment. 31. What types of price con- • Dual-purpose goods trols are in effect in Georgia? • Therapeutic agents subject to 27. Does Georgia have an The only price controls are special control established securities market? regulated tariffs in the following • Endangered species Yes, there is a securities exchange sectors: • Radioactive substances with a well-developed institu- • Communication • Means of electronic surveillance tional structure and legal frame- • Transport 24. What goods are subject to work. Trading volumes are low but • Energy export licenses and permits? rising. • Communal utilities /services

48 WWW.ADJARAINVEST.GE