Foreign Direct Investment in Georgia

The country’s leadership is forever talking about the improved rating of the country in the ease of registering a business, conducting business and all kinds of benefits where Georgia is far ahead of not only its neighbours but the almost entire world – at least this is what is presented to the population. But peoples' demands are is very modest. They want to see the results of this leadership: they want investments; they want jobs; they want a salary. Unfortunately despite the authorities' claims that country is leading in many fields, investment inflow is not increasing at all; in fact the tendency is the reverse. Immediately after the war, the country’s leadership and analysts blamed Russia for the outcome of the aggression, which was of course disastrous for the country. Then came the world economic crisis. However things have now more or less stabilised around the world and we have been assured by our authorities that Georgia has overcome the crisis successfully. We do not intend not to trust our government but results are needed and there is a concern among analysts that maybe in reality Georgia's investment environment is not that attractive and it is only a facade or simulated reality. The issue has become even more acute after the statement made by the French Ambassador HE Eric Fournier which aired the skepticism of foreign investors and businessmen over the activities of local taxation department officials. Nevertheless, Georgia’s PM Nika Gilauri keeps repeating that today investors consider Georgia as a centre of regional economy, but the question appears where are these investors? In the first quarter of 2010 only USD 76 million entered Georgia’s investment market, which is around 40% less than during the same period last year.

Local analysts believe that the Georgian government ignores critical remarks such as those aired by Ambassador Fournier. Analyst Soso Tsiskarishvili suggests that investment is not attracted by pure rhetoric and government orders. Market economic principles should be promoted and supported. He also suggests that Georgia is thought of as a place for money laundering and until the economy is a political victim serious investment will not enter the country. When money enters the country we should ensure Georgia traces its source to ensure it is not a money laundering attempt.

Analyst Gia Khukhashvili thinks that civilized capital does not enter Georgia; the origin of investments very often is rather vague. Even in media sphere some Georgian media companies are owned by completely unknown entities. According to Khukhashvili the investment climate in the country is bad, there is no fair competition and there is high political risk. He thinks that the French ambassador actually really honestly cares for Georgia; he is not a bureaucrat as we see in some international organizations. Khukhashvili’s conclusions are very pessimistic and he thinks that the current administration as well as the previous administration under Shevardnadze created certain system under which they have later become the hostages of this system. The only solution is the demolition of the existing system and creating free economy development conditions. It depends on the good will of the ruling power.