The FINANCIAL — “The interests of US companies in Georgia are divided in to two areas: the first is interest in American exports of goods, technologies, equipment and services; and the second area is investments in the Georgian economy. At this stage we should expect interest in energy, transportation, agribusiness, tourism and financial sectors, but it is also important to state that any business that brings profit can be interesting for American investors,” said Mamuka Tsereteli, President of the America-Georgia Business Council.
The FINANCIAL — “The interests of US companies in Georgia are divided in to two areas: the first is interest in American exports of goods, technologies, equipment and services; and the second area is investments in the Georgian economy. At this stage we should expect interest in energy, transportation, agribusiness, tourism and financial sectors, but it is also important to state that any business that brings profit can be interesting for American investors,” said Mamuka Tsereteli, President of the America-Georgia Business Council.
On behalf of its members the America-Georgia Business Council (AGBC) promotes investment opportunities in Georgia and provides support for Georgian companies seeking export opportunities and international partnerships. AGBC relies on a deep understanding of the Georgian political and business landscape, direct access to high-level government officials and agencies, and diversified business contacts to deliver value and maximize opportunities in Georgia for our members. AGBC was formed in January 1998.
AGBC continually seeks opportunities for increased business transactions between the two nations, defends the interests of its members, and serves as a platform for constructive dialogue on a myriad of issues related to the bilateral trade as well as the business climate in Georgia.
“It is hard to talk about the results of the elections at this stage, but expectations are very high among the businesses that are already engaged, as well as among the Georgians who live in the US, that the business environment will change for the better, towards more freedom and more opportunities,” he said.
Q. You were quoted in your previous interview as saying: “There are between USD 2 and 3 trillion of investment capital available in the US now sitting idle and expecting a destination for investments. With efforts focused on a marketing campaign and internal reforms some of this money may end up in Georgia.” Where has this money gone? Is it partially invested in Georgia?
A. Most of this money is still not invested. Unfortunately Georgia didn’t do a sufficient job in attracting these funds. According to the World Investment Report of 2012, a large number of multinational corporations still have large amounts of cash reserves that they do not invest due to uncertainties in the world economy. With greater stability and predictability, an appropriate marketing campaign and better allocation of resources Georgia could attract part of these funds.
Q. You have intensive contact with businesses in the United States. What is their perception of Georgia?
A. In general awareness of Georgia in the United States is still limited. People know Georgia from news stories that are rarely positive and in most cases are related to conflicts with Russia. Promotion of a positive image of Georgia is very important. The previous government made some effort in this direction, but this effort was scattered and not strategic. The new government needs to focus on this issue. Awareness of Georgia will improve the competitive position of the country in terms of the attraction of investments or tourists, as well as in terms of the sale of Georgian products thoughout the world. In general, the perception of Georgia among people who have visited the country is positive, so it is important to find ways to bring more people to Georgia.
Q. How would you evaluate the general business environment in Georgia, has it been progressing from year to year?
A. Georgia has most of the basic laws and regulations, as well as basic infrastructure, that is essential for business activities. Some of the areas of activities are open to competitive business activities. At the same time there are different barriers of entry in a few areas of business activities. The new Georgian Government promised to eliminate those barriers. They also promised to establish judiciary independence and an impartial dispute resolution system that should facilitate investments in the Georgian economy. This last point is particularly important since it was almost impossible to win tax or property related cases against the Government in the last several years.
Q. How does the Georgian economic environment and legislation fit Americans’ requirements?
A. The limited regulations that exist in Georgia are attractive for investors. I know there is a discussion in Georgia about revision of the labour law. I think that the new government should approach this issue with great caution: some basic principles should be in place, but the labour law shouldn’t become prohibitive for businesses, otherwise businesses will not invest in Georgia. In general, the key problem of Georgia is not government regulations, but how the Government exercised its power vis-à-vis business, and how the Government approached property rights, as well as taxation of businesses.
Q. Georgia is advertised by World Bank as the Top Business Friendly country in the world. It’s reported that Georgia is the best choice when it comes to the ease of doing business. Unfortunately this is having no significant influence on the investment volume from the US. Can you explain why?
A. Doing Business ranks countries based on the written rules and regulations, not by their execution. It also limits its assessment by a limited number of indicators. Countries around the world learned how to make changes in written laws and regulations in order to get higher rankings. These changes are not always reflected in the realities of life. Again, a high ranking in Doing Business is good for the promotion of the country, but it is not enough: you need to have a well-developed, competitive market; independent judiciary and private properties need to be protected. Georgia had problems in later issues and if improvements are not made, problems with economic development and job creation will remain.
Q. Which significant deals would you outline from the US side in 2012-13?
A. I hope that there will be some important deals in the hydro-energy area in 2013. The America-Georgia Business Council is working hard with several groups of potential investors to make this happen. I also expect that there will be some investments in agribusiness, if the USD 1 billion agribusiness fund, promised by the new government, is in place and if the fund decides to co-invest, or otherwise mitigate the risks of private investments in agriculture and agribusiness. We also facilitated small investment in the distribution of pharmaceutical products in 2012 which will facilitate the creation of a more competitive market for these products in Georgia.
Q. What should the Georgian state or business sector do to expand US business in the country?
A. The Georgian Government should have equal treatment for all the investors and create a competitive environment for Georgian, American, Turkish or any other investors. It is also important to have a stable and predictable legislative, regulatory and tax environment for many years to come. Particular sectors of the economy may require additional incentives, but the policy of infrastructure development and stability of environment should facilitate more American business coming and investing in Georgia. Again, raising awareness of the country is important. The Government needs to revitalize Investment Agency and Invest in Georgia conferences. The America-Georgia Business Council plans to host its fifteenth annual conference in Washington D.C. on 12 December to facilitate this process.
Q. What are Georgian businesses’ prospects in the US?
A. I have worked for many years on the promotion of Georgia wines in the US. Georgian wines are competing with producers from all over the world who are supported by their governments on the US market. Georgian producers have no such support. The Government needs to invest consistently for at least three to five years in the marketing of Georgian wines in the US and that will allow us to establish Georgian wines as a category on the US market. As a result every wine shop will have at least several shelves filled with quality Georgian wines. Wine represents the best that Georgia can offer to the world markets, and wine is also the best tool to raise awareness of Georgia. Wine could serve as a driver for other Georgian products as well.
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