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Georgian-Israeli Chamber of Commerce: Investors Find it Hard to Obtain Loans in the Georgian Banks

An interview with President  of the Georgian-Israeli Chamber of Commerce Itzik Moshe

What could the Georgian government do  to improve the economic situation?

Today, top-level professional economic team is working in the Georgian government, and I believe that they have more detailed information than I do. So I can only talk about some areas, in particular, about the measures carried out in different periods by Israel that will not be redundant for  Georgia today.

The economic growth needs  bold steps, often at the level of shock therapy. Governments of small countries can turn the global crisis in an advantage for themselves. For example, all foreign ambassadors should announce a new initiative of the government – each  investor who will invest in the economy of the country  $ 5 million  and l create 50 jobs will be exempt from taxes for a period of 5 years, or the period until the company begins to make a profit. The second initiative is  a quarterly VAT return to the business.

The country will  not lose  anything, and on the contrary, it will attract new investments that otherwise would not come. Such a measure would create new jobs and give an incentive to the development of the economy.

Based on the current situation, how active are  Israeli investors in Georgia, and in what areas?

First of all,  I would say that not only Georgia but the world in general is experiencing the difficult economic situation. But every crisis is also an opportunity that should be used.

With regard to the activity of investors, I do not think that today in any country investors are active. On the contrary – everyone is trying to somehow go through this difficult period with minimal losses.

Israeli investors have invested in Eastern Europe about $ 10 billion in 10 years, but then lost interest in the region. Our task is  to do everything necessary to attract new investors.

A month ago, we conducted a successful business forum in Jerusalem  attended by more than 100 businessmen. I came to the conclusion that today we can interest investors in making investments in Georgia  only by  tireless work. If  the government, the diplomatic corps work on this  and not only in Israel, but throughout the world, it is possible to attract investors.

Of course, there is a global crisis, but that’s what you want to use in Georgia. Israel is the best example of what is possible, because in those days we presented three new projects that will be carried out by Israeli investors in Tbilisi. By the way, we are not talking about investors, who were specifically looking for something –  their investments  have become  only possible thanks to our active work.

In particular, three new hotels will be built in the center of Tbilisi; a total investment will amount to $ 40 million. There are other projects, but these three are the signal for Israeli investors that they can invest in Georgia despite a difficult situation in Eastern Europe and Georgia  is a good place for investment.

It is clear that Georgia is attractive from the point of view of the tourist business, but what about the investments in other areas of the economy? Is there any concern among investors?

Of course, there is a concern, as in any country during the world crisis. Now we can only say that in comparison with some countries in Eastern Europe and the former Soviet Union, the situation in Georgia is better in terms of attractiveness for investors.

Eastern Europe is so uninteresting to the Israelis that they do not pay attention even to the visits of top officials. While up to 30 articles in the Israeli media were devoted to  the forum organized in Jerusalem by  the Georgian-Israeli Chamber.

There were problems related to the Israeli investor Meir Shavit. You  applied  to the Prime Minister of Georgia with the request to protect him from the bureaucracy. As far as we know, the problem now is almost solved, but what is the situation as a whole in terms of the bureaucracy?

Meir Shavit’s case  is a very good example of the  attitude of the Georgian government to investors. This is a very positive fact that shows that all problems can be solved through cooperation. Problems exist  and will always be, but it is important how large scale they are and whether the government has  a sincere desire to solve them.

Minimum bureaucracy  is one of  Georgia’s  advantages  as well as  easy and fast procedure for issuing licenses and permitsthat  is very important for investors.

Among the shortcomings is primarily the small size of the market, as well as financial problems. Investors find it difficult to borrow in Georgian banks. Sometimes this creates serious problems – when the businessman has already implemented half of the project and to complete it he needs additional funds. The refusal of banks to issue loans for the completion of projects is a bad signal to investors that shows that the banks do not trust their own country and do not believe in its development.