Adjara Region Report

 

February 2007

 

Author: Kartlos Gviniashvili, Bisnis Representative in Georgia

 

INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2006. ALL RIGHTS RESERVED FOR USE OUTSIDE OF THE UNITED STATES.

 

Adjara at a Glance

 

The Autonomous Republic of Adjara is one of the three self-governing republics of Georgia. The other two parts are known as the Autonomous Republic of Abkhazia, and the Autonomous South Osetia District; they are also not under the control of the Georgian government at the moment.

 

 
 

 

 

Adjara is situated in the West of Georgia. It borders Turkey in the Southwest, and the Black Sea in the West.

 

Five out of nine climatic zones of Georgia are present on the territory of Adjara. The area of this region is only 2.9 square km, 4.2 % of total area of Georgia. The population of Adjara is about 380,000, which is 8% of Georgia’s 4.5 million people.

 

Adjara is a mountainous region (97.5% of total territory), it is rich in water resources (11 rivers and 3 lakes), mineral and pure water reserves, but has poor agricultural land (290,000 ha total area). There are natural resources, mainly precious and rare metal ores.

 

The economy of Adjara, as well as that of Georgia, is on the rise. Information about value added in Adjara  during 2004-2005 is given in a table below:

 

Value Added in Adjara  Region during 2004-2005

 

2004

2005

2006 (projected)

USD mln

%

USD mln

%

USD mln

%

Adjara  - TOTAL

           288

100%

           335

100%

           379

100%

Agriculture, forestry, fishery, hunting

              56

19%

              60

18%

              64

17%

Processing by households

              16

5%

              17

5%

              18

5%

Industry

              17

6%

              18

5%

              21

5%

Construction

                9

3%

              18

5%

              21

6%

Trade and technical service

              52

18%

              58

17%

              67

18%

Transportation, storage, communication

              51

18%

              59

18%

              68

18%

Tourism

              10

3%

              14

4%

              17

4%

Public administration, defense, law enforcement

              18

6%

              18

5%

              19

5%

Education

              14

5%

              17

5%

              19

5%

Healthcare

              20

7%

              22

7%

              25

7%

Other services

              26

9%

              35

10%

              41

11%

Source: Ministry of Finance and Economics of Adjara

 

Although agricultural production (including forestry, fishing and hunting) has decreased to 17%, the actual dollar amount of activity has increased steadily in the last two years.  Transportation, storage, communication as well as trade and technical service account for the biggest share (18% each) in total value added in the Autonomous Republic of Adjara (2006). The size of the construction industry is also growing, and creating the necessary conditions for the continued growth of tourism.

 

Foreign Direct Investment in Adjara

 

Since the new Government took over in 2004, FDI has been increasing, reaching about $90 million. Turkey, Russia, Czechoslovakia, Denmark, Great Britain, and Austria, are some of the largest investors in the region:

 

 

Major Industries

 

Construction

Presently, construction is the fifth largest industry. During 2004-2006 its share in total value added in Adjara doubled, and further increase is expected. Big construction projects that are currently underway in the Adjara region are the following: construction of Batumi (Adjara regional center) International Airport, rehabilitation/reconstruction of roads as well as water and sewerage system of Batumi, construction of a tunnel connecting Batumi to Kobuleti, and reconstruction of Batumi railway station. Construction of dozens of hotels, sports and entertainment centers are also planned.

Newly reconstructed hotel Intourist (150 rooms, swimming pool, fitness club)

 

 

Tourism Infrastructure

Apart from Batumi there are 5 resorts and 19 resort areas in Adjara, as well as 56 historical monuments, gardens, parks, and a conservation area.  There are about 40 hotels in Adjara; 97 % of the hotels are privately owned.   A 100-room hotel is planned for construction on the seashore in Kobuleti.  

 

In 2006 the number of tourists in Adjara increased by 27% compared to that in 2005. The number of new hotels, restaurants, cafes, and entertainment centers is increasing to accommodate the growing demand of tourism. The new international airport (5 km distance from Batumi port), which will be in operation by May 2007, will contribute to an even further increase in the importance of tourism in the area. The regional government, as well as the Government of Georgia strongly support privatization and the development of a tourism infrastructure.

 

In general, the water tourism infrastructure is established and it is improving, but mountain and cultural tourism opportunities are unexploited.

 

Transportation

 

Of the two international airports in Georgia, one is in Batumi, Adjara. Not including the Sokhumi Port in Abkhazia, there are two ports in Georgia and one of them is in Adjara. The Adjara region is crucial to the revival of the “Silk Road” because of its location and growing development.

Batumi Seaport

 

The annual capacity of Batumi’s port is 18 million tons for oil, and 2.3 million tons for dry cargo per year. The port of Batumi is managed by the Green Oak Group of Denmark, which has a 49-year management lease. Millions of tons of Azerbaijan and Kazakhstan oil are being transported from the port of Batumi, through the straits of Istanbul, to the West.

 

Electrical Power

 

Currently, there are five Hydroelectric Power Plants (HPP) in Adjara with a total capacity of 4.32 MW per annum. The first HPP was built back in the beginning of the twentieth century in Chakvi. As the price of electricity rises, construction of small HPPs is becoming more and more viable.

 

Energy Pro, a Czech company has recently procured the Adjara Energy Company.

 

 

Textiles

 

Textile production is being revived in Adjara. The Current capacity of the industry in Adjara is small, but it appears to be rapidly increasing. Two factories, consisting of two thousand employees were set up during the last two years. They supply their production to the Marks & Spencer chain in England.

 

Useful Resources:

 

Government of Adjara Autonomous Republic:

www.adjara.gov.ge

Ministry of Finance and Economy of Adjara Autonomous Republic:

http://www.mofea.ge/en/

Web-site maintained by the Government of Adjara Autonomous Republic:

www.adjarainvest.ge 

Batumi City Hall:

www.batumi.ge/en/

Department of Tourism under the  Ministry of Finance and Economy of Adjara Autonomous Republic:

www.tourismadjara.com

 

For more information on Georgia, visit BISNIS online at:

 

http://www.bisnis.doc.gov/bisnis/country/Georgia.cfm.

 

 

BISNIS (www.bisnis.doc.gov) is part of the U.S. Commercial Service (www.export.gov). 

 

Kartlos Gviniashvili, Bisnis Representative in Georgia

(995 32) 277 000 (ext. 7132)

gviniashvilik2@state.gov