Make it your homepage |   E-mail: Subscribe Unsubscribe

Thursday, April 24, 2014
News Making Money

“Georgian Business Climate at Risk,” German Chambers Union

Written by Madona Gasanova, The FINANCIAL

22/09/2013 20:00 (213 Day 18:29 minutes ago)


The FINANCIAL -- The ban on land acquisition for foreigners is a bad signal to investors, Tobias Baumann, Director of the International Department at the German Chambers Union, told The FINANCIAL.



The bill that was adopted without general public discussion is creating risks for the development of the investment climate in Georgia. 


On 19 July, the President signed and approved amendments to the Law on Ownership of Agricultural Land adopted by Parliament on 28 June, pursuant to which agricultural land cannot be acquired (including a title by inheritance) by a foreigner, a legal entity registered abroad or a legal entity incorporating a foreigner in Georgia. This right has been stripped from these persons until 31 December 2014. The Government of Georgia has been assigned to develop a uniform state policy on the ownership of agricultural land and organize an integrated system of the land cadastre and agronomics by 31 December 2013.

“If you are looking for investors in agriculture then the acquisition of land should be possible. This is the case in most developed and liberal market economies,” Tobias Baumann, Director of the International Department at The German Chambers Union, told The FINANCIAL. “This definitely makes it easier to attract foreign investment,” he said.

“We see a liberal business climate at risk. The fact that land acquisition for foreigners is no longer possible is a bad signal. It is important to keep the achievements in opening markets which Georgia has undoubtedly made since 2008. There is the need to keep the security situation stable and all corruption down,” Baumann said.

“Accountability, reliability and political stability are crucial for attracting FDI and fostering growth. An improved dialogue with business circles and signed Deep and Comprehensive Free Trade Area (DCFTA) agreements with the European Union would help a lot to promote Georgia as a business partner with future perspectives,” Bumann said.

“Remarkably, this restriction imposed on foreigners wishing to acquire agricultural land is found in several other states. Yet, it is noteworthy that their absolute majority applies this during a transitional period (for instance, when affiliating in the EU), in order to protect the socio-economic and agronomic structure from the shock that accompanies affiliation in the union of states,” Transparency International Georgia said in its official statement.

“One such ‘shock’ could be a difference between land prices of new and old member states, creating a non-competitive environment on the market. There is definitely no such transitional stage in Georgia, and therefore the introduction of such restrictions is totally unfounded,” TI Georgia said. Germany remains the leading investor country in Georgia. But the volume of investment has dropped from USD 133 million to 6.5 in the first half of 2013, in comparison with the same period of 2012.

There are about 300 German companies in total active on the Georgian market. Almost 100 of them are members of the German Business Association (DWVG).

Fifty new German companies will be established in Georgia by the end of 2013, according to the German Chambers Union. Many companies still wait for a clear political and economic strategy for the country. The Union estimated the Georgian business atmosphere to have deteriorated since the 2012 elections.

“Many companies are still waiting for a clear political and economic strategy for the country. The business atmosphere - in our perception - has deteriorated since the elections in 2012,” Tobias Baumann, Director of the International Department (Russia, East and South East Europe, Turkey, Central Asia) at The German Chambers Union, told The FINANCIAL.


“It is difficult to see at the moment which way Georgia will go and how the direction is defined.”

“It is difficult to see at the moment which way Georgia will go and how the direction is defined. Also dialogue between official authorities and the business community was lacking, behind its former and potential performance. In that situation companies normally remain reluctant,” said Baumann.

“Many positions in government administration and on the working level have been changed since the new government came to power. This was a loss in terms of expertise, competence and established communication lines. It takes time after such changes to re-establish communication and trust,” Baumann believes.

He said that security issues are very important and define the assessment of a market to a large extent. “This could of course influence an investor’s decision,” Baumann said.

Potential for Investments

“There is potential in water power, tourism, agriculture, trade and logistics. The last requires investment in infrastructure and could support the construction sector. As for logistics and trade in the Southern Caucasus region, Georgia is in a good position, because it has good relations with both its southern neighbours. This aspect is often underestimated. In addition there is a need for better quality management for agricultural products. It is important for Georgia to diversify export markets and to catch up to international and competitive quality standards. The use of modern techniques in agriculture could increase efficiency and output also,” Baumann said.

Baumann said last year that German companies showed interest in the Partnership Fund initiated by PM Ivanishvili. “One successful project has been made. However, since the elections last year there has been no further visible development on that front,” he said.



Make Your Comment

Add NewSearchRSS
Only registered users and facebook social network members can write comments!

This text is replaced by the Flash movie.
This text is replaced by the Flash movie.
“The former Yugoslav Republic of Macedonia”: presidential election and early parliamentary elections

23/04/2014 16:38 (21:51 minutes ago)

The FINANCIAL -- A 14-member delegation of the Parliamentary Assembly of the Council of Europe (PACE), led by Stefan Schennach (Austria, SOC), will travel to “the former Yugoslav Republic of Macedonia” from 25 to 28 April to observe the conduct of the presidential election (2nd round) and the early parliamentary elections, alongside observers from the OSCE’s Parliamentary Assembly and Office for Democratic Institutions and Human Rights (ODIHR), according to PACE.

American Express Reports First Quarter EPS of $1.33, Up 16 Percent from a Year Ago

19/04/2014 14:24 (5 Day 00:05 minutes ago)

The FINANCIAL -- American Express Company reported first-quarter net income of $1.4 billion, up from $1.3 billion a year ago. Diluted earnings per share rose 16 percent to $1.33, from $1.15 a year ago, according to the American Express Company.


World News
Helping Bulgarian farmers to become landowners

19/04/2014 11:39 (5 Day 02:50 minutes ago)

The FINANCIAL -- The EBRD is providing a €5 million to loan to Elana Agrocredit AD to co-finance the development of Bulgaria’s agricultural land market.

The World Bank Supports Small and Medium-sized Businesses in Tunisia

19/04/2014 10:29 (5 Day 04:00 minutes ago)

The FINANCIAL -- The World Bank approved an additional loan for US$100 million for Micro, Small and Medium Enterprises (MSMEs) in Tunisia.

EBRD loans to boost energy efficiency and support competitiveness of Macedonian companies

16/04/2014 16:42 (7 Day 21:47 minutes ago)

The FINANCIAL -- The EBRD has teamed up with Macedonian bank, NLB Tutunska banka, to increase the competitiveness of the Macedonian private sector and to promote energy efficiency in the country with a €6 million financing package, according to EBRD.      

EBRD helps modernise Baltic freight handling

16/04/2014 16:29 (7 Day 22:00 minutes ago)

The FINANCIAL -- A €32.5 million loan from the EBRD to Klaipedos Smelte, the company operating the container terminal at Klaipeda port in Lithuania, helped modernise its freight handling capacities and upgrade the whole Baltics region as a transit hub, according to EBRD.

Africans among the most morally opposed to contraception

19/04/2014 08:33 (5 Day 05:56 minutes ago)


The FINANCIAL -- Speaking to bishops from Tanzania last week, Pope Francis praised church workers in Africa “who strive diligently to educate people in the area of sexual responsibility and chastity” with the aim of preventing HIV and AIDS.


Major Cloud Service Providers Slash Prices; Threaten Smaller Players’ Existence: IDC Warns

19/04/2014 13:40 (5 Day 00:49 minutes ago)

The FINANCIAL -- In the last week of March, major Cloud Service Providers (CSPs) in Asia dropped their prices for core services dramatically and IDC believes that this will make it very difficult for smaller CSPs to remain in business if they continue to rely on provision of basic, undifferentiated services, according to International Data Corporation (IDC).

Philippines: Further reforms to strengthen growth, create more and better jobs

11/04/2014 12:00 (13 Day 02:29 minutes ago)

The FINANCIAL -- The Philippines is likely to remain as one of the fastest growing economies in the East Asia and Pacific region in the next two years.

Gazprom and Turkey to look into possible increase in Blue Stream capacity

24/04/2014 08:03 (06:26 minutes ago)

The FINANCIAL -- Ankara hosted a working meeting between Alexander Medvedev, Deputy Chairman of the Gazprom Management Committee and Taner Yildiz, Minister of Energy and Natural Resources of the Republic of Turkey, according to Gazprom.

Zurich identifies seven cyber risks that threaten systemic shock

23/04/2014 17:00 (21:29 minutes ago)

The FINANCIAL -- The recently published Zurich Cyber Risk Report, created in collaboration with the international think tank Atlantic Council, argues that cyber-risk management professionals need to look beyond their internal information technology safeguards to interconnected risks which can build up relating to counterparties, outsourced suppliers, supply chains, disruptive technologies, upstream infrastructure and external shocks, according to Zurich Insurance Company.


Developed by Aleksandre Chiabrishvili

Design built by Creo Group