Business | Investment
RAK will invest $2b in Georgia
Ras Al Khaimah Investment Authority (Rakia) plans to invest about $2 billion (Dh7.34 billion) in Georgia over the next five years despite the global downturn and Georgia's war with Russia in 2008, the head of its local unit said.
- Reuters
- Published: 23:10 February 19, 2009
Tbilisi: Ras Al Khaimah Investment Authority (Rakia) plans to invest about $2 billion (Dh7.34 billion) in Georgia over the next five years despite the global downturn and Georgia's war with Russia in 2008, the head of its local unit said.
A brief war between Georgia and Russia in August of last year over the break-away region of South Ossetia scared off many potential investors from the country but Rakia, a sovereign wealth fund, says it plans to fully carry out all investment projects.
"In spite of dramatic events that took place in August, Rakia has a very optimistic view and continues activities in the country," Zaza Mikadze, general director of RAK Georgia Holding, said.
He said Rakia has been involved in talks with the European Bank for Reconstruction and Development and the Asian Development Bank to finance ongoing projects in the country.
"Georgia is still very attractive and interesting country for investors, with its geographic location and great business potential," Mikadze said in an interview.
In 2008, GDP growth slowed to 1.5 to 2.0 per cent from the previous year's 12.4 per cent, according to preliminary data from the state statistics department. Foreign direct investment fell to $1.1 billion last year from $1.3 billion in 2007.
Many economists say the worse-than-expected macroeconomic indicators for 2008 were caused by the war with Russia.
Last year Rakia, whose full name is the Ras Al Khaimah Investment Authority, bought the strategically located Poti Black Sea port and 300 hectares of land to develop a free industrial zone.
Rakia plans to spend $200 million on expanding the port over the next three to four years. It also wants to put $200 to $300 million toward the creation of the free industrial zone.
"These projects are extremely important for the country's economic development. Rakia intends for Poti to become one of the most strategically important cities in the Caucasus region, profitable for the world's leading companies, enterprises and international investors to enter," Mikadze said.
In January, 2008, Rakia bought one of the biggest and most popular hotels in Georgia's capital - the Sheraton Meath Palace, which will be renovated in the near future, Mikadze said. The group also plans investments in the ceramics and agriculture sectors.
A survey conducted by the Central Bank of Georgia showed that the economy is expected to get $815 million in foreign direct investment in 2009 and about $1 billion in loans and capital inflows.
"The current financial crises, however, may temporarily affect plans of some future investments, it is just a passing phase which will finally lead to better economic conditions and business growth," Mikadze said.
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