The FINANCIAL - Foreigners Back to Investing in Georgia

Foreigners Back to Investing in Georgia

Foreigners Back to Investing in Georgia

The FINANCIAL -- Reducing the unemployment rate, the distribution of wealth between the rich and the poor, and proper visa regulation for foreigners are the main challenges that Georgia is facing, according to the Dutch and Turkish Ambassadors. The Ambassadors positively estimate the Georgian economic climate and are encouraging their fellow countrymen to experience the opportunities that Georgia has to offer.

The Netherlands continues to head the list of countries with the largest volume of FDI in Georgia. USD 174,774,700 was invested during the first half of 2014, up from USD 66,930,100 from the same period of the previous year.

The volume of FDI in Georgia slumped by 10% in the first part of 2014, in comparison with the prior-year period.

“The business climate is constantly improving in Georgia. The Netherlands has been the top investor in Georgia for many years. There is growing trust in the possibility of doing business here,” Hans Horbach, Ambassador of the Kingdom of the Netherlands to Georgia and Armenia, told The FINANCIAL. “I can see that from companies from my country. An enormously important factor is the signing of the AA, which includes the DCFTA. That is creating a wealth of opportunity to increase trade on both sides. Georgia has a politically stable climate, elections, and democratic reforms - all making huge progress, that all contribute to the investment climate, which is inductive to bringing foreign investors here,” Horbach said.

According to Horbach, during the past two years there has been steady progress in Georgia. He believes that this is also reflected politically. “The approach to Euro Atlantic structures and the signing of the AA brings Georgia closer to the EU and the EU closer to Georgia. It is important that the agenda has not been controversial with the current government. The previous government had this agenda and the current one has continued it quite well. They have been relatively successful in attracting investments. And I am sure that this will be enhanced in the near future.”

Turkey is the fourth top investor in Georgia following Luxemburg, Azerbaijan and the Netherlands. Turkish investments amounted to USD 54,736,600 in the first half of 2014, up from USD 36,355,000 in the same period of the previous year.

“The business climate in Georgia is quite attractive for us. This is evident from the high level of investments from Turkey. Turkey is not only the first trading partner of Georgia, but is one of the top investors in Georgia. A couple of days ago I had a meeting with several Turkish businessmen and they are very eager to continue their investments in Georgia,” said Zeki Levent Gümrükçü, Ambassador of Turkey to Georgia.

According to Gümrükçü, energy currently appears to be the most attractive business sector for Turkish investors. “Tourism, agriculture, construction and health are also important sectors for Turkish investors. That said, there are certain things that we need to improve. For instance the new visa policy created some question marks. But I understand that the Georgian Government is going to make the necessary changes as  promised by the PM .. Apart from that, there are not any serious problems that we cannot talk about and solve. The Turkish business community is especially happy to find a receptive ear on the part of the Georgian Government .”

The main advantages of Georgia

“Georgia is a politically stable country. It has cheap labour. The business climate is quite advantageous here. The prospect of the AA, the potential that Georgia will function as a hub between Asia and Europe - these are all factors that make the country attractive to foreign investors. And last but not least it is the people, Georgians, who are very nice and open to work with. The business climate is transparent. The increasing rule of law and arbitration are also significant advantages of the country. According to the international statistics, Georgia is number eight on the doing business scale. On transparency, in terms of the corruption perception index Georgia is scoring fiftieth. If we look at the surrounding countries, they rank at one hundred, so that shows an enormous difference to its neighbouring countries,” said Horbach.

“Challenges for the future certainly include keeping up the trend of economic growth, and making sure that you distribute wealth between the rich and poor more evenly. Reducing unemployment is also a big challenge. So, foreign investments can play a key role in addressing these challenges,” said Horbach.

The Dutch Ambassador said that the ongoing Russian-Ukrainian crisis is not having any negative impact on Georgia. “Georgia is an exception. There is widespread support  for integration into the Euro Atlantic structures. These are favourable conditions that give investors trust in the future,” he explained.

From his own practice, Horbach suggests that promotion of Georgia on an international level is significant. “When I am in my home country and talk about Georgia not everybody knows about the opportunities of this country. The Government is doing something about it. We had the Minister of Economic Affairs who went to the Netherlands and had a sort of road show, where he presented the potential of Georgia to investors from my country. It was very successful. We had expected that one of the seminars where he spoke would have had thirty to forty Dutch companies, but in the end more than 100 turned up. So, it was a very successful visit. Now the Ministry of Economy is doing this more often and that is very useful.”

“I do my job as well. As the Dutch Ambassador in Georgia I work hard to promote Georgia in the Netherlands. I work in close cooperation with my Georgian colleagues in the Netherlands. We are not competitors but we both have an interest in making sure that our bilateral economic relations can further intensify,” said Horbach.

Gümrükçü considers Georgia to be a strategically important country for Turkey. “Anything that is good for Georgia is good for Turkey. This is why I love to see Turkish investors and the business community partnering with Georgia and contributing to the development of this country. For me, beyond any economic or commercial gains, it is strategically important that the Turkish business community is part of Georgia’s development. On the other hand, Georgia, as it is confirmed by international experts, has a very good business environment, an investment-friendly climate. This gives me more reason to encourage my fellow businessmen to come and explore the investment and trade opportunities in Georgia. Of course the final decision to invest or not is up to them  but I will continue to do my share in encouraging them to make the best out of the existing opportunities” said Zeki Levent Gümrükçü, Ambassador of Turkey to Georgia.

Gümrükçü believes that Georgia as a developing country has big potential. “By signing the AA and DCFTA with the EU, Georgia has considerably expanded its investment potential. This is another reason why the business community, not only Turkish, but others as well, should explore the new opportunities,” he said.

“The Georgian Government on the other hand should continue to take further steps in order to make the existing business climate more visible and known to the international business community. This might be either new tax facilities or financing tools, but in any case it is evident that the liberal business and economic environment in Georgia is its true comparative advantage in the region,” Gümrükçü believes.

“We are still going through a very delicate and difficult period in our wider region both in terms of what is happening in Ukraine and in the Middle East. In addition to the political and social grievances it creates, this situation of course impacts the economic prospects of our region too. So this is why we need to take decisive actions and strengthen our cooperation in bringing peaceful and lasting solutions to the existing and emerging problems. The peoples of the region certainly want to use their full potential for social and economic development. They are ready and willing to enjoy the benefits of cooperation rather than suffering from bones of contention and confrontation. As politicians and diplomats we need to do our best to meet the demands of our peoples and thus bring further stability, peace and prosperity to the region,” Gümrükçü told The FINANCIAL.

Author: Madona Gasanova