Cautious Optimism as American Investors Explore Georgia

Q&A with the President of American-Georgian Business Council

A conference, organized by the Washington-based American-Georgian Business Council, brought a group of Georgian and American businesspeople together in Tbilisi on October 7-8 to explore new opportunities of investment in Georgia. The Georgian authorities used the seventh annual conference to demonstrate those measures which have already been carried out to eradicate corruption and foster improvement of the investment climate in the country.

The American-Georgian Business Council was set up in 1998 in an attempt to raise Georgia’s visibility in North America and to explore the country’s investment opportunities. At the moment the council unites 19 corporate members including ExxonMobil, Northrop Grumman, BP, AIG, Ernst & Young etc.

The American International Group, Inc. (AIG), which is one of the world’s leading international insurance and financial services organization, with operations in more than 130 countries, announced on October 7 that it intends to open an office in Tbilisi. “Investment of such a huge company in Georgia is of enormous importance,” Georgian Prime Minister Zurab Zhvania, who addressed the businessmen on October 7, told reporters. But the AIG’s office will be opened only after new insurance legislation is passed in Georgia.

Enders Wimbush, President of American-Georgian Business Council, says that a number of good deals are coming up to be signed. He also said that foreign investors are “waiting very anxiously” for the new tax code to be adopted by Georgia. Civil Georgia talked with Enders Wimbush on October 8 to find out exactly what the interests and expectations of foreign investors in Georgia.

Q.: Has the investment climate improved in Georgia recently?

A.: The aim of this conference is to bring together business investors who are interested in Georgia to learn investment opportunities and particularly to learn from the Georgian government what kind of moves they are taking to improve the investment climate.

American businessmen have always looked at Georgia as a very special opportunity; sometimes it [Georgia] looks better than other times. The last two or three years I think we have probably seen a downturn in interest, but there have always been North American businesspeople who were prepared to invest in Georgia. I detect this year there is a lot more interest. I think that the business climate is improving and our members seem to reflect that.

Q.: Are there any concrete deals that have already been agreed upon?

A.: The AIG, the big insurance group, has announced that they are opening an office in Tbilisi, shortly after the new insurance legislation is passed. So that is one concrete thing. I think that number of opportunities was explored among the American businessmen and Georgian counterparts here. We are probably going to see a number of good deals coming up to be signed. But I can not be more specific on that.

Q.: Could you be more specific about those sectors of the Georgian economy which are interesting for investors?

A.: Energy is of great interest. That’s an obvious one. There are interests in hotels a growing interest in tourism. Georgia is a natural tourist destination and this needs to be exploited. We’ve talked about it for years but almost nothing has been done. So this year I think we are getting some more energy in to the whole idea of revitalizing the tourism industry in Georgia. There is of course interest in agriculture. Actually, I can say that there is an interest in almost every sector of the Georgian economy.

There is very high interest in sea ports [Batumi and Poti], for obvious reasons: they bring oil, they are a gateway for transport corridor across Central Asia. One of our members was here looking at the possibility of generating tourist interest along the sea ports. For example one of his core possibilities is to build marinas for people with yachts and Batumi is a wonderful place for people who want to sail and boat on the Black Sea, so he is exploring this.

Q.: What are the investors’ expectations?

A.: I think that the general feeling is that it [political environment for investment] is more attractive than it was last year. They [businessmen] are consciously optimistic at this point. They want to see real changes. And they are very enthusiastic about some of the evident anti-corruption measures that the President [Mikheil Saakashvili] and his government put in place.

They [foreign investors] are waiting very anxiously for the new tax code. This is the most important thing. A lot of investors can live with the situation, which may be politically, not unstable, but fluid; it is moving, they can live with that, and most of our investors have lived with that in Georgia almost from the beginning. But they can’t live with the bad tax codes. We are very optimistic that we will see something quite positive in this regard.