Parliament approves land registration changes for foreign investors

Georgia’s Parliament has approved a draft law that outlines a moratorium on the sale of land to foreign citizens to be removed for commercial banks and on special cases.

The draft law on Agriculture Land Ownership was approved by Parliament at its final hearing yesterday, February 20.

The law on Agriculture Land Ownership outlined:

• To establish a Government-appointed committee that will judge foreigners’ applications to purchase agricultural land. The criteria, on which applications will be judged, has not been decided and will be elaborated by the Government in the next few months.
• To exempt commercial banks from the ban, (which had prevented banks from taking agricultural land as collateral for a loan) but not microfinance institutions.

In June 2013, Parliament passed a temporary legal ban restricting non-Georgian citizens from purchasing or inheriting agricultural land until December 2014. This also included Georgian entities with foreign minority shareholders – "foreigners”. This ban has now been amended.

A group of experts from non-governmental organisation Transparency International (TI) Georgia have voiced concern over the new law and said it was essential for the government to develop a state policy on agricultural land ownership and organise a comprehensive land registration program.

As stated on TI Georgia’s website, the organisation believed a proposed committee, that would review applications on a case-by-case basis, as potentially less restrictive than an outright ban on foreign shareholders.

"However, its role could be highly problematic – as we outline below – and the Government has not made it clear why there is a need for this mechanism. What is urgently needed is a state policy on agricultural land ownership and a comprehensive land registration program, which the Government had promised to deliver by December 2013,” stated a report published on TI Georgia’s website.

Furthermore, TI said the changes must protect the rights of existing landowners, facilitate investment in Georgia and promote sustainable development of the agricultural sector.

Last July, Parliament suspended changing the status of agriculture land plots from agricultural to non-agriculture.

According to the Government, the moratorium was imposed to avoid the real threat of irrational privatization of land, which may have a negative consequence on the country’s economic security, environmental protection, and state security. This might also significantly damage the rural population, the Government claimed.