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A New Wave of Kazakh Investment Expected in Georgia

Kazakhstan intends to invest a great investment in Georgia – Economy Minister Giorgi Kvirikashvili announced after his  visit to Astana.
According to him, such topics as KazTransGas-Tbilisi company’s activity in Georgia,  the development of Batumi sea port, the development of the transport corridor, etc were discussed during the visit.

The meetings were  also focused on various potential investment projects.

“Kazakhstan has an intention to enter into Georgia with a great investment, and we must fully support it,” – the Minister said.

The theme of the Kazakh business has become very topical in Georgia, and sometimes even controversial.

KazTransGas – Tbilisi case is especially resonant, in particular, talks about the return of the Tbilisi gas distribution networks in the management of the Kazakh management – roughly, this will happen in January 2015.

Recently, Kazakh media have  reported about the Kazakh government’s intention to sell the company in 2015.

The events around KazTransGas caused a number of publications in the Kazakh media – in particular, the magazine Capital  published an article “The Kazakh business leaves  Georgia”. According to the journalist, a sale of assets in countries where their activities are faced with obstacles is hidden under diplomatic wording “in connection with the global privatization project”.

Moreover, the newspaper wrote that the Kazakh side could response – in particular, it may  stop the import of Georgian products. However, the visit of the governmental delegation to Astana and the general warming of relations between the two countries make irrelevant predictions about the possible freezing of economic ties between Georgia and Kazakhstan.

Currently, Kazakh investors are carried out a few large projects in Georgia.

In particular, a 5-star hotel and wellness center is being built in the resort village Likani  on the funds allocated by the  Kazakh state-owned company KazMunaiGas – service and the Partnership Fund of Georgia. The total cost of the complex is  USD 38.5 million. The international network RIXOS will operate the  hotel.

Silk Road Group is actively working in Georgia which is currently building a restaurant and entertainment complex in the center of Tbilisi. The cost of the project is  USD  5 million, the object will be commissioned in the spring of 2015.

Silk Road  also has the right to build Trump Tower in Batumi , although the timing of the project is not yet known.

Batumi Industrial Holdings founded by  KazTransOil also  operates in Georgia. The company manages the Batumi oil terminal and sea port.

Georgian-Kazakh Tiflis Development is  building  a hotel near one of the largest urban parks, as well as in the outlying areas of Tbilisi and Abastumani resort village.

Tiflis Development also built a 16-story business center “Tiflis Business Tower”.

Kazakh capital is represented in the Georgian financial market in Halik Bank and BTA Bank.

At the same time, Kazakh companies face certain problems. Apart from  KazTransGas- Tbilisi, this applies to the company Aksai BMC, which is suing the Ministry of Energy of Georgia – Kazakh investorsaccuse the Ministry  of violating its commitments, in particular, the deprivation of their licenses.

At this stage up to 90 companies operate in Georgia.

Kazakh Ambassador to Georgia Adil Tursunov  told “Commersant” about  a new wave of Kazakh investment 2 years ago.

“The potential of Kazakh business in Georgia is not yet exhausted, and we have high expectations. Kazakhstan began to  invest in  Georgia after President Nursultan Nazarbayev’s  visit in  Tbilisi in 2005. This was the period when large foreign companies  got  interested in  Georgia, including Kazakh ones. However, in 2008 the global crisis began and the process slowed down. Now the crisis is over and we are resuming activity in international markets. So, I very much hope that soon the second wave of the Kazakh investments will begin in Georgia. Kazakh businessmen who are working in Georgia will contribute to it informing their colleagues about attractive business climate in Georgia. It should be noted that large Kazakh companies such as KazMunaiGas, BTA Bank, Halik Bank, Rompetrol  and many others  are already operating in Georgia. I must say that these companies don’t enter any markets, and Georgia is one of the few countries where they have decided to work, “- said the ambassador.

However, despite this, a second wave of Kazakh investment has not yet started. Whether this will happen in the future, and whether the Prime Minister’s visit to Astana will boost Kazakh investment – will become clear in the near future.