Will foreign investments come to Georgia?

Attracting direct foreign investment into Georgia has been an important issue throughout this year. In the first half only USD 226 million was invested from other countries, almost five times less than in the same period last year. Only USD 92 million of this entered in the second quarter and it should be noted that most of this investment, about 80% has come from the UAE.

At the end of 2008 and beginning of 2009 the administration was very optimistic, promising to attract over USD 1 billion, but now the officials are much more modest in their expectations. Minister of Finance Kakha Baindurashvili has stated that the major task of the Government this year is to ensure that investments which have already been made remain here and projects they are funding continue. He cited the Poti and Kutaisi industrial zones in particular, which he says are still being built.

Analysts quote the global financial crisis and the high risk presented by Georgia as reasons for the decline in FDI. Almost all analysts think that the Russian invasion has damaged Georgia’s image and increase the risks, so many investors will now think twice before starting to put money in Georgia. There are also lots of shortcomings in Georgian legislation which need serious amendment, thinks economic analyst Alexander Khvtisiashvili.

The investment climate should be really attractive here and there are many legal advice companies in Georgia who know the genuine situation in the country and accordingly give appropriate recommendations to potential investors. The Minister of Finance is still optimistic and hopes that under the new Minister of Economy things will get better. Let’s hope so.