Elections Affect FDI Inflow
20 September, 2012
Elections Affect FDI Inflow

The preliminary data of total inflow of Foreign Direct Investments (FDIs) in Georgia in the second quarter of 2012 equals USD 219 million that makes 7% growth compared to the similar statistics of 2011 but lags by 18% behind USD 269 million data with which the country entered the first quarter of this year. Experts presume the upcoming parliamentary elections may affect the FDIs inflow further as investors are waiting for the election results to make decisions.   

According to the

official statistics released on September 11, 2012, the preliminary figures of the second quarter of this year make 88% of the confirmed FDIs figure of the reported period in 2011. The preliminary statistics of the FDIs inflow in the first half of 2012 makes USD 488 million that translates into 29% and 7% of growth compared to preliminary and proved statistics of 2011 respectively. The bad thing is that the second quarter data lags behind the first quarter statistics by USD 50 million or 18%.

As a matter of fact the traditional FDIs trend is that it increases from quarter to quarter and the following quarter data exceeds the previous one normally. This trend was actually kept within 2010-2011 and if the factor of the upcoming elections scheduled by October 1st, 2012 was ruled out Georgia might attract around USD 2 billion this year, Nodar Chichinadze, Head of Association of Young Businessmen and Financiers, elaborated in the interview to Georgian Journal. However the uncertainty of the pre-election period makes most investors think twice before investing in Georgia that affected the statistics, Irakli Lekvinadze, another economic analyst, presumes.

“Investors are wary especially now when this said parliamentary elections create so much expectations that there might be serious changes in the power balance. Not only new FDIs inflows are hurdled but local investors who already run businesses in the country have suspended all new projects until this elections are through, all expect the results,” Lekvinadze said.

He thinks the third quarter following the elections will be crucial from investments point of view depending on the election results. Lekvinadze does not rule out that FDIs may influx after elections but he expects dwindling investments this year.

“It will be good if we can hit the forecasted USD 1 billion this year, but that seems very unlikely to me, let’s see what happens,” Lekvinadze said.

Chichinadze thinks even if Georgia exceeds all expectations and attracts USD 2 billion this year it is not a sufficient figure to help Georgian economy and solve the unemployment problem.

“One job creation requires about USD 40-50 thousand and if we take into account that around 290 thousand people are unemployed in Georgia we need USD 15-17 billion totally to employ all these people. Therefore we need at average USD 3-4 billion per year to solve the unemployment problem,” he said.

He finds it positive that this year the processing industry took the third place among leading economic sectors attracting the FDIs.

The leader sector taking the biggest share in the FDIs traditionally is energy sector in the second quarter of 2012. Energy covers 34% of the total volume accounting for USD 75 million by preliminary data. Transport and communication is the runner up again by USD 58.9 million making 27% of the total FDIs volume, and reprocessing industry is the third by USD 42 million and 19%.

“That means that production gains forces,” Lekvinadze thinks.

The share of 9 biggest investor countries made 85% in the second quarter of 2012. Netherlands leads the list by 37%, the US is a runner up by 11%, and Azerbaijan is the top three by 10%. Virginia Islands showing traditionally among top ten investors of Georgia along with the Panama Islands and Cyprus disappeared from the map this time and the US came on.

“It does not mean any mystery that Virginia Islands as well as Cyprus where off-shore investors are active disappeared from the list of top investors of Georgia,  you know, maybe they expired their resources and other investors took bigger interest,” Chichinadze said.

“Netherlands is also a haunt for off-shore companies; we had significant capital outflows to Netherlands past year, may be because it was clearing some liabilities or because it is a transit country for investors in fact where the capital is accumulated and redistributed to other countries. Now the capital is inflowing from there in Georgia.  The US is a big investor country and it more-less changes position among top-investors. At any rate Panama and Virginia Islands do not show up as the leading investors lately.  As to Azerbaijan, it is traditionally among top investors in Georgia; in spite of the parliamentary elections, they are more self-confident toward our country, which is their regional partner in energy and transit projects; besides, investors from the post-Soviet countries are used to instability and uncertainty, so they feel much easier than the western investors,” Lekvinadze elaborates.

Print
Other Stories
Doing business in Georgia has become easier than in America
According to the Doing Business 2019 report published by the World Bank, Georgia ranked 6th among 190 countries in terms of simplicity of doing business. This was an improvement over two ranks compared to last year.
Problems that foreigners frequently face in Georgia
The importance of Georgia as a tourism hub is growing year after year.
Tbilisi TV Broadcasting Tower – Better than the Eiffel Tower?
It is planned to renovate the Tbilisi TV Broadcasting Tower, one of the landmarks in the capital.
Georgian Fusion Menu by The Biltmore Hotel Tbilisi
5,895,914 international visitors have visited Georgia between January and August of 2018. Compared to the previous year the number has increased by 12.2 per cent.
Advertising of gambling and lucrative games may become banned in Georgia
Advertising of gambling and lucrative games may become banned in Georgia. Those who violate the new rule would be fined GEL 10 000.
Lebanese café-lounge Beirut opens in Tbilisi
What is necessary to organize an unforgettable event? – Fun, emotions, lots of surprises, good music and delicious menu.
Georgia second among the fastest growing tourist destinations in Europe
Georgia is among the fastest growing tourist destinations in Europe. The data is published by the UN World Tourism Organization.
Bitmain launches world digital mining summit in Tbilisi, Georgia
Bitmain CEO Jihan Wu and Roger Ver, CEO of Bitcoin.com Head Speaker List featuring Circle, DEX.top and Genesis Mining when Digital Mining Leaders Convene In Tbilisi on September 21-23
GAZELLE FINANCE GEORGIA AND TBC BANK HELP THE WESTERN REGIONAL CENTER OF MODERN MEDICAL TECHNOLOGIES EXPAND ACCESS TO QUALITY HEALTHCARE SERVICES IN KUTAISI, GEORGIA
TBC Bank and Gazelle Finance have teamed-up to support Medical City, a leading healthcare provider in the western region of Georgia to launch the Western Regional Center Of Modern Medical Technologies.
Equivalent to buried treasure – resources that are underused in Georgia
For 2018 the IMF Commission has forecast an annual economic growth for the Georgian economy of about 5,5%.
Does the quality of Georgian wine increase and how the export affects it
If we look at the data collected about modern Georgian wine, we will find out that the Georgian wines produced between 2015-2017 are much better in terms of their quality and Oenologic features rather than the wines produced between 2009-2011.
Japan simplifies the visa requirements for Georgian citizens
Diplomatic and economic relations between Georgia and Japan are now moving to a new phase. Recently Japan has decided to simplify the visa requirements for Georgian citizens.
M&S (Marks and Spencer) and H&M collections to be produced in Georgia
Garments manufacturer MGMTEX will start production of the M&S and H&M trendy collections from this September.
The World Digital Mining Summit to be held in Georgia
The summit is scheduled to take place between 21st-23rd September in the Hualing Hotel, Tbilisi, Georgia.
Galt and Taggart - Tourism Boom Continues in Georgia
Tourism has become one of the key drivers for the Georgian economy. Galt and Taggart has recently published research about the Georgian tourism sector in the first half of 2018.
"The worst dream for Putin is that Russians want to live in Georgia"
This year, visitors to the Adjara region would notice that there is a boom in construction in and around Batumi.
Underground gas storage facility to be built in Georgia
KfW, a German government-owned development bank signed a EUR 150 million promotional loan with the state-owned Georgian Oil and Gas Corporation (GOGC) for the construction of the first underground gas storage facility in Georgia.
New gambling rules for Georgia
Georgian lawmakers are preparing a new draft law relating to online-casinos and gambling that will seek to curb gambling addiction in Georgia.
How expensive is it to visit Georgia?
The Georgian Lari (GEL) is the official currency of Georgia and is the only legal means of payment in the entire territory of Georgia.
Trade with the EU and the Commonwealth of Independent States (CIS) has grown significantly
Trade with the EU and the CIS has grown by 26% and 33.5 % respectively, says GeoStat, the Georgian National Statistics Office.
The unemployment rate decreases in Georgia
The unemployment rate decreased in Georgia by 1,9% and amounted to 12.1% in the 2nd quarter of 2018 compared with the previous quarter,
Memorandum of Understanding to be signed between Georgia and Malaysia
According to the Georgian Ambassador to Malaysia Nikoloz Apkhazava, Georgia plans to sign a Memorandum of Understanding (MoU) with Malaysia.
“Blauenstein Georgia” due to expand in Georgia
“Blauenstein Georgia” is planning to open more shops in Georgia. It is an agriculture company that sells meat products, meat and convenience food.
The amount of Direct Foreign Investment rises in Georgia
According to the information of the National Statistics Office of Georgia, the amount of direct foreign investment in Georgia has risen
It’s going to get  harder for foreigners to get residence permit in Georgia
It’s going to get harder for foreigners to get permit of residence in Georgia.
PHOTO OF THE DAY
Exchange Rates
GEL Exchange Rate
Convertor
16.11.2018
17.11.2018
USD
1
USD
2.6818
2.6727
EUR
1
EUR
3.0299
3.0268
GBP
1
GBP
3.4332
3.4240
RUB
100
RUB
4.0185
4.0447
Other Stories
Recently Toyota rolled out Global Campaign under this slogan that reflects the Olympic and Paralympic Spirit of Encouragement,
A couple from Switzerland combines Swiss tradition and technology with Georgian products. Their cheese is made in the Georgian mountains and sold in local stores and hotels.
It has been more than five years since the residents of Lilo village, near Tbilisi, cannot open their windows.
63 000 GEL was received by the Georgian Agro Export Group which is just a small part of the European Neighbourhood Programme for Agricultural and Rural development.
Georgian entrepreneur Guka Tavberidze, who runs his own business in the UK and does it quite well, has been invited by BBC
The grand opening of 7-star The Biltmore Hotel Tbilisi took place in Georgia’s capital on July 31.
DUSHETI, Georgia – The Georgian government and the World Bank will allocate USD 5.6 million (12 million GEL) to fund
A new Georgian clothing brand named Person has emerged in Georgian market.
Georgia is in the midst of an economic maelstrom, Euronews reports.
Situation at Georgia’s mineral water market is interesting: over the last year, the volume of export has grown by 56 percent. According to “GeoStat”, over $114 million worth of mineral water was sold
GEL Exchange
USD
1
USD
2.6727
EUR
1
EUR
3.0268
GBP
1
GBP
3.4240
RUB
100
RUB
4.0447
November 2018
Mon Tue Wed Thu Fri Sat Sun
1 2 3 4
5 6 7 8 9 10 11
12 13 14 15 16 17 18
19 20 21 22 23 24 25
26 27 28 29 30