Georgia lags behind this year’s investment target
23 December, 2010
Georgia lags behind this year’s investment target

Investments inflow for 2010 is supposed to lag much behind the forecasted USD 1.2 billion. Nonetheless government seems hopeful to have higher than predicted economic growth this year, and fill the investment gap in coming years.
According to preliminary data of Georgian official statistics body, the Foreign Direct Investments (FDI) inflow accounted for USD 160 million in the third quarter of 2010 that is by USD 37 million less than the FDI figure of the second quarter [standing at USD 197

million] and by 7% less than the volume of FDIs in the third quarter of last year - the year badly affected by financial crisis and economic slowdown when total FDIs volume made just USD 658 million against the backdrop of 2% of economic slump.
Expectations toward 2010 were much higher. Government assured that Georgia bottomed out the crisis in 2010 and the investments prognosis fluctuated from the pessimistic USD 800 million [forecasted by international financial institutions] to USD 1.2 billion [governmental forecast], and economic growth was expected to reach 4.5%.
Actually the total amount of three quarters of 2010 made about USD 433 million and to reach even the pessimistic prognosis [of USD 800 million] the volume of FDIs must almost double in the fourth quarter. That seems scarcely possible taking into account that  FDIs inflow could not reach USD 400 million in the last quarter even in 2007 when the volume of investments was the highest [more than USD 2 billion] in the history of independent Georgia.
Georgian government has already acknowledged that this year FDI prognosis will not be justified, but ascribes the reason to financial crisis and believes that the gap will be filled in the coming years. 
“If we take a look at FDIs inflow of all countries [globe over] we will see that the rate of FDIs significantly lags behind prognosis elsewhere. This is a result of financial crisis of 2009. Unfortunately even those investors who have money do not invest as eagerly as they did in 2008 and 2007. They make more detailed analysis of countries where they think to invest. Ministry of Economic Development together with other ministries works on many big projects with big investors. These projects [focused on energy, agriculture and tourism mainly] most probably will not come true in 2010 and we will not reach the targeted USD 800 million but they will be implemented in 2011, 2012, FDIs will increase in coming years,” Vera Kobalia, Minister of  Sustainable and Economic Development of Georgia, told Georgian Journal.
Irrespective diminishing FDIs economic growth Georgia exceeded this year’s target of 4-5% reaching average 6.5% based on 9 months’ analysis, Nika Gilauri, Prime Minister of Georgia, stated at governmental session of December 17, 2010. He predicted at least 7% growth next year. 
According to Demur Giorkhelidze, an independent economic analyst and former MP, 5-6% of economic growth is pretty good growth rate in a post-crisis period, but Georgia needs at least 9-12% each year to push its economy forward. And to boost economy Georgian government had  better to shift its economic focus from FDIs on activation of local economic recourses by giving an impetus to start-up businesses and Small and Medium Sized Enterprises (SME) development.
“Average volume of FDIs must make at least 20-30% of GDP to insure economic development of any country that translates into USD 2-3 billion and looks quite unrealistic to Georgia. Georgian government would focus on development of SME sector and local business rather than care for FDIs. All countries develop special stimulating programs for SME sector while Georgia absolutely lacks this strategy,” Giorkhelidze explained to GJ. “Let’s duplicate the post-crisis strategy of US that is our sample country in everything and make industry and SME development as priorities.”
Paata Sheshelidze, President of New Economic School, supposes that the slump in FDIs inflow this year is caused by increase of state expenditures, increase of some tax-rates, and shift of the super-liberal economic course to less liberal European economic course. After Georgia launched talks on conclusion of Free Trade Agreement (FTA) with the EU in 2008, government had to curb its liberal inclinations and restore anti-trust body in the country.
“Investors would like to invest in more business-friendly environment than their home-country offers. And just imagine why do they come here if we offer similar barriers to business as they have in their countries, I mean the EU in this case?” Sheshelidze asks.
He also doubts that incompetent personnel of Georgian embassies and representations abroad are one of the factors affecting FDIs inflow in Georgia. They fail to provide investors with due information on Georgia’s investment potential and business climate, he presumes.

 

Print
Other Stories
Business Positive – Successful radio program from Radio Positive
Starting point of radio program Business Positive is to meet interesting people, communicate with them and deliver information that is interesting for the audience.
A factory of electric vehicles to be built in Kutaisi
Prime Minister Mamuka Bakhtadze stated that a factory of electric vehicles will be built in Kutaisi at the presentation of the Aigroup business group.
Qvevri-shaped hotel complex to be built in Telavi
A Qvevri-shaped hotel complex is scheduled to be built in the village of Shalauri in Telavi, Kakheti (east part of Georgia).
Georgian designers presented at Fashion World Tokyo 2019
The products of 11 Georgian designers are showcased at Fashion World Tokyo 2019,
Silknet raises $200 million in Eurobond issue
27 March 2019 - JSC Silknet (“Silknet”), one of Georgia’s leading telecommunications operators, has successfully priced a debut $200 million 5-year 11% senior unsecured bonds issue (the “Notes”).
Pistachio trees will be planted in Georgia
Dozens of hectares of Pistachio are planned to be planted in Georgia this year.
Toyota Safety Sense and Hybrid Technology
Toyota Caucasus, has presented two new models the 5th generation RAV4 and the 12th generation Corolla at Rustavi International Motorpark, several days ago.
Bidzina Ivanishvili “became number one oppressor of businesses in Georgia” - ICC Georgia chairman Fady Asly
Mr. Ivanishvili promised the business community to protect them from harassment and pressure, unfortunately his words died with the sunset of that day
The best brands of Belarus will be exhibited on a large-scale exposition in Tbilisi
"The Belarusians like to come to Georgia to relax near the sea in Batumi as well as to stay in sunny Kakhetia."
Don’t treat business like a hooker! - Georgian businessman Vasil Soprpmadze addresses politicians
Businessman Vasil Sopromadze, founder of the company "Fresco", addresses politicians
RAV4 No Compromise and Corolla Set to Impress – Two New Cars Presented by Toyota
Toyota Caucasus, the company constantly aspiring to greatness, has presented two new models the 5th generation RAV4 and the 12th generation Corolla.
Mamuka Khazaradze quits TBC bank, does not sell the TBC Bank share
I made a decision to leave TBC bank where I spent 27 years of my life
10 Reasons to buy an apartment in the suburbs
There is a tendency for Tbilisi dwellers to move from central parts of the capital to the suburbs.
Georgian citizens are granted the right to work in France
The French Embassy in Georgia made remarks on granting Georgian citizens the right to work in France
The New York Times: Bitcoin declines but Georgia still bet on it
The New York Times has recently published an article about reasons, challenges and causes of generating Bitcoin in the former Soviet country Georgia.
EU to allocate € 13 billion for Eastern Partnership countries, including Georgia
The European Union together with the World Bank plans to allocate investment worth € 13 billion for infrastructure projects in the Eastern Partnership countries.
Anaklia Port and its importance for Georgia
In 2016, Anaklia Development Consortium was authorized to launch the construction of Anaklia Port.
Cryptocurrency mining threatens electrical network in Abkhazia
In the breakaway region of Akbhazia rampant cryptocurrency mining is threatening the shaky electrical network, reports an article of the news portal EuroNet.
Caucasus Wine University to be opened in Gurjaani
In the Kakheti region a new viticulture campus of the Caucasus University is in the process of planning.
Photos describing life of the poorest in Georgia
Fight with poverty should be among top priorities of every government in every country.
Training farmers to rescue the organic hazelnut production in Georgia
Even drizzling rain and unpleasant gusts of wind can’t prevent the farmers from coming and participating in the agricultural training.
Bleak times for organic farmers in Georgia – but there is hope
Organic hazelnut production is a delicate plant in Georgia that has emerged just a couple of years ago. Various pests, among them the Asian stink bug Parosana, trouble hazelnut farmers and menace their livelihood – even before their businesses could really take off.
Hybrid car imports are going through the roof in Georgia
Thanks to their fuel economy, the popularity of hybrid cars is increasing in Georgia, where fuel affordability is low and prices for fuel are unstable.
The New Year offer from MAQRO Construction - Apartments with unbelievable discounts and the parking spaces for FREE!
Location, green yard, spaces for various needs, experience of the construction company and parking space are the main important criteria for potential buyers of apartments.
Interview with the co-founder of Kiwi Vegan Café – the first vegan place in Tbilisi
Behind the Kiwi Vegan Café stands a group of activists who wants to raise Georgian’s awareness for animal rights and welfare.
PHOTO OF THE DAY
GEL Exchange Rate
Convertor
20.04.2019
21.04.2019
USD
1
USD
2.6935
2.6935
EUR
1
EUR
3.0291
3.0291
GBP
1
GBP
3.5021
3.5021
RUB
100
RUB
4.2126
4.2126
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
2.6935
EUR
1
EUR
3.0291
GBP
1
GBP
3.5021
RUB
100
RUB
4.2126
April 2019
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