Georgia now ‘open for business,’ thanks to reforms

In an interview with Globus Vision, Ambassador Gabriela von Habsburg points out that by cutting red tape and removing obstacles to investors, Georgia has managed to enter the top ten countries in the World Bank´s “Ease of Doing Business” ranking.

“We have managed to eliminate corruption, decrease unnecessary bureaucracy and red tape, and resolve the bottlenecks in the system. As a result, the ease of doing business in the country is very high,” she says.

Georgia has managed to rebound from the Russian embargo of 1996, the 2008 global financial meltdown and the more recent Eurozone crisis, to achieve a robust growth rate of 7.5% in the first half of 2012.

Strategically located at the intersection of Eastern Europe, Western Asia, and the Black Sea, Georgia provides investors access to a market of more than 80 million people, apart from its own population of 4.5 million. The country also boasts a highly educated, multi-lingual workforce and wages that are competitive with other countries in the region.

Among the areas that are attracting the interest of foreign investors are real estate, tourism, pharmaceuticals, apparel and energy.

This includes investors from Germany, where the embassy of Georgia works closely with the different chambers of commerce to promote bilateral investment and trade between the two countries.

A strategic link on the ¨Silk Road¨ connecting Asia to Europe, Georgia has experienced unprecedented economic growth in recent years, which peaked at 12% in 2007 and remained at over 6.3% in 2010 and 2011 an impressive performance compared to its crisis-stricken European neighbors. And Georgia will not stop here, as the country is gradually becoming more and more integrated in the global economy, which is generating increased foreign trade and investment, more jobs and, most importantly, an ongoing exchange of know-how with partners in Europe and beyond.

Please share your view on the state of affairs in Georgia and your expectations for 2012- 2013? 
 
The reforms that have been implemented over the last couple of years have led to an increased level of efficiency in the public sector. We have managed to eliminate corruption, decrease unnecessary bureaucracy and red tape, and resolve the bottlenecks in the system. As a result, the ease of doing business in the country is very high. We rose three places up from last year’s “Doing Business” rankings by the World Bank, for the first time putting us in to the Top 10 out of 185 countries, owing to improvements in the area of electricity, financing, taxation, cross-border trade, and contract enforcement. Georgia is strategically located at the intersection of Eastern Europe, Western Asia, and the Black Sea region. Through it, investors get access to a market of more than 80 million people (on top of its population of 4.486 million).

Despite challenges coming from the big embargo on Russia in 1996, the 2008 global financial crisis, and the more recent EU crisis, we have managed to post positive economic growth (which was 7.5%, as of the first half of 2012). This demonstrates the benefit of being an open economy.   
 
How does Georgia stand in the region?
 
As I have said earlier, Georgia is an open economy. It is open to trade with most of the countries in the world. We have Free Trade Agreements (FTA) with various countries, including the US and the members of the EU. This has benefitted us in terms of employment generation and increased economic activity. Our FTA with the EU even helped in terms of our elections. It is the 3rd country in the region to have made true development. And this positive trend continues. Our relationships with the big markets continue to go on in a very good way (especially, in light of the improvements we have had in the ease of doing business in the country). 
 
The recent elections resulted in the victory of the coalition led by technocrat and businessman Mr. Bidzina Ivanishvili. In your opinion, what will be the priorities of the new administration and its impact on the business environment in Georgia?
 
If you look at our Foreign Policy, it is very clear that the line is very straightforward, and we expect to carry on following this same line in the years to come. The way of Georgia is very clearly set up, and it is going to continue. The recent elections are a clear demonstration of Georgia as a well-functioning democracy. We have a strong opposition and a strong government. There is good Parliamentary work concerning all the issues. I think all this is going to continue very positively.  
 
What are the implications of having someone who is both a businessman and a technocrat head the government?
 
It is a very new situation for us. We are finding out that it is very positive; especially, when you talk about the future. So far, things look good. It is truly a very interesting time.  
 
Georgia is a strategic country to the energy markets in Europe and Asia as the oil pipelines from Central Asia to Western Europe go through its territory. Capitalizing on its privileged geography, Georgia has become an important trade and transit hub in the Caucasus and Black Sea Region that connects over one billion people from Europe and Asia every year. Its competitive business environment, stable political situation, great infrastructure and booming economy make Georgia an ideal investment destination that offers numerous opportunities in sectors like mining, agriculture, infrastructure, finance, industry, ICT and pharmaceuticals. Please share your insights into Georgia’s emerging investment opportunities.

The National Economic Plan will probably be set for 5 years, starting from the parliamentary election of the next government and it will carry on its positive path. Things would continue the way they are, more or less, with some changes. So far, we have a working plan.
 
The good thing about Georgia is that it is not focused on just one sector. It offers a wide range of opportunities. Of course, we continue to be strong in terms of the energy sector. Germany is trying to transition from nuclear energy to renewable energy, which happens to be Georgia’s strength. We are lucky because our geographical location allows for wind, hydro, and geothermal energy. We have about 25,000 rivers, the largest of which is the Mtkvari River. We have the Caucasus Mountains which rise as high as 18,500 feet above sea level, giving us the best conditions for hydro power. At the moment, we are only using 40% of our resources, yet it covers more than 90% of our country’s energy needs (not to mention what we export to all our neighboring countries). We have strategic links to Turkey, which is a growing country with an increasing demand for power. Clearly, there is incredible energy potential in the country.

In the area of tourism, the number of arrivals in the country is increasing. While the country has been categorized as a subtropical climatic region, it experiences a wide range of climates. Our climatic zones allow for all season tourism, with something to offer for those who want colder or warmer climes. The area facing the Black Sea tends to be warm, while the regions near the Caucasus have cold alpine weather, with chances of snow. The eastern part is arid, while the southern part is chilly. There is also the rainy weather in the Kolkhida Lowlands. 

On top of our lush and varied landscape, we also have a rich cultural product—from Armenian to Azeri, to Greek and Russian—which should appeal to tourists interested in culture and heritage.

In the area of gastronomy, we have good food and wine. The country has a long history of making wine. In fact, Georgia is the first country in the world to produce wine. Viticulture here has gone on for millennia. We are known for it. The quality of our water is world-renowned, which works nicely for our wine and bottled water industry. 
 
There have been tremendous developments in tourism recently, most notably the Anaklia and Kobuleti free tourism zones and the Akhtala Mud Resort. Would you kindly expand on this topic?
 
Yes, there is. It is a beautiful part of the country along the coast of the Black Sea where a city is being developed. This is, of course, great news. We hope to turn it into an economic cluster with skyscrapers and ports. A state-of-the-art Public Service Hall is being constructed. We hope that this project will convert Lazika into a teaming urban area, second to Tbilisi. We are going to need to set up the necessary infrastructure—roads, trains, power lines, and so on. There are also some hotels being development. These projects are all being implemented in a healthy way, with a very good and solid base.  
 
How would you comment on the country’s agriculture industry?
 
A lot of work is being done to revitalize our agriculture industry. What we have now is a highly specialized sort of agriculture. We need to expand that further, especially since, because of our history, a lot of people work in the industry.
 
What other sectors would you like to highlight?
 
Apart from agriculture, our key sectors include tourism, finance, transportation and logistics, manufacturing (under which we have apparel, pharmaceuticals, petrochemicals, organic fertilizers, medical equipment, packaging, household appliance, electronics, etc.), energy, ICT, infrastructure, and real estate development. There are also opportunities in the area of metallurgy, construction materials, wood processing, and vehicle fabrication.

The country’s services sector has a lot to offer. We have a highly skilled, well-educated and multi-lingual work force. Wages are relatively more competitive compared to other locations in the region. There is some interest in BPO/Voice Services, IT, chemical and other industries. There is huge potential there. The numbers are slowly growing for the textile industry. People here are very good with crafts. You would find a lot of good, competent people along the countryside, as well.   
 
Germany and Georgia are linked by strong historical, economic and cultural ties that have only grown stronger in recent years. Most notably, Georgia supported the German reunification and Germany was the first country to recognize the independent Georgia and to establish diplomatic relations with it. Nowadays, Germany is second only to the US in extending development aid to Georgia and is one of the top foreign investors, with a total of over EUR200 million in accumulated investments since 1993. Some of the main contributions made by German businesses have been the setting up of ProCredit Bank and the rehabilitation of the water treatment systems in Batumi. Education and culture are also priorities of bilateral cooperation, and over 2,500 Georgian youths go to study in Germany every year. Would you please give an overview of German- Georgian cooperation?
 
The main areas include diplomacy, education, health, aid, and so on. All these things are really happening in a very quick and positive way. Language is a contributing factor. A lot of Georgians speak German. This has to do with our strong history with the country. On top of which, we have a Cultural Cooperation Treaty with Germany.

In the area of business, we have Georgian-German partnerships in the different sectors. There are a number of German companies already producing products in Georgia. The numbers are growing.  Germany is also supporting us in terms of certain military aspects. All these strengthen the bond between these two countries.   
 
Can you tell us about Georgia’s current country branding initiatives?
 
There is a lot going on. For instance, we are hoping to host the 2020 European football championship. We have already made a bid. It is a great opportunity for us to showcase what we have in Georgia to an international audience.

We are also actively participating in a lot of economic events, working with the various Chambers of Commerce. We have a lot of things going on in Germany.

We engage all the different states, to promote an inclusive sort of development. We organize business delegations, and take them to the various parts of the country. We encourage several international exchanges, and have a number of Georgian missions abroad. 

Within the country, we have launched the "Invest in Georgia" Campaign under the country's National Investment Agency (NIA). The project highlights several investment opportunities in various industries, from real estate to tourism, to pharmaceuticals and apparel. Its website contains a comprehensive country profile, with information on the key sectors of the economy.

In Germany, we work with the different Chambers of Commerce to promote further business exchanges between Georgian and German companies, and perhaps encourage German investment to Georgia (and vice versa). 
 
Can you give us an example of a German success story in Georgia?
 
We have the world’s largest organic food producer producing various apple-based products in Georgia. The fact that this big company chose to set up operations here in the country says a lot. 
 
What is your goal for this foreign mission?
 
Georgia is a small country, and people tend to focus more on the bigger countries. We need to go out of our way to make people aware of the possibilities in Georgia, and the opportunities that exist in the various sectors. We try to encourage connections and strengthen existing ties so that people would know more about the country. We establish strong networks in all areas, whether it is economic or political. 
 
What key thing do you love about the country?
 
What impresses me the most about Georgia are its people—they are very warm and hospitable. This says a lot about the country. They welcome everybody. They are so open and sincere. This is good for both social and business purposes. I think foreign investors would enjoy working with these lovely people. I think the Georgians are truly special.
 
What final message would you like to leave to the readers of Worldfolio.UK?
 
One way to truly appreciate what Georgia has to offer is to come here and experience the country for yourself. Breathe the Georgian air and personally immerse yourselves in the rich Georgian culture. Visitors are always welcome.