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Challenges, Success and Plans – Businessmen Appraise the Year of 2017, Unveil the 2018 Plans

What was the year of 2017 like for business sector and Georgian economy, in general? Despite the comparatively pessimistic forecasts by World Bank and International Monetary Fund (IMF), in January-September 2017 Georgian economy grew by 4.7%.

This indicator makes Georgia one of the leading countries, but the fact is that nominal GDP is 3 855 USD and this indicator leaves the country behind many other former Soviet countries.

Among former Soviet countries Georgia ranks 9th in terms of GDP per capita. We should also note that top three countries are members of EU and NATO, while the next four countries are oil and gas exporters.

In January-November 2017 Georgian foreign trade turnover rose by 12.9% year on year. It should be noted that exports rose by 27%. The upturn is recorded to the direction of EU market and traditional exports markets of Russia and other former Soviet countries.

The year of 2017 was successful for winemakers. As compared to the previous year, exports volume rose by 63%. Negative trade balance creates a serious problem, which constitutes 49% in foreign trade turnover, that is 4.684 billion USD. As compared to the previous years, foreign direct investments (FDI) inflow is growing. In January-September 1.346 billion USD investments were made in Georgia. The country has advanced positions in international ratings too. According to January-September indicators, Georgia ranks 20th in the report published by European Chamber – Best European Countries for Doing Business. Georgia runs ahead of such European countries as Spain, Italy, Czech Republic, Slovakia, Bulgaria, Hungary and Greece.

Georgia ranks 16th in the Doing Business rating of World Bank, 44th in Corruption Perception Rating by Transparency International. According to the Doing Business 2018 report by World Bank, Georgia has won 7 positions and entered the list of top 10 countries.

Specialists assert that the profits tax abolition, that is Estonian model, was an advanced step for the business sector in 2017. Economic experts assure that the reform results will become evident at the end of 2018.

Amendments to the Insolvency Law, namely, simplified procedures for business closure, has considerably improved the business environment and this factor was also reflected in international ratings. Introduction of free trade regime with China and EU may be appraised as a success of the country and business sector. Inauguration of Baku-Tbilisi-Karsi railroad was appraised as a huge infrastructural success, as well as inauguration of Anaklia deepwater seaport construction works. As to the year of 2018, Minister of Finance Mamuka Bakhtadze  noted that an important reform will be implemented in 2018. The new project calls for introduction of more simplified and fastest automatic system for return of surplus VAT payments. Significant  infrastructure development projects will be implemented in 2018. More than 1.3 billion GEL will be spent on construction of new roads. There are serious expectations in tourism sector too. Number of foreign visitors has exceeded 7 million persons. Government of Georgia hopes that in 2018 the mentioned figure will rise by about 2 million persons. In short, if we trust the Government, the year of 2018 will be more successful thanks to the 2018 state budget, which is oriented to economic growth and development, according to officials.

Keti Bochorishvili, Anaklia City executive director:

«I believe that the year of 2017 will be important for Anaklia seaport and the city. Important and strategic partner SSA Marine has joined our project. This is an American seaport operator. It is important that all works satisfy international standards and based on this factor we have developed a master plan, which has become a precondition and the company has obtained a building license. The 24th of December is the date of crucial importance, because the construction works of this century have started. Very interesting preliminary works were finished in 2017. We will have many challenges and opportunities in 2018 too.

We started working on the Anaklia city concept in 2017. This is the city of the future and, along with the deepwater seaport, it will enable the country to become a powerful player on global level and attract  multinational companies.

Nutsa Abramishvili, Schuchmann Wines director general:

The year of 2017 was interesting. Many important events took place in the sector, where Schuchmann Wines Georgia operates. Wine, winemaking, agribusiness is our key direction. As to other projects, they include gastronomic and tourism directions: travel operator known as Schuchmann Travel. Gastronomic direction is our modern precedent on Georgian gastronomic market such as Molekula – advanced cuisine. It may be tasted at our Qarvasla bar.

Georgia has made important achievements on foreign markets. Namely, Georgia was introduced at Wine Civilization Museum in Bordeaux. For several months Georgian wine, agriculture, history and culture were  represented at the Museum. Consumers got to know Georgia. Our country has obtained a respective place on the world wine map. The year of 2017 was successful for Georgia in terms of marketing and growing perception. Wine sales have also grown.

We should make emphasis on our success – we have replaced the Russian marker by China. There were permanent problems with Russian market because of various risks (political and currency devaluation). In general, it is not expedient to be dependent on former Soviet countries space. We have already diversified exports markets and we export products to 35 countries.

Our annual sales account for 1.5 million GEL, of which 15% are sold in Georgia. Our sales are growing. Annual growth pace is at least 10%.

It is important that Schuchmann Wines will mark its 10th anniversary in 2018. Our winemakers are working on creating and bottling a special jubilee wine dedicated to this date.

As one of the important events in 2017, we obtained ISO:22 000 quality certificate. Our chateaux is a place for important meetings. 90% of our guests are foreign citizens. When they hear the German appellation, they have higher degree of confidence and therefore, we introduce new services and tastes on a constant basis. We do business that brings happiness and that is based on tastes and feelings.

Vladimer Meskhi, GeoPlant administrative director:

I would not complain about the year of 2017. Our company is oriented on novelties and we had certain difficulties that, as a rule, accompany innovations.

We introduced Gurieli tea on Georgian market in 2010. In about 2 months we managed to take control on 13% of the market. At this stage, our market ratio exceeds 23%. In 2017 we introduced several new products on the market. We pay serious attention to the market of raw materials. This is a difficult case, but our development is impossible without this component. We have issued Christmas tea – Prince Gurieli. It is an attractive and efficient product. At this stage, we have about 50 varieties of tea and we cover all segments. We also take steps in the exports direction. We supply products to European market, Central Asia market. Our ratio on Russian market is unimportant because of many risks.

We plan to develop the direction of bio tea. Therefore, we pay special attention to plantations. We will start developing this segment in 2018. It is not ruled out to launch white tea production too.

In 2015 we organized a new tea packing enterprise in Ozurgeti. We put considerable investments. We have bought high-level production equipment in various countries.

Two-month currency markets fluctuations should be considered as one of the key challenges in 2017.

Vano Goglidze, Kula company director:

The year of 2017 was quite complicated for us, on the one hand, because of Georgian currency devaluation, on the other hand,  frosts started in spring. In Shida Kartli fruits froze  and the product price hiked. Despite this, we managed to maintain prices and quality. In 2017 we built a new enterprise, which started production of meat products. We intensified exports too and these operations brought currency to us. We launched production of sugar-free products (sauces, juices, jams, stewed fruit …)

We produce 220 varieties of products and export them to 25 countries. The USA and Germany are major exports markets for us.

In 2018 we plan to produce bio juices. To this end we plan to expand our plant and invest additional 2 million USD  in expansion plan. We will employ 50 persons in addition. Currently, our company employs more than 300 citizens.