Investments, cornerstone of prosperity
By Messenger Staff
Tuesday, March 24
Investments have always been the cornerstone of prosperity, in particular for countries with limited economic potential. More investments = more prosperity. Therefore every country should do its best to attract investors by all possible means. How does Georgia comply with this simple rule?
According to preliminary data from the Georgian Ministry of Economic Development Georgia received USD 1.2937 billion in direct investment in 2008. This is a significant sum. The Georgian Government and leadership consider it vitally important for the country to attract into the country at least USD 1 billion in 2009. President Saakashvili has stated that this amount is needed to enable the country’s economy to survive the present crisis and not collapse. “One of the main tasks we have is to search for investments. Georgia has a small economy and it cannot create jobs on its own. The quest for foreign capital is not only a concern of the Prime Minister or the head of the Ministry of Finance. It is an assignment for every institution,” stated Saakashvili.
This position has been taken many times by the President. Two years ago he assigned Georgia’s Ambassadors to all countries to more actively seek out and attract investments into Georgia. He even promised to assess the Ambassadors’ professional performance by the amount they had attracted into the country in investments. Everybody also remembers how Saakashvili assigned then Defence Minister Irakli Okruashvili (now in exile in France) to promote Georgian wine(!) after Moscow had banned the import of Georgian wines to Russia.
There are, however, many different conditions which must be met before investments are attracted. The investments entering Georgia slowed due to the Russian aggression in August last year. Immediately after this tragic event the effects of the world financial crisis shattered the country. The first factor damaged Georgia’s image considerably, as the consequences of the Russian aggression were grave. Georgia lost territories and, what was more damaging for the investment climate, Russian tanks are only 50 kilometres from Tbilisi. So Georgia is now perceived worldwide as an unstable country. The situation is moreover being aggravated by the large scale protest rallies promised by the opposition. Minister for Economic Development Lasha Zhvania has admitted that many potential investors have told him that they would think about doing business in Georgia only after the demonstrations have come to some sort of conclusion.
Most of the 2008 investments entered Georgia in the first half of the year. In 2009, according to Minister Zhvania’s prognosis, investments will generally start entering the country, if they come at all, in the second half of the year, but political stability is the major driver which would attract investment to the country.
A glance at the list of the origin of investments made in 2008 reveals some interesting figures. In 2008 the UAE invested USD 237.1 million in Georgia. Next come Turkey (USD 165 million), the Netherlands (USD 145.7 million), the Virgin Islands (USD 144.3 million), the USA (116.3 million), Great Britain (111.8 million), Switzerland (80.4 million), Kazakhstan (63.6 million), Belize (38.9 million) and Germany (31.5 million). It is nice to see businessmen from such exotic countries as the Virgin Islands and Belize investing alongside those from more obvious countries, and this is an impressive list of partners, until you realise that the amount these countries invest in Georgia compared with other states is minimal. The countries which invest in Georgia are already aware that there are many better places they can go.
According to preliminary data from the Georgian Ministry of Economic Development Georgia received USD 1.2937 billion in direct investment in 2008. This is a significant sum. The Georgian Government and leadership consider it vitally important for the country to attract into the country at least USD 1 billion in 2009. President Saakashvili has stated that this amount is needed to enable the country’s economy to survive the present crisis and not collapse. “One of the main tasks we have is to search for investments. Georgia has a small economy and it cannot create jobs on its own. The quest for foreign capital is not only a concern of the Prime Minister or the head of the Ministry of Finance. It is an assignment for every institution,” stated Saakashvili.
This position has been taken many times by the President. Two years ago he assigned Georgia’s Ambassadors to all countries to more actively seek out and attract investments into Georgia. He even promised to assess the Ambassadors’ professional performance by the amount they had attracted into the country in investments. Everybody also remembers how Saakashvili assigned then Defence Minister Irakli Okruashvili (now in exile in France) to promote Georgian wine(!) after Moscow had banned the import of Georgian wines to Russia.
There are, however, many different conditions which must be met before investments are attracted. The investments entering Georgia slowed due to the Russian aggression in August last year. Immediately after this tragic event the effects of the world financial crisis shattered the country. The first factor damaged Georgia’s image considerably, as the consequences of the Russian aggression were grave. Georgia lost territories and, what was more damaging for the investment climate, Russian tanks are only 50 kilometres from Tbilisi. So Georgia is now perceived worldwide as an unstable country. The situation is moreover being aggravated by the large scale protest rallies promised by the opposition. Minister for Economic Development Lasha Zhvania has admitted that many potential investors have told him that they would think about doing business in Georgia only after the demonstrations have come to some sort of conclusion.
Most of the 2008 investments entered Georgia in the first half of the year. In 2009, according to Minister Zhvania’s prognosis, investments will generally start entering the country, if they come at all, in the second half of the year, but political stability is the major driver which would attract investment to the country.
A glance at the list of the origin of investments made in 2008 reveals some interesting figures. In 2008 the UAE invested USD 237.1 million in Georgia. Next come Turkey (USD 165 million), the Netherlands (USD 145.7 million), the Virgin Islands (USD 144.3 million), the USA (116.3 million), Great Britain (111.8 million), Switzerland (80.4 million), Kazakhstan (63.6 million), Belize (38.9 million) and Germany (31.5 million). It is nice to see businessmen from such exotic countries as the Virgin Islands and Belize investing alongside those from more obvious countries, and this is an impressive list of partners, until you realise that the amount these countries invest in Georgia compared with other states is minimal. The countries which invest in Georgia are already aware that there are many better places they can go.