The FINANCIAL — “Israel investments in Georgia have increased 5 fold over the last few years. The forecasted amount of Israeli investments in Georgia for the upcoming three years will be at minimum USD half a billion,” Itsik Moshe, President of the Israeli-Georgian Chamber of Business (IGCOB), told The FINANCIAL.
“Fixed assets were of high priority before 2008 and still remain one of the most important investing sectors for Jewish business in Georgia,” says Itsik Moshe. “In first place will be agriculture and industry for the year 2009 and for 2010 – high-tech will become the most attractive sector for investments.”
Mr. Moshe thinks that the development of high-tech has perspective in Georgia as a very big intellectual resource is focused here in the country.
“The entrance of leading companies of high-tech such as Microsoft, IBM, HP, Intel and others will open new perspectives for economical cooperation. Israel’s model is very effective in executing the above-mentioned perspective. In 1993 the Government of Israel started a special programme for the development of high-tech and allocated USD 100 million for it. For the next step joint funds were created for the development of high technologies. Export of USD 30 billion worth was made in the development of this field last year. Interest from the Government of Georgia and their decision to start the development of this field is essential for developing high-tech in the country,” Mr. Moshe explains.
“A western system, security, Georgian vector and strategic development plans – are the reasons for why Georgia is attractive for foreign investors,” Mr. Moshe says.
Speaking about the influence of Israel on the U.S. economy and public opinion, Itsik Moshe said that “not Israel, but Jews have influence…”. According to him, if the U.S. Government will give guarantees to its citizens, it will promote their investments in Georgia.
“Despite the fact that the total sum of investments in 2008 will be low compared to the previous year, the general figure has increased 5 fold over the last few years. Foreign businessmen consider Micheil Saakashvili the main reason for this. Foreigners citing other reasons, or those seeking a scientific reason, are not saying the truth.”
“Unfortunately Israeli investments have slowed down. In my opinion Israel should be more active. Trade relations with Georgia have good perspective, as the production of this country is of European quality and yet low price.”
“The Chamber of Business very often arranges important activities for the economical relations of Georgia and Israel and takes part in the process of taking decisions on subjects of current importance. I think that the biggest challenge for our Chamber is the bringing together of the business cultures of these two countries, and the familiarization and training of businessmen for this cooperation. This problem was provoked very seriously many years ago when we first started our activities in Georgia and because of this problem many investors have had difficulties. Today both the investor and their local partner are acquainted with one another’s business cultures, have talks in business languages and misunderstandings between them are becoming much rarer as a result.
“Furthermore, even in situations of difficulty we keep up our optimism regarding Georgia. In 2007, when the situation in Georgia became tougher for investors than during its time of war, our Chamber arranged a big business forum, where more than 100 new investors were acquainted with Georgia and its perspectives.
“From August’s events until now we have not stopped working and have continued the attraction of investments from Israel. I’m travelling to Kazakhstan and France these days concerning new investment projects.”
“I’m working in Georgia as I feel a very positive attitude towards Israel and not only towards Israel in this country. What is concerning is just the influence of the war, today this is a natural reaction. I believe that this is a temporary process and Georgia will be more developed economically in time. The decision taken at the Donors International Conference recently on the allocation of USD 4.5 billion for Georgia will radically change the situation in the country. Great change in the economy of Israel was guaranteed by the U.S. Government by its USD 15 billion of aid 15 years ago. Based on the experience of Israel, I am sure that in this situation every dollar allocated for the country really works, as this is the trust, support, and guarantees of the country, upgrading it from the international commonwealth.”
Speaking about the biggest Israeli investments in Georgia Itsik Moshe named the acquisition of store departments in Tbilisi by AL Offer Group, Crystal Dom, a museum and guest apartments in the centre of the country and Tsavkisis Veli.
“There are projects which have temporarily stopped or slowed down, though it is difficult in this process to determine whether this is the effect o the war or the world financial crisis, as they coincided with eachother,” Mr. Moshe says. “None of the projects will be cancelled.”
“Compared to the world financial crisis, the war that happened in Georgia is not the biggest problem. The Russian-Georgian war one again assured investors that the course of the country’s integration with Europe is firm. Therefore I cannot see a danger that any of the companies could doubt their staying in Georgia. Concerning the attraction of new investments the situation is really becoming difficult and is requiring more work. Although I will note one more time that investment-making is still going on. An example is the American and Israel joint company Fertuna, which started its serious steps in Georgia exactly during the period of war.”
Tips for investors
Itsik Moshe recommends investing in the hospitality business.
“I can say that hotels are a very actual issue today. Listen to the international news and you will understand that Georgia is a very important issue in the world.”
“We are working actively for the development of tourism and over the last two years we achieved quite good figures. What concerns the concrete steps is first of all – advertisement. Israeli newspapers were writing articles about the attractiveness of tourism in Georgia and the advertisements of tourist agencies were published in elitist magazines. On the initiative of the Chamber of Business some of the projects were executed, which considered bringing Israeli journalists to Georgia, preparing TV topics and broadcasting on the main TV channels of Israel. A member of our company has started the construction of a boutique hotels network in Georgia.”
Mr. Moshe forecast more than USD half a billion investments by Israel in the upcoming three years.
“The trading turnover between America and Israel reaches 20 billion. The most major part o that is diamonds and high-tech. Israel is at a different stage of development. An investments quantity parameter is not actual. A more important parameter is the export quantity from the country, which is the direct result of investments.
Speaking about Georgia’s chances of joining NATO, Mr. Moshe said that from a political point of view, membership to NATO is very important for Georgia.
“What concerns the business attitude on this issue, in my opinion Georgia has already received MAP in the business aspect. This became more solid after the solution made by the donors’ conference on the allocation of USD 4.5 billion. Immediately the next morning I received many letters from businessmen from Israel and other countries, for whom this resolution had changed their attitudes towards Georgia.”
“As a conclusion I will highlight the fact that Georgia became an important subject for the leading countries of the world, automatically Georgia became transparent and democratic and so the country must show the world how European it is. This fact is the biggest guarantee for business.”
Written By Sopho Kheladze