Armenian business eyes Georgian business land
21 April, 2011
Armenian business eyes Georgian business land

Starting past year, Armenian business finds Georgia as a favorable business venue. Economic analysts say governmental crackdown in Armenia is its key reason. Some experts presume they want to hit Azeri market through Georgia.
Business registration statistics bespeaks of two trends: Georgian business climate is favorable for starting business, but to develop business is quite difficult. Irrespective of this controversy Georgian business climate is much more attractive than the ones in Armenia and Azerbaijan, economic analysts say. Heavy corruption and

governmental crackdown on business strangles business there even worse than in Georgia.
Based on official statistics, by today about 195 Armenian businesses were registered in Georgia starting 1995 and 105 out of this figure were registered in 2010 alone. However, none of them [105 businesses] is big business and is made up of 27 individual entrepreneurs and 73 small companies of limited responsibilities.  Some Russian and Georgian media publications have been trumpeting the statistics as a token that Armenian business flees to Georgia to escape governmental crackdown.
According to Andranik Tevanyan, an Armenian-based economic analyst with the Research Institute, in Armenia country’s main economic malfunction lies in the strong interrelation between business and political interests which resulted in bad governance, artificial monopolies and anti-market price formation mechanism. As a result GDP of Armenia having reached its peak in growth in 2007 [13.7%] reduced to 6.8% in 2008 and fell by 14.4% in 2009.
According to Irakli Lekvinadze, an economic analyst, Armenian capital inflows in Georgia is obvious lately, mainly in middle sized business including real estate, tourism and trade.
“This inflow is outlined by hard business climate in Armenia,” Lekvinadze told GJ. “Armenian businessmen in informal talks say that local businessmen seek to take their capital out of the country, and Georgia is very comfortable for them for it has no bureaucratic barriers and corruption. While Russian capital prevails in Armenia in any sector and state crackdown on business makes hard predicaments to doing business.”
Some media publications spread information that certain big Armenian businesses were moving to Georgia, but none of them were proved in fact. Actually no pure Armenian-based business exists in Georgia, Armenian embassy reported to Georgian Journal, Armenians mainly enter in co-partnership with local partners. Big Armenian diaspora in Georgia as well as century-carved close neighboring relationships between Georgian and Armenian nations, visa-free regime laid ground for developing business connections easily. 
“They actually do not refer to the embassy that’s why we cannot provide with detailed information,” a spokesperson of Armenian Embassy in Georgia, told GJ, but he shied to put his name. “Georgian barriers-free business climate and visa regime are so easy that nobody needs our help. They find partners in Georgia without help of embassy, some have friend, some relatives here…”
Indeed, based on personal contacts of Armenian business registered at Geostat, Georgian Journal could not find any single Armenian citizen. Contact persons are either Georgian partners reporting that Armenian partner is in Armenia, or Georgian citizens of Armenian nationality. All refuse to provide with contacts of Armenian partner however. This kind of Georgian-Armenian co-partnership practice makes some confusion on how much of Armenian capital is invested in Georgia. According to official statistics, USD 150 thousand was invested in Georgia in 2010,  while USD 5.3 million and USD 14.8 million flew to Armenia [from Georgia] in 2009 and 2010 respectively.
“These figure are a result of the practice that Armenian businessmen register their businesses on Georgian citizens mainly therefore Foreign Direct Investments made by Armenians in fact are considered as domestic,” Lekvinadze elaborates.
The high registration statistics is somewhat chilled out by reality. The number of actually operational businesses is a matter of surmise as official statistics cannot provide with comprehensive statistics, researching individual entrepreneurs is quite expensive and needs bigger human resources, Geostat source explained to GJ. What Geostat affords is the research of legal entities. Based on this survey only 16 out of the registered Armenian 73 Ltds are operational in fact that bespeaks that not everything is as smooth in Georgian business climate as government touts.
Registration of business in Georgia costs just GEL 100 therefore some people register themselves in Georgia just in case to get a foothold for future, some are wholesale importers and register themselves to ease customs clearance procedures and import of goods.
“Therefore registration statistics is high, but the figure that only 16 out of 73 companies operate indicates at problems in Georgian business climate,” Demur Giorkhelidze, an economic analyst, said.
This problem creates setbacks to Georgia to become a regional economic hub in the region, Ditrikh Muller, an economic analyst with Georgian Investment Group, thinks. According to him, one of the reasons Armenian businessmen enter Georgian enterprises as co-founders is they want to hit Azeri market that is closed for them due to political reasons.
Political tension of Armenia with Azerbaijan and Turkey on the one hand, and low trust of the developed West toward Muslim countries [caused by recent political crisis in Arabian countries] on the other hand, plus liberal business climate pictures Georgia as the most favorable meeting venue for Christian and Muslim businessmen in the region, Muller thinks, and Georgia can enjoy huge economic profit of this situation if government undertakes prudent steps.
“Government has to adopt kind of Monaco model where each investor has an obligation to have a local co-founder in the business. And thanks to this obligation you cannot find a poor person in Monaco. Georgia must adopt this kind of obligation [and of course remove problems related with property right protection and taxation] as far as it has a unique chance today to attract investors from both Muslim and Christian countries. But government ignores this chance as of yet,” he told GJ.

Print
Other Stories
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.
Mziuri Park in Tbilisi to be renovated soon
It was the dream of prominent Georgian writer Nodar Dumbadze that when the original Mziuri park was constructed and opened in 1892 that it should be a park for children,
Winemakers to produce Kvanchkara in its place of origin - Racha
Khvanchakara is a semi-sweet Georgian red wine which originates from Racha, in the western part of Georgia. Kvanchkara is made of two types of grape Mujuretuli and Aleksandrouli.
The level of Georgian wine and Chacha exported has increased
The National Wine Agency of Georgia has recently published statistical information about the level of Georgian wine and Chacha exported between January and July, 2018.
New fire engines to be Manufactured in Georgia
The Acting Head of the Emergency Management Agency Shalva Khutsishvili said that the old Zili fire engines (which were made in the USSR) will be phased out and replaced with new ones, manufactured in Georgia.
Georgia witnesses a record number of tourists
The Georgian National Tourism Administration publishes statistical information about international visits to Georgia.
Canadian businessman plans to build a hotel in Bakhmaro
Canadian businessman Vadim Malishev plans to build a hotel in Bakhmaro resort, Guria, in the western part of Georgia.
Coffee Factory will open in Tbilisi in October
The first coffee factory (which will be located on the Kakheti highway) in Tbilisi will open in October.
Places in Georgia where real estate is the most expensive
The real estate market in Georgia is growing annually. In Tbilisi as well as other regions of Georgia new developments are increasingly taking place.
How much does a vacation cost in Tbilisi?
It is the middle of summer and those who have not yet taken a vacation are looking for an appropriate place for sure!
The price for extreme sports in Georgia
Georgia offers a variety of options to extreme sport lovers.
The number of Georgians who own property abroad increases
The number of foreign properties owned by Georgians is increasing.
How much does Taxi cost in Tbilisi?
Stories how Taxi drivers try to deceive passengers and charge them with more money than they should pay are known for everybody all over the world.
What are the highest paid areas in Georgia
According to the data collected by the National Statistics Office of Georgia in the first quarter of 2018 the highest paid jobs in Georgia are found in the financial and insurance fields.
PHOTO OF THE DAY
Exchange Rates
GEL Exchange Rate
Convertor
21.09.2018
22.09.2018
USD
1
USD
2.6193
2.6216
EUR
1
EUR
3.0693
3.0854
GBP
1
GBP
3.4651
3.4584
RUB
100
RUB
3.9538
3.9340
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
2.6216
EUR
1
EUR
3.0854
GBP
1
GBP
3.4584
RUB
100
RUB
3.9340