Business Environment and Regulations

Georgia’s business environment and the regulations that must be adopted as part of the Georgia-EU association agreement; The Natakhtari corporate director Nikoloz Khundzakishvili discussed these issues for the Business Partner TV program. 

Natakhtari strives for diversifying export markets and expanding its geographical area; however, this does not mean a diversification of the export portfolio. Besides traditional products, the export portfolio should also include products that will remain popular all over the world for the next 5-10 years, Nikoloz Khundzakishvili pointed out, and added that, besides financial resources,  domestic business requires more training, and new tendencies to prevent an outflow of the highly educated workforce from the country. 

“It is important for us to have diverse approaches and, together with traditional products, including tourism products, we should also add sought-after products that will be popular worldwide for the next 5-10 years. 

Consequently, we should direct our intellectual potential in other directions, and create new products for export. For example, information and telecommunication technologies are the most important components and, despite the borders, they allow working over long distances. I do not mean a supply of outsourcing services. We should become suppliers of high-tech products. Georgia has this potential. We have people who graduate from  departments of mathematics and computer sciences. The best young people are leaving the country, and they strengthen the economies of other countries. Furthermore, they get employed in a system where they cannot attain personal development and perform a routine job. 

There is no alternative to a proper education, be it dual education, vocational education, or something else. We need people who will engage in our work ecosystem. This may be achieved only through cooperation with the business sector and educational facilities”, Khundzakishvili pointed out. 

Foreign investors always refrain from entering countries where the judicial system is questionable. Besides regulations, investors pay attention to what kind of rules there are to the local game, and how independent the court system is, Khundzakishvili said. 

“For me, as an investor, it does not matter whether VAT accounts for 18% of 20%. The most important thing is how the administration of taxes is carried out, how equal conditions are for everybody, and whether there are preferences for somebody, some company or not, etc.  

The authorities should satisfy all these standards and requirements. I know that they are taking every effort to prove this to me, as a potential investor. They should ensure  a just and unbiased environment. However, when we talk about the court system, the independence of the judicial system is one of the central moments. If some questions arise in this regard, this is a bad sign. Questions mean that investors lose interest in entering this or that market”, Khundzakishvili said. 

Questions and unclear situations frighten foreign investors, most of all, he explained. 

“In this specific case, we talk about foreign investors, who have no emotional contact with Georgia and who make pragmatic, rational and reasonable decisions. We need this group while we, citizens of Georgia, can turn a blind eye to some things and make investments anyway. These foreign direct investments have declined because of this factor, including because of the global context. This category of investors refrain from entering the country, because they know we have an election year where two political forces confront each other. This situation raises questions and, consequently, our potential and rational investors are waiting until the elections pass and that, supposedly, will have no effect on business”, Khundzakishvili pointed out.