New Prospects for Georgian-Italian Trade Relations

New Prospects for Georgian-Italian Trade Relations

The FINANCIAL -- On the 8th of March the Italy-Georgia Business Forum 2017 will be held in Rome. The event will aim to promote Georgia as a destination for investment and business, Italian Ambassador to Georgia Antonio Enrico Bartoli told The FINANCIAL.

The Prime Minister will lead the Georgian delegation at the business forum. This event aims to bring together large, medium and small companies from Georgia and Italy to facilitate business cooperation between the countries.

Companies will have a unique chance to learn about the investment climate in Georgia as well as listening to eminent speakers from both the public and private sectors during thematic panel discussions.

Q. What is encouraging Italy to put more efforts into investing in Georgia?

A. Georgia has a very promising business environment. There is a good climate for investors and for business in general here. It’s a transparent environment. There are certain sectors, for example infrastructure, which are financed by international finance institutions. So transparency is assured, and there are no problems with payments. Tax exemptions, low taxes or no tax on reinvested dividends, represent another positive element. Also, the country has a great geographic location and some very interesting free industrial zones.

Good general conditions are necessary but could also be not sufficient. One should therefore discuss concrete projects, and this is one of the main objectives of the business forum that we are going to host  on 8 March in Rome, at our Ministry of Foreign Affairs and International Cooperation.

Frankly speaking, the first aim is to fill the gap of information and knowledge in the business community. This will be a good opportunity to highlight the direction of the country, the reforms you are carrying out and the headway that you have made, which are remarkable.

There will be thematic panel discussions on manufacturing; infrastructure; tourism and hospitality; and real estate. There will be the exchanging of ideas at B2B meetings. From the Italian side, all the main actors of the Italian business system will be present, among them Confindustria, which is the industrialists’ association; trade agency ICE; and SACE, our export credit agency which already partnered with the Georgian Partnership Fund.

There will be, I hope and believe, lots of Italian companies present, including those which are already in Georgia and are quite important, like Salini Impregilo from the infrastructure sector; Ferrero from agroindustry; Saipem (oli and gas); as well as companies working on the infrastructural development of ski resorts.

As of now, we have more than 60 Georgian companies registered. Lots of them are from the construction sector, food and drink, textile, and tourism. So, quite diversified. We are working on the registration of the Italian companies, and of course matchmaking, to have a fruitful B2B session after a networking lunch.

The fact that the Georgian Prime Minister is leading this delegation along with several ministers, including the Ministers of Foreign Affairs, Economy, Energy, Regional Development and Infrastructure, and several other representatives of governmental agencies, is a sign of the political importance attached to this evet.

Italy is Georgia’s 3rd trading partner in the EU, but we can do much better. To do much better we have to enlarge the audience, to reach out to different sectors. We have to foster direct contacts, while educating our business community on the general situation and the opportunities of Georgia.

Q. Which sectors are Italian companies most interested in investing in?

A. Agro industry is one of the most interesting sectors. Of course there are issues related to land registration and availability of land. But we have the very successful example of Ferrero, which is now a driver of local development.

Manufacturing means that a company can establish its activities here to use Georgia as a platform. This is what Georgians have to explain to Italian entrepreneurs, who usually prefer establishing their productive presence in larger markets.

Another interesting sector is infrastructure. Our building and construction companies are among the best in the world. We have about 38 main construction companies, 627 contracts in almost 90 countries, with a total value of EUR 87 billion.

We build highways, dams, subways and bridges all over the world. I think that our companies can be wonderful contractors and also partners because we are also discussing and exploring some PPPs, Public Partnership Initiatives.

There is an interesting programme of EU and EBRD called “EU for Business”, allowing Georgian SMEs to be in line with DCFTA standards by buying technological equipment, and Italians are there to help. As for cooperation in the tourism and hospitality sector, we can be - once again - excellent partners or providers for everything related to this business. The same goes for furniture and design accessories. I think there is a lot of opportunity for cooperation and investment.

Q. How competitive is the Georgian market for Italian business?

A. If by competitiveness you mean reasons for attraction, then low wages are an attractive element when taking a decision on starting a business. That has to be accompanied by good skills, though. I appreciate the effort of the Government in putting education high on the agenda. It is a top priority, not only university education but also vocational training, professional education.

Q. How have Georgian-Italian trade and business relations changed over the last decade?

A. It’s been a very encouraging, rather impressive, increase. If we take the GeoStat figures, we had USD 162 million in 2007, and in 2016 we registered 336 million, so it has more than doubled. It’s a remarkable figure and is testimony to the fact that there is interest and there are concrete opportunities. There is much to do in the different sectors to increase these figures.

There are good opportunities for us in the agro industry, infrastructure, machinery, and hospitality. In terms of products: agricultural machinery; materials for construction; kitchen equipment; furniture; cosmetics; fashion apparel; food. On the other hand, I think there is great curiosity also in Italy for Georgian wine and Georgian products. There are even wineries now in Italy which have started production using the traditional Georgian method.  

Q. What can you tell us about the interest of the Italian fashion industry in Georgia?

A. Let me say that we have been organizing some nice events, recently. At the beginning of this year there was a pretty amazing exhibition of Italian fashion at the Moma museum. It showcased the history of Italian fashion over the last 6 decades, through the most iconic fashion designers and the garments representing them. We also organized a fashion show with Italian garments. There are several brands present here. There is a common interest in this field. It’s a good opportunity even for Georgian operators, for distributors, for the sellers of these brands. There is a quite interesting franchising sector. I can list some brands specifically, like Carpisa; Intimissimi; Calzedonia; Coincasa; Yamamay; Ermenegildo Zegna; OVS; Terranova; Ci Gusta; Old Wild West; Max Mara Weekend; Pensarecasa; and Geox. There are also productive realities, like the Georgian companies producing for Moncler, which is a very important Italian brand. And I think there could be the opportunity to start similar businesses in the future.

I sincerely believe that there is also a nice potential for Georgian designers. Georgia has a great cultural background. The taste for beauty in its DNA, That’s why there are excellent young designers. I am ready to support exchanges of knowledge and experiences in this regard. We have very good fashion schools. We have already proposed some initiatives and we also brought a design exhibition here.

Q. What kind of environments do Italian corporations consider when choosing a country to enter?

A. I can give you some examples of figures that I think are effective in giving across the idea. There are lots of Italian FDAs abroad. In figures dating back to 2014, there have been almost EUR 550 billion of Italian investments abroad, while foreign investments in Italy have been 404. There is a positive difference. This means that there are more than 31 thousand Italian companies abroad with a turnover of EUR 560 billion and more than 1,5 million employees in more than 160 countries.

An interesting trend is that if you compare present data to 20 years ago, the quota of investments in Europe is reducing. We are going more toward countries outside of Europe. The main factors are the dimensions of the market. You can see the highest increase in the presence of Italian companies abroad in countries like Brazil, the USA and China, and this is not by chance. These are markets chosen for their trend and their actual size as the most attractive. Other factors are the quality of products that you produce there and also the exchange in terms of technical knowledge.

Many Italian companies operate in countries like Romania, which offers the advantage of more competitive production factors and of being a EU country. I think that in some time Georgia could aim at becoming like Romania for Italy and for other manufacturing countries.  

Q. What can you tell us about the cultural relations of Georgia and Italy - what events are planned in this regard?

A. We reorganized the structure of the Ministry of Foreign Affairs some years ago. We created a Directorate General called “Sistema Paese”, for Cultural and Economic Promotion and Innovation.  It covers economy and culture at the same time. We call it “integrated promotion”. It does not simply mean that companies are expected to sponsor cultural activities. Culture is a powerful driver of visibility. The best tool to convey the image of the country abroad. And businesses can take advantage of that.

So in this way we are promoting Italian culture. We believe that culture is one of the most direct channels of communication and friendship. We proposed a quite intense cultural programme last year in Georgia. We are even more ambitious for this one. Our first ambition would be to bring some important Italian masterpieces here to Georgia.

We are also looking at contemporary art. We are planning to have an exchange between young and emerging Georgian artists to provide them with a venue in Italy and do the same with Italian artists here. We will have lots of music event, starting with a concert to celebrate the 25th anniversary of the reestablishment of our diplomatic relations. We will arrange many other concerts and support the Batumi  and Baroque Festivals as well. Several Italian artists will be attending the festivals. Regular screenings of Italian films are going to be offered. We had a very intense theatre season last year. And we have planning, together with our partners, many theatre shows also this year.

I think that we are quite active because we are very passionate, and as I said, this is something that can draw on public funds but also on the generosity of sponsors. We are very much welcoming support from Georgian companies, especially those which are interested in relations with the Italian market. We think that this is also for them a good opportunity for visibility.

Q. What can you tell us about the field of tourism? What links can these two countries share in the development of tourism?

A. There are good statistics in this direction. There are good trends. If we talk about Italian tourists coming here, there were almost 13,000 in 2016 with a growth of 7% compared to the previous year. Georgia is a wonderful country and region. Personally I am a mountain lover and there are wonderful mountains here. This is nothing new though, there were Italian explorers and voyagers coming here in the past, like Vittorio Sella for example. Here in my office, I have pictures of Svaneti taken by him at the end of the 19th century. There are incredible opportunities in this sector. This can be a very important destination for Italians, but, once again, information should be enhanced.

Italy is a really good destination for Georgians. Georgians love our art, culture, history, language, food and lifestyle. Top travel destination in Europe in recent opinion polls conducted by ACT company and the country where people would like to be back. This is also why the number of Georgians travelling to Italy increased constantly in the last years totalling 15,000 people in 2016 with an increase of 16% from 2015.