“American Business in Georgia Isn’t Developing at a Preferable Speed” Mamuka Tsereteli

The FINANCIAL — Eftychis Gregos Mourginakis is a young American businessman who arrived in Georgia to invest in the country. He and his partners founded the company Delamar, which will soon start operating in the venture capital and advisory sector.

“We work to provide financing to Georgians who have good business ideas that need capital in order to be realized. When larger amounts of financing are needed, say for mid market mid lifecycle companies, we act as an intermediary to find suitable American investment partners such as high net worth individuals, private equity and venture capital funds, and other financial institutions. We are working on deals that range in size from under a million to more than 25 million USD,” said Mourginakis, representative of Delamar, in an interview with The FINANCIAL.

Currently the team of Delamar is focused on Georgia and aren’t going to start business in any other country. Mourginakis said that they are attracted by the Georgian economic sector and business environment.

“We decided to invest in Georgia because of its competitive investing environment, particularly the low levels of corruption, few and predictable regulations, and the attractive tax rates,” Mourginakis said. “The Georgian economic system is really attractive because the Government has created an environment that allows market forces to function.”

“Our main interests and expectations are to realize financial and social benefits for both our Georgian partners and our American investors,” he added.

Foreign direct investments in the first two quarters of 2011 amounted to 174 million USD according to preliminary data of the National Statistics Office of Georgia. This is a significant increase compared to the same period of last year as investment volume has more than doubled. In spite of such a high increase of foreign direct investments, American business isn’t increasing fast in Georgia. American companies are mainly interested in energy, infrastructure, agriculture and tourism sectors in Georgia.

The America-Georgia Business Council is permanently supporting business relations between the two nations. But Mamuka Tsereteli, President of The America-Georgia Business Council says that he wants more American business in Georgia.

“Hundreds of American businesses are already operating in Georgia. But the majority of them are small and medium businesses,” Tsereteli told The FINANCIAL. “Most of the big American businesses in Georgia are hotels. Several business groups including Delamar are currently in Georgia and we are negotiating with them. We are waiting for some other business groups in the near future. I hope these negotiations will end successfully.”

“In spite of these businesses operating in Georgia, we are still trying to attract much more American investors and investments. There is a serious financial crisis in the world, but there are still some untapped financial resources and we are doing our best to direct this money toward Georgia. Political and economical stability and predictability is mandatory for it,” he added.

Tsereteli named several reasons for the small amount of American businesses in Georgia. According to him, previously American business was not a priority for Georgia and mainly resulted in not a large amount of American investments.

“I can list two reasons for this,” Tsereteli said. “First of all, several years ago Georgia was oriented on the amount of investment and not on the quality. Businessmen who paid more were the ones who entered the Georgian market. But amount of money alone isn’t determining the quality of investment. That’s why American business wasn’t represented at a high level in Georgia. Another reason is that in 2003-2008 earning money was too easy in the world. American companies invested money in Europe or in the USA with low-risk conditions. Since the world economic crisis, this has changed. There is money in the USA, but they are not investing in the home country as there is vagueness and uncertainty. Now they are looking for a new market, which could be Georgia as starting up business here is so easy.”

Ranked 16th, Georgia leads the region in the ease of doing business. Georgia continued its broad programme of reform by simplifying business start-up, and expanding access to credit. Since 2005, it has introduced new company and customs codes, a revamped property registry, broad judicial reform and a credit bureau.

Recently The American National Standards Institute (ANSI) and The Georgian Accreditation Center (GAC) signed a memorandum of understanding by the support of EPI (the USAID-funded Economic Prosperity Initiative).

“Under the memorandum, ANSI will help GAC develop a roadmap to bring Georgian national accreditation and conformity assessment systems in line with international standards, which is a critical step in developing Georgia’s quality infrastructure. Its results will be seen in several directions. First, it will simplify the export of Georgian products across the world and on the other hand it will somehow attract more businesses in the country,” said Sandro Shelia, Senior Director of Accreditation Service at ANSI.

The US Embassy in Georgia is very much interested in the growth of American business in Georgia as well. John Bass, Ambassador of the USA in Georgia, claims that the recent successes in the bilateral trade and investment relationship between the two countries include investment in a cold storage facility in Poti and the creation of a loan guarantee programme for U.S. agricultural and food products.

“Deepening the economic and trade relationship between the USA and Georgia is something we have been working on for several years and we will definitely continue it. The number of American companies interested in investments in Georgia is increasing. On the other hand, the market of Georgia is continuing to progress. We will continue supporting Georgian economic growth, generating new jobs and increasing the income of Georgians,” John Bass said.

 

 

Leave a Reply