State Capitalism Ahead
17 November, 2011
State Capitalism Ahead

No more need in business for “State Inc”?

Recently we witnessed quite a number of occasions when the State agencies were effectively given the right of conducting business. Certainly, such “businesses” are motivated by financial gains. A question immediately props up: how fair could be the game rules used by these businesses in relation with their competitors, when their backs are oiled by the bulwark State agencies? This question is asked every time the news about creation of business institutions under this

or that State agency becomes known. The latest such news is about entitling the State- owned Samtrest to found private wine companies.

Grape and Wine Department of the Ministry of Agriculture takes care of state control in the sphere of viticulture and viniculture. A short while ago, the head of the state scolded the Samtrest Director for his poor performance and ordered the Minister of Agriculture to find “more competent” person to replace the Director. At the same time, the administration of the department was enhanced to both control wine companies and even entered the wine market as their competitor.

This news caused an immediate response from wine companies. They fear that this controversial move will provoke conflict of interests in the market. They refer to the international experience and absence of such precedence when similar governmental departments create their own wine companies. But the Minister of Agriculture has “strong-as-an-iron” argument. Namely, he alleges that the new state companies would enter unexplored markets where Georgian companies are not present (?!).

The Georgian Parliament also adopted the changes enabling the Chamber of Control to establish a legal entity of public law called the Institute of Public Audit. The Institute would offer commercial audit service to governmental organizations, municipalities and any interested person. On top of it, it would be able to use services of other audit firms. In other words, the Control Chamber is given an unprecedented power to control businesses officially.

Niko Tevdorashvili (Head of TMG Marketing Company): “Their decision about Samtrest is too hasty. They have not even calculated costs of constructing their own factory, as well as elaborating development strategy and marketing. I wonder where the Samtrest is going to get money to establish its own private wine company. I believe the role of Samtrest must be only that of regulatory to support wine popularization on world markets. By delivering the message of our country’s uniqueness to clients it could facilitate tourism, including wine tourism. But in case, when Samtrest acts as both regulatory body and wine producer, it would be destined to become a biased agency to take advantage of its superior market position in relation to competitors. If the state cannot get rid of the idea of creating private companies then let it create an LTD and openly admit that Samtrest is no longer alive in the country. Creation of public law persons by the state agencies will be discriminative for non-state producers. Accordingly, the Government will try to impose barriers for the alien producers to suffer and thereby help its progeny flourish without a hurdle. This is well tested method.”

Levan Kalandadze (economic expert): Naturally, it will cause awkwardness and create preferential environment for state-driven companies to the expense detriment of non-State players. These days, the country is suffering from ever so growing tax pressure. Hence, organizations will go to all lengths to avoid misunderstandings between them and the state agencies, be it the Control Chamber, Revenue Office or others. It’s a part of the State policy which moves in opposite direction to decentralization.

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
24.09.2018
25.09.2018
USD
1
USD
2.6216
2.6216
EUR
1
EUR
3.0854
3.0854
GBP
1
GBP
3.4584
3.4584
RUB
100
RUB
3.9340
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