The FINANCIAL -- “We are witnessing a boom in investments in tourism, many hotels are being built and Georgia will no doubt become, in the coming years, one of the main tourist destinations in the world,” said Fady Asly, Chairman of the International Chamber of Commerce (ICC) Georgia.
In his interview with The FINANCIAL, Asly, who leads the organisation which is referred to as the ‘voice of business’ in Georgia, stated that tourism and hospitality are heading the list of the most interesting sectors for investment nowadays.
“Investors are also very interested in power energy projects, be it hydro or wind, and I believe that Georgia has the potential to become the power energy hub of the region,” he added.
ICC continues to support businesses in Georgia and also business-oriented projects and initiatives, among them Golden Brand - one of the most influential and prestigious business awards in Georgia.
“ICC and The FINANCIAL have cooperated for years now regarding the Golden Brand Awards. This year’s ceremony was absolutely perfect; it is so important to acknowledge and reward businesses that are pushing their brands forward. The companies that were awarded are all leaders in their field and we are all witnessing their success growing more and more as the years pass. The FINANCIAL remains the undisputed leading professional publication in Georgia,” Asly said.
Q. ICC’s monthly Executive Board Meeting discussed issues related to the business climate in the country. What would you say about today’s business/investment climate of Georgia?
A. We have mixed feelings about the investment climate in Georgia, on the one hand the Government under the leadership of the Prime Minister is doing a great job promoting the country but on the other hand several foreign businesses in the country are under attack and their number is increasing by the day.
There is a dichotomy in the business environment and if the Government does not control the situation Georgia will soon be facing very serious problems.
Q. Also, how would you summarise the development of the reforms (four-point reform plan) in Georgia and the Government’s economic policy?
A. ICC fully supports the four-point reform plan adopted by the Government, as a matter of fact the Government per se is doing a great job, I can only commend the performance of the Prime Minister, Minister of Economic Development, Minister of Infrastructure, Minister of Agriculture and other Ministers as well as their deputies.
Q. Finance Minister Dimitry Kumsishvili said economic growth may exceed five percent in 2017 thanks to tax cuts and planned infrastructure spending, helping to ease pressure on the nation’s ailing currency. Are there ‘realistic’ prospects of beating the Government’s 2017 target of five percent growth? In Q1 GDP growth averaged five percent - what are your expectations about Georgia’s economic growth?
A. There is no doubt that the USD 3.5 million earmarked for infrastructure in the coming three years will boost economic growth, however a healthy economy develops on investments from the private sector, both local and foreign, and not on government spending or on loans from IFIs.
I doubt very much though that we will average 5 percent growth in 2017, and considering the serious recent setbacks to the investment climate due to attacks on several foreign businesses I believe that Georgia’s reputation as an attractive destination for investors will fade pretty quickly.
My personal assumption is that the GDP will be around 3.5 percent.
Q. Also, please discuss separately how optimistic we should be about the Lari? In his latest interview with Bloomberg, Koba Gvenetadze said a stronger Dollar is a risk for the entire emerging world, but Georgia has the tools to ride out the turbulence from a stronger dollar with its free float being the first line of defence for the country. What do you think, is Georgia really ready for a stronger dollar?
A. I personally trust Governor Gvenetadze who is experienced and professional. I believe though that the Georgian Lari remains fragile and a hostage to FDI; unfortunately this is what those who are attacking foreign businesses in Georgia do not understand.
Q. On the subject of free trade deals - Georgia signed a free trade deal with China and is now about to start negotiations with India. What would you say about the country’s goal to have these two countries in its free trade deal list? How ‘right’ is Georgia to focus on these two markets and facilitate increased bilateral business and trade?
A. From a PR point of view, having free trade agreements with most of the countries on this planet is great and of course a strong selling argument to convince foreign investors interested in Georgia.
From a practical point of view this means that Georgia, which produces very little, will be flooded with products that will pay zero customs duties and originating from every point of the globe, mainly from countries that have such large production capacities that no local manufacturer in Georgia will be ever able to compete with them.
It is very difficult for me to assess scientifically whether all those free trade agreements will result in the medium and long term in real benefits for the economy.
Of course as a selling argument to foreign investors interested in Georgia all those free trade agreements are very powerful tools for convincing.
Q. Recently you have been posting frequently on Facebook about corrupt judges. By that I guess you are saying that the judiciary has not been cleansed of corrupt judges. So, what would you say about today’s judiciary system and how serious a threat it is for Georgia’s reputation?
A. Nowadays the Georgian Judiciary has become by far the biggest impediment to foreign investments in the country; several judges are being used by private parties to steal their opponents’ or competitors’ properties and businesses; this phenomenon has been increasing exponentially since about a couple of years ago now and we are witnessing more and more businesses stripped of their assets by corrupt judges; this is becoming very worrying and unfortunately the Government is unable to do anything to stop this terrible problem.
Q. Who are those people that are corrupting the judges?
A. Well that’s a good question! Those are people close to former Prime Minister Bidzina Ivanishvili and they feel untouchable. They are trying to put their hands on most of the largest businesses in the country; the judges or government officials that those people approach believe that Bidzina Ivanishvili has sent them and therefore they follow their instructions blindly.
I personally assume that Bidzina Ivanishvili isn’t aware of most of those dirty dealings, however if he is aware and he is letting this happen then this would be absolutely terrifying.
The fact remains that corruption is spreading very fast and the investment environment is deteriorating even faster.
Dozens of foreign businesses are currently under attack and the government is unable to do anything to protect those businesses or to stop any further attacks! Things have reached a very dangerous situation.
I am starting to really question whether those attacks on foreign businesses are not well planned on purpose to destroy the business environment in the country. The question that one would ask is who benefits from the deterioration of the business climate in Georgia?
Q. What is the Government doing about this?
A. We have two forces in Georgia, a positive and honest one lead by Prime Minister Kvirikashvili that is moving the country forward and a negative and criminal force impersonated by some red directors and some former and current corrupt government officials who are drowning the country.
Unfortunately those are the guys who are technically in control of the country and Prime Minister Kvirikashvili is unable to override them; those criminals are capitalizing on the good and positive image created by the Prime Minister, hiding behind it and enriching themselves through their crooked dealings and their racketeering.
What is really dangerous is that the Government is still encouraging foreign investors to commit to Georgia at a time it is totally incapable of protecting their businesses, their investments and their properties.
Until the Government regains full control over the judiciary, the prosecution and the law enforcers, ICC cannot encourage new investors to commit to Georgia.
Q. This looks like a very dangerous situation, but how to stop it?
A. People need to speak out but most importantly, those who need to speak out are business organizations, diplomats and the heads of the International Financial Institutions.
It is not by playing the ostrich and hiding our heads in the sand or by remaining silent about these scandalous issues that we will fix this dramatic situation.
Ambassadors have to be vocal about what is going on! By being outspoken and bringing those crooked cases into the limelight we will be strengthening the government of Prime Minister Kvirikashvili by giving him the international support and power to stop those criminals once and for all.
By remaining silent we will be emboldening the criminals and weakening the Government and the state.
International support doesn’t consist of advertising the theoretical ranking of Georgia in the World Bank “Doing Business Report”, international support consists of speaking out on the situation in which those criminals have entrapped the Prime Minister and taken him hostage; it is by exerting huge pressure on those criminals that we will help Prime Minister Kvirikashvili regain full control over the country.
ICC is contemplating all its options, if the Government will not succeed in stopping the deliberate and systematic attacks on foreign businesses in the coming weeks we will have no other choice but to send out an official warning to all ICC National Committees over the world that include millions of companies so investors worldwide are warned about the very serious risks and dangers of doing business in Georgia.
We will not allow additional foreign investors to be destroyed in Georgia, we will not remain silent on the systematic and organized racketeering, ransoming, highjacking and destruction of foreign businesses in the country; in my twenty years heading a major business organization in Georgia I have never witnessed such generalized attacks on foreign businesses.
Q. What are the recent developments at ICC, and what are the future plans? Do you have new members (if so, how many and who are they)?
A. Our membership is growing steadily; ICC-Georgia counts more than 350 members including companies, business organizations and youth. ICC is the most courageous and vocal business organization in Georgia.
We are currently in talks with the Government for a possible opening of an ICC Arbitration Court in the country. Of course this would be an immense leap forward for the investment climate considering that the presence of an ICC Arbitration Court will give foreign investors the peace of mind to engage the country given the fact that the judiciary is currently the main impediment to investment.