Foreign direct investments (FDI) in Georgia amounted to USD 125.4 million in Q1 2021, which was down by 28.3% compared to Q1 2020, - preliminary data show from Georgia’s National Statistics Office (GeoStat).
The largest share of FDI was registered in the financial sector, reaching $93.9 million (74.9%), the energy sector was the second with $35.5 million (28.3%), followed by the manufacturing sector with $27.9 million (22.2%).
Levan Vepkhvadze, Executive Director of the Business Association of Georgian (BAG), declares that 1Q21 should not be compared with the same period of the previous year, as the trend should be assessed in general through the last 3-4 years.
"The dynamics have been very bad for the last 3-4 years, as foreign direct investments are declined. It seems that the favorable environment (including liberal tax regime) assessed by the international rating companies are not enough to attract foreign direct investments,” said Levan Vepkhvadze.
The CEO of BAG names the factors hindering the inflow of foreign direct investments and notes, that the existing pressure reduces them.
“We must think how to attract investors in Georgia, how can we arise their interests, who are expecting an improvement of the situation. There are complex problems, including GEL exchange rate, which is additional pressure for any investment project. We also have to improve legislation, as court disputes are continued for 5-6 years. This is a problem for the investor and they cannot consider it as a favorable environment for them. Homan resources and qualification are problematic as well. We want new investments, but on the other hand, the investor looks at how ready the local workforce is for the new technology. This is the most difficult and long-term problem; when the qualification of our workforce cannot meet the requirements of the potential investor. This is a vicarious circle”, - CEO of BAG declares.
In addition, Levan Vepkhvadze considers that FDI in the energy sector is insignificant.
“35 million USD is invested in energy sector this year, but this FDI is insignificant, as those projects have many barriers, including problems with the local population. We should also take into notice the position of the Ministry of Finance. Perhaps we should give lectures and explain that the tariff for hydropower plants and the tariff for solar and wind power stations cannot be measured in the same way. We will probably need one weekend to sit down and make them understand more adequately the problems we have today,” said Vepkhvadze.
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