The FINANCIAL -- As Georgian FDI is currently in a state of harsh decline, The FINANCIAL reached out to the President of the American Chamber of Commerce, R Michael Cowgill, who in answer to our questions covered many fundamental topics concerning the current state of the business environment.
Q. As the President of the American Chamber of Commerce, describe the business partnership between the countries?
A. The US and Georgia have a long political and economic history. Forming that partnership soon after Georgia’s independence, the US has provided much financial aid and support to develop Georgia’s democracy and business climate. AmCham was an outgrowth of those efforts, and now with its over 210 members, it is the most long-lasting and influential international business organization in the country.
AmCham serves as a gateway for US and international companies entering Georgia. It also provides a platform for doing business based on American and Western ideals and business practices. AmCham’s relationship with the US Government in the US, and the US Embassy in Georgia, together with its interaction with the Georgian Government, gives its members and the business community at large a powerful lobbying voice.
Q. What would be the general perception of investors about Georgia in 2019?
A. As I have said recently in public forums, the main problem we have regarding foreign investment in Georgia is being aware of the many opportunities that are available here. Investors have many choices as to where they put their money. On a macroeconomic level, they are aware of the many favourable World Bank and other international rankings and indices for doing business in Georgia. However, most international press or news reports focus on the negative aspects of internal or regional political conflicts (or selective business disputes) which distort the overall investment and business climate here. We all have to do more to get investors to come to Georgia and make their own personal assessment. A great quote from a previous US Ambassador was “Georgia looks a lot better close up!”. When investors do make the effort to visit, they are amazed by the favourable conditions for doing business, including the people, the strength of the many business associations, access to cheap energy and the support of the Government with low taxes and investor support.
Q. What would be a rough estimate of American FDI in 2019?
A. It is very hard to estimate upcoming FDI – but official stats show USD 22.5 million for the first quarter of 2019, which is about in line with the USD 104 million officially listed last year. But this number almost certainly understates US investment in Georgia in a range of ways. Not all US investment will work through US registered companies, and many companies register in countries like the Netherlands for the purposes of possible arbitration. More importantly, the US Government provides large amounts of loans through OPIC. My university is benefiting from an OPIC loan, and in May OPIC made a USD 50 million loan to PACE to expand their port facility. The US Government is also the single biggest contributor to the World Bank, to Asian Development Bank and even (though I know this sounds strange) EBRD. And between them, these entities probably provide loans approaching USD 1 billion per year. This supports both government and private sector projects. Therefore, in a range of ways, US financial engagement in Georgia is considerable.
Q. In the post-Soviet history of Georgia, we have seen many international companies operating here, however there are many significant players who haven't yet penetrated our markets such as Facebook, Google, Apple IBM, etc. How far off are we from seeing such companies invest in Georgia?
A. As for these specific companies, I am not sure regarding direct investment in Georgia. However, almost every one of the companies on your list has been operating in Georgia for a very long time through partner providers, such as UGT. Even my University (GAU) has a Google-sponsored auditorium and has participated in Google competitions for IT students. Similarly, Microsoft has had a regional office in Georgia for many years providing software support to its governmental and private-sector clients.
Q. What is your vision for the Georgian-American business environment?
A. AmCham will always be a strong organization in Georgia. It is actively involved with the US and Georgian Governments to help attract new American companies to come to Georgia. As I mentioned above, awareness of Georgia’s opportunities is a major concern. However, I am encouraged by the efforts as shown by the PM’s most recent visit to the US to more actively promote Georgia as a place for doing business. In the tourism/hospitality sector, new hotels linked to US hotel chains are being developed. American franchises continue to come to Georgia. Dow Chemical has just recently moved into the region. Large companies such as General Electric, Caterpillar, AECOM, Bechtel, etc, have growth opportunities in the energy and infrastructure sectors. Medical and education are also growth sectors for US companies. I believe that we will continue to see more financial services companies come to Georgia as our capital market scenario becomes a strong player. So overall, my vision is for a bright and prosperous future.
Q. Can you describe your life in Georgia, what experience have you gained from it?
A. Having lived in Georgia for over 21 years, and with dual US/Georgian citizenship, I can easily and happily say that Georgia is my home. As President and co-founder of GAU, I also stay connected to the education sphere and see the dynamic nature of Georgia’s youth – which is so important for our future. I am constantly moving back and forth between the Georgian and expatriate communities, which provides a fascinating outlook and perspective of Georgia’s challenges and opportunities. I will continue to be involved in a variety of activities that are aimed at improving overall society as I believe it is the responsibility of each and every one of us to try and make a positive difference.
First published in GLOSSY magazine.
By Gela Megeneishvili