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Foreign Companies Win More Frequently in Public Tenders in Georgia

Over the past year, foreign companies won public tenders in Georgia more frequently than the national ones did.

This information is confirmed by the study conducted by the NGO “Transparency International – Georgia”, which will be published in the near future.

According to a representative of the organization Anna Dabrundashvili, as per  preliminary results, in 2014 more foreign companies won in tenders than in past years. However, “Transparency International” does not speak about the reasons for this.

“Commersant” tried to find out the reason for the growth of foreign companies’ participation in tenders, as well as the possible consequences for the Georgian business. This is especially important due to a fact that  the state, carrying out various infrastructure and construction projects, is the largest customer  for local businesses.

If  the number of foreign market players increases, it may complicate the existence of local businesses.

We should also take into account the statements of many Georgian businessmen saying that  the public tenders became problematic for them – in this situation it is possible that the passivity of Georgian businesses in tenders can be explained by  frequent  cases of breach of contract and increased fines imposed by  the government.

The Georgian insurance company “Ardi” has repeatedly warned about the problems in the tenders and the dangerous statistics, whose representatives say that very often government tenders brought the company to bankruptcy. According to them, it is a serious problem which should be solved by  the government and Prime Minister  – but still remains unresolved.

In this situation, a sharp intensification of foreign companies in the tenders can be devastating to the Georgian business, and this is a direct blow to the country’s economy.

According to the expert Demur Giorkhelidze, the growing participation of foreign companies in tenders cannot be regarded as a positive factor, since the purchase  for  infrastructure projects can play a positive role in the development of Georgian business and therefore, the economy – however, this will not happen  if the funds allocated for the implementation of such projects go abroad and don’t support the local industry.

“It is bad when the state restricts the local  businessmen and gives preference to foreign companies at the time when Georgian companies  are  able to perform all the necessary work. Tenders are  used by monopolistic groups focused exclusively on imports, and formed under the previous government. No one can enter into this market. An increasing number of foreign companies participating  in tenders shows that the Government pursues the  wrong policy “- he notes.

However, there are opposing views – in particular, the expert Paata Sheshelidze believes that there are sectors of the economy in which foreign companies have more opportunities than Georgian.

“For example, Samsung is much better versed in high technology than the Georgian Alta . Foreign companies have much better technical equipment for the construction of hydropower stations and highways than Georgian. So, there is nothing  bad in this, “- the expert notes.