Georgian Investment Journal
15 September, 2011
Georgian Investment Journal

Investments inflow in the second quarter of this year accounted for USD 203 million that means 2.4% of reduction compared to the similar period of 2010, and exceeds the data of the previous quarter of this year by 17.3%.  Economic analysts doubt that Georgian investment inflow will be much behind the prognosis this year just like the past year forecast.

Nike Gilauri, Prime Ministry of Georgia, commanded Georgian diplomats at the ambassadorial held on September 13, 2011 to attract as much

investments as possible.

“The main task in economy is to attract more investments and companies, which predefines more job creation,” Gilauri said to the journalists after the Ambassadorial.

The commandment came shortly after releasing of preliminary statistics of Foreign Direct Investments (FDIs) in Georgia in the second quarter of 2011 published by Geostat, official statistics body of Georgia, on September 9, 2011 reporting that USD 203 million FDIs entered the country in the reported period. The figure exceeds the first quarter data of FDIs inflow by USD 30 million but lags behind the past year’s similar data by USD 5 million.

The current investments picture of Georgia seems quite sad and no gorgeous prospects unfold in the near future, Demur Giorkhelidze, an economic analyst, believes as far as the second tide of world financial crisis looms in prospect. Besides the investment climate of Georgia irrespective high Doing Business image as well as increased credit ratings of the country remains suspicious: judiciary system is still weak, property rights appear vulnerable and subjective opinion of incumbent authorities weighs down the legal point.

“Expectations of the second tide of crisis are quite high in Europe and the US, and I am not surprised that investors do not rush in Georgia,” he told Georgian Journal. “They never hurried here by the way, as no serious and reputable big brand entered this country in similar way they do in other more civilized parts of the world because in spite of PR campaign carried out by Georgian government international monitors closely study processes in Georgia and find its investment climate subjective and tailored to the ruling power’s interests.”

Past year government targeted at about USD 1.2 billion FDIs however less than half of that [USD 533 million] became available as a matter of fact. This year the target was lowered to USD 1billion and USD 800 million gradually.

Giorkhelidze sees no serious improvement this year [plus the upcoming crisis fears] therefore he does not expect any better FDIs result this year compared to the past year.

Shota Murghulia, an economic analyst with the Center for Economic Policy Research, thinks external political risks affected Georgian investment climate much more than the global financial crisis. To this end the single achievement of Georgia is that it got by couple of years further from the August war affected 2008.

According to Murghulia, there are two kinds of investors who invest in Georgia: the first one more or less cares for the internal investment climate and goes on higher risk to enjoy higher profit but wants to invest capital in relatively civilized manner. The other one does not care for internal risks and is ready to invest at higher risk to enjoy higher profit through securing governmental support. However both of them care for external political risks like August war of 2008 when nothing can secure their capital.

“No global crisis could affect Georgia like the August war, “Murghulia said. “On the reverse, there are some presumptions that  if there was a clement investment climate in Georgia during the global financial crisis investments might pool in Georgia as it was less integrated with the global market and more secured, but political conflict ruined this prospect.”

External political risks somewhat subdued as the time lapsed but another emerging risk is that 2011 is the pre-parliamentary and pre-presidential election year that are to come in 2012 and 2013 respectively.

“The point is that investors usually refrain from investing in the country before elections as they fear possible power and situation change. However I do not expect any serious change in ruling power and may be investors also calculate in this way. It is 50 to 50 whether or not this year prognosis will come true,” he said.

On the other hand some economic analysts think if country’s internal investment climate is based on fair legal system political risks are overseen. Political uncertainty does not hamper to Israel to attract more investments, Levan Kalandadze, an economic analyst, thinks and Georgia should think of it.

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