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State of the Business Climate in Georgia

Analysis of the business climate in Georgia.

State of the Business Climate in Georgia

5th March 2018

    The CCIFG and some of its members met at the initiative of the Chef of the Georgian and Armenian Economic Department Mrs Ioulia Sauhtier to discuss of the theme: "State of the business climate in Georgia". The goal was for companies to give macro-economic information to the degelation composed of Mr Daniel Gallissaires -Regional Adviser for Turkey and the Caucusus and Head of the Regional Economic Department, Mr Jules Porte, his deputy and an economist from the AFD.

Legal

    Mr Alexandre Bolkvadze from the lawyer office BLC informed of the legal point of view. He advised that the Law of Georgia is very modern and many updates have been done in order to reach its actual status. This accomplishment is visible through the drop of the corruption in the country and the will of the governement for transparency. In 2011 Georgia joined the Open Government Partnership that consists in making governments more open, accountable and responsible to citizens. In comparison to its neighbourhoods countries, Georgia is far ahead.

   However some drawbacks have also emerged, like for example, the interdiction for foreigners to purchase agricultural lands.

Food industry

    Then Mr Philippe Peguilhan from MafCarrefour and Mr Jean-Michel Charles from Entrée talked about the food industry, offering the point of view of a large corporation and of a SME. For the legal point of view and the business climate, they both confirmed the words of Mr Alexandre Bolkvadze. They had and have no issue opening and operating their activity. On the contrary, they underlined the easiness compared to other countries such as Russia and Azerbaidjan.

   The devaluation of the lari at the end of every year has been mentionned as it decreases the average basket of the consumer. Its impact is important due to the fact that the rent is to be paid in American dollars whereas the salary is in local currency.

   Georgia still has progress to make on the production and on the quality of its draw materials, as for the moment they are in majority imported.

Finance/ Encrypted currencies

    Mr Jeremy Bel from Altercorp LLC a finance institution also specialised in encrypted currencies put into light the fact that some companies in Hong-Kong and Singapour are promoting the Georgian Free Zones, which are of a number of 4. The interest raised even more after Georgia concluded a Free Trade Agreement with China, as it is the only country in the Caucasus region to have one.

    On the side of the encrypted currencies, the government validates 2 aspects out of 3: the raising of funds for start-ups and the mining. In the mining industry (Bitcoin), Georgia with the company BitFury is on of the largest player. According to the magasin Forbs Georgia, the company produced 15% of all the bitcoins in 2016. However the government is opposed to the exchange of encrypted currency.

    On an other level, the relation between Iran and Georgia is still tensed even if the sanctions on the country has been lifted in 2016.

Water purification

    Mr Anthony Mauger from the company SADE advised about the industry of water purification. In this sector of activity, the need for qualified engineers is important. However this field is underdevelopped in Georgia.

   The difficulty to respond to tenders due to a redaction that is often ambigus or not detailed enough was also mentionned.