The FINANCIAL — Sixteen new businesses have been registered in Georgia during the first two months of 2016 in cooperation with UK citizens. The number has grown from 1996 and now totals 622 enterprises. The largest number of businesses registered in a single year (77 units) was in 2014. The country’s open economy and geographical location are the main factors encouraging UK citizens to start business in Georgia.
In 2015 the UK became the second largest investor country to Georgia. According to the preliminary data of the Statistics Office of Georgia, the volume of investments exceeded USD 198 million, a record number for the last two decades. The list of organizations that attracted the largest amount of investments from the UK is as follows: BGEO Group; TAV Urban Georgia; Dizon Limited Branch of Georgia; Imperial Tobacco International Limited Representative Office in Georgia; MOTT MACDONALD LIMITED Representative Office in Georgia, and others. With USD 124.7 million the financial sector was the most attractive field for UK investments during 2015. It was followed by healthcare and social assistance amounting to USD 64.4 million.
The establishment of businesses by UK citizens in Georgia started exceeding 50 from 2011. The number was 64 in 2011; 72 in 2012; 55 in 2013; 77 in 2014; and 61 in 2015.
Pamela Kemsley-Dugladze, Managing Director at ETI Ltd, considers the open economy, geographical position between the Black Sea and the Caspian, young, often multi-lingual population, and beautiful scenery and attractive culture to be the main advantages of doing business in Georgia.
ETI provides both general and specialist English courses and offers exam preparation courses for Cambridge English language qualifications. The schools are also accredited Cambridge English examination centres.
ETI also delivers management courses and technical training courses for a variety of industries including the oil and gas industry.
The company has centres in Tbilisi, Kutaisi and Batumi. Four training centres are located in Azerbaijan, two of which are in Baku, and there are two training centres in Kazakhstan. The head office is in London.
ETI has 37 staff in Georgia. “We have made considerable investments over the past 20 years,” said Kemsley-Dugladze.
“We plan to add further internationally-accredited programmes; for example this year we will be running two prestigious CELTA courses which provide advanced training for English-language teachers leading to this high level award from Cambridge English. We have already received applications for these courses, not only from Georgian teachers but also from teachers in neighbouring countries and from countries further afield such as Saudi Arabia and India,” she added.
According to Kemsley-Dugladze the management decided to enter the Georgian market as they saw opportunities with a young population eager to be educated to international standards and also spotted opportunities in helping other western companies entering Georgia who needed support to develop their Georgian workforces.
“Georgia has a fairly open economy with good commercial law and a reasonable taxation system. The Government should be commended for listening to the views and requests of international companies investing in Georgia,” said Kemsley-Dugladze.
In order to improve the business climate of Georgia and attract more investors, Kemsley-Dugladze suggests improving internet provision and the competitiveness of this sphere as the service offered to business customers is poor with excessive prices, and is hampering business development and new opportunities.
The indexes of Georgia: ease of doing business; low corruption; educated human resources; resilient banking system; satisfactory corporate governance; easy visa regime; investment protection and proper geographical location – are what encouraged the management of SAMT LTD to start business in Georgia.
Nasrollah Mostofi, CEO at SAMT LTD, holds a PhD in tourism management from the USA. He has been in tourism, banking, the capital market and investment development – promotion for the last 20 years.
In Georgia, UK-based SAMT Ltd has registered a group of companies in different fields such as: agriculture investment fund; investment banking services & brokerage; travel & tourism; money exchange & transfer; energy & mining and trading with the affiliated companies in Germany, Turkey, Malaysia and the United Arab Emirates.
The volume of investments had been over USD 10 million.
Based on experience of the field and as an active investor, Mostofi thinks Georgia has got good potential to be the business and investment hub of the region, subject to some improvements with respect to investment services and marketing.
In Mostofi’s words, the main challenge that he has faced in Georgia is a lack of vigilance toward foreign investors. “As an example, we trusted the ICC chairman and injected seed capital for a project which has been in line with the country’s strategy. Unfortunately he did not return our money despite the contract and disappointed our partners,” he said.
“The sense of responsibility from a person who occupies the position of ICC chairman, is a very key element to give a positive message to investors,” he added.
“As a result of the good gesture, we did not get any protection from the authorities, not the ICC either which is supposed to be the voice of private sectors and investors. We have opened a file against the chairman of ICC, but it has been a long time and nothing has happened,” said Mostofi.
Mostofi hopes that the new administration will take serious measures in this regard.
The example of Dubai and steps taken to make it the financial and business hub of the region, makes Mostofi optimistic that Georgia has got the potential to do so as well.
In order to attract more investors and improve its business climate Mostofi sees the importance of establishing an Investment Promotion Unit (IPU) in the chamber of commerce to act as a conduit between investors and authorities.
He also mentions the importance of establishing the Georgia International Financial Centre (GIFC) to boost foreign investment and have high street international banking and relevant entities.
“The GIFC would make Georgia the regional financial, business and investment hub,” Mostofi told The FINANCIAL.
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