Georgia Showed up in Davos; What’s Next?
07 February, 2013
Georgia Showed up in Davos; What’s Next?
In the second half of the year, Georgia expects results of its attendance at the reputable World Economic Forum of Davos -2013. Skeptics doubt it.
After the shift of power in fall of 2012, Georgia decided to tick itself at the snobbish global economic forum that brings together around 2500 top business leaders, international political leaders, selected intellectuals and journalists to discuss the most pressing issues facing the world yearly in the Swiss mountain resort Davos. Davos - 2013 held
on January 23-27 was no exception fixing traditionally high participation charges. For example the only entrance ticket costs USD 71 thousand per person plus at least USD 156 thousand for participating clubs for private discussions. Notwithstanding high expenses, Georgian delegation headed by Prime Minister Bidzina Ivanishvili, a billionaire and the richest Georgian businessman, left for Davos to get in touch with the world economic policy-makers personally and put Georgia in a favorable light for potential investors.
Although, Ivanishvili had a number of interesting meetings with European officials, shaking hands with his Russian peer Dimitry Medvedev and invitation to Russian dinner caught the attention of media most of all: as a matter of fact, this was the first hand-shake of Georgian and Russian top officials after terminating of political relations in August of 2008 when Russia routed Georgia. Amiable hugging of Ivanishvili with George Soros did also attract some attention.
After his arrival from Davos, Giorgi Kvirikashvili, Minister of Economy and Susutainable Development, reported to media that results of very interesting meetings [that were invisible to outsiders ] with private companies and investments funds who expressed desires to invest in Georgia will be tangible in the second half of the year.
According to Kvirikashvili, they met with JP Morgan, Meridian Capital, and Blackton. Talks were conducted on high technological projects with Philips, Intel and Indian-based Tata. Philips made some suggestions that will be revealed in the second half of the year. Some groups took an interest in Georgian metallurgy and tourism; specifically hotel construction. Several groups of investors appear intent to participate in Tskaltubo development project. JP Morgan was negotiated to invest in the upcoming Investment Fund Georgian government intends to set up to attract private investments and deliver cheaper credits to small business.
Presentation of this Investment Fund expected to attract USD 1 billion this year, was actually planned in Davos; however, it was canceled ultimately, which disappointed Georgian economic analysts, who had been expecting launching of the Fund since the end of 2012.
“ Davos was the best place for launching the Investment Fund, however, it did not take place,” Irakli Lekvinadze, an economic analyst, said in the interview to Georgian Journal. “The sooner this project will be launched, the better, for there is much talk that something is done but we cannot see what is done actually.”
He approves the fact that Georgian delegation attended Davos even if it was quite costly, because in fact, Davos is a rostrum to show yourself and build up contacts that lays ground for future investment projects. Lekvinadze does not rule out that investors mentioned by Georgian government can really come to Georgia, attracted mainly by the personal trust in Ivanishvili. On the other hand, investors interested in Russian market that seems to open up soon to Georgia again may be enticed to invest here.
Ditrich Muller, co-founder of Georgian Investment Group, seems skeptical that Davos results may come true in the second part of the year. The impending second tide of economic crisis in Europe makes him wary. Moreover, the sluggish Georgian Stock Exchange leaves fewer opportunities to attract serious fishes.
“The stock market bubble is inflated again, leading economic including Chinese that is the global locomotive in fact shrunk, European leader Angela Merkel warned this year will be difficult and how are we supposed to attract investors here while our stock exchange is half-dead?” Muller wonders.
On the other hand, he finds governmental policy of elaborating potential investment projects far below par. Otherwise, government would not have gone so far to chase investors. “There is around GEL 8 billion on deposits at Georgian banks that means people do not see opportunity to invest. Banks in their turn, avoid crediting economy due to its high risks and this money lays futile. Government should work out very clear projects where the money can be invested and I believe local investors - owners of those GEL 8 billion will invest in them,” Muller said.
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