Fady Asly: “Georgia is Losing its Competitive Advantage as an Emerging Market”

Fady Asly: “Georgia is Losing its Competitive Advantage as an Emerging Market”

Fady Asly: “Georgia is Losing its Competitive Advantage as an Emerging Market”

 

Fady Asly, Chairman of the International Chamber of Commerce (ICC) Georgia, which is referred to as the ‘voice of business’ in Georgia, stated that the business and investment climates are deteriorating and the country is losing its competitive advantage as an emerging market

“We are very concerned by the totally dysfunctional judiciary; by an increase in criminality and by corruption; we are worried by the lack of decision-making by government officials; we are dismayed by politically motivated attacks on some major businesses; we are shocked by the government-driven xenophobia against foreign investors from the Middle East, India, China, and even Turkey and other countries. In short we feel that the country is heading dangerously in the wrong direction,” said Asly.

Q. You said that Bidzina Ivanishvili [Chairman of Georgian Dream and former Prime Minister of Georgia] is the number one oppressor of businesses in Georgia. You said that this government does not protect businesses from harassment and pressure. Could you provide some specific examples?

A. Yes, we believe that Bidzina Ivanishvili has become the number one impediment to business in Georgia by attacking major businesses operating in the country to serve his personal agenda; I also believe that Mr. Ivanishvili’s policy has been to curtail the flow of foreign investors to the country and the result of this is a yearly economic growth that couldn’t reach 5% since this government came into power.

Were this government to be really investor friendly, economic growth would have reached double digits a long time ago and the Georgian Lari would not have been in freefall for six years.

For the record, at 5% annual economic growth, Georgia will need about 20 years to reach the current nominal GDP per capita of Turkey, Romania and Russia, and 35 years to reach current Estonia, Czech Republic and Portugal.

In short, with the current government’s economic policies we are doomed to remain a poor country for quite some time.

Unfortunately, the Government is unable and unwilling to protect foreign investors who are having a very hard time in the country.

Having said that, I would like to emphasize that we do have some brilliant people in both government and parliament, many very hard working and competent ministers, deputy ministers and staff, some excellent chairs of committees in Parliament as well; our Prime Minister is a very competent and dedicated person as well, however none of them can decide anything without Mr. Ivanishvili’s approval.

The tragedy of Georgia is that those who have the knowledge do not have the power, and those who have the power do not have the knowledge!

Imagine a brand new luxury car with a dysfunctional GPS system that would constantly steer the car in the wrong direction, if Georgia were this luxury car, Mr. Ivanishvili would be the dysfunctional GPS system.

The major problem with Mr. Ivanishvili is that he does not know better, he is a pure product of the Soviet Union, he did business in Russia in the 1990’s when doing business was linked to corruption, harassment, pressure and criminality; he does not understand how a sound and healthy business environment should operate.

Having him in charge of the country and the economy is like having a butcher appointed head neurosurgeon in a hospital.

Q. You even listed the companies which were “damaged or bankrupted by targeted actions from the state”. Could you please tell us in which fields these damaged companies operate mostly? Which are the fields that are currently under pressure from the Government?

A. Those companies operate in various fields from trading to real estate to banking to industry to infrastructure, services etc…

What is important to understand is that the damages caused by the Government to businesses are due to not only harassment, prosecution or pressure, they are also due to a total disinterest from the Government in the problems faced by businesses and a total unwillingness to help solve those problems.

Q. You warned the Government to inform all ICC National Committees of “aggressive attacks, pressure and blackmail by the Government”. Have you informed the ICC National Committees and what result has it precipitated?

A. We have not yet sent a notice to the ICC National Committees, we have noticed a change in attitude of the Government regarding both TBC and Anaklia and we hope that this positive attitude will continue.

There is still the issue of Omega Group to be solved; we are observing the situation and will act accordingly.

Having said that, there are other foreign investors currently under attack and therefore ICC’s future steps will be determined by government willingness to stop those attacks once and for all.

Q. Akaki Zoidze, head of the Parliament’s Health Committee from Georgian Dream, advised you to create a political party. Could this be a plan of yours one day?

A. I thank Mr. Zoidze for his advice and would like to reverse the courtesy by advising him to quit politics, his record as a politician is far from being convincing, I am sure though that he might be successful in some other fields outside politics.

I have no plans at all to get into politics, however what one needs to understand is that politics and business are closely related since some political decisions do affect business and therefore businesses do respond to those policies that have a negative impact on the business environment.

Each sector of society has to play its role conscientiously and professionally, this is how countries move forward.

Q. The Ministry of Finance changed the regulations regarding the payment of excise by importers on the “Golden List”. How does this affect the business environment?

A. Adopting this new rule and granting importers 12 days only to comply, will create a very serious cash-flow problem for those companies.

ICC knows for a fact that many of those companies are unable to raise the necessary funds to cover the excise within this very short period. This will therefore have a terrible impact on their operation and could lead to their bankruptcy.

It is clear that by changing those regulations the Government intends to increase within the months of June and July the income to the budget, however this is a very short-sighted approach that solves a one-time problem but that seriously undermines the business climate and dangerously harms major businesses with all the implications that this will have on the economy, and more importantly on the credibility of Georgia.

A good business environment is a stable environment, a visible and predictable one, unfortunately this particular example is one of the many that we have witnessed for years of how unprofessional and harmful government policies are affecting the economy and the business environment.

Q. Now let’s talk about what the positive developments are in Georgia that you think are promising for Georgia’s business society and environment?

A. I would like to hail the Georgian private sector who despite all hurdles and bureaucracy are fighting to expand and develop; tourism is booming and on this occasion, I would like to thank the former Head of the Georgian Tourism Agency, George Chokovadze, who did a fantastic job for years moving tourism forward. He was replaced a few months ago by Mariam Kvrivishvili who is an amazing woman with an incredible track record of success. She is one of those impassioned Georgians who turns anything they touch into gold.

So despite the gloomy ocean, there are still islands of hope that should make every Georgian very proud.

Having said that, I would like to say that Georgia has an incredible potential to grow very rapidly, the country is exceptionally well located as a transit hub for the region and with all the free trade agreements that are in place it frustrates us a lot that it is not given the chance to develop at the pace that it should be.

Q. Also, let’s talk about ICC and its plans, what is ICC’s strategy, projects and planned activities for the upcoming months?

A. Since January, ICC Georgia has started the preparation works for the Global Launch of IncoTerms 2020 for the autumn period.

ICC’s world-renowned Incoterms rules facilitate trillions of dollars in global trade each year and we are in the process of translating the draft to provide IncoTerms 2020 in the Georgian language together with the English version.

We are also in talks with international experts to provide trainings alongside the launch of the book as well.

This summer ICC Georgia’s Economic Policy Commission, the HR Commission and the CSR Commission will be holding roundtable meetings, discussion sessions and trainings for both members and non-members.

ICC commissions are specialized working bodies composed of leaders in our community to develop projects, advocate policy, and communicate requests and concerns to the Government. They prepare policy products, including statements to contribute to intergovernmental discussions. ICC Georgia has 14 Commissions, covering the fields from Tourism & Hospitality, Arbitration, DCFTA, Trade & Investment, Commercial Law and others.

Our aim is to protect business interests in Georgia and eliminate obstacles and distortions of international commerce. We are actively carrying out activities for the promotion of the market economy system based on principles of free and fair competition among business enterprises.

The 14th Edition of ICCOMMERCE will also be launched at the upcoming Social Event in July.

We are also in talks with a newly established foreign enterprise to bring their innovative services to Georgia by the end of June.

Additionally, ICC Georgia is involved in the ICC Arbitration Court’s establishment in Georgia and we will be broadcasting updates in this regard as well in the upcoming months.

ICC remains the leading business organization protecting our members against harassment, attacks or distortion of the business environment.