Desperately seeking investment
Another key business forum on horizon in Tbilisi
By M. Alkhazashvili

The Messenger, Georgia
Nov 25 2004

Central to the administration’s economic policy is the attraction
of foreign investments to the country. To attract investment, the
government is straining to improve the investment climate as quickly
as possible, as well as to push forward its privatization program.

The new, more liberal tax code, which will come into force from next
year is intended to create not only the conditions for local business
to develop, but also the right conditions for investment from abroad.

According to the official statistics, between 1996-2004 foreign
investments amounted in total to USD 1.7 billion, the equivalent of
USD 386 per citizen. This is far from impressive: in 2003 alone,
Sakartvelos Respublika reports, foreign investment in Azerbaijan
equaled USD 410 per resident. Investment in Georgia is even less when
the two pipelines (BTC and Baku-Supsa) are taken out of the equation.

In 2003, as a result of the uncertainty surrounding the Rose
Revolution, foreign investment in the country decreased further,
but since coming to power the Saakashvili administration has made
increasing investment a priority. Some economists predict that next
year Georgia foreign investments will amount to USD 150 million. If
these investments are profitable, this will have a knock-on effect,
increasing investment in Georgia in the future.

Minister of Economy Kakha Bendukidze’s privatization program should
contribute towards increased foreign investment, though so far his
and the government’s attempts to arouse interest in state assets to
be privatized have produced little.

Local businessmen and economists complain that the privatization
process is not transparent, citing as an example the direct sale of
aviation manufacturer Tbilaviansheni to its current management in
a deal worth USD 67 million, which representatives of the Economy
Ministry describe, according to Akhali Versia, as one of the most
important sales of the year.

Deputy Minister of Economy Natia Turnava says that Georgian Telecom,
Rustavi Azoti (chemicals) and Elmavalmashenebeli (locomotive
construction factory) will be sold in the near future, while
the ministry is also currently preparing to put Elektrokavshiri
(state-owned telecommunications) and Poti and Batumi ports up for sale.

An encouraging step is the series of business conferences where
senior government officials have promoted investment in the country.
Already meetings have been held with U.S., Russian, British, Israeli,
Armenian and Azerbaijani businesses.

On November 29-20, the government will continue the effort with
the Italy-Georgia Business Forum at the Courtyard Marriott. Prime
Minister Zurab Zhvania is on tap to give the keynote address and the
government’s economic team is participating in most panel discussions.