Prominent representatives of the foreign business community in Georgia do not accept the argument from Georgian government, claiming that the depreciation of the currency is due to external factors, in particular, the Russia-Ukraine crisis. They say business-unfriendly policy of the Georgian Government, including visa restriction policy and prohibition of land acquisition by foreigners, are the main reasons behind the dramatic devaluation of the Georgian Lari against the USD.
“The Lari is depreciating because the Government changed the visa and land laws”, David Lee, Chair of the Eurasia Partnership Foundation Board, MagtiCom Ltd wrote on his faceboo wall. “External factors do not affect the Georgian economy. Russia has nothing to do with the war in Ukraine and wars do not affect FDI and exchange rates. The rule of law is not important,” said David Lee.
“An open visa policy is not sustainable in any county and the lack of land registration and a vibrant agricultural land market is a core problem. There are issues with how the Government is dealing with this. Most of all I wish to avoid self destructive political confrontation on the streets and a return to failed policies such as an open disregard for the rule of law,” said Lee.
Like Lee, Fady Asly, Chairman of the International Chamber of Commerce (ICC) Georgia, thinks that if the Government hadn’t scared off and discouraged foreign investors with a series of business-unfriendly laws, harassment and visa restrictions, then the volumes of FDI and foreign currency injected into the country would have been more than enough to shield the Lari from any devaluation and 5% economic growth would have been very easily reached, if not exceeded.
“I would beseech the Government to leave be the investors who have already invested money. They can impose any law for the newcomers. Please let us live peacefully in this country”, commented Jaswinder Singh, Proprietor at Golden Power Generating Co. He is one of many Indian investors who purchased land in Georgia and later was refused to stay in country.
“We do not want to suffer because of the bad or good policies of an earlier government. Officials should grant one-time amnesty and give investors peace of mind. We have a lot of tensions already in regard to the four consecutive years of crop failure. And the Government is not providing any help in terms of information to foreign farmers. I have not heard of the agriculture department informing or teaching foreign farmers regarding the climatic, soil, water, market or product conditions of Georgia. We foreign farmers have a lot of potential in agriculture if the Government were only to cooperate,” commented Jaswinder Singh.
“However, as the French proverb says: “No one is more deaf than the person who doesn’t want to listen,” Fady Asly added.
In Asly’s words, the Lari devaluation was caused by a shortage of foreign currency in the country due mainly to decreased income from export and remittances. However, he said that if the Government would not have destroyed Georgia’s image as an attractive place for foreign investors because of their business-unfriendly legislation, harassment of businesses by the Revenue Service, and a political sense of instability due to the jailing of tens of previous officials, the income from FDI would have more than compensated for the decrease in income from exports and remittances.
“If I dismantle my heating system at home, dress in my underwear, the country is hit by a cold wave and I catch pneumonia due to the cold, I shouldn’t blame the cold wave for that, I should blame my own stupidity. It’s the same with the Government who have suppressed Georgia’s immune system with their bad policies and now blame ‘external factors’ for the crisis,” Asly added.
Do I consider the Government responsible for the Lari’s devaluation? Of course I do!” said Asly.
“For every nation, FDI or internal investment is the most important,” commented Jaswinder Singh, Proprietor at Golden Power Generating Co. Singh suggested that Georgia should improve its image for the international investor community. “Just showing the formation or registration of a business entity doesn’t mean you have a healthy investment environment. But failure of the performance of these entities shows how bad the government policies are.
Singh argued that the usage of US dollars in daily life should be stopped immediately. “The Georgian currency is GEL not USD. Banks should stop giving out loans in dollars. US dollars should only be for foreign investors, not for native people. The possession of dollars other than in specified amounts should be treated as a crime.”
In addition, Singh criticized the Georgian Government for not helping investors in any way. “By help I do not mean to say monetary support. I mean providing them with a good, healthy environment for doing business; providing good infrastructure. At school I learned the meaning of democracy as a system in which the government serves the people. However, in Georgia the government is not for the people. Their main motivation is tax collection and to divert that money to the cities, not the villages.”
Singh mentioned the example of the Kakheti region: “What is the Government doing for the desert regions of Kakheti, specifically the Dedoplistskaro region? Nothing; no new water canals for irrigation. At least there should be a department of horticultural development for all the regions which can provide fruit saplings on subsidized rates or maybe for free. The Government has know-how in cloning or tissue culture techniques. Only one lab established in Kakheti is helping. I know that these foreign investors and Georgian farmers have the capacity to turn desert into green forest.”
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