The FINANCIAL — Following the first ever Georgian-Swiss Business Forum the State Secretariat of Switzerland has expressed interest in investing in Georgia.
The Forum also attracted foreign investors. As a result more interest has appeared at the Swiss end. The amount of FDI in Georgia from Switzerland has more than doubled in 2013 in comparison with the same period of last year. The number for the first two quarters of 2013 was USD15,960,000, while for the same period of last year it was USD 6,123,000. “For the next few years FDI is estimated to be USD 500,000,000,” said Guenther Baechler, the Swiss Ambassador to Georgia.
Q. Swiss FDI in Georgia has more than doubled in the first two quarters of 2013 in comparison with the same period of last year. What are the main reasons for this increase?
A. I think there is more interest in Georgia from the Swiss side. There is more trust in the Georgian environment and business environment, because of the political stability. But at the same time figures have to be analyzed from a more analytical background to decide whether to invest in the country or not. First of all I think that figures are still very low. Each investment may change the statistics. We started at a very low level and that’s why we wanted to do more. I think there are more chances, there are more ideas for how to boost these figures. Secondly, what we learned also from our statistics in Switzerland is that the statistics were not accurate. They somehow only amassed the information about bigger investments; they asked bigger companies whether they had invested in Georgia. So they could not grasp some of the investments that are real but were never shown in the statistics. I think they are now more accurate as they are focused on smaller investments too. This is the reason why the amount has doubled.
Q. How did the political changes that occurred in November 2012 impact on Swiss investors?
***
“Georgia is a democratic country which is now not a transition country anymore”
***
A. Georgia is a democratic country which is now not a transition country anymore. The true sense we get is that we are now much further ahead and there is trust in the economic environment and in its stability; also in the lawmakers, there is a legal background and framework. This is reliable, so as a result there are more investors that are interested in Georgia. We saw that even on private business tours some investors or businesspeople came, wanting to get to know the country. In contrast, ten years ago nobody even knew where Georgia was. There was no interest and they didn’t want to come, also there was a very small market. Maybe there was some uncertainty but this is slowly going to change. There are more articles in newspapers, more advertisements, and large tourist agencies all have Georgia in there catalogues.
Q. What are the main risks that foreign investors face in Georgia?
A. Of course there are always some risks in any investment and particularly in foreign investments. I would say that the main risks are quite normal economic risks. You don’t know the market exactly; you don’t have a clear prediction about the development of the market. You don’t know whether the product can be sold easily; whether it will be accepted. But also in a direct investment you don’t know the business environment exactly so there are the kinds of usual risks. In particular with Georgian institutions like the Business Ombudsman, this is going to minimize risks. Georgia has more reliable tax legislation, financial policies that are working on good governance principals etc. This is always important for minimizing risks. So the political risks, the risks from unforeseen events and unforeseen kinds of catastrophes, are much less now.
Q. What are the chances of Georgia becoming a NATO and EU member?
A. Becoming an EU member in particular in economic terms means that Georgia and the EU are negotiating on all the necessary elements and documents for issues like free trade, the association agreement. Both sides are quite optimistic and they are going to sign documents. I don’t see a lot of obstacles any more. What we have seen with the elections is that the Georgian people, more than 80% of the electorate, by their choice has expressed the will to draw closer to Europe. To share European values, also to join Euro Atlantic institutions.
Q. Which are the most attractive business sectors for Swiss investors in Georgia?
A. The first Georgian-Swiss Business Forum in Tbilisi which was held recently was well attended by both sides. There is a certain interest in infrastructure development, in tourism, in the energy sector, e.g. smaller power stations for local development; also the sector of logistics, for instance linked to infrastructure. There is certain interest from transport companies, shipping companies. There is a very innovative sector in Switzerland that comprises institutes with green economy in many fields collaborating on future technologies in order to safeguard our planet. Georgia should use all kinds of waste in order to produce for instance diesel or kerosene, it should use all materials.
Q. What will be the main challenge for Georgia in 2014?
A. I think that for 2014 the main challenge is to identify the sectors or sub-sectors we want to engage in. Tourism is the large field so we have to find concrete partnerships between Georgian companies and potential Swiss investors. We can facilitate this from the Embassy, from the diplomatic field, from state authorities. But there must be some kind of initiative taken by the businesspeople in terms of their own responsibility. This is maybe the challenge – to find the right partners and people.
Q. Is the Government helping to attract foreign investors and doing business in the country?
A. Georgia has a very valid actor in this field to attract foreign investments in certain sectors. I think there are priority sectors that are extremely important for Georgia. Here there is an instrument. I think from the Swiss side we have instruments as well. We have the OSEC, it’s a kind of organization that supports foreign investments, provides guidelines, informs people, also conducts small gatherings with partner countries. These instruments are quite active when it comes to Georgia. The State Secretariat in Switzerland for the economy is very much interested now for the first time. To engage in Georgia they used the Business Forum held about 3 weeks ago to come here, to explore the environment, and they were quite interested as a result. So besides the development cooperation we would have Swiss economic operation in the form of a state agency to support partnerships in Georgia.
Q. Are the investors interested in investing in our country?
A. We have people that are already here, already investing. There are also newcomers that may know Georgia but till now haven’t invested, yet do have certain interest. The Georgian Swiss Business Association includes 20 members and from these 20 some are already investing, while some are newcomers.
Q. How much will Swiss FDI amount to in 2014?
A. Given the latest developments and most recent statistics I hope it would be a much greater amount than it was in previous years. We would come closer to half a billion USD. We are encouraging not one big investment but we would like to see small and medium size enterprises investing here. Because they are innovative, they find partners, they want to really establish a long-term partnership. So there are smaller investments but perhaps bigger in numbers. It might not be a very rapid development but is instead long term, sustainable, with greater investment.
Q. What is the main Georgian product that can be exported to Switzerland?
A. It’s definitely wine, and that is already being exported to Switzerland, maybe not too much but there is a market for it there, there is a niche. Very high quality Georgian wine is served in high class restaurants. I hope that in the future with direct investments here we find partners in green economy, in more innovative technologies where Georgia can create a niche, can develop a sector and export to Switzerland. I can’t tell you now what exactly this would be but I hope the entrepreneurs here would be very happy with an innovative idea.
Discussion about this post