Executive Director (Federation of Georgian Businessmen)

Executive Director of Federation of Georgian Businessmen, Georgi Isakadze

“Doing business in Georgia is rather easier than in other post Soviet countries”

“It is just 15 years that Georgia is independent and it really hard for the potential investor to take a decision of investing in the country even though it has strategic location, beautiful landscape and etc but they should catch the momentum,” Executive Director of Federation of Georgian Businessmen, Georgi Isakadze, said.

Besides this year report of International Finance Corporation says that Georgia is on a second place as having government actively supporting business in the country. Even more, last year was a progressive one for economic freedom in Georgia according to the 2006 Index of Economic Freedom released lately.

Federation of Georgian Businessmen (FGB) is the organization that contributes to the development of attractive investment climate in the country to attract foreign businessmen to put money in Georgia. In 2004, Georgia’s oldest and largest business association- the Taxpayers` Union of Georgia was transformed into the Federation of Georgian Businessmen (FGB). FGB is a non-profit civil association, whose mission is to facilitate economic development in Georgia through establishing a business-friendly economic environment and setting a new standard for private entrepreneurship in Georgia based on state-of-the-art know how and philosophy of social responsibility.

Q: Could you speak about the history of the Georgian Business Federation?
A: From the beginning of 1996 we used to have the organization of Tax Payers’ Union of Georgia that was founded by the top Georgian businessmen of that time. Three years ago when there were sweeping political changes in the country the chairmen of the union became the member of the parliament Mr. Niko Lekoshvili who is now the head of economic committee parliament of Georgia. Then the new president was elected, he is Mr. Badri Patarkatsishvili, he is really busy man and he asked me to manage this federation together with my team. So we came here two years ago, we created action plan, changed the name of union, its constitution and created the transparent institution. There are hundred and thirty two members at the federation right now. I can say that this is the biggest independent business Association in the country.

Q: What can you say about economic developments in the country?
A: It is just 15 years that Georgia is independent and it really hard for the potential investor to take a decision of investing in the country even though it has strategic location, beautiful landscape and etc, they need to look at the legislation of the country, its executive and judiciary system. So we have some pluses and minuses as well. We have very ambition privatization process; revenue from it is really considerable. But as I feel that the situation is still quiet difficult but the businessmen are very active from searching markets for their investments to make direct investments from foreign investors.

Q: What investment climate offers Georgia to attract foreign businessmen?
A: Doing business in Georgia is rather easier than in other post Soviet countries or in our neighbor country. The executive system is not so complicated and the administrative barriers like licensing or etc has been reduced dramatically so life is getting easier and easier every day. We used to have 900 licenses and we reduced them to 150, we do not have 75 ministries as our neighbors do, we have quite mobilized government. Sure we have problems but that is normal for a transitional country, but if you take into consideration the potential of Georgia regarding communications, tourism, agriculture you will guess that the situation will be further improved very soon.

Q: You talked about investment possibilities, what is the strategy of the federation to contribute to the investments in the country?
A: We are helping local businesses to develop. For example to speak about agriculture we supported the creation of fruit refinery factories here. Georgia is famous for its fruits like apple, mandarins in Adjara and etc. and there are several factories successfully operating already.

Q: What about Tourism?
A: We have very good example of our support to tourism development in the country. I hope you are aware of Kazakhstan investments in this field, they are quite active. Besides last two years we had more then 50000 tourists from just our neighboring countries, Armenia is getting very active and only on this season we expect more then 40 000 tourists only from Armenia that means that Georgian tourism development trend is very optimistic. What I can sea real estate business becomes very profitable here as prices are rising dramatically each month that means that people are ready to build small hotels, small guest houses, restaurants, malls on a beach side for example in Batumi sea side city which is really rapidly developing.

Q: Georgia is searching for new markets especially after ban of Russia on Georgian products, how your federation supports the process?
A: I think this problem with Russia will be solved soon as this is rather political decision then economic one. Georgia is a little country and it should be oriented to the export demand groups such as Europe or some other countries. At the same time when such a big market as Russia is closed for us, we should search urgently for new markets, but it is not so easy as our government says, it needs lot of time and money.

Q: What products does Georgia export generally?
A: However the agricultural products of this country, its natural products like mineral waters and etc are really valuable for export and we have advantages as European market for thousands of our products are open for us without any custom fees. It is agreed with the EU from 2006. that also means that we can invite foreign businessmen to produce their products here in Georgia and trade in Europe is it is a wonderful opportunity for China, for Turkey and the country already began it, Georgian label has access to European market. Georgia used to be one of the biggest trade centers of this region. We had a silk road to all the countries; we have a Black Sea and huge tourism potential.

Q: Could you speak about investment risk in a country?
A: I can quote head of Turan Alem bank of Kazakhstan when Russian journalist asked him why was he investing millions in Georgia and he replied that he know that `there is a risk but in two-three years the prices will rise and my millions will triple. So this is momentum for me. ` And this is the same for everybody, it is a free way, empty space and someone have got to feel it and then we will have real competition. I can say that Turan Alem groups are monopolists in Adjara as they bought 27 hotels there.

Q: Could you speak about key figures in the federation, how many people work here and etc?
A: We have very small group here, we are six and I do not intend to raise the staff as I do not need more people. We do not have any outside funding, we just have member fees. W had more them 300 000 members last year and their number raises little by little If about key figures we have a special board including TBC group for example, Kazbegi group which is biggest bear producer in a country, TV companies are among our members as well as they understood that they are doing business as well. Georgian Business federation is the biggest lobby structure. We are lobby for the companies, for a concrete direction. That is why I am very open being twenty four ours on TV and etc.

Q: What are the directions that you lobby?
A: I cannot tell you exactly, for example one company may have problems with the financial police and I have to defend them and if they are afraid of doing something I can bring all the TV in three minutes here and summon a press conference and say that the government is doing nasty things. Politicians should get rid of us.

Q: And what is the solution?
A: They have to understand that business is a solution of all their problems. We need more diplomacy in the relations with Russia for example, businesses are not guilty and Georgian economy lost millions due to that ban on import of Georgian products in Russia. Businesses lost millions and concrete citizens of Georgia lost much as well. It is another issue how businessmen want government and politicians to help them. They have concrete answer `Do not interfere`. It is not about corruption or something like that but their political aims the situation got tense. Russia in a neighbor and nobody can take Georgia or Russia away from each other so we need to negotiate that is why I like my job. It is a network; it is a bridge between businesses and government. We are something like UN here; you should be a peacemaker sometimes.

Q: What do you think should be the strategy to enter new markets soon?
A: First of all promotion, exhibitions, contacts but the competition in Europe is dramatic.

Q: Could you name any country Georgia should take example from?
A: I am thinking about Georgia as a financial center so I can name Switzerland for some political reasons as well but if you mean economic growth or economic reforms I can say Croatia or Estonia but we cannot take exactly the same model but we have a very good period when all the reforms are supported.