Israeli Chamber: ‘Transition Period in Georgia Lasting too Long’
The FINANCIAL -- Georgia has a potential to attract over USD 250 million of FDI from Israel annually. However, reaching this figure requires strengthening bilateral cooperation from both sides. Real estate and agriculture will remain the main sectors in which Israeli investors will continue to invest during 2015. The recently established Israel-Azerbaijan Chamber is alarming for Georgian officials not wanting to lose the competitiveness of the country on a regional level.
According to the primary data of the National Statistics Office of Georgia, FDI from Israel to Georgia exceeded USD 16 million in 2014, up from USD 9.8 million from the previous year. However, Itsik Moshe, President of the Israel-Georgia Chamber of Business, said that the volume is much more. “Assuming the example of the previous year, 75% of investments issued by Israeli investors are registered under other countries.”
The Israel-Azerbaijan Chamber of Commerce was founded in 2013. During recent years Georgia has had the ambition of becoming the hub of the region. The Chamber is believed to increase bilateral economic relations between Israel and Azerbaijan. “Is there any risk that on a regional level Israeli investors will shift to Azerbaijan? - this question should be addressed to the Georgian side. Taking care of this issue is in their hands,” said Moshe.
“I still declare that there is a great potential and willingness from the Israeli side. The rest should be decided by Georgia,” Moshe said.
Q. What are the exact projects that have been established with Jewish investments in Georgia in 2014?
A. I am aware of three projects in just one business sector, which are worth USD 27 million. This is private investment without any loans. As for the funds attracted from banks, international companies and tenders, the portfolio exceeds several dozen million. The Georgia-Israel Chamber of Business mostly works on attracting private investments, and later on - their proper management. We pay more attention to it as it supports the development of the two countries’ bilateral economic relations.
Q. What are your expectations, what will the volume of FDI from Israel to Georgia be for 2015?
The potential of investments reaches over USD 250 million annually. However, in regard to this, bilateral work is important. Jewish investors will continue investing in the real estate and agriculture sectors this year.
Q. The recent changes in visa regulation and prohibition of agro-land purchase by foreigners raised big concern among the business society. How have the above-mentioned changes impacted on Israeli businessmen?
A. Imagine that an Israeli investor constructs a high class building worth millions of dollars. Together with problems like different business culture and less experience on the local market, in addition, for every three months of being here now investors have to leave the country for three months. This hinders the process of construction; it is almost equal to the sinking of the project. In addition, there is a fair amount of uncertainty. Investors are afraid that they might be prohibited from entering the country. I welcome a willingness to revise this issue.
Q. Could you please name the remaining competitive advantages of Georgia for investors in comparison with its neighbour countries?
A. There is still a normal environment in Georgia which is lacking in neighbouring countries.
Q. Due to the sharp devaluation of the national currency, economic conditions in Georgia are a bit hard. Representatives of various international chambers openly blame the Georgian Government for it. What is your viewpoint, could Georgia avoid external problems in the case of having a better domestic policy?
A. As one of the most experienced and senior representative of this sector who has been living in Georgia for 25 years, I would not join in with the harsh statements of international organizations. Their estimations might be due to less of an awareness of and approach to estimating the Georgian reality from the parameters of their own countries. Georgia is a small country and will manage to improve the issues led by domestic policy.
Q. The state of Israel managed to achieve political and economic development in a very short period of time. What is your recommendation, which steps should Georgia take in order to build a prosperous country?
A. Education, talent and potential is at a sufficient level in Georgia. I would strengthen one parameter, which is a lack of love of the country. It expresses itself in all areas.
On the one hand, it is not easy to run a country with such social-economic parameters. On the other hand though, it should not be difficult to improve the economic conditions of such a small country during 25 years. Unfortunately, this has still not been achieved.
Q. In 2014, you initiated the employment of 500 Georgians in Israel. What have the results of this initiative been?
A. This is a purely Georgian issue. The embassy as well as the business chamber do not represent a side. We declare our initiative and readiness. The rest should be taken care of by the Georgian side in line with their needs and interests.
Q. Your initiative to employ 500 Georgians in Israel was quite a positive step from your side. Meanwhile, if we discuss the issue from a global point of view, don’t you think that due to the constant crisis in the country we will experience a brain drain?
A. The problem is not in quantity but in its control and legitimacy. Working legally abroad for some period will increase qualifications in various fields and also help to improve the financial situation of Georgians.