Excusing Fines to Investors
26 November, 2013
Excusing Fines to Investors
The projected 6% growth looks impossible for the Georgian economy this year. In June the International Monetary Fund predicted 4% growth, while the European Bank for Reconstruction and Development anticipated 3%. But recently those figures dropped to 2.5% and 2%, respectively.
The new government will excuse administrative fines for breaking investment agreements to those investors who have implemented their investment projects by today. GEL 2.8 million worth of fines have already been excused to over 40 investors, and GEL 4.6
million worth of fines are under discussion to be forgiven next month.
Some sector pundits approve the initiative as positive, signaling that Georgia is investor-friendly; others disapprove of the idea on grounds that it is non-transparent.
An Inter-Structural Commission set up with Ministry of Economic and Sustainable Development of Georgia (MOED) for the purpose of handling state property has discussed over 50 investment cases of fines being charged for the breaking of investment agreements with the state. Over 40 investors - those who have successfully fulfilled investment obligations by today - were exempted from fines, in order to enable them to carry on investment projects that might have been suspended due to unpaid fines.
The Commission discusses such investment obligation breakage cases each month, starting this past March when the Commission was created under the initiative of Giorgi Kvirikashvili, Vice-Primer and Minister of Economic and Sustainable Development of Georgia, to help investment projects stalled since 2008 by the global financial crisis and the short war with Russia.
The issue is complicated, and in several instances the Commission is staffed by representatives of finance, infrastructure and regional development, as well as justice and interior ministries. The State Property Agency is the secretary and major body raising issues. Other ministries and state structures are also called in to help if a case involves any of them.
As Dimitri Kumsishvili, Deputy Head of Economy and Sustainable Development, reported to media on 14 November 2013, the Commission discusses only those cases when the fines exceed GEL 100 thousand and the investor asks to delay its investment obligations for more than a year. According to Kumsishvili, some agreements entail GEL 500-100 and even up to USD 250 thousand worth of fines per past-due day.
There are two problematic groups: one includes projects that implemented investment agreements, but with certain delay; still, if some terms are not fulfilled, penalties may accrue to millions.
The second group includes companies that are exempted only for a while in order to enable them to continue activity. “At the moment the temporary exemption amounts to more than GEL 10 million. All this enables investors to go ahead with their activity,” Kumsishvili elaborated.
To get temporary exemptions or restructure debts, investors have to apply to MOED, and if the Commission finds their arguments relevant the requesters will get preferences.
Davit Aslanishvili, a co-founder of Georgian Investment Group+, is doubtful however that the Commission makes proper decisions, and thinks it requires more transparency. “Does anybody know what kind of terms the excused investors had with the state? We speak of projects mainly that were initiated in frames of the privatization process; otherwise, the state could not handle the questioned projects. We all remember how non-transparent was the entire privatization process; contracts were not public and nobody could say for sure what the contract terms were. And how can we judge now the relevancy of the Commission’s decisions if these contracts are still not public?” Aslanishvili wonders. “Let them make all excused contracts available through web-sites, and then we’ll see whether or not the initiative is positive.”
Irakli Lekvinadze, an economic analyst, approves the fine exemption and debt restructure initiative, as it indicates that Georgia is an investor-friendly country. “Most of the problematic investment projects faced difficulties after 2008, as they could not recover from the double impact of the war and financial crisis, plus the crackdown on business practiced by the former ruling power. At any rate, this is a good initiative inasmuch as it signals that doing business in Georgia is safe and the ministry of economy is compassionate to business,” Lekvinadze said to Georgian Journal.

Other Stories
Korter: Reliable housing property data in Georgia
It's not a simple job to find fresh homes. But when you use the estate choice service Korter, everything becomes distinct.
Rent a car in Tbilisi – Parent.ge
Are you thinking of booking the best vehicles for your next trip at a very reasonable price? If yes, then this is one of the best decisions you can ever make for yourself.
Pleasant Sunday for the whole family – Renewed Sunday’s brunch at The Biltmore Tbilisi Hotel
Summer, the season of endless fun and vacations, has ended and Tbilisi has become a usually crowded city.
GEL devalues, officials show optimism though
Devaluation of the national currency has sent shockwaves among citizens in Georgia. Officials think that the trend will return to its normal frame, though.
ProCredit Bank’s 20 years of challenges and successes in Georgia and what it means to be a responsible bank
“The bank’s 20-year long presence in Georgia was marked by many challenges and success stories.
Comments on alarming GEL devaluation
The National Bank of Georgia set a new exchange rate, according to which, dollar price became GEL 2.9507 on Tuesday.
Euronews and Silknet sign an MOU to launch “Euronews Georgia”
Euronews and Silknet, Georgia’s leading telecommunications company, are announcing the signing of an MOU in view of launching Euronews Georgia, a news channel and digital platform aimed at a Georgian-speaking audience.
Green Diamond starts to hand over flats to owners as second stage of construction finishes
Second stage of construction of Green Diamond living apartments by MAQRO Construction has finished and process of hand over of flats to owners has started.
Georgian wine tasting in the US came off excellently
Georgian wine tasting in the main cities of the US, New York, Chicago, and Boston went off excellently.
The most wanted fruits from Georgia
The fruit exportation has decreased in Georgia. According to Geostat (National Statistics Office of Georgia), this year, up until May Georgia exported 25 939 300 USD worth of fruit – 6 771 300 USD less than in 2018.
Investment Plan for Europe – Additional EUR 800 million for SMEs as EIF and ProCredit double support for innovative companies
The European Investment Fund (EIF) and ProCredit Group are providing an additional EUR 800 million to innovative small and medium-sized companies (SMEs),
Everything of comfortable life in one space – Second part of construction of one of the largest apartment complexes finished in Tbilisi
Apartment in ecologically clean environment, thousands of square meters of green yard, swimming pools, places for various sports activities, treks for walking and running, commercial spaces – all these available in one space is not a fantasy.
Batumi awarded Europe's Leading Emerging Tourism Destination 2019
World Travel Awards Europe Gala Ceremony 2019 took place on the 8th of June in Madeira, Portugal.
Coca Cola to open new factory in Georgia, will hire female drivers
Coca Cola is opening new factory in Georgia in December.
World's best party supply company now on the Georgian market
The largest party supply store in Georgia - MyDay is launching as the official distributor of AMSCAN from 2019.
Live as a marketing tool and an unprecedented live stream launched by Livetag
Sharing information has become smoother and more versatile in today’s technological world. Recently, live streaming, an online streaming media has become especially popular.
Theme and program of Caspian Energy Forum Tbilisi – 2019 changed
“The 8th International Caspian Energy Forum Tbilisi – 2019, scheduled for June 21, will focus on the development of the Azerbaijan-Georgia relations in the field of economy and energy”,
Misunderstanding over Poti deep sea ports
There was misunderstanding around deep sea ports in Georgia – in Poti.
High demand for dollars or the investment decline – Why Georgian Lari depreciates
$1 equals GEL 2,7470 in the official rate set by the National Bank of Georgia (NBG).
PSP Group confirms negotiations regarding purchasing of GEO Hospitals
PSP Group confirms negotiations regarding purchasing of GEO Hospitals.
New life to be given to Dashbashi Canyon
Georgia’s Agency of Protected Areas is planning to give new life to Dashbashi Canyon in Tsalka (southeastern Georgia).
Who is constructing “Khadori 3” Hydropower Plant in Pankisi Gorge?
Clashes broke out in Pankisi Gorge, Georgia’s northeastern region between special forces and residents
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).
GEL Exchange Rate
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