Georgia’s Trump investment
17 March, 2011
Georgia’s Trump investment

Investment plans of American real estate mogul Donald Trump targeting at USD 250 million-worth investments to be implemented in Georgia is considered as a trump card to sweep investors to Georgia if the plans do not remain on paper.
A contract signed by Trump and Georgia’s Silk Road Group, one of the largest private investment companies in the South Caucasus, in New York on the sidelines of Georgian President Mikheil Saakashvili’s visit to the United States, pegs investments’ expectations of

official Tbilisi high this year.
The deal envisages the construction of two 40-storey buildings in the country including the Trump Tower in the capital of Georgia and the Trump Riviera, in the Black Sea resort town of Batumi. This will be the first ever Trump investment in the Black Sea region and in the post-Soviet countries alike, which accentuates the special importance of Georgia and specifically Batumi tourist potential, Georgian economic analysts believe. They assure that the Trump brand can tag a long trail of foreign investors to Georgia as soon as the first foundation stone of Trump branded hotel is put in its place. Otherwise the Trump card is not supposed to win, the economic analysts warn.
Trump’s decision to expand into Georgia through constructing skyscrapers complex in Batumi and Tbilisi first was disclosed in September of 2010 and it had been touted by the government as a breakthrough in the sluggish investment climate of Georgia. 
And despite the fact that the memorandum of understanding was signed by the sides past fall, no breakthrough took place.
According to the preliminary data of official statistics, the inflow of Foreign Direct Investments (FDIs) accounted for USD 553 million in 2010, which was well below the initial forecast of USD one billion and translates into a 16% drop compared to the FDI total volume of 2009 standing at USD 658.4 million.
However, the figures did not chill governmental optimism. According to Vera Kobalia, Minister of Economy and Sustainable Development of Georgia, FDIs inflow slumped in all countries globe over in 2010 due to financial crisis and Georgia is supposed to fill the gap in the coming years thanks to new investment projects. Trump’s investment plans are supposed to be a drive force to this end.
“We see a big interest on the part of foreign investors to invest in Georgia ... Signing an agreement with Donald Trump will be a good promotion for Georgia,” Nika Gilauri, Prime Minister of Georgia said at the government meeting.
“Trump’s name can become a drive force to attract FDIs to Georgia,” Levan Surguladze, Head of Caucasus Financial Service, said. “It can give a “following smart money” effect…it means that if investments go anywhere one of key addressers will be Georgia this year.”
According to him, Georgia overcame financial crisis much better than other developing and even developed countries, plus corruption is cut down and stability increased that reflected in improved Fitch rating [early this month] that make potential investors think that risks reduced and Georgia is the very country where investments pay-back is high.
But while the name of smart investor  “re-alerts” interest of foreign investors toward Georgia it is not supposed to blind companies to security concerns in breakaway Abkhazia and South Ossetia, Alice Mummery, an economic analyst with The Economist Intelligence Unit, is reported saying by EurasiaNet.Org.
The expected effect of smart money is supposed to occur only after the first stone will be put in the basement of Trump branded towers.
“Donald Trump promised Russia to implement significant investments long before but did not keep the promise as of yet, “Ditrich Muller, economic analyst with Georgian Investment Group, told Georgian Journal. “The news that he invests in Georgia is an excellent signal to other investors but they will be waiting till the first stone of Trump’s projects will be laid down– this will be a guaranteed sign that money can be put in Georgia. Neither the memorandum of understanding signed last year nor the contract endorsed in New York recently can give similar effect.”
As of yet neither Trump’s office, nor its partner Silk Road Group or Georgian government disclose details of timetables when  the construction works launch is scheduled exactly and how much will be spent on the projects. All the financing data claiming USD 250-300 million is earmarked by Trump to Georgian projects are provided by the US media calculations that lack official confirmation of deal-involved sides. The single thing Trump’s Michael Cohen, executive vice-president of the Trump Organization, disclosed is that the deal is a licensing agreement, that means that not Trump [personally] but some other investor will be investing in the project under the aegis of Trump brand, Muller said.
“But that does not matter in fact; investments will come like a heavy rain in Georgia if construction works [of Trump’s projects] are actually launched,” Muller said.

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