The FINANCIAL — The American Chamber of Commerce in Georgia (AmCham), cooperated with the America Georgia Business Development Council’s (AGBDC) for the 10th annual business forum Choosing Georgia, AmCham promotes US-Georgian economic and commercial relations.
The FINANCIAL interviewed Amy Denman, Executive Director, regarding the Chambers strategy for presenting Georgia as a favourable place to invest, and the chamber’s relations with AGBDC, its cooperating partner in Washington DC.
Q. You came to Georgia in 1996 from Chicago where you were Multimedia Specialist for secondary education products in the Marketing Department of Houghton Mifflin Publishing Company. What were your expectations of Georgia?
I had first visited Georgia for 2 weeks back in the spring of 1995. It was certainly a shock, very few cars, dark, anything of value had been basically pillaged including transmission wires, man-hole covers, any and all loose wood… the country was just starting its emergence from the darkest years. I remember one incident well.
It was around 10pm and I was coming back from dinner with a friend. There were no cars anywhere in sight… so we were walking near Freedom Square on our way home. Across the street in a pile of rubble which is now the Courtyard Marriott we heard a gun fight – gangs firing automatic weapons at each other. We saw a policeman and frantically told him there were gun shots across the street and he should probably go investigate. He literally answered “hell no, I’m not going over there – it’s dangerous!” At that point we saw a car, flagged it down and asked the guy to drive us home.
To answer your question about my expectations of Georgia – I expected adventure. I knew my work would be difficult under the circumstances, but challenging and rewarding. I pretty much knew what I was getting into, and made a very conscious decision to go for it. What I didn’t expect as much was the wondrous countryside with its natural beauty, rivers, lakes and mountains. Tbilisi was what it was – a city almost in ruins. But my trips into the regions were always full of beautiful surprises.
I expected adventure – and Georgia certainly fulfilled my expectations.
Q. In 1998, after working for IFRC (International Federation of Red Cross and Red Crescent Societies) you became the Coordinator, then founding Executive Director of AmCham Georgia in 1999 and since then you’ve been leading the chamber's activities in Georgia. Can you remember the best and worst times?
Professionally speaking I can think of many best times. As you mentioned I was the founding Executive Director of AmCham. Having started the chamber with just me, my car and my personal laptop (no office, no staff, no funding) – it is a thrill for me to know that our chamber has become such a success. One of my “best times” was when I presented AmCham Georgia for full membership in the European Council of American Chambers of Commerce (ECACC).
Many of the Western European AmChams were sceptical that Georgia could join the ranks of countries such as Germany, France, and Britain. After my presentation, half of the audience came up afterwards and basically said that they thought we were perhaps the most effective chamber of all of the 32 countries. This is quite a compliment coming from 100 year-old AmChams with membership numbers in the thousands. This year in the objective survey of all European AmChams, Georgia was ranked the third most successful Amcham in Europe. That was also a “best” time for me. It is very satisfying professionally to receive objective positive feedback on the work I do.
The worst times? That’s more difficult. If I got into what have been the absolute worst times professionally speaking I’d get myself into trouble… I guess I could play it safe and say one “worst” professional time was this year’s Independence Day picnic when 15 minutes before the start of the picnic near hurricane force winds blew in over the mountains.
The temperature dropped 30 degrees and the sky turned black. All the chairs, umbrellas, thousands of dollars in decorations literally blew away. There were 20 heavy guys holding down the tents and 20 women trying to hold down the outside buffet that was set for 1000 people. Months of planning, thousands of dollars in decorations, the hard work of all the volunteers – blown away.
The band played on… and the hearty guests persevered. People were actually wearing winter ski-jackets and wrapping themselves in blankets huddled behind trees. On July 4th!
Personally the worst time was when a close friend of mine was kidnapped in summer 2001. He was held for 77 days before his return. I felt a tremendous amount of anger at Georgia during that time. He and his wife and 3 kids are both fine and happy now.
Q. AmCham organizes conferences and seminars, works on legislative initiatives of concern to the business community in Georgia, and most importantly, provides an ongoing forum for members of the American business community to gather and share knowledge, experiences, problems and solutions. How actively were you involved in AGBC’s 10th annual conference?
The American Georgia Business Council basically serves as our counterpart in Washington DC. We try to closely cooperate to promote US-Georgian economic and commercial ties. But as you can imagine, reaching across the Atlantic to bring investors to a country which until recently was relatively unknown isn’t easy. The word is getting out thanks to the combined efforts of AGBC, AmCham and the government as well as others. Georgia is a place to invest.
It’s a small country and a small market – but is positioning itself well now. It is still an emerging market, meaning that there are holes to be filled by entrepreneurs. The AGBC annual conference is one of several effective mechanisms to allow American investors to come and take a look for themselves.
Q. “Hardly a day goes by that one does not encounter a senior Georgian diplomat or official in the United States. Being from Georgia no longer causes people to jump to the conclusion that you have roots in Atlanta, such is the level of familiarity much of the American public now has with the small country in the South Caucasus. Georgians no longer make Americans think only of elegant athletic dancers.
Now, Georgians even play on several teams in the National Basketball Association. Clearly the breadth and depth of the relationship between Georgia and America have grown, strengthening both sides,” says S. Enders Wimbush AGBC President. How do you think, will the AGBC September conference help Georgian businesses to penetrate the U.S market?
Honestly I think it will help more the other way around. As Enders mentions, the relationship between Georgia has grown – but it is still very difficult for Georgian goods to penetrate the US market. For most goods, the European market, Turkey and even Central Asia are more realistic targets, being closer and less expensive to get goods to. I think the conference is aimed more to help US investors learn about the opportunities here in tourism, IT and other interesting sectors.
There are goods that can be viably exported from Georgia to the US. Including wine, water and spirits of course – this is already happening. And in fact, transportation costs to the US are not that much higher than transport costs to the EU. But in general I think that Georgia is doing the right thing by first looking at closer markets. The EU market is historically and socially easier to navigate and understand for Georgians. Plus Georgian goods are better known in the EU than in the US. Branding the Geo name there will be easier.
Having said that, AmCham and the US Embassy are working to increase and encourage trade between Georgia and the US. Trade missions and investment conferences are a good way to introduce Americans to the bounty of products available in Georgia.
Q. The American Chamber of Commerce in Georgia is an association aiming to promote the development of commercial relations between Georgia, the United States of America, and the international community in Georgia. Can you remember concrete success stories that AmCham’s been involved in?
Absolutely. Our legislative initiatives in Tax and Customs have been successful to ease restraints for businesses. Our work to delay a potentially expensive amendment in the Law on Consumer Protection saved American exporters to Georgia millions of dollars. We’ve been involved in two trade missions with the US Department of Agriculture where almost half of the delegates eventually ended up with commercial contracts with Georgian companies.
We’ve helped a lot of companies on an individual basis as well. It used to be that we focused on helping American companies that were already operating here – there have been a lot of rough times in the past. Now that the investment climate is much more liberal, and corruption has been vastly reduced, we can now confidently promote Georgia as a place for American investors to come and put their money. It is our job to honestly relay the opportunities and risks of investing in Georgia – at the moment, the opportunities generally outweigh the risks.
Q. The Chamber was officially registered in Georgia as a non-profit non-commercial organization on September 29, 1998. Considering the already almost 10 years of activities in the country, how could you evaluate the local investment climate development?
Greatly improved without a doubt. The country I came to 10 years ago doesn’t even resemble the country I live in today. (At least I can say this for Tbilisi). It has been an extraordinary transformation in a very short period of time. I am proud that AmCham has been a part of it.
The Tax rates are comparatively low in Georgia. Customs tariffs have been abolished. Onerous licenses and permits have been eliminated, the Labour Code has been liberalized, business registration procedures are simplified, corruption has been vastly reduced… the list goes on and on.
This government really gets things done. The business community will continue to work as their partner towards effectively implementing these reforms. It is our job to remind the government that it is not a matter of checking a box and then moving onto the next reform. The administration is the key… the inner workings of administrative reforms need more attention. Sometimes the tip of the spear moves faster than the shaft can keep up.
Q. Who are the key policy makers and appropriate governmental bodies in both the US and Georgia the Chamber promotes its goals by establishing relations with on subjects of interest to its members?
We work with the policy makers who get things done. I can say that our main partner in the US is the US Chamber of Commerce. The US Chamber represents over 3 million businesses and more than 100 American Chambers of Commerce in 91 countries. They have a very powerful voice in both the US executive and legislative branch. When and if an issue is identified that will affect US businesses, we call them in as our partners to help solve the problem. One concrete example was the amendment to the “Law on Consumer Protection” that was proposed in 2006 which basically called for Georgian Language labelling on products entering Georgia.
The problem wasn’t the intent of the law, but rather the time-line that was specified. It gave major American and other manufactures such as Procter & Gamble, Colgate Palmolive and Wrigley’s an impossibly short window to redesign their manufacturing and labelling plants to comply with this law. These companies have plants all over the world. The timeline was too short and practically imposed a barrier to trade. Together with the US Chamber we lobbied for an extension of the timeline. We were successful in delaying implementation of the law to allow US and other manufacturers time to comply.
In Georgia, we work most closely with the Ministry of Economic Development and the Ministry of Finance. When it comes to Tax and Customs issues we partner with the MoF. When it comes to actual investments we work closely with the MoED.
We are happy to work with any and all government officials to fight for business and free trade.
Q. Could you please speak about the contribution by AmCham in terms of legislative initiatives: Labour Code, Tax Code, Customs Code?
Since the inception of AmCham, we’ve had an annual meeting called “taking the temperature of the investment climate.” During these meetings, our members summarize the most important issues that were negatively affecting their business operations. Tax and Customs problems topped the list almost every single year until just a couple of years ago.
Now, businesses are more satisfied with how the Tax and Customs Departments are operating. There are still issues to be fixed – some legislative and some of them administrative, but in general, these two issues have improved greatly. AmCham has played a major role in both. In the Tax arena – AmCham has openly supported the newest proposed change to combine social and income tax into a personal income tax with a rate of 25%. We support the government’s efforts to make Georgia the most attractive tax regime in the neighbourhood.
In Customs, we’ve been deeply involved in several aspects of the reform efforts. We mobilized the business community to give input on the re-write of the new code which came into effect on January 1, 2007 working both with the Ministry of Finance and the Budget & Finance Committee in Parliament. 85-90% of our comments were incorporated into the code. It was a very good example of how the writers of legislation and the users of legislation (traders) can cooperate productively to make a good product.
The only problem was that the secondary legislation, where the practicalities come into play was hastily written. The timeline of writing and implementing the new code was unrealistic, so now we are working together again with the State Revenue Service to go back and revisit important subjects that were not entirely well thought out during the first draft.
This time we’re pulling in other organizations to maximize our effective impact. On our initiative, the EU-Georgian Business Council, the Federation of Georgian Businesses, the Turkish Georgian Business Council, the Freight Forwarders Association and the Georgia International Road Carrier’s Association (IRU Georgia) are all working together to have our voice heard loudly and clearly during this revision process. We will concentrate on the penalties system, clarifying the declaration processes and then taking a second look at the rules regarding Customs regimes.
Basically, while we applaud the reform process, and fully acknowledge that the government is moving in the right direction, AmCham would like to see the drafters of legislation slow down a bit. It’s destabilizing for the business community when laws are written too fast and without analysis or cross-reference to other laws. We’re seeing more and more contradictions occurring between laws, simply because unrealistic deadlines have been set. We also see more and more mistakes being made – leading to constant amendments. Businesses which have to use/comply with the law can’t keep up. It is a common complaint we are hearing.
Q. The Investment Guide to Georgia is a project of the American Chamber of Commerce in Georgia (AmCham) and its Investment & Tax Committee through technical assistance by the U.S. Agency for International Development’s Georgia Enterprise Growth Initiative. How successfully has the guide been implementing its motto: Something about everything and everything about something?
I’ll let the numbers speak for themselves. We had over 71,000 visitors to the site since it went live 2 years ago. The visitor breakdown by continent is: North America 42%, Asia 30%, Europe 12%, Africa 1%. So yes, it seems that people definitely utilize our site.
Within the next month, we’ll be completely updating the site. It’s gone a bit out of date, so now the investment committee of AmCham is taking responsibility to oversee the update.
Q. What other related projects does AmCham work on?
Well we’ve got our magazine – AmCham News which is the leading English language magazine in Georgia. We are working now quite a bit on tourism. Together with the SME Support Project we did a project to identify what international tourists expect or want when they come to Georgia. Also in this arena, I personally would think it great if we started a campaign to work with the government to make sure Georgia protects its assets. If, in their rush to bring in FDI, they let investors pave over or ruin the beautiful nature of Georgia… all future tourism is lost.
Encouraging big, ugly, poorly thought-out hotels all over Georgia will kill the future of tourism here. Selling off beautiful natural sites in Georgia to the highest bidder is a mistake. What makes Georgia interesting has to be protected at all costs. That is its nature, historical sites and cultural activities.
Q. Where do you see yourself in the next 10 years if you plan to stay in Georgia?
I want to start looking at investments myself. I’ve recently become a minority shareholder in the Donut Stop which makes the most delicious donuts. There is also a wonderful café at the Donut Stop. It’s got the best Caesar salad in town. Real estate is attractive of course – at least on a small scale as far as my own investment goes. I honestly doubt that I’ll be here in 10 years, but you never know… Regardless, I am sure I will always maintain a connection with Georgia whether through my future investments or just having a lovely Georgian retreat home.
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