Monthly Archives: November 2014

Abkhazia, a new investment land!

By Alessio Zillio, Venetian Diplomatic Consultant for the Republic of Abkhazia. An entrepreneur who is interested in investing abroad will often explore various alternatives before choosing the country where to set up a new business and commit his forces. But nowadays a lot is missed due to misinformation and many important areas with good economic potential are also missed due to ignorance or prejudice. Yet the dream of those who want to start a business abroad remains that of finding a virgin territory, where to be the first to arrive and create something secure out of nothing. The Republic of Abkhazia is one of these unknown destinations, a State that is as internationally strategic for the geo-political status quo of the entire Caucasian area as it is neglected by most people. Including entrepreneurs. Indeed, to date from 1991, this small Transcaucasian country remains oneof the few in the world where foreign investment has been scarce.

1.1.Geopolitical map of the Republic of Abkhazia and neighbouring State

1.1.Geopolitical map of the Republic of Abkhazia and neighbouring State

The reason is simple. Abkhazian Republic is a State with limited international recognition; from 2006 it has been legitimized only by Venezuela, Nicaragua, Tuvalu, Nauru, Vanuatu and Russia, the latter being its only real trading partner.

1.2 The Abkhazian Parliament to Sukhum

1.2 The Abkhazian Parliament to Sukhum

Until 2006, therefore, Abkhazia was a nation forced to self-support, with few foreign commercial partners, such as Turkey, to which to export coal extracted from Tkvarchel Mountains District. Since then, national politics have addressed better protection for the environment, which is in iteself the real treasure of this country, given that tourism, both in summer and winter, is becoming its true vocation. Foreign entrepreneurs able to start a process of genuine national economic reconstruction have been so far almost exclusively Russians, with rare examples from other nationalities. Opportunities of investment are thousands, starting from infrastructures. This Republic fought for independence in early ‘90s and was left with great urban damages, as exemplified in the picture by the ruins of the historic headquarters of the Abkhazian Parliament. This building is located in the heart of the Capital, Sukhum, which in 1992 was the last battlefield in the war of liberation. Today, two-fifths of the city are still composed of tottering palaces and homes, some of them being historic buildings of the Soviet era as the magnificent Hotel Abkhazia. Cultural life in the Capital remains quite vivid. Sukhum is the only Abkhazian University, though also in need of major restoration works and left with a frame that still remembers the war of 1991/92. The Capital’s current state is partly due to the rapid development of the northern part of the country, which is bordering with Russia (City of Sochi is only 4 km from the border). This area has been lucky enough to not be touched by the war, and so it has been able to host, since mutual recognition between the two countries was signed, thousands of Russian tourists. Sukhum’s “recovery” plans should, however, end up with shadowing the importance of Abkhazian northern border towns. Government’s projects indeed indicate as key targets: a) the building of a new airport, few miles from the Capital, precisely in the adjacent province of Gulripsh, b) the restructuring and implementation of the old railway network, which ideally should link Moscow to Armenia crossing the centre of Abkhazia, and finally c) the creation of a trading hub to attract huge volumes of merchandise, like Sochi and Sevastopol are doing already. Russian entrepreneurs have already bid for themselves, but the Abkhazian administration would also welcome Europeans to become effective partners in the reconstruction of their capital. On top of economic infrastructures, are then needed all those initiatives necessary for the proper functioning of a city that, according to the forecast, within ten years will host an annual flow of more than 300.000 visitors. This involves the construction of an efficient network of hospitals, not only locally but also nationwide and at least in the major cape towns (which are nine). This would open a market for pharmaceutical sectors and those who manufacture medical equipment. Reconstruction needs would be the main drive for a series of renovation projects in all areas situated south of the Capital, especially for transports and the development of tourist activities. As for the latter it is important to know that Abkhazia, which overviews the Black Sea, has a very long summer, which runs from late May to early October, with average temperatures of 24 C grades. Only the northern part is enjoying tourism development, with sufficient infrastructures, albeit outdated, not touched by the war. Interior mountains and southern regions have not enjoyed prosperity since the end of Soviet era. For southern provinces investment scenarios are similar to those identified for the Capital and its surroundings, thus great potential but still poorly addressed. These are areas of mainly agricultural, wine-producing and cattle rearing activities, with typically small size Abkhazian bovines, not uncommonly loitering free in the downtowns. Gulripsh and Ochamchira districts enjoyed spa centers in the past, and today these are coming back alongside the restoration of several former Soviet sanatoriums. Business around welfare centres and the spa should however need more investors, focused not only on tourism but also on waters treatment, both for health and drinking usage. Abkhazian territory is widely crossed by thousands of streams that come down from the Caucasus, and that in Soviet times were a major resource for hydroelectric power. With the advent of independence many power stations and generators have been abandoned and would need substantial repair and refurbishing, especially in view of a growing population, both local and touristic, that requires more and more energy. Internal areas of Abkhazia are short of roads suitable to connect the mountain villages with the Black Sea centers; a parallel development of strategic roads would facilitate a steady stream of tourists who love mountain nature both in summer and winter.

1.3 Mountain landscape in Abkhazia

1.3 Mountain landscape in Abkhazia

At the moment tourist facilities are virtually non-existent, the only one worthy of mentioning being located at Lake Ritsa, where summer trekking usually alternates with white winter holidays. In fact Abkhazia could attract far more tourists even in winter months if there were good hotels and update facilities for skiing. In particular some private project proposals have suggested to learn from past cooperation between the autonomous province of Trento and the autonomous Republic of Adyghezia for skiing installations. In conclusion, Abkhazia represents a country full of opportunities and credit for young people and their future. Important co-operations between Italian municipalities and Abkhazians councils could ensure greater mobility for young people. To move forward, the Abkhazian Government is now aiming at building a dense net of schools so to improve education and reintroduce Abkhaz as main official language (today Russian is still the most spoken language). As a consequence there is need for a large information network, computer services, advertising and book printing shops that can employ lots of skilled young people from abroad. Investing in this country is easier than ever for foreign entrepreneurs, and the opportunities are many. Abkhazia has recently signed an agreement that grants important benefits for those who have business companies in Russian territory and wish to transfer them in this country. Customs check-points between the two countries have recently been wiped off, so far allowing for free trade, something unthinkable until just few years ago. Abkhazia is not far and it is a beautiful and in many ways still unspoiled country where creating safe and affordable economic relations is now definitely possible. allessilio-zillio Alessio Zillio, Entrepreneur Venetian Diplomatic Consultant for the Republic of Abkhazia


Report on Green Economy Opportunities in Denmark for Venetian Entrepreneurs

Your Excellent People of our Serenissima Republic, as your Venetian Ambassador to Denmark I am pleased to send you this first report, hoping to attract interest and investments by Venetian entrepreneurs:

Denmark is amazingly emerging as a new green economy prairie and few know it. This is why it is important to count on a network of contacts like the one VA is already consolidating here. We must find back the Venetian spirit of innovation and immense curiosity that made our ancestors become merchants and explorers of excellent reputation for centuries.

But first of all, a little introduction:

You should know that in Scandinavian countries successful trading is based on already established networks. If you want to succeed you need to be introduced through networks, which usually consist of pools of private companies, local council or governmental agencies, before starting any activity.

There is a sharing type of mentality; in practice through various networks you create and share tasks, knowledge, experience and market, and this is team work. Indeed the same word “competition” is difficult to place given this mental inclination to create business “monopolies”.

I am currently part of several of these networks and, on behalf of VA, I can put them safely at disposal of the Venetian entrepreneurs, given the interest on the new technologies that are already available in Veneto and that surely will find space and life in the Nordic market.

And here are some data that together with my co-workers we believe can be of sure appeal:

1) With regard to the environmental sector and in particular to the waste-recycling sector I can anticipate that in Denmark they still don’t practice separate collection. You could create a partnership with local companies and propose a project to collect, treat and recycle certain types of waste that today are lost (such as paper, cardboard, plastic, metal, etc.)

2) With regard to the health sector and the Infectious Waste Treatment, we believe that this is certainly an interesting activity given the possible solution for the disposal of toxic waste from hospitals, which now must be dealt with in very effective and safe manner by law nearly everywhere in Europe.

Danish Government has planned a 9.8 billion DKK (Danis Crowns) investment, equivalent of $ 1,313,250,000, for the renovation of hospitals starting from Sjellandia Island, the island where Copenhagen lays, and then extending into the remaining Danish territory for the next 5-8 years.

The technology which has already been offered by the most innovative Venetian companies could be installed directly in hospitals or in a great Disposal Centre which could serve several hospital all together.

We have evaluated both solutions and we deem both of them valid. Of course the political aspect of this choice will also be important given the opportunity to enjoy advanced technologies and create new jobs in a period of economic crisis from the perspective of local communities as well as national politics.

For this you can count on networks such as the Association of Danish Industries and its offices or the Area/Territory networks, depending on the type of local organization.

Of course, I would consider exploring the possibility of installations (and so new jobs creation) even in the most deprived areas of Denmark, not just in the well off ones like those next to the Capital.

3) As for electric vehicles, we believe there is good chance in investing in electric scooters coupled with charging power stations.

4) As for renewable energy I do not think there will be great opportunities for photovoltaics, but there could be some for energy saving LED technology, a field where I am aware Venetian entrepreneurs can show a very interesting and comprehensive range of products.

Our proposal is then to create an on-site company that can promote Venetian technologies straight from here and I would advise the creation of a corporation called APS here (which can be started with the modest sum of 1 DKK which would correspond to 0,13€). In addition you would have the possibility to offset for 2 years the money needed to financially optimize the company, for as much as 58,000 DKK, corresponding to about $ 8,000.

That company would enjoy all securities and protections of a capital based company and would have the opportunity to grow into a real corporation without requiring any statutory change.

Very importantly, taxation will never exceed 25%. By Danish Law you even have the opportunity to create within the corporation a financial hub where to convey undistributed profits for the benefit of the central fund and gain some level of independence from banks (so to be protected risk of credit crunch).

Our Danish accountants are already available to Venetian entrepreneurs who can be presented directly by VA. We have consultants in the boards of many leading Scandinavian companies and excellent relations with the Danish Government. Our accountants would be happy to assist Venetian entrepreneurs for their start-ups in Denmark, offering their technical knowledge and their professional network.

They can also find potential Investors who can be Financial Partners of the company they intend to set up.

Place for investments can be Denmark, Norway, Sweden and possibly, given the extension of our contacts, they could reach even Finland.

I think a new structure like this would represent for our entrepreneurs the possibility of having an operational base on site (at a low cost) that can give international visibility to our excellent Venetian enterprises, too often penalized by an inefficient Italian diplomatic representation.

As you know, here institutions work well and laws are systematically applied. Cost of bureaucracy is cheap and most things work electronically with the support of

public authority which have a “friendly” policy towards them, given the social weight they represent.

I hope I have been comprehensive and clear enough in this initial report and I hope

there will be eagerness to invest in the Scandinavian market where innovations and new “Green Technologies” are more than welcome.

May I greet you all sincerely while I remain available for any further information or enquiry you may need to address me for.

VI ses i Danmark!


Stefano Nicoletto, Venetian Ambassador in Denmark

Kopenaghen, December 16th , 2014

Central VA DC.



SENDER: Stefano Nicoletto, Venetian Ambassador to Denmark

LOCATION: Copenhagen

DATE: 16 December 2014